UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION
In re NEXTCARD, INC. SECURITIES
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LITIGATION
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This Document Relates To:
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ALL ACTIONS.
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Master File No. C-01-21029-JF(PVT)
CLASS ACTION
NOTICE OF PROPOSED SETTLEMENT OF
CLASS ACTION WITH JEREMY LENT
IF YOU PURCHASED NEXTCARD, INC. SECURITIES BETWEEN APRIL 19, 2000 AND OCTOBER 30, 2001, YOU
COULD GET A PAYMENT FROM A CLASS ACTION SETTLEMENT.
A federal court authorized this Notice. This is not a solicitation from a lawyer.
Security and Time Period: NextCard, Inc. (“NextCard”) common stock purchased between April 19, 2000 and
October 30, 2001.
Settlement Fund: $635,000.00 in cash. $23.2 million was previously recovered pursuant to a Court-approved
settlement with Ernst & Young LLP (“E&Y”) making the combined settlement proceeds $23,835,000.00. If the settlement with
Jeremy Lent is approved, he will pay $635,000.00. Your total recovery will depend on the amount of stock purchased and the
timing of your purchases and any sales. Based on the number of eligible shares that have filed claims in connection with the
previous settlement, the estimated average recovery per share from the combined settlements will be approximately $1.08 before
deduction of Court-approved fees and expenses.
Reasons for Settlement with Lent: Avoids the risks associated with continued litigation, including danger of less or
no recovery from Lent.
If the Case Against Lent Had Not Settled: Continuing with the case against Lent could have resulted in a finding
that Lent was not liable for the alleged violations of the securities laws. In addition, the two sides do not agree on the amount
of money that could have been won if Lead Plaintiffs prevailed against Lent at trial.
Attorneys’ Expenses: Court-appointed Co-Lead Counsel will ask the Court for reimbursement of out-of-pocket
expenses not to exceed $234,000 to be paid from the Settlement Fund. If the above amounts are requested and approved by the
Court, the average cost per share will be $0.01.
Deadlines:
Submit Claim:
August 20, 2007 *If you previously submitted a valid claim
form related to the settlement with E&Y, you should not
submit a new claim form.
File Objection:
July 6, 2007 *If you previously submitted an objection
related to the settlement with E&Y, that objection will not
automatically be considered in connection with this
settlement.
Court Hearing on Fairness of Settlement:
July 20, 2007
Your rights are affected even if you do not act. Please read this carefully.
I.
More Information:
www.rg2claims.com or
Claims Administrator:
Co-Lead Counsel:
NextCard Securities Litigation
c/o RG/2 Claims Administration LLC
Claims Administrator
P.O. Box 59479
Philadelphia, PA 19102-9479
Rick Nelson
Shareholder Relations
Lerach Coughlin Stoia Geller Rudman & Robbins LLP
655 West Broadway, Suite 1900
San Diego, CA 92101
INTRODUCTION
A securities case was brought against Jeremy Lent (“Lent”) and other defendants by Lead Plaintiffs Jacksonville Police
& Fire Pension Fund and M. Richard Andrews (“Lead Plaintiffs”) on behalf of themselves and a class that includes people who
purchased the securities of NextCard between April 19, 2000 and October 30, 2001, inclusive (the “Settlement Class”). It
alleges violations under §§10(b) and 20(a) of the Securities Exchange Act of 1934. Lead Plaintiffs, on behalf of themselves and
the Settlement Class, have agreed to reach a settlement with defendant Lent, subject to Court approval. If approved, this
settlement will become effective only if and when, among other things, the claims against certain Remaining Defendants are
dismissed.
The Court in charge of the case is the United States District Court for the Northern District of California, and the case
is known as In re NextCard, Inc. Securities Litigation, Master File No. C-01-21029-JF(PVT). Lead Plaintiffs, on behalf of
themselves and a settlement class, previously settled with E&Y and E&Y paid $23.2 million. A Notice of Pendency and
Proposed Partial Settlement of Class Action explaining the action and the allegations was previously mailed to potential
Settlement Class Members when the E&Y settlement was reached. A copy of that notice can be found at www.rg2claims.com.
More information can also be obtained by contacting the Claims Administrator or Co-Lead Counsel at the above addresses.
II.
WHO IS IN THE SETTLEMENT
On December 2, 2005, the Court certified a Settlement Class for purposes of settlement of this Litigation. The
Settlement Class includes all Persons who purchased NextCard securities between April 19, 2000 and October 30, 2001, and
who were damaged thereby, except those Persons and entities that are excluded, as described below.
You are not a Settlement Class Member if you are Lent, one of the Remaining Defendants (John V. Hashman, Yinzi Cai
or Bruce C. Rigione), NextCard, E&Y, a member of the immediate family of Lent or a Remaining Defendant, an entity in which
Lent, a Remaining Defendant, NextCard or E&Y has or had a controlling interest, a current or former director or officer of
NextCard or E&Y, or a legal representative, heir, successor, or assign of any excluded person or entity. You are also not a
Settlement Class Member if you timely and validly requested exclusion from the Settlement Class pursuant to the Notice of
Pendency and Proposed Partial Settlement of Class Action sent to Settlement Class Members on October 5, 2005.
III.
RECOVERY
Under the proposed settlement with Lent, Lent will pay $635,000.00. Lent denies that he has done anything giving rise
to liability. After deduction for attorneys’ expenses, the remainder will be distributed to Settlement Class Members pursuant to
the Plan of Allocation approved by the Court on December 2, 2005. Based on the number of damaged shares that have already
submitted claims, the average recovery from the combined settlements is $1.08 per damaged share. If a significant number of
new claims are received, these estimates will decrease.
If you want to receive money from this settlement and have not already submitted a claim form, you must complete and
submit a claim form with supporting documentation, postmarked by August 20, 2007, to RG/2 Claims Administration at the
address listed above. A claim form is included. You can get extra copies at www.rg2claims.com or by calling RG/2 at 215/9791620.
If you are a Settlement Class Member and have not already submitted a claim form and do not submit a valid claim
form postmarked by August 20, 2007, you will not be paid and you will lose your right to file your own lawsuit about the claims
in this case.
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The Court previously approved of a plan of allocation for distribution of the settlement proceeds obtained pursuant to
the settlement with E&Y. Under the Plan of Allocation, a claim will be calculated as follows:
(a)
For shares of NextCard, Inc. common stock purchased on April 19, 2000 through October 30, 2001, and
(i)
sold on or before October 30, 2001, the claim per share is zero.
(ii)
retained at the close of trading on October 30, 2001, the claim per share is $4.469 (October 31, 2001
Price Decline).
(b)
For Settlement Class Members who held shares at the beginning of the Settlement Class Period or made
multiple purchases or sales during the Settlement Class Period, the first-in, first-out (“FIFO”) method will be applied to such
holdings, purchases and sales for purposes of calculating a claim. Under the FIFO method, sales of shares during the Settlement
Class Period will be matched, in chronological order, first against shares held at the beginning of the Settlement Class Period.
The remaining sales of shares during the Settlement Class Period will then be matched, in chronological order, against shares
purchased during the Settlement Class Period.
(c)
A Settlement Class Member will be eligible to receive a distribution only if a Settlement Class Member had a
net loss, after all profits from transactions in NextCard common stock during the Settlement Class Period are subtracted from
all losses.
The payment you get will reflect your pro rata share after deduction of preliminarily-approved fees and expenses and
current expenses approved by the Court. Depending on the number of eligible shares that participate in the settlement and when
those shares were purchased and sold, the estimated average payment from the combined settlements will be approximately
$1.08 for each share before deduction of Court-approved fees and expenses. If a substantial number of Settlement Class
Members send in new claim forms, you could get less money.
IV.
OUTCOME OF CASE
The parties disagree on both liability and damages as well as on the average damages per share that would be
recoverable if the Settlement Class were to prevail. The potential damages vary depending on the assumptions and methodologies used. The parties disagree about: (1) the method for determining whether NextCard securities were artificially inflated
during the relevant period; (2) the amount of any such inflation; (3) the extent that various facts alleged by Lead Plaintiffs were
materially false or misleading; and (4) the extent that various facts alleged by Lead Plaintiffs influenced the trading price of
NextCard securities during the relevant period.
V.
ATTORNEYS’ FEES AND COSTS
The Court appointed the law firms of Lerach Coughlin Stoia Geller Rudman & Robbins LLP and Bernstein Litowitz
Berger & Grossmann LLP (“Co-Lead Counsel”) to represent you and other Settlement Class Members. If you want to be
represented by your own lawyer, you may hire one at your own expense. Co-Lead Counsel will not seek attorneys’ fees from
the Settlement Fund, but will seek reimbursement of their out-of-pocket expenses up to $234,000 ($0.01 per share), which were
advanced in connection with the Litigation. Such sums as may be approved by the Court will be paid from the Settlement Fund.
The Court may award less than this amount.
VI.
HEARING
The Court will hold a hearing on July 20, 2007, at 9:00 a.m., at the United States Courthouse, 280 South First Street,
San Jose, California. At this hearing the Court will consider whether the settlement is fair, reasonable and adequate. If you are
a Settlement Class Member, you can object to the settlement if you don’t like any part of it. To object, you must send a letter
saying that you object to the settlement with Lent in In re NextCard, Inc. Securities Litigation, Master File No. C-01-21029JF(PVT). You must include your name, address, telephone number, your signature, the number of shares of NextCard common
stock purchased and sold between April 19, 2000 and October 30, 2001, inclusive, and the reasons you object to the settlement.
Any objection to the settlement must be mailed or delivered such that it is received by each of the following no later than July
6, 2007:
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Court:
Co-Lead Counsel for Plaintiffs:
Clerk of the Court
United States District Court
Northern District of California
United States Courthouse
280 South First Street
San Jose, CA 95113
Joy Ann Bull
LERACH COUGHLIN STOIA GELLER
RUDMAN & ROBBINS LLP
655 W. Broadway, Suite 1900
San Diego, CA 92101
Counsel for Lent:
Shirli Fabbri Weiss
DLA PIPER US LLP
401 B Street, Suite 1700
San Diego, CA 92101-4297
If there are objections, the Court will consider them. Judge Fogel will listen to people who have asked to speak at the
hearing. The Court will also consider how much to pay to Co-Lead Counsel. The Court may decide these issues at the hearing
or take them under consideration.
You may ask the Court for permission to speak at the fairness hearing. To do so, you must send a letter saying that it
is your intention to appear in In re NextCard, Inc. Securities Litigation, Master File No. C-01-21029-JF(PVT). Be sure to
include your name, address, telephone number, your signature, and the number of shares of NextCard common stock purchased
between April 19, 2000 and October 30, 2001. Your notice of intention to appear must be received no later than July 6, 2007,
and be sent to the Clerk of the Court, Co-Lead Counsel, and Lent’s counsel, at the three addresses listed above. You cannot
speak at the hearing if you have excluded yourself from the Settlement Class.
VII.
GETTING MORE INFORMATION
This Notice summarizes the proposed settlement. More details are in the Stipulation of Settlement with Jeremy Lent
dated as of April 18, 2007. You can get a copy of this stipulation by writing to Rick Nelson, c/o Lerach Coughlin Stoia Geller
Rudman & Robbins LLP, 655 West Broadway, Suite 1900, San Diego, CA 92101, or from the Clerk’s office at the United States
District Court for the Northern District of California, 280 South First Street, San Jose, California during regular business hours.
You can: (1) call 619/231-1058 or write to Rick Nelson, Lerach Coughlin Stoia Geller Rudman & Robbins LLP, 655
West Broadway, Suite 1900, San Diego, CA 92101; or (2) visit the website at www.rg2claims.com.
DO NOT TELEPHONE THE COURT REGARDING THIS NOTICE
SPECIAL NOTICE TO NOMINEES
If you held any NextCard common stock purchased between April 19, 2000 and October 30, 2001 as nominee for a
beneficial owner, then, within ten (10) days after you receive this Notice, you must either: (1) send a copy of this Notice by first
class mail to all such Persons; or (2) provide a list of the names and addresses of such Persons to RG/2 at the address listed
above. If you choose to mail the Notice and Proof of Claim yourself, you may obtain from the Claims Administrator (without
cost to you) as many additional copies of these documents as you will need to complete the mailing. Regardless of whether you
choose to complete the mailing yourself or elect to have the mailing performed for you, you may obtain reimbursement for or
advancement of reasonable administrative costs actually incurred or expected to be incurred in connection with forwarding the
Notice and which would not have been incurred but for the obligation to forward the Notice, upon submission of appropriate
documentation to the Claims Administrator.
DATED: April 27, 2007
BY ORDER OF THE COURT
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
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