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UNITED STATES DISTRICT COURT FILE COPYSOUTHERN DISTRICT OF NEW YORK
IN RE MERRILL LYNCH & CO., INC. Master File No. 07-cv-9633 (JSR)(DFE)SECURITIES, DERIVATIVE AND ERISALITIGATION
This Document Relates To:Securities Action, 07cv9633 (JSR)(DFE)
STIPULATION AND AGREEMENT OF SETTLEMENT
This stipulation and agreement of settlement dated as of February 17, 2009 (the
"Settlement Stipulation") is submitted pursuant to Rule 23 of the Federal Rules of Civil
Procedure. Subject to the approval of the District Court, this Settlement Stipulation is entered
into by State Teachers' Retirement System of Ohio ("Lead Plaintiff'), individually and on behalf
of the proposed Settlement Class (defined below), by and through its counsel, and certain
Defendants (defined below), by and through their respective counsel
This Settlement Stipulation is intended by the parties hereto to fully and finally
compromise, resolve, discharge and settle the Released Claims, as defined herein, subject to the
terms and conditions set forth below and final approval of the District Court:
WHEREAS:
A. Beginning in October 2007, a number of putative class action complaints alleging
violations of federal securities laws were filed, variously naming as defendants Merrill Lynch &
Co., Inc. ("Merrill"), Merrill Lynch, Pierce, Fenner & Smith Incorporated, Merrill Lynch Capital
Trust I, Merrill Lynch Capital Trust II, Merrill Lynch Capital Trust III, E. Stanley O'Neal,
Ahmass L. Fakahany, Gregory J. Fleming, Jeffrey N. Edwards, Lawrence A. Tosi, Armando M.
Codina, Virgis W. Colbert, Alberto Cribiore, John D. Finnegan, Judith Mayhew Jonas, Aulana L.
Peters, Joseph W. Prueher, Ann N. Reese, Charles 0. Rosotti, Citigroup Global Markets, Morgan
Stanley & Co., UBS Securities, Wachovia Capital Services and Deloitte & Touche LLP
(collectively, "Defendants").
B. On December 31, 2007, certain plaintiffs moved to consolidate the securities
cases and for appointment as lead plaintiff pursuant to the Private Securities Litigation Reform
Act ("PSLRA"). On January 2, 2008, the State Teachers Retirement System of Ohio moved for
appointment as lead plaintiff in the Securities Action (defined below).
C. On March 12, 2008, the District Court consolidated certain actions brought on
behalf of investors in Merrill securities and appointed State Teachers Retirement System of Ohio
as sole Lead Plaintiff in the Securities Action and approved Lead Plaintiff's selection of Kaplan
Fox & Kilsheimer LLP, Berger & Montague, P.C. and Barrack Rodos & Bacine ("Co-Lead
Counsel") as counsel in the Securities Action.
D. On May 21, 2008, Lead Plaintiff, together with additional plaintiff Gary Kosseff,
(together, on behalf of themselves and all others similarly situated, "Plaintiffs") filed a
Consolidated Amended Class Action Complaint (the "Amended Complaint") in the Securities
Action which asserts claims under Sections 10(b), 14(a), and 20(a) of the Securities Exchange
Act of 1934 (the "Exchange Act") and Sections 11, 12(a)(2), and 15 of the Securities Act of
1933 ("Securities Act"), on behalf of purchasers or acquirers of Merrill common stock and
certain Preferred Securities (defined below) issued by Merrill or its affiliates during the period
October 17, 2006 through January 16, 2008.
E. The Amended Complaint alleges that Defendants accumulated financial exposure
to U.S. subprime residential mortgage-related assets and asset backed securities ("ABS"),
collateralized debt obligations ("CDOs"), and related exposures and financial instruments
2
(hereinafter referred to "U.S. subprime ABS CDOs" or "U.S. subprime ABS CDO exposures")
which reached $40 billion by the end of June 2007. The Amended Complaint alleges that
Defendants did not properly disclose Merrill's exposure to these assets until beginning October 5,
2007, when Merrill began to disclose its exposures and began to initiate write-downs. By
January 17, 2008, Merrill had written down over $24 billion in U.S. subprime ABS CDO
exposures. Lead Plaintiff also alleges: (a) that Defendants sought to minimize and/or obscure
Merrill's exposure by falsely representing that Merrill's risk controls and hedging techniques
were effectively mitigating and minimizing any impact that subprime assets would have on
Merrill; (b) that Defendants falsely led investors to believe that the impact of subprime assets
would be minimal on Merrill; and (c) that by at least February 2007, Merrill's U.S. subprime
ABS CDO exposures had become substantially impaired and should have been materially written
down by Merrill.
F. On or about July 28, 2008, Lead Plaintiff entered into a tolling agreement with
the Underwriter Defendants (defined below) in which, among other things, Lead Plaintiff agreed
to .voluntarily dismiss these defendants from the Securities Action in accordance with the tolling
agreement and Rule 41(a) of the Federal Rules of Civil Procedure. On August 5, 2008, the
District Court so ordered the voluntary dismissal of the Underwriter Defendants.
G. On July 21, 2008, certain Defendants moved, pursuant to Federal Rules of Civil
Procedure 9(b) and 12(b)(6) and pursuant to the PSLRA, to dismiss the Amended Complaint and
to strike certain allegations of the Amended Complaint. With respect to Plaintiffs' claims under
the Exchange Act, Defendants moved to dismiss on the basis that, inter alia, Plaintiffs had failed
to plead that Defendants acted with scienter, had failed to plead loss causation and had failed to
allege any actionable misstatement or omission. With respect to Plaintiffs' claims under the
3
Securities Act, Defendants moved to dismiss on the basis that, inter alia, Plaintiffs had failed to
meet the pleading requirements of Fed. R. Civ. P. (9)(b), had failed to allege any untrue
statement or actionable omission, and lacked standing to bring their claims under Sections 11
and 12(a) of the Securities Act.
H. On September 19, 2008, Plaintiffs filed a consolidated opposition to Defendants'
motions to dismiss. Plaintiffs also filed a Motion to Strike Extrinsic Documents and Certain
Arguments Made by the Merrill Defendants and Defendants Edwards, O'Neal, Fakahany and
Fleming in Their Motions to Dismiss the Consolidated Amended Class Action Complaint.
1. On November 14, 2008, Defendants filed reply memoranda in farther support of
their motions to dismiss, and in opposition to Plaintiffs' motion to strike. Plaintiffs filed a reply
memorandum in further support of their motion to strike on November 14, 2008.
J. On November 25, 2008 the District Court issued an order setting oral argument on
the pending motions to dismiss in the Securities Action for January 15, 2009.
K. On January 7, 2009, with the motions to dismiss the Securities Action still
pending, the parties in the Securities Action agreed in principle to settle the Securities Action.
Benefits of the Settlement to the Class
A. Co-Lead Counsel believe that the Settlement provides an excellent monetary
recovery for the Settlement Class (defined below) based on the claims asserted, the procedural
posture of the litigation, the evidence developed and the damages that might be proven by the
Settlement Class.
• B. Co-Lead Counsel, on behalf of Lead Plaintiff, further recognize and acknowledge
the expense and length of continued proceedings necessary to prosecute the Securities Action
4
through trial and appeal. They have also considered the uncertain outcome and the risk of any
litigation, including the risk that Plaintiffs might recover nothing, especially in complex litigation
such as this case, as well as the difficulties and delays inherent in any such litigation. Co-Lead
Counsel are also mindful of the inherent problems of proof and possible defenses to the federal
securities law violations asserted against Defendants, and therefore believe that it is desirable
that the Released Claims (defined below) be fully and finally compromised, settled and resolved
as set forth herein. Based upon their evaluation, Co-Lead Counsel, on behalf of Lead Plaintiff
and the Settlement Class, have determined that the Settlement (defined below) set forth in this
Settlement Stipulation is fair, reasonable and adequate and in the best interests of Lead Plaintiff
and the Settlement Class.
NOW THEREFORE, without any admission or concession on the part of Lead Plaintiff
or Co-Lead Counsel of any lack of merit in the claims asserted, and without any admission or
concession of any liability or wrongdoing or lack of merit in the defenses whatsoever by
Defendants, it is hereby
STIPULATED AND AGREED, by and among the parties to this Settlement Stipulation,
through their respective attorneys, subject to approval of the District Court pursuant to Rule 23(e)
of the Federal Rules of Civil Procedure, the PSLRA and other conditions set forth herein, in
consideration of the benefits flowing to the parties hereto, that the Securities Action and all
Released Claims as against the Released Parties (defined below) shall be finally and fully
compromised, settled, released and dismissed, on the merits and with prejudice, in the manner
and upon and subject to the terms and conditions set forth herein.
5
Certain Definitions
1. The following capitalized terms used in this Settlement Stipulation shall have the
meanings specified below:
(a) "Amended Complaint" means the Consolidated Amended Class Action
Complaint filed on May 21, 2008.
(b) "Authorized Claimant" means any Settlement Class Member whose
claim for recovery has been allowed pursuant to the terms of this Settlement Stipulation and the
Plan of Allocation.
(c) "Claim" means the submission to be made by Settlement Class Members,
on the Proof of Claim form attached hereto as Exhibit A-2, or as may be required by the
District Court.
(d) "Claims Administrator" means the entity appointed by the District Court
to administer the settlement and disseminate notice to the Settlement Class.
(e) "Co-Lead Counsel" means Frederic S. Fox of Kaplan Fox & Kilsheimer
LLP, Lawrence J. Lederer of Berger & Montague, P.C., and M. Richard Komins of Barrack,
Rodos & Bacine.
(f) "Defendants" means Merrill; Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Merrill Lynch Capital Trust I, Merrill Lynch Capital Trust II, Merrill Lynch
Capital Trust III, E. Stanley O'Neal, Ahmass L. Fakahany, Gregory J. Fleming, Jeffrey N.
Edwards, Lawrence A. Tosi, Armando M. Codina, Virgis W. Colbert, Carol T. Christ, Alberto
Cribiore, John D. Finnegan, Judith Mayhew Jonas, Aulana L. Peters, Joseph W. Prueher, Ann
6
N. Reese, Charles 0. Rosotti, Citigroup Global Markets, Morgan Stanley & Co., UBS
Securities, Wachovia Capital Services and Deloitte & Touche LLP.
(g) "District Court" means the United States District Court for the Southern
District of New York (Rakoff, J.).
(h) "Effective Date" means the first day following the date on which the
settlement contemplated by this Settlement Stipulation shall become effective as set forth in
130 below.
(i) "Escrow Account" means the interest-bearing accounts established
pursuant to II 4 & 5 herein.
(i) "Escrow Agent" shall mean Kaplan Fox & Kilsheimer LLP, Berger &
Montague, P.C. and Barrack Rodos & Bacine. The Escrow Agent shall perform the duties set
forth in this Settlement Stipulation.
(k) "Final Approval" means the date of the entry of the Order and Final
Judgment by the District Court in this Securities Action approving (i) the Settlement and (ii)
the release of the Released Claims as to the Released Parties as fair, adequate and reasonable;
and dismissing the claims of the Plaintiffs and the Settlement Class against each of the
Defendants, with prejudice and the expiration of any time for appeal or review of the Order and
Final Judgment, or, if any appeal is filed and not dismissed, after the Order and Final Judgment
is upheld on appeal in all material respects and is no longer subject to review upon appeal or
review by certiorari or otherwise, and the time for any petition for reargument, appeal or review,
by certiorari or otherwise, has expired; or, in the event that the District Court enters an order
and final judgment in a form other than that provided above ("Alternative Judgment") and none
7
of the parties hereto elect to terminate this Settlement, the date that such Alternative Judgment
becomes final and no longer subject to appeal or review by certiorari or otherwise, and the time
for any petition for reargument, appeal or review, by certiorari or otherwise, has expired
provided, however, that any disputes or appeals relating to amount, payment or allocation of
attorney's fees and expenses shall have no effect on finality for purposes of determining the
date of Final Approval.
(1) "Lead Plaintiff" means State Teachers' Retirement System of Ohio
appointed by Order of the District Court as Lead Plaintiff in this Securities Action.
(m) "Net Settlement Fund" shall have the meaning set forth in 11 8 herein.
(n) "Order and Final Judgment" means the order(s) and final judgment(s) to
be entered in this Securities Action pursuant to ¶27 of this Settlement Stipulation and
substantially in the form of Exhibit B hereto.
(o) "Payor Defendant" means the entity that funds the Settlement.
(p) "Person" and "Persons" means any individual, corporation, partnership,
association, affiliate, joint stock company, estate, trust, unincorporated association, entity,
government and any political subdivision thereof, or any other type of business or legal entity.
(q) "Plaintiffs" means Lead Plaintiff, the Ohio State Teachers' Retirement
System and additional plaintiff Gary Kosseff, on behalf of themselves and the proposed
Settlement Class, defined below.
(r) "Plan of Allocation" means the plan for allocating the Net Settlement
Fund (as set forth in the Notice of Pendency and Proposed Settlement of Class Action) to
Authorized Claimants after payment of expenses of notice and administration of the Settlement,
8
Taxes and Tax Expenses and such attorneys' fees, costs and expenses as may be awarded by
the District Court.
(s) "Preferred Securities" means:
(a) Merrill Lynch Preferred Capital Trust III — 7% Cumulative Trust Originated PreferredSecurities ("TOPRS");
(b) Merrill Lynch Preferred Capital Trust IV — 7.12% Cumulative TOPRS;(c) Merrill Lynch Preferred Capital Trust V — 7.28% Cumulative TOPRS;(d) Merrill Lynch Series 1 Preferred;(e) Merrill Lynch Series 2 Preferred;(f) Merrill Lynch Series 3 Preferred;(g) Merrill Lynch Series 4 Preferred;(h) Merrill Lynch Series 5 Preferred;(i) Merrill Lynch Series 6 Preferred;(j) Men-ill Lynch Series 7 Preferred;(k) Merrill Lynch Capital Trust I Preferred 6.45% Securities;(1) Merrill Lynch Capital Trust II Preferred 6.45% Securities; and(m)Merrill Lynch Capital Trust III Preferred 7.375% Securities
(t) "Preliminary Order" means the Preliminary Order in Connection With
Settlement Proceedings that the Co-Lead Counsel and counsel for Defendants will seek from
the District Court, substantially in the form attached as Exhibit A and as described in IT 26
below.
(u) "Publication Notice" means the summary notice of pendency and
proposed settlement for publication substantially in the form attached as Exhibit A-3.
(v) "Released Claims" means any and all claims, actions, debts, demands,
set-offs (both legal and equitable), causes of action, rights or liabilities whatsoever (including,
but not limited to, any claims for damages, equitable relief, interest, attorneys' fees, expert or
consulting fees, and any other costs, expenses or liability whatsoever), whether based on
federal, state or local statutory or common law or any other law, rule or regulation, whether
fixed or contingent, accrued or un-accrued, liquidated or un-liquidated, at law or in equity,
9
matured or un-matured, whether direct, representative, class, individual or in any other form,
including both known claims and Unknown Claims (defined below), that have been asserted in
the Securities Action by the Settlement Class Members or any of them against any of the
Released Parties, or which otherwise were or could have been at issue in the Securities Action,
or that have been or could have been asserted in any forum by the Settlement Class Members or
any of them against any of the Released Parties which arise out of or relate to or are based in
whole or in part upon any of the allegations, transactions, facts, matters or occurrences,
representations, disclosures, statements or omissions alleged, involved, set forth, or referred to
in the Amended Complaint, in connection with such Settlement Class Members' purchase or
acquisition of Merrill common stock or the Preferred Securities during the Settlement Class
Period. Released Claims includes only the claims that were or could have been asserted on
behalf of purchasers or acquirers during the Settlement Class Period of only Merrill common
stock and the Preferred Securities. Released Claims specifically excludes the claims asserted in
(1) all derivative actions consolidated into the docket number 07cv9696 by order dated March
12, 2008, the derivative action captioned Lambrecht v. O'Neal, 08cv6582, and all derivative
actions involving substantially similar facts; (2) the ERISA actions consolidated into the docket
number 07cv10268 by order dated March 12, 2008; and (3) the claims relating to the following
securities asserted in the action captioned Louisiana Sheriffs' Pension and Relief Fund, et al. v.
Merrill Lynch & Co., Inc., et al., 08cv09063: 8.625% Non-Cumulative Preferred Securities,
Series 8 (CUSIP: 59023V373); Medium-Term Notes, Series C (CUSP: 59018YYR6);
Medium-Term Notes, Series C (CUSIP: 59018YYW5); 6.11% Subordinated Notes due January
29, 2037 (CUSIP: 59022CAJ2); 5.70% Subordinated Notes due May 2, 2017 (CUSIP:
59022CCS0); Medium-Term Notes, Series C (CUSIP: 59018YE72); 6.05% Medium-Term
10
Notes, Series C (CUSIP: 59018YJ36); 6.40% Medium-Term Notes, Series C (CUSEP:
59018YJ69); Accelerated Return Notes (CUSH': 59022W356); 5.45% Medium-Term Notes,
Series C (CUSIP: 59018YM40); 6.15% Medium-Term Notes, Series C (CUSIP: 59018YN56);
6.875% Medium-Term Notes, Series C (CUSIP: 59018YN64); 7.75% Subordinated Notes
(CUSIP: 59023VAA8). Released Claims also specifically excludes the claims asserted in the
securities actions captioned, Sklar v. Bank of America Corp., et al., 09-cv-580 (S.D.N.Y. filed
Jan. 21, 2009) Boorn v. Bank of America Corp., et al., 09-cv-0159 (N.D. Ga. filed Jan. 21,
2009), and Zitner v. Bank of America Corp., et aL, 09-cv-00881 (S.D.N.Y. filed Jan. 30, 2009),
as well as any actions involving substantially similar facts.. It is expressly understood that no
release is given to any Released Party in connection with any purchase, acquisition, or retention
of Bank of America Corp. ("BAC") securities by any purchaser, acquirer, or holder of BAC
securities.
(w) "Released Parties" means Defendants and their respective heirs,
executors, personal representatives, estate and administrators; their respective past, present and
future parent entities, affiliates, related parties, subsidiaries, predecessors and successors; and
each of their respective past, present and future assigns, insurers, partners, officers, directors,
controlling persons, representatives, employees, agents, attorneys, counsel, underwriters, and
financial or investment advisors.
(x) "Securities Action" means the putative securities class actions
consolidated by the District Court into docket number 07cv9633 pursuant to the order dated
March 12, 2008.
(y) "Settlement" means the settlement as set forth in this Settlement
Stipulation.
11
(z) "Settlement Amount" means four hundred seventy-five million dollars
($475,000,000) in cash.
(aa) "Settlement Class" means such Class as may be certified by the District
Court for purposes of settlement of the Securities Action. Included in such Settlement Class
are persons who purchased or acquired Merrill common stock or Preferred Securities during the
Settlement Class Period. Excluded from the Settlement Class are the Defendants and their
affiliates, Temasek Capital (Private) Limited, Davis Selected Advisors L.P. and their affiliates.
Also excluded are present and former employees of Merrill and its subsidiaries who acquired
Merrill securities through exercise of warrants and/or as compensation.
(bb) "Settlement Class Members" means Persons who are members of the
Settlement Class who do not timely and properly exclude themselves therefrom.
(cc) "Settlement Class Period" means the time period from October 17, 2006
through and including December 31, 2008.
(dd) "Settlement Fund" means the payment made pursuant to If 4 herein plus
any interest earned thereon.
(ee) "Settlement Notice" means the Notice of Pendency of Class Action and
Proposed Settlement which is to be sent to Settlement Class Members substantially in the form
attached hereto as Exhibit A-1.
(ff) "Taxes" means any taxes due and payable with respect to the income
earned by the Settlement Fund, including any interest or penalties thereon.
(gg) "Tax Expenses" means any expenses and costs incurred in connection
with the payment of Taxes (including, without limitation, expenses of tax attorneys and/or
12
accountants and other advisors and expenses relating to the filing or failure to file all necessary
or advisable tax returns).
(hh) "Underwriter Defendants" means Citigroup Global Markets; Morgan
Stanley & Co.; UBS Securities; and Wachovia Capital Markets LLC and any other underwriter
who performed services in connection with any offerings of Merrill common stock or Preferred
Securities during the Settlement Class Period.
(ii) "Unknown Claims" means any and all Released Claims that Plaintiffs
and any Settlement Class Member does not know or suspect to exist in his, her or its favor at
the time of the release of the Released Parties. With respect to any and all Released Claims, the
parties stipulate and agree that upon the Effective Date, Lead Plaintiff shall expressly, and each
Settlement Class Member shall be deemed to have, and by operation of the Order and Final
Judgment shall have, expressly waived any and all provisions, rights and benefits conferred by
any law of any state or territory of the United States, or principle of common law, which is
similar, comparable or equivalent to Cal. Civ. Code § 1542, which provides:
A general release does not extend to claims which the creditor does notknow or suspect to exist in his favor at the time of executing the release, which ifknown by him must have materially affected his settlement with the debtor.
Lead Plaintiff and Defendants acknowledge, and Settlement Class Members by operation of law
shall be deemed to have acknowledged, that the inclusion of "Unknown Claims" in the definition
of Released Claims was separately bargained for and was a key element of the Settlement.
SCOPE AND EFFECT OF SETTLEMENT
2. The obligations incurred pursuant to this Settlement Stipulation shall be in full
and final disposition of the Securities Action as against Defendants and any and all Released
Claims as against all Released Parties. It is an important element to the Defendants' participation
13
in the Settlement that the Released Parties obtain the fullest possible release from further liability
to any Settlement Class Member relating to the Released Claims, and it is the intention of the
parties to this Settlement that all further liability of Defendants and the Released Parties relating
to the Released Claims hereby be eliminated.
3. (a) Upon the Effective Date of this Settlement, Settlement Class Members
(including but not limited to any Settlement Class Member who is a party to any other action,
arbitration or other proceeding who is asserting claims related to the Released Claims against any
of the Defendants or Released Parties that are pending on the day of Final Approval), on behalf
of themselves, their heirs, joint tenants, tenants in common, beneficiaries, executors and
administrators, successors and assigns, release and shall be deemed to have released, dismissed
and forever discharged the Released Claims against each and all of the Released Parties, with
prejudice and on the merits, without costs to any party.
(b) Lead Plaintiff and all Settlement Class Members, whether or not any such
person submits a Proof of Claim, or otherwise shares in the Settlement Fund, on behalf of
themselves and each of their predecessors, successors, assigns, personal representatives, heirs
and any other Person who purports to claim through them, will be deemed by this Settlement to
release and forever discharge the Released Parties from any and all of the Released Claims. As
of the Effective Date, Lead Plaintiff and all Settlement Class Members, and anyone claiming
through or on behalf of any of them, are forever barred and enjoined from commencing,
instituting, prosecuting or continuing to prosecute any action or other proceeding in any court of
law or equity, arbitration tribunal, administrative forum, or other forum of any kind, asserting
against any of the Released Parties, and each of them, any of the Released Claims.
14
(c) Upon the Effective Date of the Settlement, all claims for contribution,
indemnification, or any other form of relief by other alleged joint tortfeasors against the Released
Parties based upon, arising out of, relating to, or in connection with the Released Claims of the
Settlement Class or any Settlement Class Member are thereby barred, extinguished, discharged,
satisfied and otherwise rendered unenforceable to the full extent permitted by law, and the future
filing of any such claims enjoined.
(d) Upon the Effective Date of the Settlement, Defendants, including any and
all of their respective successors in interest, predecessors, representatives, trustees, executors,
administrators, heirs, assigns or transferees, immediate and remote, and any Person or entity
acting for or on behalf of, or claiming under any of them, and each of them, release Plaintiffs,
Co-Lead Counsel, and Settlement Class Members and each of their predecessors, successors,
assigns, personal representatives, heirs and any other Person submitting a Claim on behalf of a
Settlement Class Member in the Securities Action, from any and all claims arising out of or
relating to their having filed and prosecuted the Securities Action.
THE SETTLEMENT CONSIDERATION
4. On or before five (5) business days following the date of the entry of the
Preliminary Order, but in no event later than February 24, 2009, the Payor Defendant, in full and
complete settlement of the Released Claims, shall pay the Settlement Amount into the Escrow
Account established for the Settlement Fund by the Co-Lead Counsel for the benefit of the
Settlement Class Members. Except as provided in 5 hereof, Co-Lead Counsel shall invest any
fund held in the Escrow Account in United States Treasury Bills.
15
NOTICE AND ADMINISTRATION FUND
5. Co-Lead Counsel will establish a "Notice and Administration Fund" in the
amount of $2,000,000, which monies shall come exclusively from the Settlement Amount, to be
used for reasonable out-of-pocket costs in connection with providing notice of the Settlement to
the Settlement Class and for other reasonable out-of-pocket administrative expenses related
thereto. Co-Lead Counsel shall disburse funds from the Notice and Administration Fund to pay
the costs of notifying the Settlement Class, soliciting the filing of claims by Settlement Class
Members, assisting them in filing their claims, and otherwise administering the Settlement on
behalf of the Settlement Class. Additional amounts may be transferred from the Settlement Fund
into the Notice and Administration Fund upon instruction from Co-Lead Counsel. Co-Lead
Counsel shall hold the Notice and Administration Fund in an interest bearing bank account
insured by the Federal Deposit Insurance Corporation ("FDIC").
6. If the Effective Date does not occur, the balance of the Notice and Administration
Fund, including all interest accrued thereon, shall be returned to the Payor Defendant, except for
all reasonable notice costs that have been disbursed or incurred.
7. At Defendants' request, Co-Lead Counsel shall provide Defendants with
appropriate documentation of all out-of-pocket costs incurred in connection with providing
notice to the Settlement Class and for other administrative expenses.
THE SETTLEMENT FUND
8. The Settlement Fund, net of any Taxes and Tax Expenses, shall be used to pay
1) the notice and administration costs referred to in 5-7 hereof, and 2) the attorneys' fee and
expense award referred to in II 13-16 hereof. The balance of the Settlement Fund, together with
16
all interest earned from the date of preliminary approval of the Settlement, but less any payments
set forth above, shall be the "Net Settlement Fund," which shall be distributed to the Authorized
Claimants as provided in TT 17-25 hereof. All costs and expenses incurred by or on behalf of the•
Plaintiffs and the Settlement Class associated with the Settlement shall be paid from the
Settlement Fund. In no event shall Defendants bear any further or additional responsibility for
any such costs or expenses beyond payment of the Settlement Amount.
9. Upon the payment of the Settlement Fund or any portion thereof, the parties agree
to treat the Settlement Fund as a Qualified Settlement Fund within the meaning of Treasury
Regulation §1.468B-1 and the Claims Administrator shall be responsible for timely making such
elections as are necessary or advisable to carry out the provisions of this paragraph, including but
not limited to the relation-back election (as defined in Treasury Reg. §1.468B-1) to the earliest
permitted date. Such elections shall comply with the procedures and requirements contained in
such Regulations. Additionally, it shall be the responsibility of the Claims Administrator to
prepare and deliver the necessary documentation for signature by all necessary parties, and
thereafter to cause the appropriate filing(s) to occur. The Claims Administrator and Co-Lead
Counsel, as required, shall do all things that are necessary or advisable to carry out the provisions
of this paragraph and Defendants shall reasonably cooperate with the Claims Administrator and
Co-Lead Counsel to carry out the provisions of this paragraph.
10. All Taxes (including any interest or penalties) and Tax Expenses shall be
considered to be a cost of administration of the Settlement and shall be paid out of the Settlement
Fund. The Released Parties shall not have any liability or responsibility for any such Taxes or
Tax Expenses. Co-Lead Counsel, or their agents, shall timely and properly file all informational
and other tax returns necessary or advisable with respect to the Settlement Fund and the
17
distributions and payments therefrom, including, without limitation, the tax returns described in
Treas. Reg. §1.468B-2(k), and to the extent applicable, Treas. Reg. §1.468B-2(1). Such returns
shall be consistent with the terms hereof and in all events shall reflect that all such Taxes,
including any interest or penalties, on the income earned by the Settlement Fund shall be paid
out of the Settlement Fund, subject to the limitations set forth in this paragraph. Co-Lead
Counsel, or their agents, shall also timely pay Taxes and Tax Expenses, subject to the limitations
set forth in this paragraph, out of the Settlement Fund, and are authorized to withdraw, without
prior order of the District Court, from the Settlement Fund amounts necessary to pay Taxes and
Tax Expenses. The parties hereto agree to cooperate with the Claims Administrator, each other,
and their tax attorneys and accountants to the extent reasonably necessary to carry out the
provisions of this Stipulation. The Released Parties shall have no responsibility or liability for
the acts or omissions of Co-Lead Counsel or their agents, as described herein.
11. This is not a claims-made settlement. As of the Effective Date, Defendants shall
have no right to the return of the Settlement Fund or any portion thereof irrespective of the
number of Claims filed, the collective amount of losses of Authorized Claimants, the percentage
of recovery of losses, or the amounts to be paid to Authorized Claimants from the Settlement
Fund. Any undistributed money from the Settlement Fund that camiot be distributed cost
effectively to a Settlement Class Member shall be donated to one or more charities (as the
District Court may approve upon the suggestion of Co-Lead Counsel).
12. The finality of the Settlement shall not be conditioned on any ruling by the
District Court concerning the Plan of Allocation or any award of attorneys' fees. Any order or
proceeding relating to a request for approval of the Plan of Allocation, or any appeal from any
order relating thereto or reversal or modification thereof, shall not operate to terminate the
18
Settlement or affect or delay the Effective Date or the effectiveness or finality of the Order and
Final Judgment and the release of the Released Claims. There shall be no distribution of any of
the Settlement Fund to any Settlement Class Member until the Plan of Allocation is finally
approved and such order of approval is affirmed on appeal and/or is no longer subject to review
by appeal or certiorari, and the time for any petition for rehearing, appeal, or review, by certiorari
or otherwise, has expired.
ATTORNEYS' FEES AND EXPENSES
13. Co-Lead Counsel will apply to the District Court for an award from the
Settlement Fund of attorneys' fees plus reimbursement of actual expenses, plus interest. Such
amounts as are awarded by the District Court shall be payable from the Settlement Fund to Co-
Lead Counsel. Co-Lead Counsel shall allocate the attorneys' fees and expense awards amongst
Plaintiffs' counsel in a manner in which they in good faith believe reflects the contributions of
such counsel to the prosecution and settlement of the Securities Action.
14. Defendants shall have no responsibility for, and no liability with respect to, the
attorneys' fees or expenses that the District Court may award in the Securities Action or the
allocation of the fees and expenses that Co-Lead Counsel may make to other counsel who may
represent or purport to represent Plaintiffs and the Settlement Class in connection with this
Securities Action or any other person who may assert some claim thereto.
15. The procedure for and amounts of any award of attorneys' fees and expenses, and
the allowance or disallowance by the District Court thereof, shall not be a condition of the
Settlement. Co-Lead Counsel shall request that their application for an award of attorneys' fees
and expenses be considered by the District Court separately from the District Court's
consideration of the fairness and adequacy of the Settlement. Any order or proceedings relating
19
to such request, or any appeal from any order relating thereto or reversal or modification thereof,
shall not operate to terminate the Settlement or affect the release of the Released Claims. The
finality of the Settlement shall not be conditioned on any ruling by the District Court concerning
Co-Lead Counsel's application for attorneys' fees and expenses.
16. The attorneys' fees and expenses awarded by the District Court shall be paid to
Co-Lead Counsel from the Settlement Fund upon Final Approval and when the Order of the
District Court awarding such fees and expenses becomes final.
DISTRIBUTION TO AUTHORIZED CLAIMANTSAND ADMINISTRATION OF SETTLEMENT
17. The Claims Administrator, subject to the supervision, direction and approval of
Co-Lead Counsel and the District Court, shall administer and calculate the Claims submitted by
Settlement Class Members, oversee distribution of the Settlement Fund and perform all claims
administration procedures necessary or appropriate in connection therewith. Defendants shall
have no liability, obligation or responsibility for the Settlement Notice, administration or
processing of claims or of the Settlement or disbursement of the Net Settlement Fund, including
without limitation, determinations as to the validity of any Proof of Claim the amounts of claims,
distributions of the Settlement Fund, or any loss incurred by the Escrow Agent or the Claims
Administrator. Defendants shall cooperate in the administration of the Settlement to the extent
reasonably necessary to effectuate its terms.
18. The Settlement Amount and Fund shall be applied as follows:
(a) To pay all costs and expenses incurred in connection with providing
notice to the Settlement Class, locating Settlement Class Members, soliciting claims, assisting
20
with the filing of claims, administering and distributing the Settlement Fund to the Settlement
Class Members, processing proofs of claim, processing requests for exclusion and costs;
(b) To pay Taxes and Tax Expenses owed by the Settlement Fund;
(c) Subject to the approval and further order(s) of the District Court, for
payment of all attorneys' fees and expense reimbursement as may be awarded by the District
Court to Co-Lead Counsel, who may make payment therefrom to other Plaintiffs' counsel as
set forth herein;
(d) Subject to the approval and further order(s) of the District Court, and
upon the Effective Date, to distribute the Net Settlement Fund to Authorized Claimants as
provided herein and in the manner set forth in the notice attached hereto as Exhibit A-1 (which
notice shall include a Plan of Allocation of the Net Settlement Fund), or as otherwise ordered
by the District Court in order to participate in such distribution of the Net Settlement Fund.
19. 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 seeking to participate in distributions from
the Net Settlement Fund shall be required timely to submit to the Claims Administrator a
separate signed Proof of Claim (substantially in the form attached hereto as Exhibit A-2),
supported by such documents as are designated therein, including proof of all purchases and
sales of subject securities during the Settlement Class Period, the Claimant's loss, or such other
documents or proof as Co-Lead Counsel, in their discretion, may deem acceptable;
21
(b) All Proofs of Claim must be submitted by the date specified in the
Settlement Notice unless such period is extended by Order of the District Court. Any Settlement
Class Member who fails to submit a Proof of Claim within such period shall be forever barred
from receiving any payment pursuant to this Settlement Stipulation (unless, by Order of the
District Court, a later submitted Proof of Claim by such Settlement Class Member is approved),
but in all other respects shall be subject to and bound by the provisions of this Settlement
Stipulation and the Settlement, including the terms of the Order and Final Judgment to be entered
in the Securities Action and the releases of the Released Claims provided for herein, and will be
barred from bringing any action or proceeding against the Released Parties concerning the
Released Claims. A Proof of Claim shall be deemed to have been submitted when postmarked,
if received with a postmark indicated on the envelope and if mailed by first-class mail, postage
prepaid, and addressed in accordance with the instructions thereon. In all other cases, the Proof
of Claim shall be deemed to have been submitted when actually received by the Claims
Administrator;
(c) Each Proof of Claim shall be submitted to and reviewed by the Claims
Administrator, under the supervision of Co-Lead Counsel, who shall determine in accordance
with this Settlement Stipulation the extent, if any, to which each claim shall be allowed, subject
to review by the District 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 shall communicate
with the claimant in order to afford the claimant opportunity to remedy any curable deficiencies
in the Proof of Claims submitted. The Claims Administrator shall notify, in a timely fashion and
in writing, all claimants whose Proofs of Claim it proposes to reject in whole or in part, setting
22
forth the reasons therefor, and shall indicate in such notice that the claimant whose claim is to be
rejected has the right to a review by the District Court if the claimant so desires and complies
with the requirements of subparagraph (e) below;
(e) The administrative determinations of the Claims Administrator accepting
and rejecting claims shall be presented to the Court, on notice to Defendants' Counsel, for
approval by the District Court.
20. Each claimant shall be deemed to have submitted to the jurisdiction of the District
Court with respect to his, her or its claim, and the claim will be subject to investigation and
discovery under the Federal Rules of Civil Procedure, provided that such investigation and
discovery shall be limited to the claimant's status as a Settlement Class Member and the validity
and amount of the claimant's claim. No discovery shall be allowed on the merits of the
Securities Action or Settlement in connection with processing of the Proofs of Claim.
21. No Settlement Class Member or Authorized Claimant shall have any claim
against Co-Lead Counsel, Lead Plaintiff, any other Plaintiffs and Plaintiffs' counsel in the
Securities Action, Defendants or their counsel, the Claims Administrator or any employees or
agents of any of the foregoing, based on the distributions made substantially in accordance with
this Settlement Stipulation or as otherwise approved or directed by the District Court. Payment
pursuant to this Settlement Stipulation shall be deemed final and conclusive against all
Settlement Class Members. All Settlement Class Members whose claims are not approved by
the District Court shall be barred from participating in distributions from the Net Settlement
Fund, but otherwise shall be subject to and bound by the provisions of this Settlement Stipulation
and the Settlement, including the terms of the Order and Final Judgment to be entered in the
23
Securities Action and the releases provided for herein, and will be barred from bringing any
action against the Released Parties concerning the Released Claims
22. All proceedings with respect to the administration, processing and determination
of claims described herein this Settlement 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 District Court.
23. The Net Settlement Fund shall be distributed to Authorized Claimants by the
Claims Administrator only after the Effective Date and after: (i) all timely Proofs of Claim 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 District Court, and all appeals therefrom have been resolved or the time therefor
has expired; and (iii) all matters with respect to attorneys' fees, costs and disbursements have
been resolved by the District Court, all appeals therefrom have been resolved or the time therefor
has expired.
24. In the interests of achieving substantial justice, Co-Lead Counsel shall have the
right, but not the obligation, to advise the Claims Administrator to waive what they deem to be
formal or technical defects in any submitted Proofs of Claim.
25. Following distribution of the Net Settlement Fund, the Claims Administrator shall
maintain the completed Proofs of Claim on file for three years after the Effective Date.
24
TERMS OF PRELIMINARY ORDER INCONNECTION WITH SETTLEMENT PROCEEDINGS
26. Promptly after execution of this Settlement Stipulation, Lead Plaintiff, by and
through Co-Lead Counsel, with Defendants' counsel's consent, shall submit the Settlement
Stipulation together with its Exhibits to the District Court and shall apply for entry of the
Preliminary Order in Connection with Settlement Proceedings substantially in the folin annexed
hereto as Exhibit A.
TERMS OF ORDER AND FINAL JUDGMENT
27. Lead Plaintiff, by and through Co-Lead Counsel, with Defendants' counsel's
consent, shall request that the District Court enter an Order and Final Judgment substantially in
the form annexed hereto as Exhibit B. The Settlement is expressly conditioned upon, among
other things, the entry of an Order and Final Judgment substantially in the form annexed hereto
as Exhibit B.
SUPPLEMENTAL AGREEMENT
28. Simultaneously herewith, Lead Plaintiff, by and through Co-Lead Counsel, and
the Payor Defendants are executing a "Supplemental Agreement" setting forth certain conditions
under which this Settlement Stipulation may be withdrawn or terminated at the discretion of
Defendants if potential Settlement Class Members who meet certain criteria exclude themselves
from the Settlement Class. The Supplemental Agreement shall not be filed with the District
Court except that the substantive contents of the Supplemental Agreement may be brought to the
attention of the District Court, in camera, if so requested by the District Court or as otherwise
ordered by the District Court. The parties will keep the terms of the Supplemental Agreement
confidential, except if compelled by judicial process to disclose the Supplemental Agreement. In
25
the event of a withdrawal from this Settlement Stipulation pursuant to the Supplemental
Agreement, this Settlement Stipulation shall become null and void and of no further force and
effect. In the event the Settlement and this Settlement Stipulation are terminated, the provisions
of II 6-7, 22, 32-34, 38 & 48 shall survive termination. Notwithstanding the foregoing, the
Settlement Stipulation shall not become null and void as a result of the election by the
Defendants to exercise their option to withdraw from the Settlement Stipulation pursuant to the
Supplemental Agreement until the conditions set forth in the Supplemental Agreement have been
satisfied.
CONFIRMATORY DISCOVERY
29. The Settlement is subject to the completion of reasonable confirmatory discovery
by Lead Plaintiff. Among other things, the confirmatory discovery shall include proffers as to,
and documents and information regarding, the then-known status of any governmental
investigations and proceedings relating to the claims asserted in the Amended Complaint and any
contemplated restatement of Menill's financial statements. Confirmatory discovery shall be
subject to a Court-ordered confidentiality agreement and shall be for the sole purpose of
assessing the reasonableness and adequacy of the Settlement, the scope and timing of which shall
be reasonable and mutually agreed upon by the parties. Lead Plaintiff, by and through Co-Lead
Counsel, shall have the right to withdraw from the proposed Settlement at any time prior to filing
its motion for final approval of the parties' proposed Settlement if, in its discretion, information
is produced in confirmatory discovery that renders the proposed Settlement unfair, unreasonable
and inadequate. In the event that the Settlement is terminated for any reason or if the Effective
Date fails to occur, Plaintiffs shall return all materials made available to them and are prohibited
26
from using any facts learned in confirmatory discovery in any subsequent complaint unless and
until such facts are later obtained during the course of the litigation.
EFFECTIVE DATE OF SETTLEMENT, WAIVER OR TERMINATION
30. The Effective Date of Settlement shall be the latest date when all the following
shall have occurred:
(a) entry of the Preliminary Order;
(b) approval by the District Court of the Settlement and certification of the
Settlement Class following notice to the Settlement Class and a hearing in accordance with
Rule 23 of the Federal Rules of Civil Procedure; and
(c) entry by the District Court of an Order and Final Judgment and the
expiration of any time for appeal or review of the Order and Final Judgment, or, if any appeal is
filed and not dismissed, after the Order and Final Judgment is upheld on appeal in all material
respects and is no longer subject to review upon appeal or review by certiorari or otherwise,
and the time for any petition for reargument, appeal or review, by certiorari or otherwise, has
expired, or, in the event that the District Court enters an Alternative Judgment and none of the
parties hereto elects to terminate this Settlement, the date that such Alternative Judgment
becomes final and no longer subject to appeal or review by certiorari or otherwise, and the time
for any petition for reargument, appeal or review, by certiorari or otherwise, has expired.
31. Defendants and Lead Plaintiff shall have the right to terminate the Settlement and
this Settlement Stipulation by providing written notice of their election to do so ("Termination
Notice") to the other within ten (10) days of the date on which: 1) the District Court declines to
enter the Preliminary Order; 2) the District Court refuses to approve this Settlement Stipulation
27
or any material part of it; 3) the District Court declines to enter the Order and Final Judgment; 4)
the Order and Final Judgment is vacated, modified or reversed in any material respect; 5) an
Alternative Judgment is vacated, modified or reversed in any material respect; or 6) the Effective
Date of Settlement otherwise does not occur. Defendants may also terminate the Settlement and
this Settlement Stipulation pursuant to 1128. The foregoing list is not intended to limit or impair
the parties' rights under the law of contracts of the State of New York with respect to any breach
of this Settlement Stipulation. In the event the Settlement and this Settlement Stipulation are
terminated, the provisions of 6-7, 22, 32-34, 38 & 48 shall survive termination.
32. In the event the Settlement and this Settlement Stipulation are terminated or if the
Effective Date fails to occur for any reason, the parties to this Settlement Stipulation shall be
deemed to have reverted nunc pro tune to their respective status in the Securities Action as of
January 6, 2009, except as otherwise expressly provided, the parties shall proceed in all respects
as if this Settlement Stipulation and any related orders had not been entered and without any
prejudice in any way from the negotiation, fact or terms of this Settlement.
33. In the event this Settlement Stipulation is terminated or if the Effective Date fails
to occur for any reason, then within ten (10) business days after written notice is sent by Co-Lead
Counsel or counsel for Defendants, the balance of the Settlement Fund including the Notice and
Administration Fund, less any expenses paid or incurred in connection with the Notice and
Administration Fund but not yet paid, shall be refunded to the Payor Defendants, including
interest accrued thereon. In such event, the parties to this Settlement Stipulation shall be deemed
to have reverted nunc pro tunc to their respective status as of the date and time immediately
before the execution of this Settlement Stipulation and, except as otherwise expressly provided,
28
they shall proceed in all respects as if this Settlement Stipulation and related orders had not been
entered and without prejudice in any way from the negotiation, fact or terms of this Settlement.
NO ADMISSION OF WRONGDOING
34. This Settlement Stipulation, whether or not consummated, and any proceedings
taken pursuant to it:
(a) shall not be offered or received against Defendants, other Released
Parties, Lead Plaintiff or the Settlement Class as evidence of, or be deemed to be evidence of,
any presumption, concession or admission by any of the Defendants or other Released Parties
or by Lead Plaintiff or the Settlement Class with respect to the truth of any fact alleged by Lead
Plaintiff or the validity, or lack thereof, of any claim that had been or could have been asserted
in the Securities Action or in any litigation, or the deficiency of any defense that has been or
could have been asserted in the Securities Action or in any litigation, or of any liability,
negligence, fault or wrongdoing of Defendants or other Released Parties;
(b) shall not be offered or received against the Released Parties 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 any Released Party, or
against Lead Plaintiff or any of the Settlement Class as evidence of any infirmity in the claims
of Lead Plaintiff and the Settlement Class;
(c) shall not be offered or received against the Released Parties, Lead
Plaintiff or the Settlement Class 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 Settlement Stipulation, in any arbitration proceeding
29
or other civil, criminal or administrative action or proceeding, other than such proceedings as
may be necessary to effectuate the provisions of this Settlement Stipulation; provided, however,
that if this Settlement Stipulation is approved by the Court, the Released Parties may refer to it
to effectuate the liability protection granted them hereunder;
(d) shall not be construed against the Released Parties, Co-Lead Counsel or
Lead Plaintiff or the Settlement 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 Lead Plaintiff or the Settlement Class or any of, them that
any of their claims are without merit or that damages recoverable under the Amended
Complaint would not have exceeded the Settlement Fund.
35. This Settlement Stipulation and the Settlement may be pleaded as a full and
complete defense to any action, suit or other proceeding that may be instituted, prosecuted or
attempted with respect to any of the Released Claims. The Released Parties may offer the
Settlement Stipulation or Order and Final Judgment from the Securities Action in any other
action that may be brought against them by any Settlement Class Member or other Released
Party in order to support a defense or counterclaim based on principles of res judicata, collateral
estoppel, release, good faith settlement, judgment bar or reduction or any similar defense or
counterclaim. The Settlement Class Members and Defendants agree that any such proceeding
would cause irreparable injury to the party against whom it is brought and that the District Court
or any court of competent jurisdiction may enter an injunction restraining the prosecution of such
proceeding.
30
MISCELLANEOUS PROVISIONS
36. All of the Exhibits attached hereto are hereby incorporated by reference as though
fully set forth herein. Notwithstanding the foregoing, in the event that there exists a conflict or
inconsistency between the terms of this Settlement Stipulation and the terms of any exhibit
hereto, the terms of this Settlement Stipulation shall prevail.
37. This Settlement 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.
38. Neither the Settlement Stipulation nor the Settlement, nor any act performed or
document executed pursuant to or in furtherance of the Settlement Stipulation or the Settlement:
(i) is or may be deemed to be or may be used as an admission or evidence of the validity of any
Released Claim or of any wrongdoing or liability of any of the Released Parties; or (ii) is or may
be deemed to be or may be used as an admission or evidence of any fault or omission of any of
the Released Parties in any civil, criminal or administrative proceeding in any court, any
arbitration proceeding or any administrative agency or other tribunal, other than in such
proceedings as may be necessary to consummate or enforce the Settlement Stipulation, the
Settlement or the Order and Final Judgment.
39. The parties to this Settlement Stipulation intend the Settlement to be a final and
complete resolution of all disputes asserted or which could be asserted by the Settlement Class
Members against the Released Parties with respect to the Released Claims. Accordingly, Lead
Plaintiff and Defendants agree not to assert any claim under Rule 11 of the Federal Rules of
Civil Procedure or any similar law, rule or regulation, that the Securities Action was brought or
defended in bad faith or without a reasonable basis. The parties to this Settlement Stipulation
31
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 based upon
adequate information and after consultation with experienced legal counsel.
40. The waiver by one party of any breach of this Settlement Stipulation by any other
party shall not be deemed a waiver of any other prior or subsequent breach of this Settlement
Stipulation.
41. This Settlement Stipulation and its exhibits constitute the entire agreement among
these parties, and no representations, warranties or inducements have been made to any party
concerning this Settlement Stipulation or its exhibits, other than the representations, warranties
and covenants contained and memorialized in such documents.
42. This Settlement Stipulation may be executed in one or more counterparts,
including by signature transmitted via facsimile, or by a .pdf/.tif image of the signature
transmitted via e-mail. All executed counterparts and each of them shall be deemed to be one
and the same instrument.
43. The parties hereto and their respective counsel of record agree that they will use
their best efforts to obtain all necessary approvals of the District Court required by this
Settlement Stipulation.
44. Each counsel signing this Settlement Stipulation represents that such counsel has
authority to sign this Settlement Stipulation on behalf of Lead Plaintiff or Defendants, as the case
may be.
45. This Settlement Stipulation shall be binding upon and shall inure to the benefit of
the successors and assigns of the parties hereto, including any and all Released Parties and any
32
corporation, partnership, or other entity into or with which any party hereto may merge,
consolidate or reorganize.
46. Notices required by this Settlement Stipulation shall be submitted either by any
form of overnight mail or in person to each of:
Frederic S. FoxKAPLAN FOX & KILSHEIMER, LLP850 Third Avenue, 14 th FloorNew York, New York 10022Telephone: (212) 687-1980Facsimile: (212) 687-7714
Lawrence J. LedererBERGER & MONTAGUE, P.C.1622 Locust StreetPhiladelphia, PA 19103Telephone: (215) 875-3000Facsimile . (215) 875-4604
M. Richard KominsBARRACK, RODOS & BACINE3300 Two Commerce Square2001 Market StreetPhiladelphia, PA 19103Telephone: (215) 963-0600Facsimile: (215) 963-0838
Plaintiffs' Co-Lead Counsel
Michael J. ChepigaJay B. Kasner SIMPSON THACHERSICADDEN, ARPS, SLATE & BARTLETT LLPMEAGHER & FLOM LLP 425 Lexington Avenue
Four Times Square New York, New York 10017New York, New York 10036 Telephone: (212) 455-2000Telephone: (212) 735-3000 Facsimile: (212) 455-2502Facsimile: (212) 735-2000
Attorneys for Defendant E. Stanley O'NealAttorneys for Defendants Merrill Lynch & Co.,Inc., Merrill Lynch Capital Trust I, MerrillLynch Capital Trust II, Merrill Lynch CapitalTrust III and Merrill Lynch, Pierce, Fenner &Smith Incorporated
33
James N. Benedict Joseph S. AllerhandMILBANK, TWEED, HADLEY WEIL, GOTSHAL & MANGES LLP
& MCCLOY LLP 767 Fifth AvenueOne Chase Manhattan Plaza New York, New York 10153New York, New York 10005 Telephone: (212) 310-8000Telephone: (212) 530-5000
Attorneys for Defendant Gregory J. FlemingAttorneys for Defendant Ahmass L. FakahanyMichael R. Young Dennis J. BlockWILLKIE FARR & GALLAGHER LLP CADWALADER, WICKERSHAM787 Seventh Avenue & TAFT LLPNew York, New York 10019 One World Financial CenterTelephone: (212) 728-8000 New York, New York 10281
Telephone: (212) 504-6000Attorneys for Defendant Jeffrey N. Edwards
Attorneys for Defendants Carol T. Christ,Armando M Codina, Virgis W. Colbert,Alberto Cribiore, John D. Finnegan, JudithMayhew Jonas, Aulana L. Peters, Joseph W.Prueher, Ann N. Reese and Charles 0. Rossotti
George A. SchierenCLIFFORD CHANCE US LLP31 West 52 StreetNew York, New York 10019Telephone: (212) 878-8000Facsimile: (212) 878-8375
Attorneys for the Underwriter Defendants
Notice shall be deemed effective upon receipt.
47. The administration, consummation and enforcement of the Settlement as
embodied in this Settlement Stipulation shall be under the authority of the District Court and the
parties intend that the District Court retain jurisdiction for the purpose of entering orders,
providing for awards of attorneys' fees and expenses to Co-Lead Counsel, and enforcing the
terms of this Settlement Stipulation and the Settlement.
48. The construction, interpretation, operation, effect and validity of this Settlement
Stipulation, and all documents necessary to effectuate it, shall be governed by the internal laws
34
of the State of New York without regard to conflicts of laws, except to the extent that federal law
requires that federal law governs.
49. This Settlement 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 Settlement Stipulation.
35
4KAPLA OX & 1(1 H71 ER LLP BERGER & MONTAG'UE, P.C.
Frederic `f. Fox Lawrence J. LedererRobert N. Kaplan Merrill G. DavidoffJoel B. Strauss Arthur StockDonald R. Hall Robin SwitzenbaumJeffrey P. Campisi Gary E. CantorChristine Fox Lane Vines850 Third Avenue, 14th Floor 1622 Locust StreetNew York, New York 10022 Philadelphia, PA 19103Telephone: (212) 687-1980 Telephone: (215) 875-3000Facsimile: (212 687-7714 Facsimile: (215) 875-4604
BARRACK, RODOS & BAC1NE
M. Richard KominsRobert A. HoffmanJeffrey A. BarrackBeth T. SeltzerJulie B. Palley3300 Two Commerce Square2001 Market StreetPhiladelphia, PA 19103Telephone: (215) 963-0600Facsimile: (215) 963-0838
Co-Lead Counsel for Lead Plaintiff StateTeachers' Retirement System of Ohio
36
KAPLAN FOX & KILSHEIMER LLP BERGER & MONTAGUE, P .
Frederic S. Fox wrence J. -Robert N. Kaplan Merrill G. Da idoffJoel B. Strauss Arthur StockDonald R. Hall Robin SwitzenbaumJeffrey P. Campisi Gary E. CantorChristine Fox Lane Vines850 Third Avenue, 14th Floor 1622 Locust StreetNew York, New York 10022 Philadelphia, PA 19103Telephone: (212) 687-1980 Telephone: (215) 875-3000Facsimile: (212 687-7714 Facsimile: (215) 875-4604 •
BARRACK, RODOS & BACINE
M. Richard KominsRobert A. HoffinanJeffrey A. BarrackBeth T. SeltzerJulie B. Palley3300 Two Commerce Square2001 Market StreetPhiladelphia, PA 19103Telephone: (215) 963-0600Facsimile: (215) 963-0838
Co-Lead Counsel for Lead Plaintiff StateTeachers' Retirement System of Ohio
36
• •• ..,
•
KAPLAN FOX & K1LSHEIMER LLP BERGER & MONTAGUE, P.C.
Frederic S. Fox Lawrence J. LedererRobert N. Kaplan Merrill G. DavidoffJoel B. Strauss Arthur StockDonald R Hall Robin SwitzenbaumJeffrey P. Campisi Gary E. CantorChristine Fox Lane Vines850 Third Avenue, 14th Floor 1622 Locust StreetNew York, New York 10022 Philadelphia, PA 19103Telephone: (212) 687-1980 Telephone: (215) 875-3000Facsimile: (212 687-7714 Facsimile: (215) 875-4604 •
BARRACKAe• ODOS & BA INE
_rigiattaLL_M. Ric ard KominsRobert A. HoffmanJeffrey A. BarrackBeth T. SeltzerJulie B. Palley3300 Two Commerce Square2001 Market StreetPhiladelphia, PA 19103Telephone: (215) 963-0600Facsimile: (215) 963-0838
Co-Lead Counsel for Lead Plaintiff StateTeachers' Retirement System of Ohio
36
SKADDEN, ARPS, SLATE SIMPSON THACHERMEAGHER & FLOM LLP & BARTLETT LLP
Ort. y Kasner Michael J. Chepiga
Christopher P. Malloy Paul C. CuminScott D. Musoff 425 Lexington AvenueFour Times Square New York, New York 10017New York, New York 10036 Telephone: (212) 455-2000Telephone: (212) 735-3000 Facsimile:Facsimile: (212) 735-2000
Attorneys for Defendant E. Stanley O'NealAttorneys for Defendants Merrill Lynch & Co.,Inc., Merrill Lynch Capital Trust I, MerrillLynch Capital Trust II, Merrill Lynch CapitalTrust III and Merrill Lynch, Pierce, Fenner &Smith Incorporated
MILBANK, TWEED, HADLEY WEIL, GOTSHAL & MANGES LLP& MCCLOY LLP
James N. Benedict Joseph S. AllerhandGeorge Canellos Jonathan D. PolkesOne Chase Manhattan Plaza 767 Fifth AvenueNew York, New York 10005 New York, New York 10153Telephone: (212) 530-5000 Telephone: (212) 310-8000
Attorneys for Defendant Ahmass L. Falcothany Attorneys for Defendant Gregory J. Fleming
WILLKIE FARR & GALLAGHER LLP CADWALADER, WICKERSHAM& TAFT LLP
Michael R. Young Dennis J. Block787 Seventh Avenue Gregory A. MarkelNew York, New York 10019 Jason M. HalperTelephone: (212) 728-8000 One World Financial Center
and
New York, New York 10281Telephone: (212) 504-6000
WILLKIE FARR & GALLAGHER LLPRichard D. Bernstein Attorneys for Defendants Carol T. Christ,1875 K. Street, N.W. Armando M Codina, Virgis W. Colbert,Washington, D.C. 20006 Alberto Cribiore, John D. Finnegan, JudithTelephone: (202) 303-1108
Mayhew Jonas, Aulana L. Peters, Joseph W.Prueher, Ann N. Reese and Charles 0. Rossotti
Attorneys for Defendant Jeffey N. Edwards
SKADDEN, ARPS, SLATE SIMPSON THACHERMEAGHER & FLOM LLP & BARTLETT LLP
1 ,16d "/ 1Jay B. Kasner ichael J. ChepigaChristopher P. Malloy Paul C. CuminScott D. Musoff 425 Lexington AvenueFour Times Square New York, New York 10017New York, New York 10036 Telephone: (212) 455-2000Telephone: (212) 735-3000 Facsimile:Facsimile: (212) 735-2000
Attorneys for Defendant E. Stanley O'NealAttorneys for Defendants Merrill Lynch & Co.,Inc., Merrill Lynch Capital Trust I, MerrillLynch Capital Trust II, Merrill Lynch CapitalTrust III and Merrill Lynch, Pierce, Fenner &Smith Incorporated
MILBANK, TWEED, HADLEY WEIL, GOTSHAL & MANGES LLPIC/ICCLOY LLP
,
James N. Benedict Joseph S. AllerhandGeorge Canellos Jonathan D. PolkesOne Chase Manhattan Plaza 767 Fifth AvenueNew York, New York 10005 New York, New York 10153Telephone: (212) 530-5000 Telephone: (212) 310-8000
Attorneys for Defendant Ahmass L. Fakahany Attorneys for Defendant Gregory J Fleming
WILLKIE FARR & GALLAGHER LLP CADWALADER, WICKERSHAM1 AFT LLP
• ..&416/ /. Michael R. Yo for ennis J. Block787 Seventh Avenue Gregory A. MarkelNew York, New York 10019 Jason M. HalperTelephone: (212) 728-8000 One World Financial Center
and
New York, New York 10281Telephone: (212) 504-6000
WILLKIE FARR & GALLAGHER LLPRichard D. Bernstein Attorneys for Defendants Carol T. Christ,1875 K. Street, N.W. Armando M Codina, Virgis W Colbert,
* Washington, D.C. 20006 Alberto Cribiore, John D. Finnegan, JudithTelephone: (202) 303-1108
Mayhew Jonas, Aulana L. Peters, Joseph W.Prueher, Ann N. Reese and Charles 0. Rossotti
Attorneys for Defendant Jeffrey N. Edwards
George A. SchierenMark HollandCLIFFORD CHANCE US LLP31 West 52 StreetNew York, New York 10019Telephone: (212) 878-8000Facsimile: (212) 878-8375
Attorneys for the Underwriter Defendants
38
EXHIBIT A
UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK
IN RE MERRILL LYNCH & CO., INC. Master File No. 07-cv-9633 (JSR)(DFE)SECURITIES, DERIVATIVE AND ERISALITIGATION
This Document Relates To:Securities Action, 07-cv-9633 (JSR)(DFE)
[PROPOSED] ORDER PRELIMINARILY APPROVING SETTLEMENT ANDPROVIDING FOR NOTICE
WHEREAS, effective February 17, 2009, Co-Lead Counsel on behalf of Lead Plaintiff,
the State Teachers' Retirement System of Ohio, and the Settlement Class, and Defendants, by
and through their respective counsel, have entered into a settlement of the claims asserted in the
Securities Action, the terms of which are set forth in a Stipulation and Agreement of Settlement,
dated as of February 17, 2009 (the "Settlement Stipulation"), which is subject to review under
Rule 23 of the Federal Rules of Civil Procedure and which, together with the exhibits thereto,
sets forth the terms and conditions for the proposed settlement of the claims alleged in the
Securities Action on the merits and with prejudice, upon the terms and conditions set forth in the
Settlement Stipulation; and the Court having read and considered the Settlement Stipulation, the
proposed Notice of Pendency and Proposed Settlement of Securities Class Action, the proposed
Summary Notice of Pendency and Proposed Settlement of Securities Class Action, the proposed
Plan of Allocation of Net Settlement Fund among Settlement Class Members, the proposed form
of the Proof of Claim and Release, the proposed form of Order and Final Judgment relating to
the Settlement and submissions made relating thereto, and finding that substantial and sufficient
grounds exist for entering this Order; and capitalized terms used but not otherwise defined herein
having the meanings defined in the Settlement Stipulation;
NOW, THEREFORE, IT IS HEREBY ORDERED, this day of
2009, that:
1. Pursuant to Rule 23(a) and (b)(3) of the Federal Rules of Civil Procedure and for
the purposes of the Settlement only, the Securities Action which is part of this consolidated
litigation is hereby preliminarily certified as a class action on behalf of all persons who
purchased or acquired the common stock or certain preferred securities (the "Preferred
Securities," of Merrill Lynch & Co., Inc. ("Merrill") (which Preferred Securities are listed in the
Settlement Stipulation at 11(s)) from October 17, 2006 through and including December 31,
2008. Excluded from the Settlement Class are the Defendants and their affiliates, and Temasek
Capital (Private) Limited, Davis Selected Advisors L.P. and their affiliates. Also excluded are
present and former employees of Merrill and its subsidiaries who acquired Merrill securities
through exercise of warrants and/or as compensation. Also excluded from the Settlement Class
are any Settlement Class Members who exclude themselves by filing a timely, valid request for
exclusion.
2. The Court finds, preliminarily and for purposes of this Settlement only, that the
prerequisites for a class action under Rules 23(a) and (b)(3) of the Federal Rules of Civil
Procedure have been satisfied in that: (a) the number of Settlement Class members is so
numerous that joinder of all members of the Settlement Class is impracticable; (b) there are
questions of law and fact common to each member of the Settlement Class; (c) the claims of the
Lead Plaintiff are typical of the claims of the Settlement Class it seeks to represent; (d) the Lead
Plaintiff will fairly and adequately represent the interests of the Settlement Class; (e) the
questions of law and fact common to the members of the Settlement Class predominate over any
2
questions affecting only individual members of the Settlement Class; and (f) a class action is
superior to other available methods for the fair and efficient adjudication of the controversy.
3. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, preliminarily and for
the purposes of Settlement only, Lead Plaintiff is certified as the class representative on behalf of
the Settlement Class and the Co-Lead Counsel previously selected by Lead Plaintiff and
appointed by the Court are hereby appointed as Co-Lead Counsel for the Settlement Class.
4. A hearing (the "Settlement Fairness Hearing") pursuant to Federal Rule of Civil
Procedure 23(e) is hereby scheduled to be held before the Court on July 27, 2009 at 4:00 p.m. for
the following purposes:
(a) to finally determine whether the Securities Action satisfies the applicable
prerequisites for class action treatment under Federal Rules of Civil Procedure 23(a) and (b);
(b) to determine whether the Settlement is fair, reasonable, and adequate, and
should be approved by the Court;
(c) to determine whether the Order and Final Judgment as provided under the
Settlement Stipulation should be entered, dismissing the Securities Action, on the merits and
with prejudice, and to determine whether the release by the Settlement Class of the Released
Parties, as set forth in the Settlement Stipulation, should be ordered;
(d) to determine whether the proposed Plan of Allocation for the net proceeds
of the Settlement is fair and reasonable and should be approved by the Court;
(e) to consider the application of Co-Lead Counsel for an award of attorneys'
fees and expenses; and
to rule upon such other matters as the Court may deem appropriate.
5. The Court reserves the right to approve the Settlement with or without
3
modification and with or without further notice of any kind. The Court further reserves the right
to enter its Order and Final Judgment approving the Settlement Stipulation and dismissing the
Securities Action, on the merits and with prejudice, regardless of whether it has approved the
Plan of Allocation or awarded attorneys' fees and expenses.
6. The Court approves the form, substance and requirements of (a) the Notice of
Pendency and Proposed Settlement of Securities Class Action (the "Notice"), and (b) the Proof
of Claim and Release form (the "Proof of Claim"), both of which are annexed hereto as Exhibits
1 and 2 respectively.
7. Co-Lead Counsel have the authority to enter into the Settlement Stipulation on
behalf of the Settlement Class and are authorized to act on behalf of the Members of the
Settlement Class with respect to all acts or consents required by or that may be given pursuant to
the Settlement Stipulation or such other acts that are reasonably necessary to consummate the
Settlement.
8. Rust Consulting, Inc. is retained as Claims Administrator. The Claims
Administrator shall cause the Notice and the Proof of Claim, substantially in the forms annexed
hereto, to be mailed, by first class mail, postage prepaid, within 30 calendar days of the entry of
this Order, to all Settlement Class Members who can be identified with reasonable effort. The
Claims Administrator shall take appropriate steps to provide notice to the Settlement Class and
administer all Proofs of Claim as set forth in the parties' Settlement Stipulation.
9. Co-Lead Counsel are authorized to establish a Notice and Administration Fund
(as defined in the Settlement Stipulation) in the initial amount of $ 2,000,000 to be used for
reasonable out-of-pocket costs in connection with providing notice of the Settlement to the
Settlement Class and for other reasonable out-of-pocket administrative expenses related to the
4
Notice. Additional amounts may be transferred from the Settlement Fund to the Notice and
Administration Fund as required for such purposes but only after express written authorization of
the Court.
10. Any and all issuers, securities firms or transfer agents holding transfer records for
Merrill common stock and Preferred Securities at issue are hereby ordered to produce such
transfer records in a usable electronic format to the Claims Administrator within 14 calendar
days of receipt of a copy of this Order.
11. The Claims Administrator shall also make reasonable efforts to give notice to
nominee owners such as brokerage firms and other persons or entities who purchased Merrill
Lynch common stock or Preferred Securities during the Settlement Class Period. Such nominee
purchasers are directed to forward copies of the Notice and Proof of Claim to their beneficial
owners or to provide the Claims Administrator with lists of the names and addresses of the
beneficial owners, and the Claims Administrator is ordered to send the Notice and Proof of
Claim promptly to such beneficial owners. Additional copies of the Notice shall be made
available to any record holder requesting same for the purpose of distribution to beneficial
owners, and such record holders shall be reimbursed from the Settlement Fund, upon receipt by
the Claims Administrator of proper documentation, for the reasonable expense of sending the
Notices and Proofs of Claim to beneficial owners. Co-Lead Counsel shall, at or before the
Settlement Fairness Hearing, serve upon Defendants' Counsel, and file with the Court, proof of
mailing of the Notice and Proof of Claim.
12. The Court approves the form of the Summary Notice of Pendency and Proposed
Settlement of Securities Class Action (the "Publication Notice") in substantially the form and
content annexed hereto as Exhibit 3. The Claims Administrator shall cause the Publication
5
Notice to be published in The Wall Street Journal and published electronically within 14
calendar days of the mailing of the Notice. Co-Lead Counsel shall, at or before the Settlement
Fairness Hearing, serve upon Defendants' Counsel and file with the Court proof of publication of
the Publication Notice.
13. The form and method set forth herein of notifying the Settlement Class of the
Settlement and its terms and conditions meet the requirements of due process, Rule 23 of the
Federal Rules of Civil Procedure, Section 21D(a)(7) of the Exchange Act, 15 U.S.C. §78u-
4(a)(7), as amended by the Private Securities Litigation Reform Act of 1995 constitutes the best
notice practicable under the circumstances, and shall constitute due and sufficient notice to all
persons and entities entitled thereto. Under no circumstances shall any Settlement Class Member
be relieved from the terms of the Settlement, including the releases provided for therein, based
upon the contention or proof that such Settlement Class Member failed to receive actual or
adequate notice.
14. In order to be entitled to participate in the Net Settlement Fund, as defined in the
Settlement Stipulation, in the event the Settlement is effected in accordance with all of the terms
and conditions thereof, each Settlement Class Member shall take the following action and be
subject to the following conditions:
(a) A properly executed Proof of Claim (the "Proof of Claim"), substantially
in the form attached hereto as Exhibit 2, must be submitted to the Claims Administrator, at the
Post Office Box specified in the Notice, postmarked not later than September 9, 2009. This
deadline may be further extended by Order of the Court. Each Proof of Claim shall be deemed
to have been submitted when postmarked (if properly addressed and mailed by first class mail)
provided the Proof of Claim is actually received prior to the filing of a motion for an Order of the
6
Court approving distribution of the Net Settlement Fund. Any Proof of Claim submitted in any
other manner shall be deemed to have been submitted when it was actually received at the
address designated in the Notice.
(b) The Proof of Claim submitted by each Settlement Class Member must
satisfy the following conditions: (i) it must be properly filled out, signed and submitted in a
timely manner in accordance with the provisions of the preceding subparagraph; (ii) it must be
accompanied by adequate supporting documentation for the transaction reported therein, in the
form of broker confirmation slips, broker account statements, an authorized statement from the
broker containing the transactional information found in a broker confirmation slip, or such other
documentation as is deemed adequate by Co-Lead Counsel; (iii) if the person executing the Proof
of Claim is acting in a representative capacity, a certification of his current authority to act on
behalf of the Settlement Class Member must be included in the Proof of Claim; and (iv) the
Proof of Claim must be complete and contain no material deletions or modifications of any of the
printed matter contained therein and must be signed under penalty of perjury.
(c) Once the Claims Administrator has considered a timely submitted Proof of
Claim, the Claims Administrator shall determine, based upon the Class definition and Plan of
Allocation of Net Settlement Fund, whether such claim is valid, deficient or rejected, subject to
the supervision of Co-Lead Counsel and the approval of the Court. For each claim determined to
be either deficient or rejected, the Claims Administrator shall send a deficiency letter or rejection
letter as appropriate, describing the basis on which the claim was so determined.
(d) As part of the Proof of Claim, each Settlement Class Member shall submit
to the jurisdiction of the Court with respect to the claim submitted.
15. Settlement Class Members shall be bound by all determinations and judgments in
7
the Securities Action, whether favorable or unfavorable, unless such persons request exclusion
from the Settlement Class in a timely and proper manner, as hereinafter provided. A Settlement
Class Member wishing to make such request shall mail the request in written form, by first class
mail, postage prepaid, and postmarked no later than July 6, 2009 to the Post Office Box address
listed in the Notice. Such request for exclusion shall clearly state the name and address of the
person seeking exclusion, that the sender specifically requests to be excluded from the
Settlement Class (as defined in the Settlement Stipulation) and must be signed by such person.
Such persons requesting exclusion are also requested to set forth all purchases or acquisitions of
the relevant Merrill Lynch common stock and Preferred Securities during the Settlement Class
Period, including the number and price of the shares purchased or acquired, the number and price
of shares sold during the Settlement Class Period, and the date of each such purchase, acquisition
or sale. It is also requested that such persons provide their telephone number or other contact
information. The request for exclusion shall not be effective unless the request for exclusion
provides the required information and is made within the time stated above, or the exclusion is
otherwise accepted by the Court.
16. Settlement Class Members requesting exclusion from the Settlement Class shall
not be entitled to receive any payment out of the Net Settlement Fund as described in the
Settlement Stipulation and Notice.
17. The Court will consider comments and/or objections to the Settlement, the Plan of
Allocation, or the award of attorneys' fees and reimbursement of expenses, only if such
comments or objections and any supporting papers are served on or before July 6, 2009, upon
each of the following:
8
Frederic S. FoxKAPLAN FOX & KILSHEEMER, LLP850 Third Avenue, 14th FloorNew York, New York 10022Telephone: (212) 687-1980Facsimile: (212) 687-7714
Lawrence J. LedererBERGER & MONTAGUE, P.C.1622 Locust StreetPhiladelphia, PA 19103Telephone: (215) 875-3000Facsimile: (215) 875-4604
M. Richard KominsBARRACK, RODOS & BACINE3300 Two Commerce Square2001 Market StreetPhiladelphia, PA 19103Telephone: (215) 963-0600Facsimile: (215) 963-0838
Plaintiffs' ' Co-Lead Counsel
Jay B. KasnerSKADDEN, ARPS, SLATEMEAGHER & FLOM LLP
Four Times SquareNew York, New York 10036Telephone: (212) 735-3000Facsimile: (212) 735-2000
Attorneys for Defendants Merrill Lynch & Co.,Inc., Merrill Lynch Capital Trust I, MerrillLynch Capital Trust II, Merrill Lynch CapitalTrust III and Merrill Lynch, Pierce, Fenner &Smith Incorporated
and the objector has filed the objections, papers and briefs, showing due proof of service upon
counsel identified above, with the Clerk of the Court, U.S. District Court, Southern District of
New York, 500 Pearl Street, New York, NY 10007. Attendance at the hearing is not necessary;
however, persons wishing to be heard orally in opposition to the approval of the Settlement, the
9
Plan of Allocation, and/or Co-Lead Counsel's request for attorneys' fees are required to state in
their written objection their intention to appear at the hearing. Persons who intend to object to
the Settlement, the Plan of Allocation, and/or Co-Lead Counsel's application for award of
attorneys' fees and expenses and desire to present evidence at the Settlement Fairness Hearing
must include in their written objections, evidence of their membership in the Class and the
identity of any witnesses they may call to testify and exhibits they intend to introduce into
evidence at the Settlement Fairness Hearing.
18. Any Settlement Class Member who does not object in the manner prescribed
above shall be deemed to have waived all such objections and shall forever be foreclosed from
making any objection to the fairness, adequacy or reasonableness of the Settlement, the Order
and Final Judgment to be entered approving the Settlement, the Plan of Allocation, or Co-Lead
Counsel's application for an award of attorneys' fees and reimbursement of expenses.
19. The Court reserves the right to adjourn the Settlement Fairness Hearing or any
adjournment thereof without any further notice other than an announcement at the Settlement
Fairness Hearing or any adjournment thereof, and to approve the Settlement without further
notice to the Class.
20. All papers in support of the Settlement, the Plan of Allocation and any application
for attorneys' fees or expenses shall be filed and served on June 26, 2009.
21. Pending final determination of whether the Settlement should be approved, all
Settlement Class Members, and each of them, and anyone who acts or purports to act on their
behalf shall not institute, commence or prosecute any action that asserts any Released Claims
against any of the Released Parties.
22. In the event that the Settlement is not consummated pursuant to its terms, the
10
Settlement Stipulation, except as otherwise provided therein, including any amendment(s)
thereto, and this Order Preliminarily Approving Settlement and Providing For Notice, shall be
null and void, of no further force or effect, and without prejudice to any party, and may not be
introduced as evidence or referred to in any action or proceedings by any person or entity, and
each party shall be restored to his, her or its respective position as it existed prior to the
execution of the Settlement Stipulation.
23. The Court retains exclusive jurisdiction over the action to consider all further
matters arising out of, or connected with, the Settlement.
Dated: New York, New York , 2009
UNITED STATES DISTRICT JUDGE
JED S. RAKOFF
11
EXHIBIT A-1
April 6, 2009
Dear Investor:
You are listed as an investor or former investor in Merrill Lynch & Co., Inc. ("Merrill Lynch") common stock or certainpreferred securities. Enclosed is a notice about the settlement of a class action lawsuit called In re Merrill Lynch & Co., Inc.Securities, Derivative and ERISA Litigation. You may be eligible to claim a payment from the settlement, or you may want toact on other legal rights. Important facts are highlighted below and explained more fully in the attached Notice.
Merrill Lynch Securities Class Action Settlement
• 14 Securities: (1) Merrill Lynch common stock (NYSE: "MER" CUSIP 590188108) and certain preferredsecurities, specifically: (2) "MERPRD" CUSIP 59021E206; (3) "MERPRE" CUSIP 59021G204; (4) "MERPRF"CUSIP 59021K205; (5) "MERPRG" CUSIP 59021S703; (6) "MERPRH" CUSIP 59021S638; (7) "MERPRI"CUSIP 59021V839; (8) "MERPRJ" CUSIP 59021V813;(9) "MERPRL" CUSIP 59022C178; (10) "MERPRN"CUSIP 59022Y840; (11) "MERPRO" CUSIP 59022Y832; (12) "MERPRK" CUSIP 590199204; (13) "MERPRM"CUSIP 59024T203; and (14) "MERPRP" CUSIP 59025D207.
• Time Period: October 17, 2006 — December 31, 2008 (inclusive).
• Settlement Amount: $475 million in cash (estimated average of $0.881 per damaged common share and $0.165 perdamaged Preferred Security available for public purchase prior to January 17, 2008 as described in the attachedNotice), plus interest.
• Reasons for Settlement: Avoids costs and risks from continuing the lawsuit; pays money to investors like you.
• If the Case had not Settled: There would have been pretrial motion practice and possibly a trial and appeals. Theparties disagree on the liability and damage issues. (See Question 4 of the notice for further explanation.)
• Attorneys' Fees and Expenses: Lawyers for investors will ask the Court for an award of attorneys' fees of up to7.82% of the settlement fund, and reimbursement of out-of-pocket costs and expenses in an amount not to exceed$2,500,000, which will reduce the per share recovery by an estimated $0.073 per damaged common share and$0.014 per damaged Preferred Security available for public purchase prior to January 17, 2008 as described in theattached Notice. The attorneys' fees and expenses awarded by the Court will be paid out of the settlement fund asfees and expenses for investigating the facts, litigating the case, and negotiating and administering the settlement.
• Deadlines:o To File Claims: September 9, 2009o To Request Exclusion: July 6, 2009o To File and Serve Objections: July 6, 2009o Court Hearing on Fairness of Settlement: July 27, 2009 at 4:00 p.m.
• More Information:
Claims Administrator: Lawyers for Lead Plainti & Investors:
Merrill Lynch & Co., Inc. Securities Litigation Frederic S. Fox, Esq. Lawrence J. Lederer, Esq.c/o Rust Consulting, Inc. Kaplan Fox & Kilsheimer, LLP Berger & Montague, P.C.
P.O. Box 9444 850 Third Avenue, 14th Fir. 1622 Locust Street
Minneapolis, MN 55440-9444 New York, NY 10022 Philadelphia, PA 19103
1-877-576-9980212-687-1980 215-875-3000
www.CompleteClaimSolutions.com M. Richard Komins, Esq.Barrack, Rodos & Bacine3300 Two Commerce Square2001 Market StreetPhiladelphia, PA 19103215-963-0600
Other details about this settlement and the case are in the attached Notice.
United States District Court For The Southern District Of New York
In Re Merrill Lynch & Co., Inc. Securities, Derivativeand ERISA Litigation
Master File No. 07-cv-9633 (JSR)(DFE)
This Notice Relates Only To: The Securities Action
NOTICE OF PENDENCY AND PROPOSED SETTLEMENT OF CLASS ACTION,MOTION FOR ATTORNEYS' FEES AND EXPENSES AND COURT HEARING
If You Bought or Acquired the Common Stock or the PreferredSecurities of Merrill Lynch & Co., Inc. Listed Below During thePeriod from October 17, 2006 Through and Including December 31,2008, You Could Get a Payment from a Class Action Settlement.
Whether or not you obtain a payment, all Settlement Class Member claims involving MerrillLynch common stock and the Preferred Securities during the Settlement Class Period will beeliminated and resolved by this litigation if the settlement is approved.
A federal court authorized this notice. This is not a solicitation from a lawyer.
The settlement will provide a settlement fund of $475 million in cash, plus interest (the"Settlement Fund"), to pay claims filed by investors who suffered damages from buying oracquiring Merrill Lynch common stock and certain "Preferred Securities" listed below betweenOctober 17, 2006 and December 31, 2008, inclusive (the "Settlement Class Period"). For sharespurchased on or before January 16, 2008, the settlement represents an estimated average recovery of$.881 per damaged common share available for public trading (known as the "float") and $.165 perdamaged share of Preferred Securities in the float. For shares purchased after January 16, 2008, thesettlement represents an estimated average recovery of $.084 per damaged common share in thefloat and $.007 per damaged share of Preferred Securities in the average float. These figures areonly estimates and assume that all shares in the float are "damaged shares" and that claims are filedon behalf of 100% of the estimated damaged shares, and are before deduction of any fees and costswhich the Court may award. Your actual recovery from the Settlement Fund will vary depending onwhen you purchased your Merrill Lynch common or Preferred Securities, the price you paid, thedate of any sales and sales proceeds received, the number of eligible common and PreferredSecurities purchased by other Settlement Class Members who elect to participate in the settlement,and other factors listed in the answer to Question 8 on pages [10-12] below.
List of Eligible Merrill Lynch Securities Symbol CUSIP No.
1. Merrill Lynch Common Stock MER 590188108
Nos. 2 — 14 below are collectively referred to as the "Preferred Securities" in this Notice
2. Merrill Lynch Trust 1117% MER D MERPRD 59021F206
Questions? Call 1-877-576-9980 TOLL FREE, or VISIT: www.CompleteClaimSolutions.com 1
List of Eligible Merrill Lynch Securities Symbol CUSIP No.
3. Merrill Lynch Trust IV 7.12% MER E MERPRE 59021G204
4. Merrill Lynch Trust V 7.28% MER F MERPRF 59021K205
5. Merrill Lynch Series 1 Preferred MER G MERPRG 59021S703
6. Merrill Lynch Series 2 Preferred MER H MERPRH 59021S638
7. Merrill Lynch Series 3 Preferred MER I MERPRI 59021V839
8. Merrill Lynch Series 4 Preferred MER J MERPRJ 59021V813
9. Merrill Lynch Series 5 Preferred MER L MERPRL 59022C178
10. Merrill Lynch Series 6 Preferred MER N MERPRN 59022Y840
11. Merrill Lynch Series 7 Preferred MER 0 MERPRO 59022Y832
12. Merrill Lynch Capital Trust I 6.45% Preferred MER K MERPRK 590199204
13. Merrill Lynch Capital Trust 11 6.45% Preferred MER M MERPRM 59024T203
14. Merrill Lynch Capital Trust III 7.375% Preferred MER P MERPRP 59025D207
The settlement resolves a lawsuit concerning claims that Merrill Lynch did not properlydisclose the extent of its exposure to subprime mortgage backed securities and related assets.Plaintiffs allege that as a result of these practices, the price of Merrill Lynch common stock andPreferred Securities was inflated artificially during much of the Settlement Class Period. Ifapproved, this settlement will resolve the claims alleged against defendants Merrill Lynch & Co.,Inc. and its affiliates Merrill Lynch, Pierce, Fenner & Smith, Inc., Merrill Lynch Capital Trust I,Merrill Lynch Capital Trust II, and Merrill Lynch Capital Trust III (collectively, "Merrill Lynch"),as well as the claims brought against the underwriters of certain Merrill Lynch securities that wereoffered and sold during the Settlement Class Period, claims against Merrill Lynch's accounting firm,Deloitte & Touche, LLP, and claims against certain of Merrill Lynch's officers and directors whoalso were named as Defendants. If approved, the proposed settlement will also release relatedclaims against other persons and entities affiliated with the Defendants as set forth more fully inresponse to Question 11 on pages [13-15] below. A further description of the claims in this caseappears in the answer to Question 2 on pages [5-7] below. The full list of Defendants appears onpage [14] below.
By entering into the settlement, Defendants have not admitted the allegations in the lawsuitand Plaintiffs have not admitted that any of their claims are without merit. The parties do not agreeon the merits of the claims or any damage issues. Defendants deny they engaged in any wrongdoingand deny that any Settlement Class Member can recover any damages. Lead Plaintiff State TeachersRetirement System of Ohio and Plaintiffs' Co-Lead Counsel believe that this settlement is in thebest interests of the Settlement Class considering the risks posed by further litigation and thepossibility that absent the settlement, Settlement Class Members risk obtaining no recovery. See theanswer to Question 4 on pages [7-9] below for further explanation.
Plaintiffs' Co-Lead Counsel have expended considerable time and effort in the prosecutionof this litigation on a contingent fee basis, and have advanced the expenses of the litigation in theexpectation that if they were successful in obtaining a recovery for the Settlement Class they wouldbe paid from such recovery, as is customary in this type of litigation. Plaintiffs' Co-Lead Counsel
Questions? Call 1-877-576-9980 TOLL FREE, or VISIT: www.CompleteClaimSolutions.com 2
have not received previously any compensation for their services in this litigation. Plaintiffs' Co-Lead Counsel intend to ask the Court to award them attorneys' fees of up to $37,125,000(approximately 7.82% of the Settlement Fund), along with reimbursement of out-of-pocketexpenses in an amount not to exceed $2,500,000. If the Court awards these amounts, the award willreduce the estimated average per share recovery by an estimated $.073 per damaged common shareand by $.014 per damaged share of Preferred Securities available for purchase in the float on orbefore January 16, 2008, and by $.007 per damaged common share and by $.001 per damaged shareof Preferred Securities available for purchase in the average float after January 16, 2008. Inaddition, the costs of providing notice to the Settlement Class members and in processing the claimsreceived will also be deducted from the settlement. See answer to Question 16, on page [16] below.
Your legal rights are affected whether you act, or don't act. Read this notice carefully.
YOUR LEGAL RIGHTS AND OPTIONS IN THIS SETTLEMENT:
SUBMIT A CLAIM FORM The only way to receive a payment.
EXCLUDE YOURSELF Receive no payment. This is the only option that allows you to ever bepart of any other lawsuit against Defendants about the claims in thiscase.
OBJECT BUT REMAIN IN Write to the Court about why you don't like the settlement.THE SETTLEMENT
Go TO A HEARING The Hearing on July 27, 2009, at 4:00 p.m. is open to the public. Tospeak in Court in support of any objection you may have filed, youwill need to give advance written notice to the Court and the parties.
DO NOTHING Receive no payment. Give up any rights you may have.
These rights and options — and the deadlines to exercise them — are explained in this Notice.
The Court still has to decide whether to approve the settlement. Payments will be made if the Courtapproves the settlement and after any appeals are resolved and claims are processed. Claimsprocessing takes time. Please be patient.
For further information regarding this settlement, you may contact Plaintiff's Co-LeadCounsel for the Securities Action: Frederic S. Fox, Kaplan Fox & Kilsheimer LLP, 850 ThirdAvenue, 14th Floor, New York, NY 10022, telephone (212) 687-1980; Lawrence J. Lederer, Berger& Montague, P.C., 1622 Locust Street, Philadelphia, PA 19103, telephone (215) 875-3000; or M.Richard Komins, Barrack, Rodos & Bacine, 3300 Two Commerce Square, 2001 Market Street,Philadelphia, PA 19103, telephone (215) 963-0600; or the Claims Administrator c/o RustConsulting, Inc., P.O. Box 9444, Minneapolis, MN 55440-9444, Telephone: 1-877-576-9980.
Please do not contact the Court, any representative of the Defendants or Merrill Lynch.
Questions? Call 1-877-576-9980 TOLL FREE, or VISIT, www.CompleteClaimSolutions.com 3
WHAT THIS NOTICE CONTAINS Page
BASIC INFORMATION [5]1. Why did I get this Notice package? [5]2. What is this lawsuit about? [5]3. Why is this a class action? [7]4. Why is there a settlement? [7]
WHO IS IN THE SETTLEMENT [9]5. How do I know if I am part of the settlement? [9]6. Are there exceptions to being included ? [10]7. I'm still not sure if I am included [10]
THE SETTLEMENT BENEFITS — WHAT You GET [10]8. What does the settlement provide? [10]
a. What is the Settlement Fund ? [11]b. How can I compute my Payable Claim? [12]
How You GET A PAYMENT — SUBMITTING A CLAIM FORM [12]9. How can I get a payment? [12]10. When would I receive my payment? [13]11. What am I giving up to receive a payment or stay in the Settlement Class? [13]
EXCLUDING YOURSELF FROM THE SETTLEMENT [15]12. What do I do if I decide that I do not want to be part of the settlement? [15]13. If I do not exclude myself, can I sue Defendants for the same thing later? [16]14. If I exclude myself, can I receive money from this settlement? [16]
THE LAWYERS REPRESENTING You [16]15. Do I have a lawyer in this case? [16]16. How will the lawyers be paid? [16]
OBJECTING To THE SETTLEMENT OR FEES [17]17. How do I tell the Court that I do not like the settlement or fees? [17]18. What is the difference between objecting and requesting exclusion ? [18]
THE COURT'S FAIRNESS HEARING [18]19. When and where will the Court decide whether to approve the settlement ? [18]20. Do I have to come to the Fairness Hearing? [19]21. May I speak at the Fairness Hearing? [19]
IF You Do NOTHING [19]22. What happens if I do nothing at all? [19]
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GETTING MORE INFORMATION [19]23. How do I get more information about the settlement? [19]
UNDERSTANDING YOUR PAYMENT — THE PLAN OF ALLOCATION [20]
SPECIAL NOTICE To SECURITIES BROKERS AND OTHER NOMINEES [26]
INQUIRIES [26]
APPENDIX A -TABLE OF ELIGIBLE SECURITIES, STOCK SYMBOLS,
DISCLOSURE DATES AND MAXIMUM RECOGNIZED Loss PER SHARE [27]
BASIC INFORMATION
1. Why did I get this Notice package?
You may have purchased or acquired Merrill Lynch common stock or any of the PreferredSecurities listed on pages [1-2] above during the Settlement Class Period from October 17, 2006through December 31, 2008.
The Court in charge of this case is the United States District Court for the Southern Districtof New York. The case is known as In Re Merrill Lynch & Co., Inc. Securities, Derivative andERISA Litigation, Master File No. 07-cv-9633 (JSR)(DFE). However, the settlement described inthis Notice applies only to the claims in the securities class action cases and not the claims in therelated derivative or ERISA cases. Judge Jed Rakoff is the judge hearing this case. The people whosued are called plaintiffs. Merrill Lynch and the other parties who were sued in this case are theDefendants. The full list of Defendants appears on page [14] below. This case is one of severalrelated actions which were filed against Defendants and others relating to Merrill Lynch's exposuresto, and disclosures relating to, subprime mortgages, securities backed by subprime mortgages andrelated assets. All such related cases were consolidated before Judge Rakoff under the caption In ReMerrill Lynch & Co., Inc. Securities, Derivative and ERISA Litigation, Master File No. 07-cv-9633(JSR)(DFE).
This Notice is sent to you because you have a right to know about the proposed settlement ofthis case, and about all of your options, before the Court decides whether to approve the settlement.If the Court approves the settlement, and resolves any objections to the settlement submitted bySettlement Class Members and any appeals are resolved as explained below, then an administratorappointed by the Court will process the claims received and distribute the payments to SettlementClass Members with valid claims.
2. What is this lawsuit about?
Beginning in October 2007, a number of class action complaints alleging violations offederal securities laws were filed (the "Securities Action"), naming as defendants Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner & Smith, Inc., Citigroup Global Markets, Morgan Stanley &
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Co., UBS Securities, Wachovia Capital Services and Deloitte & Touche LLP, certain Merrill Lynchofficers and directors, and others.
On December 31, 2007, certain plaintiffs moved to consolidate the Securities Action and forappointment as lead plaintiff pursuant to the Private Securities Litigation Reform Act ("PSLRA").On January 2, 2008, the State Teachers Retirement System of Ohio moved for appointment as leadplaintiff in the Securities Action.
On March 12, 2008, the Court consolidated the actions brought on behalf of investors inMerrill Lynch securities and appointed State Teachers Retirement System of Ohio as sole leadplaintiff in the Securities Action (the "Lead Plaintiff'). The Court also approved Lead Plaintiff'sselection of Kaplan Fox & Kilsheimer LLP, Berger & Montague, P.C. and Barrack Rodos & Bacineas Co-Lead Counsel in the Securities Action.
On May 21, 2008, Lead Plaintiff, together with additional plaintiff Gary Kosseff(collectively, "Plaintiffs"), filed the Amended Complaint in the Securities Action. Plaintiffs allegedclaims against the Defendants under Sections 10(b), 14(a), and 20(a) of the Securities Exchange Actof 1934 (the "Exchange Act") and Sections 11, 12(a)(2), and 15 of the Securities Act of 1933("Securities Act") on behalf of investors in Merrill Lynch common stock and the PreferredSecurities issued by Merrill Lynch or its affiliates.
The Amended Complaint alleges that during the Settlement Class Period Merrill Lynchaccumulated financial exposure to U.S. subprime residential mortgage-related assets and assetbacked securities ("ABS"), collateralized debt obligations ("CDOs"), and related exposures andfinancial instruments that reached $40 billion by the end of June 2007. The Amended Complaintalleges that Defendants did not properly disclose Merrill Lynch's exposure to these assets untilbeginning October 5, 2007, when Merrill Lynch began to disclose its exposures and began to initiatewrite-downs. By January 17, 2008, Merrill Lynch had written down over $24 billion in U.S.subprime ABS and CDO exposures. Plaintiffs also allege: (a) that Defendants sought to minimizeand/or obscure Merrill Lynch's exposure by falsely representing that Merrill Lynch's risk controlsand hedging techniques were effectively mitigating and minimizing any impact that subprime assetswould have on Merrill Lynch; (b) that Defendants falsely led investors to believe that the impact ofsubprime assets would be minimal on Merrill Lynch; and (c) that by at least February 2007, MerrillLynch's U.S. subprime ABS CDO exposures had become substantially impaired and should havebeen materially written down.
On or about July 28, 2008, Lead Plaintiff entered into a tolling agreement with CitigroupGlobal Markets, Morgan Stanley & Co., UBS Securities, and Wachovia Capital Markets LLC(collectively, the "Underwriter Defendants"), as a result of which Lead Plaintiff agreed tovoluntarily dismiss without prejudice the Underwriter Defendants from the Securities Action. OnAugust 5, 2008, the Court approved the voluntary dismissal of the Underwriter Defendants.
On July 21, 2008, certain of the Defendants moved to dismiss the Amended Complaint.Merrill Lynch also moved to strike certain allegations of the Amended Complaint, which motioncertain other of the Defendants also joined. On September 19, 2008, Plaintiffs filed a consolidatedopposition to Defendants' motions to dismiss and Merrill Lynch's motion to strike. Plaintiffs also
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filed a motion to strike certain arguments and documents Defendants submitted with their motionsto dismiss.
On November 14, 2008, Defendants filed reply memoranda in further support of theirmotions to dismiss, and in opposition to Plaintiffs' motion to strike. Plaintiffs filed a replymemorandum in further support of their motion to strike on November 14, 2008. On November 25,2008, the Court issued an Order setting oral argument on the pending motions to dismiss in theSecurities Action for January 15, 2009.
On January 7, 2009, with the motions to dismiss the Securities Action pending, the parties inthe Securities Action agreed in principle to settle the Securities Action on behalf of the SettlementClass Members, subject to certain conditions, including approval by the Lead Plaintiff. On January16, 2009, Lead Plaintiff notified Merrill Lynch that it agreed to the proposed settlement. Thesettlement includes all claims that Lead Plaintiff alleged or could have alleged in the AmendedComplaint during the Settlement Class Period as set forth in the definition of Released Claims onpage [13] below. The Settlement Class Period extends from October 17, 2006 through andincluding December 31, 2008, the day before Merrill Lynch was acquired by Bank of America.
3. Why is this a class action?
In a class action, one or more persons and/or entities called class representatives, sue onbehalf of all persons and/or entities who have similar claims. All of these persons and/or entities arecollectively referred to as a Class, or individually, as Class Members. One court resolves all of theissues in the case for all Class Members, except for those Class Members who exclude themselvesfrom the Class. In this notice, the Class is known as the Settlement Class and the Class Membersare known as the Settlement Class Members.
4. Why is there a settlement?
The Court did not decide in favor of Plaintiffs or Defendants. Instead, Lead Plaintiff andDefendants have agreed to settle this action. Lead Plaintiff has agreed to settle this action based onthe risks of continued litigation, and its conclusion and the conclusion of Co-Lead Counsel that theproposed settlement is fair, reasonable and adequate and, indeed, an excellent recovery for themembers of the Settlement Class. By settling, the Settlement Class avoids the cost and risks ofcontinued litigation, while at the same time the Settlement Class will receive substantialcompensation. Consequently, Lead Plaintiff and Co-Lead Counsel recommend approval of thesettlement. Merrill Lynch has agreed to the settlement to put this matter behind it and to avoid thecosts, distraction and risks of the litigation.
Lead Plaintiff and Co-Lead Counsel believe that there were many risks of continuedlitigation in this case. For example, in their motions to dismiss, the Defendants raised severaldefenses challenging the sufficiency of Plaintiffs' allegations of scienter — that is, whether theDefendants acted with the required intent to deceive Merrill Lynch investors. The Defendants alsoasserted defenses concerning whether the Plaintiffs have sufficiently alleged that the Defendantseven made any false or misleading statements relating to Merrill Lynch's businesses in subprimemortgages and related mortgage securities and other assets (or otherwise). They have also arguedthat Merrill Lynch's financial problems and Plaintiffs' losses were caused by the market-wide creditcrisis that also impacted adversely several other investment banks during the Settlement Class
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Period, and that any losses were not caused by any improper conduct or false statements onDefendants' part. Additionally, the Defendants have asserted defenses concerning damages andrelated issues, among others.
Lead Plaintiff and Co-Lead Counsel are also mindful that, even if the motions to dismisswere denied, there exist inherent problems of proof under, and possible other defenses to, the federalsecurities law violations asserted in the Securities Action. For example, Lead Plaintiff andDefendants do not agree on whether there were damages, and if so, the average amount of damagesper share that would have been recoverable if Plaintiffs were to have prevailed on each claimasserted in the Securities Action. The issues on which they disagree include, among others: (1) theappropriate method for determining the amount by which Merrill Lynch common stock andPreferred Securities were allegedly artificially inflated (if at all) during the Settlement Class Period;(2) the amount by which Merrill Lynch common stock and Preferred Securities were allegedlyartificially inflated (if at all) during the Settlement Class Period; (3) the effect of various marketforces influencing the trading prices of Merrill Lynch common stock and Preferred Securities atvarious times during the Settlement Class Period; (4) the extent to which external factors, such asgeneral market conditions, influenced the trading prices of Merrill Lynch common stock andPreferred Securities at various times during the Settlement Class Period; (5) the extent to which thevarious statements that Plaintiffs allege were materially false or misleading influenced (if at all) thetrading prices of Merrill Lynch common stock and Preferred Securities at various times during theSettlement Class Period; (6) the extent to which the various allegedly adverse material facts thatPlaintiffs allege were omitted influenced (if at all) the trading prices of Merrill Lynch common stockand Preferred Securities at various times during the Settlement Class Period; (7) whether thestatements made were false or materially misleading, and whether such statements or the factsallegedly omitted were material or otherwise actionable under the federal securities laws; and (8)whether Plaintiffs could rely on the fraud-on-the-market presumption of reliance in lieu of provingactual reliance on Defendants' allegedly false statements during the Settlement Class Period bypurchasers of Merrill Lynch common stock and Preferred Securities.
In the absence of any settlement, the parties would present factual and expert testimony oneach of these issues, and there is considerable risk that the court may strike one or more experts orthat the Court or jury would resolve the inevitable "battle of the experts" against Lead Plaintiff andthe Settlement Class.
Although Lead Plaintiff believes that the claims it alleges have substantial merit, LeadPlaintiff recognizes that these defenses present serious contingent risk. Further, even if theDefendants' motions to dismiss were denied, the Defendants would likely have continued to assertthese defenses throughout the litigation. And even if Lead Plaintiff survived Defendants' efforts toobtain pre-trial dismissal and prevailed through trial, the Defendants could be expected to appealand continue to assert one or more of these defenses. Lead Plaintiff and Co-Lead Counsel have alsoconsidered several other factors, including Merrill Lynch's potential ability to satisfy a judgment foran amount substantially in excess of the Settlement Fund even assuming Lead Plaintiff prevailedthrough trial and on appeal.
Lead Plaintiff and Co-Lead Counsel also recognize and acknowledge the expense and lengthof continued proceedings necessary to prosecute the Securities Action against the Defendantsthrough trial and through appeals. Co-Lead Counsel have also taken into account the uncertain
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outcome and the risk of any litigation, especially in complex actions such as the Securities Action,as well as the difficulties, costs, and delays inherent in such litigation.
Co-Lead Counsel have conducted extensive and lengthy discussions and arm's-lengthnegotiations with counsel for Defendants with respect to the proposed settlement to achieve the bestrelief possible consistent with the interests of the Settlement Class. Co-Lead Counsel have retaineddamage experts who assisted in estimating potential damages and in constructing the Plan ofAllocation set out at the end of this Notice. Accordingly, Lead Plaintiff and Co-Lead Counselbelieve that the settlement provides an excellent monetary recovery for the Settlement Class basedon the claims asserted, the procedural posture of the Securities Action, the evidence developed, andthe damages that might be proven by the Settlement Class.
The settlement is embodied in the parties' Stipulation and Agreement of Settlement datedFebruary 17, 2009 (the "Settlement Stipulation"). The parties' Settlement Stipulation has been filedwith the Court and is available at the website: www.CompleteClaimSolutions.com .
Defendants have denied, and continue to deny, each and every claim and contention allegedby Lead Plaintiff in the Securities Action. Defendants have expressly denied, and continue to deny,all charges of wrongdoing or liability against them arising out of any of the conduct, statements, actsor omissions alleged, or that could have been alleged, in the Securities Action. Defendants believethat Lead Plaintiff's allegations of fraud have no merit and that a class could not be certified underthe relevant federal class action rule. Defendants have also denied, and continue to deny, amongother things, the allegations that Lead Plaintiff or the Settlement Class has suffered damage, that theprices of Merrill Lynch common stock and Preferred Securities were inflated artificially by reasonsof alleged misrepresentations, non-disclosures or otherwise, or that Lead Plaintiff or the SettlementClass was harmed by the conduct alleged in the Securities Action.
Nonetheless, Defendants have concluded that further conduct of the Securities Action wouldbe protracted and expensive, and that it is desirable that the Securities Action be fully and finallysettled in the manner and upon the terms and conditions set forth in the Settlement Stipulation toavoid further costs and distraction associated with continued litigation.
The Settlement is subject to certain conditions under which the parties may terminate theSettlement, including conditions based on the number and extent of the exclusions received.
WHO IS IN THE SETTLEMENT
5. How do I know if I am part of the settlement?
To see if you will get money from this settlement, you first have to decide if you are amember of the Settlement Class in this Action. The Court decided that everyone who fits thefollowing description is a Settlement Class Member:
All persons who purchased or acquired Merrill Lynch common stock or the PreferredSecurities (listed on pages [1-2] above) during the time period from October 17,2006 through and including December 31, 2008 (the "Settlement Class Period").
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The Court has also decided that pending final determination of whether the settlementsummarized in this Notice should be approved, all Settlement Class Members, and anyone who actsor purports to act on their behalf, are prohibited from instituting or commencing any action whichasserts Released Claims against any of the Released Parties (as those terms are defined in theanswer to Question 11 below).
6. Are there exceptions to being included?
Even if you otherwise fall within the definition of the Settlement Class described in theanswer to Question 5 above, you are not a Settlement Class Member if: (1) you are a Defendant orany of their affiliates; (2) you are Temasek Capital (Private) Limited or Davis Selected AdvisorsL.P., or any of their affiliates; or (3) you are or were a present or former employee of Merrill Lynchand its subsidiaries and you acquired Merrill Lynch common stock or Preferred Securities throughexercise of warrants and/or as compensation. Also, if you exclude yourself from the SettlementClass, by following the steps described in the answer to Question 12 below, you will not be a part ofthe Settlement Class and therefore will not be entitled to share in the settlement.
If one of your mutual funds owns Merrill Lynch common stock or any of the PreferredSecurities listed on page above, that alone does not make you a Settlement Class Member. Youare a Settlement Class Member only if you purchased or otherwise acquired Merrill Lynch commonstock or any of the Preferred Securities during the Settlement Class Period. Contact your broker tosee if during the Settlement Class Period you own, held or acquired Merrill Lynch common stock orany of the Preferred Securities.
7. I'm still not sure if I am included.
If you are still not sure whether you are included in the Settlement Class, you can ask for freehelp, by calling the Claims Administrator, 1-877-576-9980 for more information, or by visiting thewebsite wwvv.CompleteClaimSolutions.com . Or you can fill out and return the claim form attachedto this Notice to see if you qualify.
THE SETTLEMENT BENEFITS — WHAT YOU GET
8. What does the settlement provide?
The parties arrived at a proposed settlement of the lawsuit which is embodied in theSettlement Stipulation signed by their attorneys. The parties' agreement, by itself, is not sufficientfor the settlement to be official. Instead, the proposed settlement requires the Court's approvalbefore it can become official. The terms of the proposed settlement are summarized below, and thefull settlement terms are in the Settlement Stipulation. You can obtain a copy of the SettlementStipulation by writing to Co-Lead Counsel: Frederic S. Fox, Kaplan Fox & Kilsheimer LLP, 850Third Avenue, 14th Floor, New York, NY 10022, telephone (212) 687-1980; Lawrence J. Lederer,Berger & Montague, P.C., 1622 Locust Street, Philadelphia, PA 19103, telephone (215) 875-3000;or M. Richard Komins, Barrack, Rodos & Bacine, 3300 Two Commerce Square, 2001 MarketStreet, Philadelphia, PA 19103, telephone (215) 963-0600.
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a. What is the Settlement Fund?
Pursuant to the proposed settlement, the $475 million cash Settlement Fund has beenestablished for the Settlement Class in full and complete settlement of the Securities Action. TheSettlement Fund has already been placed into an escrow account established by Co-Lead Counselfor the benefit of the Settlement Class, and has been invested in interest-bearing instruments orfunds backed by the United States government or its agencies, pending final approval of thesettlement by the Court as provided in the parties' Settlement Stipulation. If the settlement is notapproved by the Court, Defendants are entitled to a refund of the Settlement Fund less certain noticecosts and taxes, also as set forth in the parties' Settlement Stipulation.
It is estimated that prior to a secondary offering of Merrill Lynch common stock on July 29,2008, approximately 446.6 million shares of Merrill Lynch common stock were available for publictrading by investors (commonly known as the "float") during the Settlement Class Period, and mayhave sustained damages caused by one of the "corrective disclosures" identified by Co-LeadCounsel and their economic and damages consultant — that is, a disclosure that at least partiallyrevealed the true extent of Merrill Lynch's exposure to subprime mortgages, ABS, CDOs andrelated investments. (See Plan of Allocation at pages [20 to 28] below.) Similarly, it is estimatedthat following the secondary offering of Merrill Lynch common stock on July 29, 2008,approximately 814.8 million shares of Merrill Lynch common stock were in the float and may havesustained damages following an additional disclosure on August 7, 2008. (See page [21] below.)Between January 17, 2008 and August 6, 2008, the weighted average float is approximately 465million shares. With regard to the 13 issues of Preferred Securities, it is estimated that the float wasapproximately 245.2 million shares throughout the entire Settlement Class Period. As used in thisnotice, all shares of common stock or Preferred Securities in the float are "damaged shares" — that isshares that have incurred damage as a result of one or more of the "corrective disclosures" identifiedin the Plan of Allocation.
As a result, for shares purchased by Settlement Class Members on or before January 16,2008, it is estimated that the $475 million recovery represents an average recovery of $.881 perdamaged common share in the float and $.165 per damaged share of Preferred Securities in thefloat. For shares purchased by Settlement Class Members after January 16, 2008, it is estimated thatthe settlement represents an average recovery of $.084 per damaged common share in the weightedaverage float and $.007 per damaged share of Preferred Securities in the float. These figures areonly estimates and assume that claims are filed on behalf of 100% of the estimated amount ofdamaged shares. Also, these figures are before deduction of any fees and costs that the Court mayaward.
After deducting the requested attorneys' fees of up to 7.82% of the Settlement Fund and upto $2,500,000 in reimbursement of costs and expenses (see answer to question 16 below), the netrecovery is estimated to be $.807 per damaged common share and $.151 per damaged share ofPreferred Securities purchased during the Settlement Class Period on or before January 16, 2008,and $.077 per damaged common share and $.006 per damaged share of Preferred Securitiespurchased during the Settlement Class Period after January 16, 2008. These are only estimates.These net recovery figures are before deducting any costs incurred in providing notice of thesettlement or in processing the claims received from Settlement Class Members (to the extent not
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offset by interest income earned by the Settlement Fund), and your actual recovery may vary. (Seeanswer to Question 8(b) below.)
Under the federal securities laws, persons who purchased Merrill Lynch common stock orPreferred Securities may recover, in general, only for losses proximately caused by disclosurescorrecting Defendants' prior misleading statements, and may not recover for any price declinescaused by general market or industry factors or by disclosures of other negative information notalleged to have corrected prior misstatements. It is likely, therefore, that if Plaintiffs were to prevailcompletely in establishing liability on every single claim at trial, and if all claims were upheldthrough all appeals, that the recovery for investors who purchased their Merrill Lynch commonstock or Preferred Securities would be considerably less than the market losses on these Securities.Defendants do not agree that any portion of the market declines could be recovered even if liabilitywere to be established.
After the deduction of all fees, costs and other expenses as approved by the Court and anytaxes, the remaining proceeds in the Settlement Fund (the "Net Settlement Fund") will be availableto pay to Settlement Class Members who file valid Proof of Claim and Release forms and otherwisemeet all of the requirements of the Plan of Allocation described on pages [20] to [28] of this Notice.
b. How can I compute my Payable Claim?
Your actual recovery from the Net Settlement Fund will vary from the estimates set outabove depending on: (1) the date you purchased your Merrill Lynch common stock or PreferredSecurities, (2) the number of shares purchased and the price you paid, (3) the date of any sales ofyour Merrill Lynch common stock or Preferred Securities, (4) the sales price you received, (5) theexpense of administering the claims process, (6) attorneys' fees and expenses awarded by the Court,(7) interest income received and taxes paid by the Settlement Fund, (8) the number of eligible sharesof common stock and Preferred Securities purchased by other Settlement Class Members who electto participate in the settlement, and (9) the Recognized Losses and Payable Claims of all other validapproved claimants computed in accordance with the Plan of Allocation set out on pages [20] to[28] below. Defendants take no position on the Plan of Allocation.
By following the Plan of Allocation at the end of this Notice, you can calculate your PayableClaim. Payments from the Net Settlement Fund are likely to be significantly less than each validclaimant's Payable Claim. The claims administrator appointed by the Court, Rust Consulting, Inc.(the "Claims Administrator") will distribute the Net Settlement Fund according to the Plan ofAllocation after the deadline for submission of Proof of Claim and Release forms has passed, and allother claims have been processed.
HOW YOU GET A PAYMENT - SUBMITTING A CLAIM FORM
9. How can I get a payment?
To qualify for payment, you must send in a Proof of Claim and Release form. This form isattached to this Notice. You may also obtain a claim form on the Internet atwww.CompleteClaimSolutions.com. Please read the instructions carefully, fill out the form, sign itin the two locations indicated, include all the documents the form asks for, and mail the claim formand documentation, postmarked no later than September 9, 2009, to:
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Claims AdministratorMerrill Lynch & Co., Inc. Securities Litigation
c/o Rust Consulting, Inc.P.O. Box 9444
Minneapolis, MN 55440-9444
The Claims Administrator will process your claim and advise you if you are an "AuthorizedClaimant" — meaning whether your claim satisfies the requirements approved by the Court.
10. When would I receive my payment?
The Court will hold a Hearing at 4:00 p.m. on July 27, 2009, to decide whether to approvethe settlement (the "Hearing" or "Fairness Hearing"). The Hearing date can be changed by theCourt. Upon approval of the settlement and the resolution of any appeals, the Claims Administratorwill process all of the claim forms. Everyone who sends in a claim form will be informed of theapproval or disapproval of their claim. Before any distribution can occur, the Court will be asked toapprove any distribution. Please be patient.
II. What am I giving up to get a payment or stay in the Settlement Class?
Unless you exclude yourself, you will remain in the Settlement Class. That means that if thesettlement is approved by the Court, and the settlement becomes effective under the terms of theSettlement Stipulation (the "Effective Date"), you and all Settlement Class Members (including anySettlement Class Member who is a party to any other action, arbitration or other proceeding), willrelease (that is, can't sue, continue to sue, or be part of any other lawsuit or arbitration) all"Released Claims" and "Unknown Claims" against, and in favor of, all of the "Defendants" and allof the other "Released Parties" as those terms are defined in the Settlement Stipulation and alsobelow. It also means that all of the Court's orders will apply to you and legally bind you (and yourheirs, joint tenants, tenants in common, beneficiaries, executors and administrators, successors andassigns), even if you receive no allocation.
"Released Claims" means any and all claims, actions, debts, demands, set-offs (both legaland equitable), causes of action, rights or liabilities whatsoever (including, but not limited to, anyclaims for damages, equitable relief, interest, attorneys' fees, expert or consulting fees, and anyother costs, expenses or liability whatsoever), whether based on federal, state or local statutory orcommon law or any other law, rule or regulation, whether fixed or contingent, accrued or un-accrued, liquidated or un-liquidated, at law or in equity, matured or un-matured, whether direct,representative, class, individual or in any other form, including both known claims and UnknownClaims (defined below), that have been asserted in the Securities Action by the Settlement ClassMembers or any of them against any of the Released Parties, or which otherwise were or could havebeen at issue in the Securities Action, or that have been or could have been asserted in any forum bythe Settlement Class Members or any of them against any of the Released Parties which arise out ofor relate to or are based in whole or in part upon any of the allegations, transactions, facts, mattersor occurrences, representations, disclosures, statements or omissions alleged, involved, set forth, orreferred to in the Amended Complaint, in connection with such Settlement Class Members'purchase or acquisition of Merrill common stock or the Preferred Securities during the SettlementClass Period. Released Claims includes only the claims that were or could have been asserted on
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behalf of purchasers or acquirers during the Settlement Class Period of only Merrill common stockand the Preferred Securities
The definition of "Released Claims" above specifically excludes the claims asserted in(1) all derivative actions consolidated into the docket number 07cv9696 by order dated March 12,2008, the derivative action captioned Lambrecht v. O'Neal, 08cv6582, and all derivative actionsinvolving substantially similar facts; (2) the ERISA actions consolidated into the docket number07cv10268 by order dated March 12, 2008; and (3) the claims relating to the following securitiesasserted in the action captioned Louisiana Sheriffs' Pension and Relief Fund, et al. v. Merrill Lynch& Co., Inc., et al., 08cv09063: 8.625% Non-Cumulative Preferred Securities, Series 8 (CUSIP:59023V373); Medium-Term Notes, Series C (CUSH): 59018YYR6); Medium-Term Notes, Series C(CUSlP: 59018YYW5); 6.11% Subordinated Notes due January 29, 2037 (CUSH': 59022CAJ2);5.70% Subordinated Notes due May 2, 2017 (CUSEP: 59022CCS0); Medium-Term Notes, Series C(CUSIP: 59018YE72); 6.05% Medium-Term Notes, Series C (CUSIP: 59018YJ36); 6.40%Medium-Term Notes, Series C (CUSlP: 59018YJ69); Accelerated Return Notes (CUSP:59022W356); 5.45% Medium-Tenn Notes, Series C (CUSIP: 59018YM40); 6.15% Medium-TermNotes, Series C (CUSEP: 59018YN56); 6.875% Medium-Term Notes, Series C (CUSlP:59018YN64); 7.75% Subordinated Notes (CUSIP: 59023VAA8). Released Claims also specificallyexcludes the claims asserted in the securities actions captioned, Sklar v. Bank of America Corp., etal., 09-cv-580 (S.D.N.Y. filed Jan. 21, 2009); Boorn v. Bank of America Corp., et al., 09-cv-0159(N.D. Ga. filed Jan. 21, 2009); and Zitner v. Bank of America Corp., et al., 09-cv-00881 (S.D.N.Y.filed Jan. 30, 2009), as well as any actions involving substantially similar facts. It is expresslyunderstood that no release is given to any Released Party in connection with any purchase,acquisition, or retention of Bank of America Corp. ("BAC") securities by any purchaser, acquirer, orholder of BAC securities.
"Defendants" means Merrill Lynch & Co., Inc.; Merrill Lynch, Pierce, Fenner & SmithIncorporated, Merrill Lynch Capital Trust I, Merrill Lynch Capital Trust II, Merrill Lynch CapitalTrust In, E. Stanley O'Neal, Ahmass L. Fakahany, Gregory J. Fleming, Jeffrey N. Edwards,Lawrence A. Tosi, Armando M. Codina, Virgis W. Colbert, Carol T. Christ, Alberto Cribiore, JohnD. Finnegan, Judith Mayhew Jonas, Aulana L. Peters, Joseph W. Prueher, Ann N. Reese, Charles 0.Rosotti, Citigroup Global Markets, Morgan Stanley & Co., UBS Securities, Wachovia CapitalServices and Deloitte & Touche LLP.
"Released Parties" means Defendants and their respective heirs, executors, personalrepresentatives, estate and administrators; their respective past, present and future parent entities,affiliates, related parties, subsidiaries, predecessors and successors; and each of their respective,past, present and future assigns, insurers, partners, officers, directors, controlling persons,representatives, employees, agents, attorneys, counsel, underwriters, and financial or investmentadvisors.
"Unknown Claims" any and all Released Claims that Plaintiffs and any Settlement ClassMember does not know or suspect to exist in his, her or its favor at the time of the release of theReleased Parties. With respect to any and all Released Claims, the parties stipulate and agree thatupon the Effective Date of the settlement, Lead Plaintiff shall expressly, and each Settlement ClassMember shall be deemed to have, and by operation of the Order and Final Judgment shall have,expressly waived any and all provisions, rights and benefits conferred by any law of any state or
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territory of the United States, or principle of common law, which is similar, comparable orequivalent to California Civil Code, Section 1542, which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR
HER SETTLEMENT WITH THE DEBTOR.
Lead Plaintiff and Defendants acknowledge, and Settlement Class Members by operation oflaw shall be deemed to have acknowledged, that the inclusion of "Unknown Claims" in thedefinition of Released Claims was separately bargained for and was a key element of the settlement.
In addition, Lead Plaintiff and all Settlement Class Members, whether or not any suchperson submits a Proof of Claim, or otherwise shares in the Settlement Fund, on behalf ofthemselves and each of their predecessors, successors, assigns, personal representatives, heirs andany other Person who purports to claim through them, will be deemed by this settlement to releaseand forever discharge the Released Parties from any and all of the Released Claims. Assuming thesettlement is approved, Lead Plaintiff and all Settlement Class Members, and anyone claimingthrough or on behalf of any of them, will be forever barred and enjoined from commencing,instituting, prosecuting or continuing to prosecute any action or other proceeding in any court of lawor equity, arbitration tribunal, administrative forum, or other forum of any kind, asserting againstany of the Released Parties, and each of them, any of the Released Claims, as set forth in the parties'Settlement Stipulation.
Also assuming the settlement is approved, all claims for contribution, indemnification, orany other form of relief by other alleged joint tortfeasors against the Released Parties based upon,arising out of, relating to, or in connection with the Released Claims of the Settlement Class or anySettlement Class Member will be barred, extinguished, discharged, satisfied and otherwise renderedunenforceable to the full extent permitted by law, and the future filing of any such claims enjoined,also as set forth in the parties' Settlement Stipulation.
EXCLUDING YOURSELF FROM THE SETTLEMENT
12. What do I do if I decide that I do not want to be part of the settlement?
If you do not want to receive a payment from this settlement, and you want to keep the rightto sue or continue to sue Defendants on your own about the legal and factual issues in this case, thenyou must take steps to get out of the settlement. This is called excluding yourself — or is sometimesreferred to as "opting out" of the Settlement Class.
To exclude yourself from the settlement, you must send a letter by mail stating that you wantto be excluded from the Settlement Class.
Be sure to include your name, address, telephone number, a statement requesting exclusionfrom the Settlement Class and your signature. Please also provide a complete description of yourpurchases and sales in Merrill Lynch common stock and Preferred Securities during the Settlement
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Class Period, including the dates, the number of shares, and the prices paid and received per sharefor each purchase and sale. Please also include the amount of shares of Merrill Lynch commonstock or Preferred Securities held by you, if any, as of the close of business on December 31, 2008.You must mail your exclusion request, postmarked no later than July 6, 2009, and send it to:
Claims AdministratorMerrill Lynch & Co., Inc. Securities Litigation
c/o Rust Consulting, Inc.P.O. Box 9444
Minneapolis, MN 55440-94441-877-576-9980
www.CompleteClaimSolutions.com
You cannot exclude yourself on the phone or by e-mail. If you ask to be excluded, you willnot receive a settlement payment, and you cannot object to the settlement. You will not be legallybound by anything that happens in this lawsuit.
13. If I do not exclude myself, can I sue Defendants for the same thing later?
No. Unless you exclude yourself, you give up any right to sue (or bring arbitration claimsagainst) Defendants for the claims that this settlement resolves. If you have a pending lawsuit orarbitration proceeding relating to the claims in this case, it is important that you speak to yourlawyer in that case immediately. You must exclude yourself from this Settlement Class to continueyour own lawsuit or arbitration. Remember, the exclusion deadline is July 6, 2009.
14. If I exclude myself, can I receive money from this settlement?
No. If you exclude yourself, do not send in a claim form to ask for any money.
THE LAWYERS REPRESENTING YOU
15. Do I have a lawyer in this case?
The Court appointed the law firms of: Kaplan Fox & Kilsheimer LLP, 850 Third Avenue,14th Floor, New York, NY 10022, telephone (212) 687-1980; Berger & Montague, P.C., 1622Locust Street, Philadelphia, PA 19103, telephone (215) 875-3000; and Barrack, Rodos & Bacine,3300 Two Commerce Square, 2001 Market Street, Philadelphia, PA 19103, telephone (215) 963-0600, to represent you and other Settlement Class Members in this case. These lawyers are calledCo-Lead Counsel or Class Counsel. You will not be charged separately for these lawyers. If youwant to be represented by your own lawyer, you may hire one at your own expense.
16. How will the lawyers be paid?
Co-Lead Counsel have expended considerable time litigating this case on a contingent feebasis. They have also advanced the expenses of litigation including experts' fees with theexpectation that if they were successful in recovering money for the Settlement Class, they wouldreceive fees and be reimbursed for their expenses from the Settlement Fund, as is customary in thistype of litigation. Accordingly, on or before the July 27, 2009 Fairness Hearing, Co-Lead Counsel
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will file a motion asking the Court to award them attorneys' fees in an amount of up to $37,125,000(or approximately 7.82% of the Settlement Fund), plus any interest earned thereon, together withreimbursement of costs and expenses Co-Lead Counsel incurred and disbursed on behalf of theSettlement Class in an amount estimated not to exceed $2,500,000. For shares purchased bySettlement Class Members on or before January 17, 2008, the requested fees and expenses areestimated to amount to an average of $.073 per damaged common share and $.014 per damagedshare of Preferred Securities. For shares purchased during the Settlement Class Period, but afterJanuary 16, 2008, the requested fees and expenses are estimated to amount to an average of $.007per damaged common share and $.001 per damaged share of Preferred Securities. In addition,Plaintiffs, including the Lead Plaintiff, reserve the right to seek approval from the Court at theFairness Hearing for reimbursement from the Settlement Fund for the reasonable costs and expensesthey have incurred in conducting this litigation on behalf of the Settlement Class.
These average per share figures are based on the estimated number of shares of MerrillLynch common stock and Preferred Securities available in the float, as described in response toQuestion 8(a) above. The Court may award a different amount. Any amounts awarded by the Courtwill come out of the Settlement Fund. Any Settlement Class Member may present objections to themotion for an award of attorneys' fees and reimbursement of expenses.
OBJECTING TO THE SETTLEMENT OR FEES
17. How do I tell the Court that I do not like the settlement Plan of Allocation or therequest for fees?
If you are a Settlement Class Member, you can object to the settlement if you do not like anypart of it, including the Plan of Allocation. You can state why you think the Court should notapprove it. Similarly, you may object to Co-Lead Counsels' motion for approval of attorneys' feesand reimbursement of expenses or any part of it. The Court will consider your views. To object,you must send a written objection stating that you object to the settlement or attorneys' fees in theSecurities Action which is part of In Re Merrill Lynch & Co., Inc. Securities, Derivative and ERISALitigation, Master File No. 07-cv-9633 (JSR)(DFE). Be sure to include your name, address,telephone number, your signature, proof of number of shares of Merrill Lynch common stock orPreferred Securities that you purchased and sold during the Settlement Class Period, and the reasonsyou object to the any part of the settlement or the motion for attorneys' fees and expenses. Yourobjection must be mailed or hand-delivered so that it is received no later than July 6, 2009, and befiled with the Clerk of Court and sent to Co-Lead Counsel and counsel for the Defendants, at eachof the following five addresses:
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Court Plaintiffs' Co-Lead Counsel Merrill Lynch's Counsel
Clerk of the Court Frederic S. Fox, Esq. Jay B. Kasner, Esq.United States District Court Kaplan Fox & Kilsheimer, LLP Skadden, Arps, Slate,U.S. Courthouse 850 Third Avenue, 14th Fir. Meagher & Flom LLP500 Pearl Street, Room 1930 New York, NY 10022 Four Times SquareNew York, NY 10007-1312
New York, NY 10036-and-
Lawrence J. Lederer, Esq.Berger & Montague, P.C.1622 Locust StreetPhiladelphia, PA 19103
-and-
M. Richard Komins, Esq.Barrack, Rodos & Bacine3300 Two Commerce Square2001 Market StreetPhiladelphia, PA 19103
18. What is the difference between objecting and requesting exclusion?
Objecting is simply telling the Court that you do not like something about the settlement, thePlan of Allocation or the motion for attorneys' fees and expenses. You can object only if you stayin the Settlement Class. Excluding yourself is telling the Court that you do not want to be part ofthe Settlement Class. If you exclude yourself, you have no basis to object because the case nolonger affects you. If you exclude yourself, you will be unable to share in the settlement.
THE COURT'S FAIRNESS HEARING
19. When and where will the Court decide whether to approve the settlement?
The Court will hold the Fairness Hearing at 4:00 p.m. on July 27, 2009, at the United StatesDistrict Court for the Southern District of New York, Daniel Patrick Moynihan United StatesCourthouse, 500 Pearl Street, New York, NY 10007. The Fairness Hearing date can be changed bythe Court without further notice to the Settlement Class. At this Fairness Hearing, the Court willconsider whether the settlement is fair, reasonable and adequate and related matters, including howmuch to award to Co-Lead Counsel for attorneys' fees and expenses. You may attend and ask tospeak. If there are objections, the Court will consider them. The Court will listen to people (or theircounsel) who have submitted a written objection and who have submitted a separate written noticeof their intention to appear and speak at the Fairness Hearing ("Notice of Intention to Appear"),mailed or hand delivered so that it is received no later than July 6, 2009 by the Clerk of the Courtand each of the four law firms listed in the chart following Question 17 above. At or after theFairness Hearing, the Court will decide whether to approve the settlement and the Plan of
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Allocation, and how much to award to Co-Lead Counsel for attorneys' fees and expenses anyseparate request for reimbursement of reasonable costs and expenses by the Plaintiffs. We cannotpredict how long these decisions will take.
20. Do I have to come to the Fairness Hearing?
No. Co-Lead Counsel will answer any questions the Court may have on behalf ofSettlement Class Members. But, you are welcome to come at your own expense. If you send anobjection, you do not have to come to Court to talk about it. As long as you mailed your writtenobjection on time, the Court will consider it. You may also attend or pay your own lawyer to attendto speak in support of any objection you may have filed, as long as you have followed theinstructions set forth in the answer to Question 21 below. Nevertheless, it is not necessary for youor your lawyer to attend or speak at the Fairness Hearing.
21. May I speak at the Fairness Hearing?
If you have submitted a written objection to the settlement, the Plan of Allocation, themotion of Co-Lead Counsel for attorneys' fees and expenses or any other aspect of the settlementand follow the instructions set out in response to Questions 17, 19 and 20 above, or the Courtotherwise orders, you (or your counsel) may speak at the Fairness Hearing in support of yourobjection. To do so, along with your written objection, please be certain to also file and serve yourNotice of Intention to Appear as stated in the answers to Questions 17 and 19 above. Unless theCourt allows, you cannot speak at the Fairness Hearing if you exclude yourself or if you do notfollow the instructions set forth in response to Questions 17, 19 and 20 above.
IF YOU DO NOTHING
22. What happens if I do nothing at all?
If you do nothing, and you are a member of the Settlement Class, you will not receive anymoney from this settlement but you will be bound by all judgments entered, whether favorable orunfavorable to the Settlement Class. Unless you exclude yourself, you will not be able to start alawsuit, continue with a lawsuit, or be part of any other lawsuit against Defendants about the legaland factual issues in this case, ever again.
GETTING MORE INFORMATION
23. How do I obtain more information about the settlement?
To obtain more information about the settlement, the claims asserted or any other issuepertaining to this case or the settlement, you may contact the Claims Administrator, RustConsulting, Inc., PO. Box 9444, Minneapolis, MN 55440-9444, or any one of Co-Lead Counsel,Kaplan Fox & Kilsheimer LLP; Berger & Montague, P.C.; or Barrack, Rodos & Bacine, at theiraddresses listed in cover page and in the answer to Question 17 above.
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UNDERSTANDING YOUR PAYMENT — THE PLAN OF ALLOCATION
Settlement Class Members who purchased or acquired any of the fourteen issues of MerrillLynch common stock or Preferred Securities listed below (collectively referred to the "MerrillSecurities") during the Settlement Class Period (October 17, 2006 to December 31, 2008, inclusive)and who otherwise meet all of the requirements of this Plan of Allocation, are eligible to participatein this settlement. Defendants take no position on this Plan of Allocation.
List of Merrill Securities Covered by this Plan of Allocation Symbol CUSIP No.
1. Merrill Lynch Common Stock MER 590188108
Nos. 2 — 14 below are collectively referred to as the "Preferred Securities" in this Notice
2. Merrill Lynch Trust III 7% MER D MERPRD 59021F206
3. Merrill Lynch Trust IV 7.12% MER E MERPRE 59021G204
4. Merrill Lynch Trust V 7.28% MER F MERPRF 59021K205
5. Merrill Lynch Series 1 Preferred MER G MERPRG 59021S703
6. Merrill Lynch Series 2 Preferred MER H MERPRH 59021S638
7. Merrill Lynch Series 3 Preferred MER I MERPRI 59021V839
8. Merrill Lynch Series 4 Preferred MER J MERPRJ 59021V813
9. Merrill Lynch Series 5 Preferred MER L MERPRL 59022C178
10. Merrill Lynch Series 6 Preferred MER N MERPRN 59022Y840
11. Merrill Lynch Series 7 Preferred MER 0 MERPRO 59022Y832
12. Merrill Lynch Capital Trust I 6.45% Preferred MER K MERPRK 590199204
13. Merrill Lynch Capital Trust II 6.45% Preferred MER M MERPRM 590241203
14. Merrill Lynch Capital Trust III 7.375% Preferred MER P MERPRP 59025D207
1. The Net Settlement Fund will be allocated among the Authorized Claimants in accordancewith this "Plan of Allocation." The amount so allocated to each Authorized Claimant constitutes,and is referred to in this Plan of Allocation as, the Authorized Claimant's "Payable Claim." ThePlan of Allocation is based upon Co-Lead Counsels' assessment of the merits and the relativestrengths and weaknesses, including recoverable damages, of the claims of the Members of theSettlement Class. In developing this Plan of Allocation, Co-Lead Counsel have consulted with theireconomic and damages expert and have considered, among other things, the following:
(a) Lead Plaintiff alleges that Defendants inflated the prices of the Merrill Securities byfailing to disclose properly Merrill Lynch's financial condition and by issuing false and misleadingstatements about Merrill Lynch's subprime mortgage and related assets, among other things. LeadPlaintiff further alleges that as a result, at least certain of the Merrill Securities traded at artificiallyinflated prices during the Settlement Class Period.
(b) Co-Lead Counsel, in consultation with their economic and damages expert, haveconcluded that the artificial inflation associated with these misrepresentations was removed bypartial disclosures in several steps, each of which caused a significant price decline in the prices of
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the Merrill Securities, thus causing a loss to Settlement Class Members. The losses occurred on theday of or following the disclosures listed below (collectively, the "Disclosure Dates"):
(1) On October 24, 2007, Merrill Lynch announced that it had written down theasset value of CDOs and U.S. subprime mortgages in its portfolio by $7.9 billion in the thirdquarter of 2007;
(2) On November 2, 2007, industry analysts concluded that Merrill Lynch wouldhave to write-down the asset value of CDOs and U.S. subprime mortgages in its portfolio byan additional $10 billion;
(3) On January 17, 2008, in connection with its release of fourth quarter financialresults, Merrill Lynch announced an additional writedown of mortgage-related assets of $16billion;
(4) On March 28, 2008, industry analysts concluded that Merrill Lynch wouldhave to write down the asset value of CDOs and U.S. subprime mortgages in its portfolio byan additional $6 billion in the first quarter of 2008;
(5) On July 9, 2008 Fitch ratings announced that it had placed Merrill Lynch debton credit watch, due to the cumulative real estate asset write-downs to date, and anticipatedfuture asset write-downs;
(6) On July 14, 2008, it was reported that the SEC might require Merrill Lynch tobuy back billions of dollars worth of securities that Merrill Lynch allegedly sold to its clientsas relatively liquid and secure fixed income securities that allegedly had become illiquid ordeclined in value;
(7) On July 28, 2008, Merrill Lynch announced that in the second quarter of 2008it would record $5.7 billion of additional write-downs in connection with sales of CD0s;and
(8) On August 7, 2008, Merrill Lynch followed announcements by other majorbrokerage firms and announced that it had agreed to buy back at full par value up to $12billion of certain securities that Merrill Lynch allegedly sold to its clients as relatively liquidand secure fixed income securities that had allegedly become illiquid or declined in value.
(c) According to the economic and damages expert retained by Co-Lead Counsel,following each of the eight announcements described in paragraph 1(b) above, one or more of theMerrill Securities declined in value, net of market factors, by a significant amount. The calculationof the portion of these significant declines (the Recognized Loss per share) for each issue of MerrillSecurities, appears in the tables included in Appendix A to this Notice. (See pages [27] and [28]below.).
(d) Under the federal securities laws, persons who purchased Merrill Securities mayrecover, in general, only for losses proximately caused by disclosures correcting Defendants' priormisleading statements, and may not recover for any price declines caused by general market factors
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or by disclosures of other negative information not alleged to have corrected prior misstatements.Similarly, persons who both purchased and sold Merrill Securities prior to a corrective disclosure orbetween corrective disclosures may not have recoverable damages resulting from those transactions.
(e) Accordingly, only those Settlement Class Members who purchased or otherwiseacquired Merrill Securities during the Settlement Class Period and held these Merrill Securities untilafter the next Disclosure Date identified in paragraph 1(b) above and in Appendix A, and who meetthe other conditions of this Plan of Allocation, will be eligible to qualify as Authorized Claimantsentitled to receive distributions from the Net Settlement Fund. For the same reasons, SettlementClass Members will be ineligible to receive distributions from the Net Settlement Fund for thosetransactions in which they: (i) purchased or acquired their Merrill Securities during the SettlementClass Period and also sold the same Merrill Securities before October 24, 2007 (the first identifiedDisclosure Date identified above), (ii) purchased or acquired their Merrill Securities after any one ofthe Disclosure Dates identified above and then sold these Merrill Securities before the nextDisclosure Date; or (iii) purchased or acquired their Merrill Securities on or after August 7, 2008(the last Disclosure Date). Whether or not a Settlement Class Member qualifies as an AuthorizedClaimant, he, she or it will be bound by the settlement and the releases in this action (described inthe answer to Question 11 above) unless he, she or it opts out as set forth in the answer to Question12 above.
2. The Payable Claim will be calculated so that each Authorized Claimant shall receive, on aproportionate basis, that share of the Net Settlement Fund that the Authorized Claimant'sRecognized Loss (as defined below) bears to the total Recognized Losses of all AuthorizedClaimants, subject to the further provisions of this Plan of Allocation set forth below.
3. An Authorized Claimant's recognized loss ("Recognized Loss") is determined by the date(s)the Authorized Claimant purchased and sold Merrill Securities, as set forth below and in the tablesappearing in Appendix A.
4. The "Recognized Loss" shall be calculated for those who purchased any of the MerrillSecurities in the Settlement Class Period and held those Securities through one or more DisclosureDates identified above and in Appendix A on which a significant decline occurred in the price of theMerrill Security due to a relevant corrective disclosure.
5. The tables in Appendix A list for each Merrill Security: the relevant Disclosure Dates andthe maximum amount of the Recognized Loss per share of each Merrill Security attributed to eachDisclosure, if any. For those Merrill Securities that were not trading prior to a specific DisclosureDate, or where there was no corrective price decline attributed to a specific Disclosure Date, thetables in Appendix A show either "N/A" or "$0.00" as the amount of the Recognized Loss per sharefor the relevant Disclosure Date.
6. A Claimants' Recognized Loss for Merrill Securities held through one or more significantprice declines attributed to the Disclosure Dates identified above shall be calculated as follows:
(a) If you have an overall net market gain (sales proceeds exceed purchase cost) on all ofyour transactions in the 14 issues of Merrill Securities during the Settlement Class Period, youshould not file a claim because you will not be eligible to receive a recovery from this settlement.
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Before computing Recognized Losses, the Claims Administrator will first determine if the Claimanthas an overall net market gain on all of its transactions during the Settlement Class Period. Incomputing such net market gains or net market losses, the Claims Administrator: (i) will offsetmarket gains in any one or more of the 14 issues of Merrill Securities against market losses in anyother of the 14 Merrill Securities, and (ii) will treat any Merrill Security retained at the end of theSettlement Class Period as if it were sold for the closing price on December 31, 2008. If there issuch an overall net market gain, the claim will be rejected and not allowed to share in the NetSettlement Fund. If there is an overall market loss from purchases of Merrill Securities, the ClaimsAdministrator will compute the Recognized Loss, if any, on such purchases as indicated insubparagraphs 6(b) through 6(i) below.
(b) For any purchase of Merrill Securities for which there is a market loss, theRecognized Loss is the smaller of: (i) price paid to purchase the Merrill Securities less the closingprice for the relevant issue of Merrill Securities on the date of the last Disclosure Date identifiedabove through which the claimant held his, her or its Merrill Securities, as shown in the relevantcolumn in Appendix A; or (ii) the total of the Maximum Recognized Loss per share figures set forthin the relevant column in Appendix A for each of the Disclosure Dates identified above throughwhich the claimant held his, her or its Merrill Securities.
(c) In computing Recognized Losses, shares of common stock acquired through MerrillLynch's acquisition of First Republic Bank are deemed to have a purchase price of $75.02 per share.Preferred Securities acquired through the First Republic acquisition are deemed to have a purchaseprice of $25 per share.
(d) Any Merrill Securities purchased at any time in the Settlement Class Period that werelater sold during the Settlement Class Period for a gain or that would have a gain if they were sold atthe end of the Settlement Class Period at the closing price on December 31, 2008, will have noRecognized Loss, regardless of whether the sale occurred after one or more of the Disclosure Dates.
(e) If Merrill Securities are sold on the day of a significant price decline attributed to aDisclosure Date identified in paragraph 1(b) above and in Appendix A, the Recognized Lossattributed to that Disclosure Date shall be lesser of: (i) the closing price for that issue of MerrillSecurities on the day before the Disclosure Date less the selling price received, or (ii) theappropriate maximum Recognized Loss per share figure set out on the tables appearing in AppendixA for that Disclosure Date.
(0 In the tables appearing in Appendix A, the maximum Recognized Losses per share ofMerrill Securities held through any of the Disclosure Dates between October 17, 2006 and January16, 2008, are equal to 100% of the significant price declines net of market and industry factorscomputed by the economic and damages expert consulted by Co-Lead Counsel.
(g) In the tables appearing in Appendix A, the Recognized Losses per share of Merrillcommon stock held through any of the Disclosure Dates between January 17, 2008 andDecember 31, 2008 are equal to 10% of the significant price declines, net of market and industryfactors, computed by the economic and damages expert consulted by Co-Lead Counsel. Thisdiscount reflects the relative weight assigned to claims relating to purchases of Merrill Securities onor after January 17, 2008 — following the January 16, 2008 end of the original class period alleged in
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the Amended Complaint.
(h) In the tables appearing in Appendix A, the maximum Recognized Loss per share ofcommon stock issued pursuant to the First Republic acquisition, the maximum Recognized Loss pershare of Preferred Securities that were offered for sale in initial public offerings during theSettlement Class Period or that were issued in exchange for First Republic securities, and themaximum Recognized Loss per common share purchased in a secondary stock offering of MerrillLynch common stock on July 29, 2008 are equal to 125% of the weighted significant price declines,net of market and industry factors, computed by economic and damages expert consulted by Co-Lead Counsel and as weighted under the terms of paragraphs 6(0 and 6(g) above. Investors in thesecategories have claims under the Securities Act of 1933 that have a lower threshold of proof thanclaims alleging fraud, and may be considered, therefore, stronger claims than the fraud claims ofother Settlement Class Members.
(i) Any purchase of Merrill Securities on or after August 7, 2008, will have noRecognized Loss.
7. To conserve administrative costs, no claim will be paid unless the Authorized Claimant isentitled to at least $50 from the Net Settlement Fund.
8. For purposes of determining which Merrill Securities purchased during the Settlement ClassPeriod were sold at any time either during or retained at the close of the Settlement Class Period,purchases and sales of the same issue of Merrill Securities are matched, on a "first-in, first-out"("FIFO") basis, by matching the first Merrill Securities sold against any position of the same issueof Merrill Securities held as of the day prior to the start of the Settlement Class Period, and then ona FIFO basis against any additional shares of the same issue of Merrill Securities purchased duringthe Settlement Class Period based on the assumption that the first share purchased was the firstshare sold. The matching under FIFO will be applied to Merrill Securities irrespective of thedifferent accounts in which the Merrill Securities were purchased and sold unless the title orbeneficial ownership of the accounts differed.
9. The date of purchase or sale is the "contract" or "trade" date as distinguished from the"settlement" date.
10. The restrictions on computing Recognized Losses set out in the following foursubparagraphs apply to all claims. As a practical matter, however, they apply primarily to certaintransactions engaged in by sophisticated traders or certain corporate or institutional claimants:
(a) "Short" sales shall not be recognized for any amount of loss on the cover or purchasetransaction, and no Recognized Loss will be computed for any such covering purchase transaction.
(b) No Recognized Loss will be computed for any transactions the Merrill Securitiesengaged in by market makers or specialists as those terms are defined in the federal securities lawsand SEC regulations.
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(c) No Recognized Loss will be computed for any option premium paid or receivedwhere the shares of Merrill Securities were purchased or sold by reason of having exercised or beenassigned an option.
(d) No Recognized Loss will be computed for that portion of the purchase price of anyshares of Merrill Securities not acquired on the open market and at prices above the market priceson the day(s) of such transactions (for example, as part of an exchange for non-cash consideration).This provision does not apply to shares of Merrill Securities acquired in the merger with FirstRepublic or in initial public offerings as indicated in paragraph 6(i) of this Plan of Allocation above.
11. If you inherited or received a gift of Merrill Securities during the Settlement Class Period,that inheritance or gift is not considered a purchase unless your ancestor or donor was the actualpurchaser of Merrill Securities during the Settlement Class Period. You, as a recipient of a gift orinheritance, and the original purchaser may not both file a claim with regard to the same MerrillSecurities. If both you and the donor (or you and your ancestor's estate) make such a claim, only theclaim filed by the recipient (or heir) will be honored.
12. Merrill Securities "transferred into", "delivered into" or "received into" the claimant'saccount shall NOT be considered as a purchase of Merrill Securities unless the claimant submitsdocuments supporting that the original purchase of the Merrill Securities occurred during theSettlement Class Period. Also, Merrill Securities purchased and subsequently "transferred out" or"delivered out" of claimant's account will NOT be considered part of claimant's claim, as the rightto file for those Merrill Securities belongs to the person or party receiving the Merrill Securities.
13. Nothing in this Plan of Allocation represents an admission by any of the Defendants thatthere is liability or damage of any kind as a result of the allegations in the Amended Complaint orthat the dollar amounts set forth in this Plan of Allocation reflect actual or potential damages to theSettlement Class.
14. Payment in the manner set forth above will be deemed conclusive compliance with theSettlement Stipulation against all Authorized Claimants.
15. All Settlement Class Members who fail to submit valid and timely Proofs of Claim will bebarred from participating in the distribution of the Net Settlement Fund but otherwise will be boundby all of the terms of the Settlement Stipulation, including the terms of any final orders orjudgments entered and the releases given to Defendants and others.
16. The finality of the settlement is not conditioned upon the Court approving the Plan ofAllocation. Any rulings pertaining to the Plan of Allocation shall not operate to terminate thesettlement or affect or delay the settlement from becoming effective, assuming the settlement isapproved by the Court. The Net Settlement Fund shall not be distributed to any Settlement ClassMember until the Court approves the Plan of Allocation.
17. No Authorized Claimant shall have any claim against the Settlement Fund, Lead Plaintiff,Plaintiffs, Co-Lead Counsel, the Claims Administrator, Defendants, Defendants' Counsel, theReleased Parties, or any other agent designated by Co-Lead Counsel based on the distributions madesubstantially in accordance with the Settlement Stipulation, the Plan of Allocation, and further
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orders of Court. In addition, in the interest of achieving substantial justice, Co-Lead Counsel shallhave the right, but not the obligation, to waive what they deem to be formal or technical defects inany Proofs of Claim filed.
SPECIAL NOTICE TO SECURITIES BROKERS AND OTHER NOMINEES
If you purchased Merrill Lynch common stock or any of the listed Preferred Securitiesduring the Settlement Class Period as nominee for a beneficial owner, then within ten (10) days afteryou receive this Notice, you must either: (a) send a copy of this Notice and the accompanying Proofof Claim and Release form by first-class mail to all such beneficial owners; or (b) provide a list,electronically if possible, of the names and addresses of such beneficial owners to the ClaimsAdministrator:
Merrill Lynch & Co., Inc. Securities Litigationc/o Rust Consulting, Inc.
P.O. Box 9444Minneapolis, MN 55440-9444
1-877-576-9980vvww.CompleteClaimSolutions.com
If you chose option (a) above, you may request enough Notice forms from the ClaimsAdministrator (at no charge to you) to complete your mailing and send a written statement to theClaims Administrator confirming that the mailing was made as directed, and identifying the personsand the addresses to whom this notice was sent. You may seek reimbursement of your reasonableexpenses actually incurred in complying with these directives, subject to approval of Co-LeadCounsel or the Court. All communications concerning this matter should be addressed to theClaims Administrator.
INQUIRIES
All inquiries concerning this Notice, the Proof of Claim form, or any other questions bySettlement Class Members should be directed to:
Merrill Lynch & Co., Inc. Securities Litigationc/o Rust Consulting, Inc.
P.O. Box 9444Minneapolis, MN 55440-9444
1-877-576-9980www.CompleteClaimSolutions.com
PLEASE DO NOT CONTACT THE COURT OR THE COURT'S CLERK REGARDINGTHIS NOTICE
Dated: April 6, 2009 By Order of the District Court:Jed Rakoff, Judge
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Appendix A -Table of Eligible Securities, Stock Symbols, Disclosure Dates and Maximum Recognizec
Merrill Lynch Preferred Capital TrustsCommon Stock
Merril(Cumulative Preferred)
MerrillMerrill Merrill Merrill
Shares Lynch Lynch Lynch LynchShares Preferred
Received Preferred Preferred CapitalPlan of Shares Purchased Cap. Tr. IV
9/21/07 Cap. Tr. III Cap. Tr. V - Trust I -Allocation Purchased in 7/29/08 - 7.12%
from First - 7% Cum. 7.28% Cum. 6.45%Paragraph on NYSE New Cum.
Republic Preferred Preferred PreferredReference Offering Preferred
Disclosure Acquisition (Issued (Issued (Issuedon Page _ (Issuedof Notice Dates 1/12/98)
6/16/98)10/29/98) 12/6/06)
MER MER MER MER PFD MER PFE MER PFF MER PFK
rill(b)(1) & 10/24/07 83.130 $3.913 N/A $0.000 $0.000 80.180 $0.5886(0
¶111(b)(2) &11/02/07 $2.910 83.638 N/A $0.520 $0.890 $0.670 $0.500
6(0
$$ 1(b)(3) &01/17/08 $3.530 $4.413 N/A 80.160 80.130 $0.030 80.625
6(0
11$ 1(b)(4) &03/28/08 $0.130 $0.163 N/A $0.044 80.037 80.052 80.025
6(g)
$1 1(b)(5) &07/09/08 80.105 80.131 N/A 80.013 $0.011 $0.041 80.011
6(g)
$$ 1(b)(6) &07/14/08 80.028 80.035 N/A $0.140 80.150 $0.195 $0.103
6(g)
$$ 1(b)(7) &07/28/08 $0.192 80.240 N/A $0.000 80.015 80.025 80.034
6(g)
¶11(b)(8) &08/07/08 $0.154 $0.193 $0.193 $0.000 $0.000 $0.000 80.000
6(g) Purchased
$ 6(i) on or after $0.000 N/A N/A $0.000 $0.000 $0.000 $0.00008/07/08
Total MaximumRecognized Loss/Share If $10.179 812.724 80.193 $0.877 81.233 81.193 $1.885
Purchased Before 1stEvent & Held Past 8/6/08
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Appendix A - Table of Eligible Securities, Stock Symbols, Disclosure Dates and Maximum Recognized
Merrill Lynch Floating Rate Preferred Merrill Lynch Fixed ](Non-Cumulative) (Non-Cumul
Series 2 Series 4 Series (
Plan of Series 5 Series 3Series 1 Floating Floating (Issued 9/2
Allocation Floating (Issued 11/17/05Floating Preferred Preferred with Fir
Paragraph Preferred & 12/8/05)Preferred (Issued (Issued Republic A
Reference (IssuedDisclosure (Issued 11/1/04) 3/14/05 & 11/17/05 &on Page 3/20/07) 6.375%
of Notice Dates 4/4/05) 2/28/06) Preferred 6.70% Prefi
MER PFG MER PFH MER PFJ MER PFL MER PFI MER PI
1 1(b)(1) &10/24/07 $0.340 $0.480 $0.290 $0.000 $0.000 $0.000
6(0
IT 1(b)(2) &11/02/07 $1.080 $0.750 $0.510 $1.663 $2.080 $0.000
6(0
IN 1(b)(3) &01/17/08 $0.560 $0.220 $0.570 $0.000 $0.160 $0.000
6(0
¶1i 1(b)(4) &03/28/08 $0.032 $0.025 $0.050 $0.041 $0.023 $0.000
6(g)
gl(b)(5) &07/09/08 $0.000 $0.000 $0.125 $0.000 $0.031 $0.000
6(g)
I 1(b)(6) &07/14/08 $0.098 $0.105 $0.000 $0.101 $0.093 $0.231
6(g)
TIE 1(b)(7) &07/28/08 $0.008 $0.025 $0.045 $0.030 $0.030 $0.150
6(g)
in 1(b)(8) &08/07/08 $0.000 $0.030 $0.000 $0.000 $0.000 $0.078
6(g) Purchased
I 6(i) on or after $0.000 $0.000 $0.000 $0.000 $0.000 N/A08/07/08
Total MaximumRecognized Loss/Share If $2.118 $1.635 $1.590 $1.835 82.417 80.459
Purchased Before 1stEvent & Held Past 8/6/08
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EXHIBIT A-2
UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK
IN RE MERRILL LYNCH & CO., INC. Master File No. 07-cv-9633 (JSR)(DFE)SECURITIES, DERIVATIVE AND ERISALITIGATION
This Document Relates To:Securities Action, 07cv9633 (JSR)(DFE)
PROOF OF CLAIM AND RELEASE
I. GENERAL INSTRUCTIONS
1. To recover on your claims in the above-captioned action as In Re Merrill Lynch &Co., Inc. Securities, Derivative and ERISA Litigation, Master File No. 07-cv-9633 (JSR)(DFE) (the"Action"), you must complete and sign this Proof of Claim and Release form in the two placesindicated (on pages [11] and [13]) and send it, plus all supporting documents, in a timely fashion tothe Claims Administrator. YOU MUST MAIL YOUR COMPLETED AND SIGNED PROOF OFCLAIM AND SUPPORTING DOCUMENTS, POSTMARKED ON OR BEFORESEPTEMBER 9, 2009, ADDRESSED AS FOLLOWS:
Merrill Lynch & Co., Inc. Securities Litigationc/o Rust Consulting, Inc.
P.O. Box 9444Minneapolis, MN 55440-9444
2. If you fail to timely send to the Claims Administrator a properly completed Proof ofClaim and Release form, your claim may be rejected and you may be precluded from sharing in anyrecovery from the Settlement Fund created in connection with the settlement of this SecuritiesAction.
3. Submission of this Proof of Claim and Release, however, does not assure that youwill share in the proceeds of the Settlement Fund created in the settlement of this Securities Action.Instead, you need to submit a valid Proof of Claim and Release form and your claim must beapproved for payment.
4. If you are NOT a member of the Settlement Class (as defined below), DO NOTsubmit any Proof of Claim and Release form. Similarly, if you otherwise qualify as a member of theSettlement Class but timely and properly submitted a request to be excluded from the Settlement
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Class, you are ineligible to share in the Settlement Fund and you should NOT submit any Proof ofClaim and Release form.
5. If you are a member of the Settlement Class ("Settlement Class Member") andyou do not timely request exclusion, you are bound by the terms of any judgment entered inthe Action, whether or not you submit a Proof of Claim and Release.
II. CLAIMANT IDENTIFICATION
6. The Settlement Class is defined as follows:
All persons who purchased or acquired Merrill Lynch common stock or the PreferredSecurities (listed in paragraph 7 below) during the time period from October 17,2006 through and including December 31, 2008 (the "Settlement Class Period").Excluded from the Settlement Class are the Defendants and their affiliates, TemasekCapital (Private) Limited, Davis Selected Advisors L.P. and their affiliates. Alsoexcluded are present and former employees of Merrill and its subsidiaries whoacquired Merrill securities through exercise of warrants and/or as compensation.
7. To be a Settlement Class Member, you must have purchased shares in one or more ofthe 14 "Eligible Merrill Lynch Securities" identified in the table below:
List of Eligible Merrill Lynch Securities Symbol CUSIP No.1. Merrill Lynch Common Stock MER 590188108
Nos. 2 — 14 below are collectively referred to as the "Preferred Securities" in this Notice
2. Merrill Lynch Trust ffl 7% MER D MERPRD 59021F206
3. Merrill Lynch Trust IV 7.12% MER E MERPRE 59021G204
4. Merrill Lynch Trust V 7.28% MER F MERPRF 590211(205
5. Merrill Lynch Series 1 Preferred MER G MERPRG 59021S703
6. Merrill Lynch Series 2 Preferred MER H MERPRH 59021S638
7. Merrill Lynch Series 3 Preferred MER I MERPRI 59021V839
8. Merrill Lynch Series 4 Preferred MER J MERPRJ 59021V813
9. Merrill Lynch Series 5 Preferred MER L MERPRL 59022C178
10. Merrill Lynch Series 6 Preferred MER N MERPRN 59022Y840
11. Merrill Lynch Series 7 Preferred MER 0 MERPRO 59022Y832
12. Merrill Lynch Capital Trust I 6.45% Preferred MER K MERPRK 590199204
13. Merrill Lynch Capital Trust II 6.45% Preferred MER M MERPRM 59024T203
14. Merrill Lynch Capital Trust Ea 7.375% Preferred MER P MERPRP 59025D207
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8. If you are a Settlement Class Member, you qualify to complete and submit this Proofof Claim and Release form seeking to share in the Settlement Funds as described more fully in theNotice of Pendency and Proposed Settlement of Settlement Class Action, motion for Attorneys' feesand Expenses and Court Hearing (the "Printed Notice") attached to this Proof of Claim and Releaseform. More information about this Securities Action, the claims asserted, the settlement and relatedmatters is set forth in the Printed Notice. You should read the Printed Notice carefully. Thesettlement of this Securities Action is set forth in the parties' Stipulation of Settlement, the terms ofwhich are summarized in the Printed Notice. The parties' Stipulation of Settlement is available toSettlement Class Members by requesting a copy from Co-Lead Counsel as set forth in the PrintedNotice.
9. If you purchased or otherwise acquired the common stock or any of the PreferredSecurities of Merrill Lynch during the Settlement Class Period and held the certificate(s) in yourname, you are the beneficial owner as well as the record owner. If, however, you purchased MerrillLynch common stock or Preferred Securities and the certificate(s) were registered in the name of athird party, such as a nominee or brokerage firm, you are the beneficial owner and the third party isthe record owner.
10. Attached to this Proof of Claim and Release is a form for Settlement Class Membersto complete. Use Part 1 of that form, entitled "Claimant Identification", to identify each recordowner, if different from the beneficial owner of Merrill Lynch common stock or Preferred Securitieswhich forms the basis of this claim. THIS PROOF OF CLAIM AND RELEASE MUST BE FILEDBY THE ACTUAL BENEFICIAL OWNER OR OWNERS, OR THE LEGALREPRESENTATIVE OF SUCH BENEFICIAL OWNER OR OWNERS OF THE MERRILLLYNCH COMMON STOCK OR PREFERRED SECURITIES UPON WHICH THE CLAIM ISBASED.
11. All joint beneficial owners must sign this Proof of Claim and Release form.Executors, administrators, guardians, conservators and trustees must complete and sign this Proof ofClaim and Release form on behalf of persons represented by them and provide with their Proof ofClaim documentation evidencing their authority and their titles or capacities to so act. The SocialSecurity (or Employer Identification) number and telephone number of the beneficial owner may beused in verifying the claim. Failure to provide the foregoing information could delay verification ofyour claim or result in rejection of the claim.
III. PROOF OF CLAIM FORM
12. If you purchased shares of Merrill Lynch common stock or Preferred Securitiesduring the Settlement Class Period and seek to share in the Settlement Fund, you must complete theattached form. You must also list all of the required details of your transaction(s) in Merrill Lynchcommon stock or Preferred Securities. If you need more space or additional schedules, attachseparate sheets giving all of the required information in substantially the same form. Sign and printor type your name on each additional sheet.
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13. On the schedules, provide the requested information with respect to all of yourpurchases and all of your sales of Merrill Lynch common stock or Preferred Securities that tookplace at any time during the Settlement Class Period, whether such transactions resulted in a profitor a loss. You must also supply the number of shares of Merrill Lynch common stock or PreferredSecurities you held as of October 16, 2006 (the day prior to the beginning of the Settlement ClassPeriod), and the number you retained as of the end of trading on the December 31, 2008 (the lastday of the Settlement Class Period and before Merrill Lynch was acquired by Bank of America).Failure to report all such transactions may result in the rejection of your claim.
14. For each one of the Eligible Merrill Lynch Securities, list each transaction in theSettlement Class Period separately and in chronological order, beginning with the earliest. Youmust accurately provide the month, day, and year of the trade date of each transaction you list.
15. If you acquired or disposed of your Merrill Lynch common stock or PreferredSecurities in a transaction other than through an open market transaction, you should supply anyadditional documentation that supports your claim regarding the number or amount of the MerrillLynch common stock or Preferred Securities acquired or disposed of and the value of theconsideration paid or received in the transaction you list.
16. The date of covering a "short sale" is deemed to be the date of purchase of MerrillLynch common stock. The date of a "short sale" is deemed to be the date of sale of Merrill Lynchcommon stock. "Short sales" will not be recognized for any amount of loss on the cover orpurchase transaction, and no Recognized Loss will be computed for any such covering purchasetransaction. The Plan of Allocation is set forth in the attached Printed Notice and describes how theavailable settlement proceeds will be allocated to eligible Settlement Class Members who file validand timely claims
17. Copies of brokers' confirmations or other documentation of your transactions andholdings in Merrill Lynch common stock or Preferred Securities must be attached to your claim.Failure to provide this documentation could delay verification of your claim or result in rejection ofyour claim. Do not attach originals.
18. Settlement Class Members with more than 50 transactions in all of the EligibleMerrill Lynch Securities should contact the Claims Administrator to lean how they may file theirclaim in electronic form. Instructions are also available at www.CompleteClaimSolutions.com.
19. Merrill Lynch common stock or Preferred Securities "transferred into", "deliveredinto" or "received into" the claimant's account will NOT be considered as purchased Merrill Lynchcommon stock or Preferred Securities unless the claimant submits documents supporting that theoriginal purchase of the Merrill Lynch common stock or Preferred Securities occurred during theSettlement Class Period. Also, Merrill Lynch common stock or Preferred Securities purchased andsubsequently "transferred out" or "delivered out" of claimant's account will NOT be considered partof claimant's claim, as the right to file for that Merrill Lynch common stock or Preferred Securitiesbelongs to the person receiving the Merrill Lynch common stock.
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20. The information contained in this Proof of Claim is subject to suchverification as the Claims Administrator may request or as Co-Lead Counsel for the SettlementClass or the Court may direct, and the claimant agrees to cooperate in any such verification. (Theinformation requested herein is designed to provide the minimum amount of information necessaryto process most simple claims. The Claims Administrator may request additional information asrequired to efficiently and reliably calculate your Recognized Claim. In some cases, the ClaimsAdministrator may condition acceptance of the claim based upon the production of additionalinformation.)
UNITED STATES DISTRICT COURT — SOUTHERN DISTRICT OF NEW YORKIn Re Merrill Lynch & Co., Inc. Securities, Derivative and ERISA Litigation, Master File No. 07-cv-
9633 (JSR)(DFE)
PROOF OF CLAIM
Must be Postmarked No Later Than: September 9, 2009
Please Type or Print
PART 1: CLAIMANT IDENTIFICATION
Beneficial Owner's Name (First, Middle, Last)
Joint Beneficial Owner's Name (First, Middle, Last)
If you are a bank or other institution filing on behalf of a third-party, and an account number isneeded to identify the claimant for your records, indicate account number here:
Street Address
City/State/Zip Code
Foreign Province/Country
E-Mail Address (To be used only to contact you about your claim)
Claimant is: Individual Joint Corporation IRA Other (specify)
- - Or_Social Security Number Employer Identification Number
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(day)Area Code Telephone Number (evening)
Area Code Telephone Number
Record Owner's Name (if different from beneficial owner listed above)
Market Maker or Specialist
I was /I was not a Market Maker or a Specialist in Merrill Lynch common stock or PreferredSecurities during the Settlement Class Period.
PART 2A: SCHEDULE OF TRANSACTIONS IN MERRILL LYNCH COMMON STOCK
A. Number of Shares of Merrill Lynch common stock held as of the close of trading on October 16,2006:
B. Number of shares of Merrill Lynch common shares acquired as a result of Merrill Lynch'sacquisition of First Republic Bank:
C. Purchases of Merrill Lynch common stock from October 17, 2006 through December 31, 2008(inclusive):
Trade Date No. of Shares Price Per Share Total CostMonth/Day/Year Purchased (Excl. Commissions/Fees)
1.
2.
3.
4.
5.
6.
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D. Total Shares of Merrill Lynch common stock Purchased from October 17, 2006 throughDecember 31, 2008, including any shares received as a result of Merrill Lynch's acquisition of FirstRepublic Bank:
E. Sales of Merrill Lynch common stock from October 17, 2006 through December 31, 2008,including any sales of shares received as a result of Merrill Lynch's acquisition of First RepublicBank:
Trade Date No. of Shares Price Per Share Total ProceedsMonth/Day/Year Sold (Excl. Commissions/Fees)
1.
2.
3.
4.
5.
6.
F. Total Shares of Merrill Lynch common stock sold from October 17, 2006 through December 31,2008 (inclusive):
G. Number of shares of Merrill Lynch common stock retained at the close of trading on December31,2008:
If you require additional space, attach extra schedules in the same format as above. Sign andprint your name on each additional page. If you have a transaction that did not take place on theopen market, be sure to include any additional documents supporting your claim and theconsideration paid or received in any such transaction.
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PART 2B: SCHEDULE OF TRANSACTIONS IN MERRILL LYNCH PREFERREDSECURITIES
A. For each separate issue of Merrill Lynch Preferred Securities, list the number of shares ofMerrill Lynch Preferred Securities Held as of the close of trading on October 16, 2006:
Issue: No. of shares held:
Issue: No. of shares held:
Issue: No. of shares held:
B. For each separate issue of Merrill Lynch Preferred Securities, list the number of shares of MerrillLynch Preferred Securities acquired as a result of Merrill Lynch's acquisition of First RepublicBank:
Issue: No. of shares held:
Issue: No. of shares held:
Issue: No. of shares held:
C. Purchases of Merrill Lynch Preferred Securities from October 17, 2006 through December 31,2008 (inclusive):
Description of Issue Trade Date No. of Shares Price Per Share Total Cost
or Ticker Symbol Month/Day/Year Purchased (Excl. Commissions/Fees)
1.
2.
3.
4.
5.
6.
D. For each separate issue of Merrill Lynch Preferred Securities, list the total number of sharespurchased from October 17, 2006 through December 31, 2008, including any shares received as aresult of Merrill Lynch's acquisition of First Republic Bank:
Issue: Total no. of shares purchased:
Issue: Total no. of shares purchased:
Issue: Total no. of shares purchased:
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E. Sales of Merrill Lynch Preferred Securities from October 17, 2006 through December 31, 2008,including any sales of shares of Preferred Securities received as a result of Merrill Lynch'sacquisition of First Republic Bank:
Description of Issue Trade Date No. of Shares Price Per Share Total Costor Ticker Symbol Month/Day/Year Purchased (Excl. Commissions/Fees)
1.
2.
3.
4.
5.
6.
F. For each separate issue of Merrill Lynch Preferred Securities, list the total number of shares ofMerrill Lynch Preferred Securities Sold from October 17, 2006 through December 31, 2008(inclusive):
Issue: Total no. of shares Sold: Issue: Total no. of shares Sold: Issue: Total no. of shares Sold:
G. For each separate issue of Merrill Lynch Preferred Securities, list the total number of shares ofMerrill Lynch Preferred Securities retained at the close of trading on December 31, 2008:
Issue: Total no. of shares Sold: Issue: Total no. of shares Sold: Issue: Total no. of shares Sold:
If you require additional space, attach extra schedules in the same format as above. Sign andprint your name on each additional page. If you have a transaction that did not take place on theopen market, be sure to include any additional documents supporting your claim and theconsideration paid or received in any such transaction.
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YOU MUST READ AND SIGN THE RELEASE BELOW.
PART 3: SUBMISSION TO JURISDICTION OF THE COURT AND ACKNOWLEDGMENTS
I/We submit this Proof of Claim and Release under the terms of the Stipulation ofSettlement (the "Stipulation") described in the Notice of Pendency and Proposed Settlement ofSettlement Class Action, Motion for Attorney's Fees and Expenses and Court Hearing (the "PrintedNotice"). I/We understand and agree that the terms used herein have the meanings defined in thePrinted Notice and in the parties' Stipulation. I/We also submit to the jurisdiction of the UnitedStates District Court for the Southern District of New York with respect to my/our claim as aSettlement Class Member and for purposes of enforcing the release set forth herein. 1/We furtheracknowledge that I am (we are) bound by and subject to the terms of any judgment that may beentered in the Securities Action. I/We agree to furnish additional information to the ClaimsAdministrator to support this claim if required to do so. I/We have not submitted any other claimcovering the same purchases of Merrill Lynch common stock or Preferred Securities during theSettlement Class Period and know of no other person having done so on my/our behalf. If thisProof of Claim and Release is submitted on behalf of a corporation, trust or partnership, or otherentity, I am (we are) authorized to sign on behalf of such entity.
PART 4: RELEASE AND COVENANT NOT TO SUE
1. I/We, on my/our own behalf and on behalf of my/our predecessors,successors, assigns, personal representatives, heirs and any other person who purports to claimthrough me/us, release, relinquish and forever discharge all Released Claims and all UnknownClaims (as those terms are defined in the parties' Stipulation of Settlement and described in thePrinted Notice), as against, and in favor of, the Defendants and all of the other Released Parties.I/We understand and agree that I/we and my/our predecessors, successors, assigns, personalrepresentatives, heirs and any other person who purports to claim through me/us, are permanentlybarred and enjoined from instituting, commencing or prosecuting any and all Released Claimsagainst any and all of the Defendants and any and all other Released Parties. With respect to theReleased Claims, I/We wee that upon the effectiveness of the settlement, I/We shall have expresslywaived any and all provisions, rights and benefits conferred by any law of any state or territory ofthe United States, or principle of common law, reflected in, or which is similar, comparable, orequivalent to, Cal. Civ. Code § 1542, which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR
AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR
HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETILEMENT WITH
THE DEBTOR.
I acknowledge that the inclusion of Unknown Claims in the definition of Released Claims wasseparately bargained for and was a key element of the settlement of which this release is a part.
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2. The foregoing release and covenant not to sue shall be of no force or effectunless and until the Court approves the settlement and the settlement becomes effective. Theforegoing release and covenant not to sue shall be in addition to and not in derogation of the releaseset forth in the parties' Stipulation of Settlement and the Order and Final Judgment.
3. l/We hereby warrant and represent that Fwe have not assigned or transferred,or purported to assign or transfer, voluntarily or involuntarily, any matter released pursuant to thisrelease or any other part or portion thereof.
4. I/We hereby declare and warrant, under penalty of perjury under the laws ofthe United States of America, that 1/we have included information about all of my/our transactionsin Merrill Lynch common stock or Preferred Securities that occurred during the Settlement ClassPeriod, including specifically: (i) the number of shares of Merrill Lynch common stock or PreferredSecurities owned by me/us (or the corporation, partnership, trust or other entity on whose behalf thisclaim has been filed) as of the close of trading on October 16, 2006; (ii) the number of shares ofMerrill Lynch common stock or Preferred Securities purchased or acquired during the SettlementClass Period; (iii) the number of shares of Merrill Lynch common stock or Preferred Securities soldduring the Settlement Class Period, and (iv) the number of shares of Merrill Lynch common stock orPreferred Securities retained following the close of trading on December 31, 2008. 1/We alsohereby declare and warrant, under penalty of perjury under the laws of the United States of America:(i) that we are authorized to submit this claim, and, if this claim is submitted on behalf of acorporation, partnership, trust or other entity, that I/we are authorized to file this claim on behalf ofsuch entity, and (ii) that the foregoing information and all other information submitted in this Proofof Claim or Release, including any attachment or supporting documentation, is true and correct.
Dated: Signature of Claimant
(Type or print your name here)
(Signature of Joint Claimant, if any)
(Type or print your name here)
(Capacity of person(s) signing, e.g., BeneficialPurchaser(s), Executor, Administrator, Trustee,Corporate Title, etc.)
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SUBSTITUTE FORM W-9
Request for Taxpayer Identification Number (TIN) and Certification
PART 1
NAME:
Check appropriate box:
Individual/Sole Proprietor Pension Plan
Corporation Partnership Trust
IRA Other (specify)
Enter your Taxpayer Identification Number ("TIN") in the appropriate space. For individuals, thisis your social security number ("SSN"). For sole proprietors, you must show your individual name,but you may also enter your business or "doing business as" name. You may enter either your SSNor your Employer Identification Number ("EIN"). For other entities, it is your EIN.
-- or _ _ _ _Social Security Number Employer Identification Number
(For individuals) (For estates, trusts, corporations, etc.)
PART 2
CERTIFICATION
UNDER THE PENALTIES OF PERJURY, I (WE) CERTIFY THAT:
The number shown on this form is my/our correct Taxpayer Identification Number;and I (we) certify that I am (we are) NOT subject to backup withholding under the provisions ofSection 3406 (a)(1)(C) of the Internal Revenue Code because: (a) I am (we are) exempt frombackup withholding; or (b) I (we) have not been notified by the Internal Revenue Service that I am(we are) subject to backup withholding as a result of a failure to report all interest or dividends; or(c) the IRS has notified me (us) that I am (we are) no longer subject to backup withholding.
NOTE: If you have been notified by the IRS that you are subject to backupwithholding, you must cross out the word "NOT" above and check here D. The Internal RevenueService does not require your consent to any provision of this document other than the certificationrequired to avoid backup withholding.
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NOTE: If you require instructions for Completing Substitute Form W-9, please make awritten request to us at Claims Administrator, Merrill Lynch & Co., Inc. Securities Litigation, c/oRust Consulting, Inc., P.O. Box 9444, Minneapolis, MN 55440-9444. Please note that youraccountant should also be able to provide you with these instructions.
I/We declare under penalty of perjury under the laws of the United States of Americathat the foregoing information supplied by the undersigned is true and correct.
Executed this day of , 200(Month)
in (City) (State / Country)
Signature of Person whose name appears above or its Representative
(Type or print your name here)
(Capacity of person(s) signing, e.g., Beneficial Purchaser(s), Executor,Administrator, Trustee, Corporate Title, etc.)
•
ACCURATE CLAIMS PROCESSINGTAKES A SIGNIFICANT AMOUNT OF TIME.
THANK YOU FOR YOUR PATIENCE.
Reminder Checklist:
1 Please sign the Release on page [11] and W-9 certification on page [13].
2. Remember to attach copies of supporting documentation.
3. Do not send original or copies of stock certificates.
4. Keep a copy of your Proof of Claim form for your records.
5. If you desire an acknowledgment of receipt of your Proof of Claim form,please send it via Certified Mail, Return Receipt Requested.
6. If you move after submitting your Proof of Claim form, it is imperative thatyou please send your new address to the Claims Administrator.
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EXHIBIT A-3
UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK
IN RE MERRILL LYNCH & CO., INC. Master File No. 07-cv-9633 (JSR)(DFE)SECURITIES, DERIVATIVE AND ERISALITIGATION
This Document Relates To:Securities Action, 07cv9633 (JSR)(DFE)
SUMMARY NOTICE OF PENDENCY AND PROPOSED SETTLEMENT OF SECURITIES CLASS ACTION
TO: ALL PERSONS WHO PURCHASED OR OTHERWISE ACQUIRED THECOMMON STOCK OR CERTAIN PREFERRED SECURITIES OF MERRILLLYNCH & CO., INC. ("MERRILL LYNCH") DURING THE PERIOD OCTOBER17, 2006 THROUGH AND INCLUDING DECEMBER 31, 2008 ("SETTLEMENTCLASS PERIOD")
YOU ARE HEREBY NOTIFIED, pursuant to an Order of the United States District
Court for the Southern District of New York, that a hearing will be held on July 27, 2009 at 4:00
p.m. in courtroom 14B before the Honorable Jed Rakoff, United States District Judge of the
Southern District of New York, 500 Pearl Street, New York, NY 10007 (the "Settlement
Hearing") for the purpose of determining . (1) whether the proposed Settlement, consisting of the
sum of $475,000,000 in cash, plus interest, should be approved by the Court as fair, reasonable,
and adequate; (2) whether the proposed plan to distribute the settlement proceeds (the "Plan of
Allocation") is fair, reasonable and adequate; (3) whether the application for an award of
attorneys' fees and reimbursement of expenses should be approved; and (4) whether the
Securities Action should be dismissed with prejudice.
If you purchased or otherwise acquired shares of Merrill Lynch common stock or certain
preferred securities during the Settlement Class Period, your rights may be affected by the
Settlement of this action. If you have not received a detailed Notice of Pendency and Proposed
Settlement of Securities Class Action and a copy of the Proof of Claim and Release, you may
obtain copies by writing to Rust Consulting, Inc., P.O. Box 9444, Minneapolis, MN 55440-9444
or going to the website: www. .com. If you are a member of the Settlement Class, in order
to share in the distribution of the Net Settlement Fund, you must submit a Proof of Claim and
Release no later than September 9, 2009, establishing that you are entitled to recovery. You will
be bound by any judgment rendered in the Securities Action whether or not you make a claim.
Any objection or exclusion to the Settlement, Plan of Allocation, or the Request for
Award of Attorneys' Fees and Reimbursement of Expenses must be mailed or delivered such
that it is received by each of the following no later than July 6, 2009:
Clerk of the CourtU.S. District CourtSouthern District of New York500 Pearl StreetNew York, NY 10007
Frederic S. FoxKAPLAN FOX & KILSHEIMER, LLP850 Third Avenue, 14th FloorNew York, New York 10022Telephone: (212) 687-1980Facsimile: (212) 687-7714
Lawrence J. LedererBERGER & MONTAGUE, P.C.1622 Locust StreetPhiladelphia, PA 19103Telephone: (215) 875-3000Facsimile: (215) 875-4604
M. Richard KominsBARRACK, RODOS & BAC1NE3300 Two Commerce Square2001 Market StreetPhiladelphia, PA 19103
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Telephone: (215) 963-0600Facsimile: (215) 963-0838
Attorneys for State Teachers RetirementSystem of Ohio and Plaintiffs' Co-Lead Counsel
Jay B. KasnerScott D. MusoffSKADDEN, ARPS, SLATE, MEAGHER
& FLOM LLPFour Times SquareNew York, New York 10036Telephone: (212) 735-3000Facsimile: (212) 735-2000
Attorneys for Defendants
If you have any questions about the Settlement, you may write to any of the law firms
listed above as Plaintiffs' Co-Lead Counsel:
PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE
REGARDING THIS NOTICE.
DATED: BY ORDER OF THE UNITED STATESDISTRICT COURT FOR THESOUTHERN DISTRICT OF NEW YORK
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EXHIBIT B
UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK
IN RE MERRILL LYNCH & CO., INC. Master File No. 07-cv-9633 (JSR)(DFE)SECURITIES, DERIVATIVE AND ERISALITIGATION
This Document Relates To:Securities Action, 07-cv-9633 (JSR)(DFE)
[PROPOSED] ORDER AND FINAL JUDGMENT
On the day of , a hearing having been held before this Court to determine- (1)
whether the terms and conditions of the Stipulation and Agreement of Settlement dated February
17, 2009 (the "Settlement Stipulation") are fair, reasonable and adequate for the settlement of all
claims asserted by the Settlement Class against Defendants Merrill Lynch & Co., Inc.
("Merrill"); Merrill Lynch, Pierce, Fenner & Smith, Inc.; E. Stanley O'Neal; Gregory J. Fleming;
Ahmass L. Fakahany; Jeffrey Edwards; Citigroup Global Markets; Morgan Stanley & Co.; UBS
Securities; Wachovia Capital Markets LLC; Deloitte & Touche LLP; Merrill Lynch Capital
Trust I; Merrill Lynch Capital Trust II; and Merrill Lynch Capital Trust III; (2) whether
judgment should be entered dismissing the Securities Action on the merits and with prejudice, in
favor of the Defendants and as against all persons or entities who are members of the Settlement
Class herein who have not requested exclusion therefrom; (3) whether to approve the proposed
Plan of Allocation as a fair and reasonable method to allocate the settlement proceeds among
members of the Settlement Class; and (4) whether and in what amount to award attorneys' fees
and reimbursement of expenses to Co-Lead Counsel;
The Court having considered all matters submitted to it at the hearing and otherwise; and
It appearing that a notice of the Settlement Hearing substantially in the form approved by
the Court in the Order Preliminarily Approving Settlement and Providing for Notice
("Preliminary Approval Order") was mailed to all persons and entities reasonably identifiable
who purchased or acquired the common stock or Preferred Securities of Merrill that are the
subject of the Securities Action, during the Settlement Class Period, except those persons and
entities which validly excluded themselves from the definition of the Settlement Class; and
It appearing that a Summary Notice of the hearing substantially in the form approved by
the District Court in the Preliminary Approval Order was published in accordance with the
Preliminary Approval Order and the specifications of the Court;
NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED
THAT:
1. The Court has jurisdiction over the subject matter of the Securities Action, Lead
Plaintiff, all Settlement Class Members and the Defendants.
2. All capitalized terms used but not otherwise defined herein shall have the same
meanings as set forth and defined in the Settlement Stipulation.
3. The Court finds that the prerequisites for a class action under Rule 23 (a) and
(b)(3) of the Federal Rules of Civil Procedure have been satisfied in that: (a) the number of
Settlement Class Members is so numerous that joinder of all members thereof is impracticable;
(b) there are questions of law and fact common to the Settlement Class; (c) the claims of the
Lead Plaintiff are typical of the claims of the Settlement Class it seeks to represent; (d) Lead
Plaintiff fairly and adequately represents the interests of the Settlement Class; (e) the questions
of law and fact common to the members of the Settlement Class predominate over any questions
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affecting only individual members of the Settlement Class; and (0 a class action is superior to
other available methods for the fair and efficient adjudication of the controversy.
4. Pursuant to Rule 23(a) and (b)(3) of the Federal Rules of Civil Procedure and for
the purposes of the Settlement only, the Securities Action, which is part of this consolidation
litigation, is hereby certified as a class action on behalf of all persons who purchased or acquired
the common stock or Preferred Securities of Merrill from October 17, 2006 through and
including December 31, 2008. Excluded from the Settlement Class are the Defendants and their
affiliates, and Temasek Capital (Private) Limited, Davis Selected Advisors L.P. and their
affiliates. Also excluded are present and former employees of Merrill and its subsidiaries who
acquired Merrill securities through exercise of warrants and/or as compensation. Also excluded
from the Settlement Class are any Settlement Class Members who have excluded themselves by
filing a timely, valid request for exclusion.
5. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, and for purposes of
the Settlement only, Lead Plaintiff is certified as class representative, and the Co-Lead Counsel
previously selected by Lead Plaintiff and appointed by the Court are hereby appointed as Co-
Lead Counsel for the Settlement Class.
6. The Court hereby finds that the notice provided to the Settlement Class provided
the best notice practicable under the circumstances. Said notice provided due and adequate
notice of these proceedings and the matters set forth herein, including without limitation the
Settlement and Plan of Allocation, to all persons entitled to such notice to the fullest extent
practicable and said notice fully satisfied the requirements of Rule 23 of the Federal Rules of
Civil Procedure, the Private Securities Litigation Reform Act, and the requirements of due
process. A full opportunity has been offered to the Settlement Class Members to object to the
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proposed Settlement and matters related thereto, and and to participate in the hearing thereon.
Thus, it is hereby determined that all Members of the Settlement Class are bound by this Order
and Final Judgment, except those persons set forth on Exhibit A.
7. The Settlement Stipulation is approved as fair, reasonable and adequate, and in
the best interests of the Settlement Class. Lead Plaintiff and the Defendants are directed to
consummate the Settlement in accordance with the terms and provisions the Settlement
Stipulation.
8. The Securities Action is hereby dismissed with prejudice and without costs. Lead
Plaintiff and the Settlement Class Members , on behalf of themselves, their heirs, joint tenants,
tenants in common, beneficiaries, executors and administrators, successors and assigns, hereby
release and forever discharge all claims, actions, debts, demands, set-offs (both legal and
equitable), causes of action, rights or liabilities whatsoever (including, but not limited to, any
claims for damages, equitable relief, interest, attorneys' fees, expert or consulting fees, and any
other costs, expenses or liability whatsoever), whether based on federal, state or local statutory or
• common law or any other law, rule or regulation, whether fixed or contingent, accrued or un-
accrued, liquidated or un-liquidated, at law or in equity, matured or un-matured, whether direct,
representative, class, individual or in any other form, including both known claims and Unknown
Claims, that have been asserted in the Securities Action by the Settlement Class Members or any
of them against any of the Released Parties, or which otherwise were or could have been at issue
in the Securities Action, or that have been or could have been asserted in any forum by the
Settlement Class Members or any of them against any of the Released Parties which arise out of
or relate to or are based in whole or in part upon any of the allegations, transactions, facts,
matters or occurrences, representations, disclosures, statements oromissions alleged, involved,
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set forth, or referred to in the Amended Complaint, in connection with such Settlement Class
Members' purchase or acquisition of Merrill common stock or the Preferred Securities during the
Settlement Class Period. Released Claims includes only the claims that were or could have been
asserted by the Plaintiffs in the Amended Complaint on behalf of purchasers or acquirers during
the Settlement Class Period of only Merrill common stock and the Preferred Securities.
Released Claims specifically excludes the claims asserted in (1) all derivative actions
consolidated into the docket number 07cv9696 by order dated March 12, 2008, the derivative
action captioned Lambrecht v. O'Neal, 08cv6582, and all derivative actions involving
substantially similar facts; (2) the ERISA actions consolidated into the docket number
07cv10268 by order dated March 12, 2008; and (3) the claims relating to the following securities
asserted in the action captioned Louisiana Sheriffs' Pension and Relief Fund, et al. v. Merrill
Lynch & Co., Inc., et aL, 08cv09063: 8.625% Non-Cumulative Preferred Securities, Series 8
(CUS1P: 59023V373); Medium-Term Notes, Series C (CUSIP: 59018YYR6); Medium-Term
Notes, Series C (CUSFP: 59018YYW5); 6.11% Subordinated Notes due January 29, 2037
(CUSIP: 59022CAJ2); 5.70% Subordinated Notes due May 2, 2017 (CUSFP: 59022CCS0);
Medium-Term Notes, Series C (CUS1P: 59018YE72); 6.05% Medium-Term Notes, Series C
(CUSIP: 59018YJ36); 6.40% Medium-Term Notes, Series C (CUSIP: 59018YJ69); Accelerated
Return Notes (CUSIP: 59022W356); 5.45% Medium-Term Notes, Series C (CUS1P:
59018YM40); 6.15% Medium-Term Notes, Series C (CUSLP: 59018YN56); 6.875% Medium-
Term Notes, Series C (CUSIP: 59018YN64); 7.75% Subordinated Notes (CUSLP: 59023VAA8).
Released Claims also specifically excludes the claims asserted in the securities actions captioned,
Sklar v. Bank of America Corp., et al., 09-cv-580 (S.D.N.Y. filed Jan. 21, 2009) Boorn v. Bank
of America Corp., et al., 09-cv-0159 (N.D. Ga. filed Jan. 21, 2009), and Zitner v. Bank of
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America Corp., et aL, 09-cv-00881 (S.D.N.Y. filed Jan. 30, 2009), as well as any actions
involving substantially similar facts. It is expressly understood that no release is given to any
Released Party in connection with any purchase, acquisition, or retention of Bank of America
Corp. ("BAC") securities by any purchaser, acquirer, or holder of BAC securities.
9. Lead Plaintiff and the Settlement Class Members are hereby permanently barred
and enjoined from prosecuting the Released Claims against the Released Parties.
10. The Court finds that all parties and their counsel have complied with each
requirement of Rule 11 of the Federal Rules of Civil Procedure as to all proceedings herein.
11. Neither this Order and Final Judgment, the Settlement Stipulation, nor any of the
negotiations, documents or proceedings connected with them shall be:
(a) referred or used against the Released Parties or against the Settlement Class, or
any Member thereof, as evidence of wrongdoing by anyone;
(b) construed against the Released Parties or the Settlement Class, or any Member
thereof, 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; or
(c) construed as, or received in evidence as, an admission, concession or presumption
against the Settlement Class, or any Member thereof, that any of their claims are
without merit or that damages recoverable under the Amended Complaint would
not have exceeded the Settlement Fund.
12. Without further order of the Court, the parties may agree to reasonable extensions
of time to carry out any of the provisions of the Settlement Stipulation.
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13. There is no just reason for delay in the entry of this Order and Final Judgment,
and immediate entry by the Clerk of the Court is directed pursuant to Rule 54(b) of the Federal
Rules of Civil Procedure.
14. The finality of this Order and Final Judgment shall not be affected, in any manner,
by rulings that the District Court may make on the Plan of Allocation or Co-Lead Counsel's
application for an award of attorneys' fees and reimbursement of expenses.
15. In the event that the Settlement does not become final and effective in accordance
with the terms and conditions set forth in the Settlement Stipulation, then this Order and Final
Judgment shall be rendered null and void and be vacated, and the Settlement and all orders
entered in connection therewith shall be rendered null and void (except as provided in Ifif 28, 31
in the Settlement Stipulation), and the parties shall be returned to their respective positions
immediately prior to the execution of the Settlement Stipulation.
16. Exclusive jurisdiction is hereby retained over the parties and the Settlement Class
Members for all matters relating to the Securities Action, including the administration,
interpretation, effectuation or enforcement of the Settlement Stipulation and this Order and Final
Judgment, and including any application for fees and expenses in this litigation including without
limitation any such fees and expenses incurred in connection with administering and distributing
the settlement proceeds to the Settlement Class Members.
Dated: New York, New York , 2009
UNITED STATES DISTRICT JUDGE
JED S. RAKOFF
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