2103 JUL 1 2 6 t j IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO EASTERN DIVISION VIJAY SHERMA, on behalf of herself and all others similarly situated , Plaintiff , V . COLE NATIONAL CORPORATION, et al., Defendants . Case No . 1 :02cv239 7 Judge John R . Adams D O Jill, 21 203 o'clock M at CLERK OF COUI~' `~ STIPULATION OF SETTLEMENT U .S . DISTRICT COUR1 AKRO N This Stipulation of Settlement (the "Stipulation "), dated as of July 3, 2003, is submitte d pursuant to Rule 23 of the Federal Rules of Civil Procedure . Subject to the approval of th e Court, this Stipulation is entered into by and among the following parties (as defined further i n §V hereof) to the above-entitled Litigation : (i) The Lead Plaintiff (on behalf of herself and each of the Settlement Class Members), by and through her counsel of record in the Litigation ; and (ii) the Defendants, by and through their counsel of record in the Litigation . The Stipulation i s intended by the Settling Parties to fully, finally and forever resolve, discharge and settle th e Released Claims (as defined herein), upon and subject to the terms and conditions hereof . THE LITIGATION . On December 6, 2002, a complaint was fled in the United States District Court for th e Northern District of Ohio, Eastern Division (the "Court"), as a proposed class action on behalf of CL[-] 092073v2
Transcript
2103 JUL 1 2 6
t j
IN THE UNITED STATES DISTRICT COURTFOR THE NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
VIJAY SHERMA, on behalf of herselfand all others similarly situated ,
Plaintiff,
V .
COLE NATIONAL CORPORATION,et al.,
Defendants .
Case No . 1 :02cv2397
Judge John R. Adams
DOJill, 21 203
o'clock Mat CLERK OF COUI~' `~
STIPULATION OF SETTLEMENT U.S. DISTRICT COUR1AKRON
This Stipulation of Settlement (the "Stipulation "), dated as of July 3, 2003, is submitted
pursuant to Rule 23 of the Federal Rules of Civil Procedure . Subject to the approval of the
Court, this Stipulation is entered into by and among the following parties (as defined further i n
§V hereof) to the above-entitled Litigation : (i) The Lead Plaintiff (on behalf of herself and each
of the Settlement Class Members), by and through her counsel of record in the Litigation ; and
(ii) the Defendants, by and through their counsel of record in the Litigation. The Stipulation i s
intended by the Settling Parties to fully, finally and forever resolve, discharge and settle th e
Released Claims (as defined herein), upon and subject to the terms and conditions hereof .
THE LITIGATION .
On December 6, 2002, a complaint was fled in the United States District Court for th e
Northern District of Ohio, Eastern Division (the "Court"), as a proposed class action on behalf of
CL[-] 092073v2
persons who purchased common stock of Cole National Corporation ("Cole National") during a
defined period of time .
On June 25, 2003, a consolidated, amended class action complaint in the litigation (the
"Complaint") was filed with the Court : Vijay Sherma v . Cole National Corporation, et al. , Case
No . 1 :02cv2397 . That action is referred to herein as the Litigation . The Complaint generally
alleges, among other things, that Defendants issued materially false and misleading financia l
statements and other statements regarding Cole National's financial condition during th e
purported class period. The Complaint further alleges that the Lead Plaintiff and the Settlement
Class Members purchased the common stock of Cole National at prices that were artificiall y
inflated as a result of Defendants' alleged misrepresentations and omissions, purportedly i n
violation of §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder. The Class, for purposes of this Stipulation and Settlement only ,
consists of all persons who purchased the common stock of Cole National between January 31 ,
1998 , and May 16, 2003, inclusive (the "Class Period") . Excluded from the Class are the
Defendants (as defined herein), any entity in which a Defendant has a controlling interest or is a
parent or subsidiary of or is controlled by Cole National, Cole National's officers and directors ,
and the legal representatives , heirs, predecessors , successors and assigns of any such excluded
party (the "Class"). The Complaint names as Defendants Cole National Corporation, Jeffre y
Cole, Larry Pollock , Lawrence Hyatt, and Thomas T .S . Kaung .
II . PRETRIAL PROCEEDINGS AND DISCOVERY IN THE LITIGATION .
A. Pretrial Proceedings .
On February 25, 2003, the Court entered an order appointing Vijay Sherma as Lea d
Plaintiff and approving Schiffrin & Barroway, LLP, as Lead Counsel ("Lead Counsel") an d
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Weisman, Kennedy and Berris Co., LPA, as Liaison Counsel . On June 25, 2003, Lead Plaintiff
filed a consolidated, amended class action complaint .
B . Discovery, Investigation And Research .
Counsel for the Lead Plaintiff has conducted discovery and investigation of the claim s
pleaded in the Litigation . This discovery and investigation has included, inter alia, ( i) inspection
and analysis of approximately six thousand pages of documents produced by Defendants ; (ii)
inspection and analysis of documents produced by nonparties, including, among others ,
regulatory agencies, Cole National' s competitors, and securities analysts ; ( iii) consultation with
experts; (iv) review of public filings, annual reports, and other public statements ; (v) interview s
of percipient witnesses ; and (vi) research of the applicable law with respect to the claims asserte d
in the Complaint and the potential defenses thereto .
III . DEFENDANTS' DENIALS OF WRONGDOING AND LIABILITY .
The Defendants have denied and continue to deny each and all of the claims an d
contentions alleged by the Lead Plaintiff in the Litigation . The Defendants also have denied and
continue to deny, inter alia, that they made any material misstatements or omissions wit h
scienter, that the price of Cole National common stock was artificially inflated by reasons o f
alleged misrepresentations , nondisclosures or otherwise, or that the Lead Plaintiff or th e
Settlement Class were harmed in any way by the conduct alleged in the Complaint .
Nonetheless , the Defendants have concluded that it is desirable that the Litigation be fully
and finally settled in the manner and upon the terms and conditions set forth in this Stipulation to
limit further expense, inconvenience and distraction, to dispose of burdensome and protracte d
litigation , and to permit the operation of Cole National' s business without further expensive
litigation and the distraction and diversion of Cole National's executive personnel with respect t o
matters in issue in the Litigation . The Defendants also have taken into account the uncertaint y
CLI-1092073v2
and risks inherent in any litigation, especially in complex cases like this Litigation . The
Defendants have, therefore, determined that it is desirable and beneficial to them that th e
Litigation be settled in the manner and upon the terms and conditions set forth in this Stipulation .
There has been no adverse determination by any Court as to the merits of the claims asserted b y
the Lead Plaintiff against the Defendants .
IV. CLAIMS OF THE LEAD PLAINTIFF AND THE SETTLEMENT CLASS ANDBENEFITS OF SETTLEMENT .
The Lead Plaintiff believes that the claims asse rted in the Litigation have merit and that
the evidence developed to date and the applicable law supports the claims asserted . Lead
Counsel for the Lead Plaintiff recognize and acknowledge, however, the expense and length o f
continued proceedings necessary to prosecute the Litigation against the Defendants through tria l
and through appeals. Lead Counsel for the Lead Plaintiff also have taken into account th e
uncertain outcome and the risk of any litigation, especially in complex actions such as thi s
Litigation, as well as the difficulties and delays inherent in such litigation . Lead Counsel for the
Lead Plaintiff also are mindful of the inherent problems of proof under and possible defenses t o
the federal securities law violations asserted in the Complaint . Lead Counsel for the Lead
Plaintiff believe that the settlement set forth in the Stipulation confers substantial benefits upo n
the Settlement Class and each of the Settlement Class Members . Based on their investigation
and evaluation, Lead Counsel for the Lead Plaintiff have determined that the settlement set fort h
in the Stipulation is fair, reasonable, and adequate and is in the best interests of the Lead Plaintiff
and the Settlement Class and each of the Settlement Class Members .
V. TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT .
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among the
Lead Plaintiff (for herself and the Settlement Class Members) and the Defendants, by an d
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through their respective counsel or attorneys of record, that, subject to the approval of the Court ,
a class of purchasers of Cole National common stock as set forth in 11 . 17 herein shall be
certified and the Litigation and the Released Claims shall be finally and fully compromised ,
settled and released, and the Litigation shall be dismissed with prejudice as to all Settling Parties ,
upon and subject to the terms and conditions of the Stipulation, as follows :
Definitions .
As used in the Stipulation, the following terms have the meanings specified below :
1 .1 "Authorized Claimant" means any Settlement Class Member whose claim for
recovery has been allowed pursuant to the terms of the Stipulation.
1 .2 "Claimant" means any Settlement Class Member who files a Proof of Claim i n
such form and manner, and within such time, as the Court shall prescribe .
1 .3 "Cole National" means Cole National Corporation .
1 .4 "Defendants" means Cole National Corporation, Jeffrey Cole, Larry Pollock,
Lawrence Hyatt, and Thomas T .S. Kaung .
1 .5 "Effective Date" me ans the third court day following the first date by which all o f
the events and conditions specified in ¶ 8 .1 of the Stipulation have been met and have occurred.
1 .6 "Escrow Agent" means The Garden City Group, Inc .
1 .7 "Final" means the latest of ( i) the date of final affirmance on an appeal of the
Judgment, the expiration of the time for a petition for or a denial of a writ of certiorari to revie w
a ruling on appeal from the Judgment and, if certiorari be granted, the date of final affirmance o f
the Judgment following review pursuant to that grant ; (ii) the date of final dismissal of any
appeal from the Judgment or the final dismissal of any proceeding on certiorari to review th e
Judgment; or (iii) if no appeal is filed, the expiration date of the time for the filing or noticing o f
any appeal from the Court's Judgment approving the Stipulation in the form of Exhibit B hereto ,
CL[-] 092073v2
i .e ., thirty (30) days after entry of the Judgment . Any proceeding or order, or any appeal o r
petition for a writ of certiorari pertaining solely to any plan of allocation and/or application fo r
attorneys' fees, costs or expenses, shall not delay or preclude the Judgment from becoming final .
1 .8 "Individual Defendants " means , as the context requires , Jeffrey Cole, Larry
Pollock, Lawrence Hyatt, and Thomas T .S . Kaung .
1 .9 "Judgment" means the judgment to be rendered by the Court , in the form
proposed on the attached Exhibit B .
1 .10 "Person" means an individual, corporation, partnership, limited partnership ,
personal or legal representatives, predecessors, successors, parents, subsidiaries, divisions, join t
ventures, assigns , spouses , heirs, associates, related or affiliated entities, any entity in which a
Defendant has a controlling interest , any members of a Defendant 's immediate family, or any
trust of which any Defendant is the settlor or which is for the benefit of any Defendant and/o r
member(s) of his family, or any past or present officer or director of each of the foregoin g
entities .
1 .14 "Released Claims" means any and all claims or causes of action, includin g
"Unknown Claims" as defined in ¶ 1 .22 hereof, demands, rights, liabilities and causes of action
of every nature and description whatsoever, known or unknown, asserted or that might have bee n
asserted (including, without limitation, claims for negligence, gross negligence, breach of duty o f
care and/or breach of duty of loyalty, fraud, breach of fiduciary duty, or violations of any state or
federal statutes, rules or regulations) in the Litigation by the Lead Plaintiff or the Settlemen t
Class Members, or any of them, against the Released Persons based upon, arising from, o r
related to (a) the purchase of Cole National common stock by the Lead Plaintiff or a Settlemen t
Class Member during the Settlement Class Period, or (b) the subj ect matter of this litigation .
1 .15 "Released Persons" means each and all of the Defendants and each and all of thei r
respective Related Parties .
1 .16 "Representative Plaintiff"or "Lead Plaintiff' means Vijay Sherma .
1 .17 "Settlement Class" means all persons who purchased the common stock of Col e
National during the period beginning January 31, 1998, through and including May 16, 2003 ,
inclusive. Excluded from the Class are the Defendants (as defined herein), any entity in which a
Defendant has a controlling interest or is a parent or subsidiary of or is controlled by Col e
National, Cole National's officers and directors, and the legal representatives, heirs, predecessors ,
CLI-1092073v2 7
successors and assigns of any such excluded party. Also excluded from the Settlement Class are
those persons who timely and validly request exclusion from the Settlement Class pursuant to th e
Notice to be sent to the Class .
1 .18 "Settlement Class Period" or "Class Period" means the period commencing o n
January 31, 1998, through and including May 16, 2003, inclusive .
1 .19 "Settlement Class Member" or "Member of the Settlement Class" means a Perso n
who falls within the definition of the Settlement Class as set forth in ¶ 1 .17 of the Stipulation .
1 .20 "Settlement Fund" means the principal amount of Five Million, Three Hundred
Seventy-Five Thousand Dollars ($5,375,000) which shall be paid pursuant to ¶ 2 .1 of the
Stipulation and transferred into the Escrow Account .
1 .21 "Settling Parties" means, collectively, each of the Defendants and the Lead
Plaintiff on behalf of herself and the members of the Settlement Class .
1 .22 "Unknown Claims" means any Released Claims which the Lead Plaintiff o r
Settlement Class Member does not know or suspect to exist in his, her or its favor at the time o f
the release of the Released Persons which, if known by him, her or it, might have affected his ,
her or its settlement with and release of the Released Persons, or might have affected his, her o r
its decision not to object to this settlement . With respect to any and all Released Claims, the
Settling Parties stipulate and agree that, upon the Effective Date, the Lead Plaintiff and each o f
the Settlement Class Members shall be deemed to have, and by operation of the Judgment shal l
have, expressly waived and relinquished, to the fullest extent permitted by law, the provisions ,
rights and benefits of § 1542 of the California Civil Code, which provides :
A general release does not extend to claims which the creditor does notknow or suspect to exist in his favor at the time of executing the release,which if known by him must have materially affected his settlement withthe debtor .
CLI-1092073v2
The Lead Plaintiff and the Settlement Class Members, upon the Effective Date, shall be deeme d
to have, and by operation of the Judgment shall have waived any and all provisions, rights an d
benefits conferred by any law of any state or territory of the United States , or principle o f
common law, which is similar , comparable or equivalent to § 1542 of the Califo rnia Civil Code.
The Lead Plaintiff and Settlement Class Members may hereafter discover facts in addition to o r
different from those which he, she or it now knows or believes to be true with respect to th e
subject matter of the Released Claims, but the Lead Plaintiff and each Settlement Class Member ,
upon the Effective Date, shall be deemed to have, and by operation of the Judgment shall have ,
fully, finally and forever settled and released any and al l Released Claims, known or unknown ,
suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden ,
which now exist, or heretofore have existed upon any theory of law or equity now existing o r
coming into existence in the future, including, without limitation, conduct which is negligent ,
intentional, with or without malice, or a breach of any duty, law or rule, without regard to th e
subsequent discovery or existence of such different or additional facts .
2 . The Settlement .
2 .1 The total p rincipal amount of $5,375,000 shall constitute the Settlement Fund .
(a) On or before July 9, 2003, Cole National will cause to be transferred on it s
behalf the sum of Five Million, Three Hundred Seventy-Five Thousand Dollars ($5,375,000)
into an account ("Escrow Account") designated and cont ro lled by, and under a taxpayer numbe r
to be provided by, the Escrow Agent .
(b) If the sum of $5,375 ,000 is not transferred in accordance with ¶ 2 . 1(a) on
or before July 9, 2003, Lead Counsel shall have the right, exercisable in their sole discretion, t o
terminate the Stipulation and the Settlement provided herein .
CLf-1092073v2 9
2.2 Cole National warrants that the payments made by or on behalf of it pursuant t o
¶ 2 .1 above did not or will not render Cole National insolvent within the meaning of and/or fo r
the purposes of the United States Bankruptcy Code including §§ 101 and 547 thereof . Thi s
warranty is made by Cole National and not by Cole National 's counsel .
2.3 If a case is commenced in respect of any Defendant under Title 1 i of the United
States Code (Bankruptcy), or a trustee, receiver or conservator is appointed under any simila r
law, and in the event of the entry of a final order of a court of competent jurisdiction determinin g
the transfer of the Settlement Fund, or any portion thereof, by or on behalf of such Defendant t o
be a preference, voidable transfer, fraudulent transfer or similar transaction, then the release s
given and Judgment entered in favor of the Defendants pursuant to this Stipulation shall be nul l
and void and the Settling Parties shall be restored to their respective positions in the Litigation a s
of immediately prior to the execution of the parties' Memorandum of Understanding to settle thi s
Litigation .
2 .4 The Escrow Agent shall invest the Settlement Fund paid pursuant to ¶ 2 .1 above
in instruments backed by the full faith and credit of the United States Government or full y
insured by the United States Government or an agency thereof and shall reinvest the proceeds o f
these instruments as they mature in similar instruments at their then current market rates . The
Escrow Agent shall bear all risks related to investment of the Settlement Fund ; Defendants shal l
bear no risk related to investment of the Settlement Fund . All interest or other income earned o n
the Settlement Fund shall be added to and become part of the Settlement Fund .
2.5 The Escrow Agent shall not disburse the contents of the Escrow Account excep t
as provided in the Stipulation, the written agreement of counsel for Defendants and Lea d
Counsel, or an Order of the Court .
CLI-1092073v2 10
2.6 Subject to such further order and/or direction as may be made by the Court, th e
Escrow Agent is authorized to execute such transactions on behalf of the Settlement Clas s
Members as are consistent with the terms of the Stipulation.
2.7 All funds held in the Escrow Account shall be deemed and considered to be i n
custodia leis of the Court, and shall remain subject to the jurisdiction of the Court, until such
time as such funds shall be distributed pursuant to the Stipulation and/or further order(s) of th e
Court .
2 .8 (a) The Defendants and the Escrow Agent agree to treat the Settlement Fun d
as being at all times a "qualified settlement fund" within the meaning of Treas . Reg. Section
1 .468E-1 . In addition, the Escrow Agent and, as required, the Defendants shall jointly and timel y
make such elections as are necessary or advisable to carry out the provisions of this ¶ 2 .8 ,
including the "relation-back election" (as defined in Treas . Reg. Section 1 .468E-1) back to th e
earliest permitted date . The form of such election is attached hereto as Exhibit C and shall be
executed contemporaneously with the Stipulation . Such elections shall be made in complianc e
with the procedures and requirements contained in such regulations . It shall be the responsibilit y
of the Escrow Agent to timely and properly prepare and deliver the form of election and an y
other necessary documentation for signature by all necessary parties, and thereafter to cause th e
appropriate filing or filings to occur .
(b) For the purpose of Section 468B of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder, the "administrator" shall be the Escro w
Agent. The Escrow Agent shall timely and properly file all informational and other tax return s
necessary or advisable with respect to the Settlement Fund (including, without limitation, the
returns described in Treas. Reg. Section 1.468B-2(k)) . Such returns (as well as the electio n
CLI-1092073v2 11
described in ¶ 2 .8(a)) shall be consistent with this ¶ 2 .8 and in all events shall reflect that al l
taxes (including any interest or penalties) on the income earned by the Settlement Fund shall b e
paid out of the Settlement Fund as provided in ¶ 2 .8(c) hereof.
(c) All (i) taxes (including any interest or penalties) arising with respect to th e
income earned by the Settlement Fund, including any taxes or tax detriments that may b e
imposed upon the Defendants with respect to any income earned by the Settlement Fund for an y
period during which the Settlement Fund does not qualify as a "qualified settlement fund" for
Federal or state income tax purposes ("Taxes") ; and (ii) expenses and costs incurred in
connection with operating and implementing this ¶ 2 .8 (including, without limitation, expenses
of tax attorneys and/or accountants and mailing and distribution costs and expenses relating t o
filing (or failing to file) the returns described in this ¶ 2 .8) ("Tax Expenses"), shall be paid out o f
the Settlement Fund ; in all events the Defendants shall have no liability or responsibility for th e
Taxes or the Tax Expenses . The Settlement Fund shall indemnify and hold Defendants harmles s
for Taxes and Tax Expenses (including, without limitation, taxes payable by reason of any suc h
indemnification) . Further, Taxes and Tax Expenses shall be treated as, and considered to be, a
cost of administration of the Settlement and shall be timely paid by the Escrow Agent out of th e
Settlement Fund without prior order from the Court and the Escrow Agent shall be obligate d
(notwithstanding anything herein to the contrary) to withhold from distribution to Clas s
Members any funds necessary to pay such amounts including the establishment of adequat e
reserves for any Taxes and Tax Expenses (as well as any amounts that may be required to b e
withheld under Treas . Reg. Section 1 .468B-2(1) (2)) ; the Defendants are not responsible and shal l
have no liability therefor . The parties hereto agree to cooperate with the Escrow Agent, each
CLI-1092073v2 12
other, and their tax attorneys and accountants to the extent reasonably necessary to carry out th e
provisions of this'd 2 .8 .
(d) For the purpose of this ¶ 2 .8 and ¶¶ 2.9 and 6 .4 below, references to the
Settlement Fund shall include both the Settlement Fund and the Class Notice and Administratio n
Fund and shall also include any earnings thereon .
2 .9 In the event that the Stipulation is not approved, or is terminated, canceled or fail s
to become effective for any reason , the Settlement Fund (including accrued interest) less
appropriate expenses actually incurred or due and owing in connection with the settlemen t
provided for herein, shall be refunded to the entity that made the payment on behalf of Cole
National as described in ¶ 8 .5 below .
3 . Class Notice And Administration Fund .
3 .1 The Escrow Agent shall establish an escrow account to be known as the "Clas s
Notice and Administration Fund," and shall deposit up to $100,000 from the Settlement Fund in
it . The Class Notice and Administration Fund may be used by Lead Counsel to pay costs an d
expenses reasonably and actually incurred in connection with printing and mailing the notice and
proof of claim forms to the Class, publishing a summary notice, locating Class members ,
soliciting Class claims, assisting with the filing of claims, administering and distributing th e
Settlement Fund to Authorized Claimants, and processing Proofs of Claim and Release, and
other reasonable and customary fees and expenses . The Class Notice and Administration Fund
may also be invested and earn interest as provided for in ¶ 2 .4 of this Stipulation . Any unused
portion of the Class Notice and Administration Fund shall be returned to the Settlement Fund .
4. Notice Order And Settlement Hearing, .
4.1 Promptly after executing the Stipulation, the Settling Parties shall submit the
Stipulation together with its Exhibits to the Court and shall jointly apply for entry of an order
CLI-1092073x2 13
(the "Notice Order"), substantially in the form attached as Exhibit A. The Notice Order shall
specifically include provisions that, among other things, will :
(a) Approve the certification of the Settlement Class and preliminarily
approve the Stipulation and the Settlement set forth herein as being fair, just, reasonable an d
adequate to the Settlement Class ;
(b) Approve the form of Notice of Pendency of Class Action, Propose d
Settlement of Class Action, and Settlement Hearing ("Notice") (substantially in the form
attached as Exhibit A-1) for mailing to members of the Settlement Class ;
(c) Approve the form of Proof of Claim and Release ("Proof of Claim and
Release ") (substantially in the form attached as Exhibit A-2) for mailing to members of th e
Settlement Class ;
(d) Approve a summary notice of the proposed sett lement for publication (the
"Summary Notice") (substantially in the form attached as Exhibit A-3) ;
(e) Direct Lead Counsel to mail or cause to be mailed by first class mail the
Notice and the Proof of Claim and Release to those Persons in the Settlement Class who can b e
identified through reasonable effort, on or before the date specified in the Notice Order ;
(f) Direct that nominees who purchased Cole National common stock durin g
the Settlement Class Period send the Notice and Proof of Claim and Release form to al l
beneficial owners of such Cole National stock within ten (10) days after receipt of the Notice o r
send a list of the names and addresses of such beneficial owners to the Claims Administrato r
within ten (10) days of receipt of the Notice ;
(g) Direct Lead Counsel to cause the Summary Notice to be published once i n
the national edition of the Wall Street Journal on or before the date specified in the Notice Order ;
CL1-1092073v2 14
(h) Provide that Settlement Class Members who wish to participate in th e
settlement provided for in this Stipulation shall complete and file Proof of Claim and Release
forms pursuant to the instructions contained therein ;
(i) Find that the notice given pursuant to subparagraphs (c)-(h) above ,
constitutes the best notice practicable under the circumstances, including individual notice to al l
Persons in the Settlement Class who can be identified upon reasonable effort, and constitute s
valid, due and sufficient notice to all Persons in the Settlement Class, complying fully with the
requirements of Rule 23 of the Federal Rules of Civil Procedure, the Constitution of the Unite d
States, and any other applicable law ;
(j) Schedule a hearing(s) (the "Settlement Hearing") to be held by the Cour t
to consider and determine whether the proposed settlement of the Litigation as contained in th e
Stipulation should be approved as fair, reasonable and adequate and whether the Judgmen t
approving the settlement should be entered ;
(k) Provide that Class Members who so desire may exercise the right t o
exclude themselves from the Settlement Class but only if they comply with the requirements fo r
so doing as set forth in the Notice ;
(1) Provide that at or after the Settlement Hearing, the Court shall determine
whether the proposed Plan of Allocation should be approved ;
(m) Provide that at or after the Settlement Hearing, the Court shall determine
and enter an order regarding whether Lead Counsel's application for an award of attorneys' fee s
and reimbursement of expenses should be awarded to Lead Plaintiffs counsel ;
(n) Provide that pending final determination of whether the settlement
contained in the Stipulation should be approved, neither the Lead Plaintiff, nor any Settlement
CLI-1092073v2 15
Class Member, either directly, representatively or in any other capacity, shall commence o r
prosecute any action or proceeding in any court or tribunal asserting any of the Released Claims
against any of the Defendants ;
(o) Provide that any objections to (i) the proposed settlement contained in the
Stipulation; (ii) entry of the Judgment approving the settlement ; (iii) the proposed Plan of
Allocation or entry of the order approving same; or (iv) Lead Plaintiffs counsel's Fee and
Expense Application, shall be heard and any papers submitted in support of said objections shal l
be received and considered by the Court at the Settlement Hearing only if, on or before the dat e
specified in the Notice Order, Persons making objections shall file and serve written notice o f
their intention to appear (which shall set forth each objection and the basis therefor) and copie s
of any papers in support of their position as set forth in the Notice Order ;
(p) Provide that, upon the occurrence of the Effective Date, all Settlemen t
Class Members, whether or not they file a Proof of Claim and Release, shall be forever barred
from assert ing, prosecuting , commencing or continuing any Released Claims against any of the
Released Persons and each and all Settlement Class Member(s) shall conclusively be deemed to
have released any and all such Released Claims as against all of the Released Persons ;
(q) Provide that, upon the Effective Date, each of the Defendants shall b e
discharged from all claims for contribution that have been, or may hereafter be, brought that ar e
based upon, relate to, or arise out of the Released Claims ;
(r) Provide that the Settlement Hearing may, from time to time and without
further notice to the Settlement Class, be continued or adjourned by Order of the Court ; and
(s) Provide that, whether or not the Effective Date occurs, any Settlemen t
Class Member who does not properly and timely request exclusion from the Settlement Clas s
CLI-1092073v2 16
shall be bound by any and all judgments or settlements entered or approved by the Court,
whether favorable or unfavorable to the Settlement Class .
5 . Releases .
5.1 Upon the Effective Date, each of the Settlement Class Members shall be deeme d
to have, and by operation of the Judgment shall have, fully, finally and forever released ,
relinquished and discharged all Released Claims against the Released Persons, whether or not th e
Settlement Class Member executes and delivers the Proof of Claim and Release .
5 .2 The Proof of Claim and Release to be executed by the Settlement Class Member s
shall confirm the release of all Released Claims against the Released Persons and shall b e
substantially in the form contained in the attached Exhibit A-2 .
5.3 Upon the Effective Date, each of the Released Persons shall be deemed to have ,
and by operation of the Judgment shall have, fully, finally and forever released, relinquished an d
discharged each and all of the Settlement Class Members, Lead Plaintiff and her counsel from al l
claims (including "Unknown Claims "), arising out of, relating to, or in connection with the
institution, prosecution, assertion or resolution of the Litigation or the Released Claims .
5 .4 Upon the Effective Date, each of the Defendants shall be discharged from al l
claims for contribution that have been, or may hereafter be, brought that are based upon, relat e
to, or arise out of the Released Claims . That discharge shall be substantially in the form show n
in the proposed Judgment attached as Exhibit B .
6 . Administration And Calculation Of Claims, Final AwardsAnd Supervision And Distribution Of Settlement Fund .
6.1 Lead Counsel, or their authorized agents, acting on behalf of the Settlement Class ,
and subject to such supervision and direction of the Court as may be necessary or a s
circumstances may require, shall administer and calculate the claims submitted by Settlemen t
CLI-1092073v2 17
Class Members and shall oversee distribution of the Net Settlement Fund (defined below) to
Authorized Claimants .
6 .2 The Settlement Fund shall be applied as follows :
(a) To pay Lead Plaintiffs atto rneys' fees , expenses and costs (the "Fee and
Expense Award"), if and to the extent allowed by the Court ;
(b) To pay all the costs and expenses reasonably and actually incurred in
connection with providing notice to the Class, locating Class Members, soliciting Class claims,
assisting with the filing of claims, administering and distributing the Settlement Fund to the
Settlement Class, and processing Proofs of Claim ;
(c) To pay the Taxes and Tax Expenses owed by the Settlement Fund ; and
(d) To distribute the balance of the Settlement Fund (the "Net Settlemen t
Fund") to Authorized Claimants as allowed by the Stipulation and the Plan of Allocation, or th e
Court .
6 .3 Upon the Effective Date and thereafter, and in accordance with the terms of th e
Stipulation, the Plan of Allocation, or such further approval and further order(s) of the Court a s
may be necessary or as circumstances may require, the Net Settlement Fund shall be distribute d
to Authorized Claimants, subject to and in accordance with the following :
(a) Within ninety (90) days after the mailing of the Notice or such other tim e
as may be set by the Court, each Person claiming to be an Authorized Claimant shall be require d
to submit to the claims administrator a completed Proof of Claim and Release substantially in th e
form attached as Exhibit A-2 and signed under penalty of perjury, and supported by suc h
documents as specified in the Proof of Claim and Release and as are reasonably available to the
Authorized Claimant .
CL[-1092073x2 18
(b) Except as otherwise ordered by the Court, all Settlement Class Member s
who fail to timely submit a Proof of Claim and Release within such period, or such other perio d
as may be ordered by the Court, or otherwise allowed, shall be forever barred from receiving an y
payments pursuant to the Stipulation and the Settlement set forth herein, but will in all othe r
respects be subject to and bound by the provisions of the Stipulation, the Settlement and release s
contained herein, and the Judgment.
(c) The Net Settlement Fund shall be distributed to the Authorized Claimant s
substantially in accordance with a Plan of Allocation to be described in the Notice and approve d
by the Court .
6 .4 As soon as Cole National has made or caused to be made the payment required
under ¶ 2.1 above, the Defendants and/or their counsel shall have no responsibility for, interes t
in, or liability whatsoever with respect to the investment or distribution of the Settlement Fund ,
the Net Settlement Fund, the Plan of Allocation, the determination, administration, calculation o r
payment of claims, the payment or withholding of taxes, or any losses incurred in connection
therewith, whether or not those activities are undertaken in accordance with the Stipulation an d
Settlement contained herein, the Plan of Allocation, or further orders of the Court .
6 .5 No Person shall have any claim against Lead Counsel or any claims administrato r
or other agent designated by Plaintiffs' Lead Counsel based on the distributions mad e
substantially in accordance with the Stipulation and the Settlement contained herein, the Plan o f
Allocation, or further orders of the Court .
6 .6 It is understood and agreed by the Settling Parties that any proposed Plan o f
Allocation of the Net Settlement Fund including, without limitation, any adjustments to an
Authorized Claimant's Claim set forth therein, is not a part of the Stipulation and is to b e
CLI-1092073x2 19
considered by the Court separately from the Court's consideration of the fairness, reasonableness
and adequacy of the Settlement set forth in the Stipulation, and any order or proceedings relatin g
to the Plan of Allocation shall not operate to terminate or cancel the Stipulation or affect th e
finality of the Court' s Judgment approving the Stipulation and the Se ttlement set forth herein, or
any other orders entered pursuant to the Stipulation .
6 .7 Lead Counsel will apply to the Court, on notice to Defendants' counsel, for a n
order ("Class Distribution Order") approving the administrative determinations concerning th e
acceptance and rejection of the claims submitted herein and approving any fees and expenses no t
previously applied for, and if the Effective Date has occurred , directing payment of the
Settlement Fund to Authorized Claimants .
6 .8 The Settlement Fund shall be distributed to Authorized Claimants only after th e
Effective Date and after ( i) all claims have been processed , and all claimants whose claims have
been rejected or disallowed, in whole or in part, have been notified and provided the opportunity
to be heard concerning such rejection or disallowance ; (ii) all objections with respect to al l
rejected or disallowed claims have been resolved by the Court, and all appeals therefrom hav e
been resolved or the time therefore has expired ; (iii) all matters with respect to attorneys' fees ,
costs, and disbursements have been resolved by the Court, and all appeals therefrom have bee n
resolved or the time therefore has expired ; and (iv) all costs of administration have been paid .
7 . Attorneys' Fees And Reimbursement Of Expenses .
7.1 The Lead Plaintiff or her counsel may submit an application or applications (the
"Fee and Expense Application") for distributions to them from the Settlement Fund (the "Fee an d
Expense Award") for: (i) an award of attorneys' fees of up to 33-1/3 percent of the Settlement
Fund; plus (ii) reimbursement of the expenses incurred in connection with prosecuting th e
Litigation .
CLI-1092073v2 20
7.2 The Fee and Expense Award as awarded by the Court shall be paid to Lead
Counsel from the Settlement Fund, as ordered, within five ( 5) business days after the Court
executes an order awarding such fees and expenses and Lead Counsel shall thereafter allocate th e
attorneys' fees amongst counsel for Lead Plaintiff in a manner in which they in good faith
believe reflects the contributions of such counsel to the prosecution and settlement of th e
Litigation . In the event that the Effective Date does not occur, or the Judgment or the Orde r
making the Fee and Expense Award is reversed or modified on appeal, and in the event that th e
Fee and Expense Award has been paid to any extent , then Lead Counsel and the other counse l
for Lead Plaintiff jointly and severally shall be obligated within five (5) business days fro m
receiving notice from Defendants' counsel or from a court of appropriate jurisdiction, to refun d
to the Settlement Fund the fees, expenses and costs previously paid to them from the Settlemen t
Fund plus interest thereon at the same rate as earned on the Settlement Fund in an amount
consistent with such reversal or modification . Schiffrin & Barroway, LLP; Andrew L .
Barroway; Weisman , Kennedy & Berris, Co., LPA ; and R. Eric Kennedy, severally , personally
guarantee this repayment obligation .
7.3 The procedure for and the allowance or disallowance by the Court of any
applications by Lead Counsel for attorneys ' fees and expenses to be paid out of the Settlement
Fund, are not part of the settlement set forth in the Stipulation, and are to be considered by th e
Court separately from the Court' s consideration of the fairness, reasonableness and adequacy o f
the settlement set forth in the Stipulation, and any order or proceedings relating to the Fee and
Expense Application, or any appeal from any order relating thereto or reversal or modification
thereof, shall not operate to terminate or cancel the Stipulation, or affect or delay the finality of
the Judgment approving the Stipulation and the settlement of the Litigation set forth herein .
CLI-1092073v2 21
8 . Conditions of Settlement, Effect Of Disapproval,Cancellation Or Termination .
8.1 The Effective Date of the Stipulation shall be conditioned on the occurrence of al l
of the following events :
(a) Defendants have timely made their contributions to the Settlement Fund a s
required by ¶ 2 .1 above ;
(b) The Court has entered the Notice Order, as required by ¶ 4 above ;
(c) The number of shares of Cole National stock purchased by Class Member s
during the Settlement Class Period subject to valid and timely requests for exclusion from the
Class is less than the number set forth in the Supplemental Agreement described in '¶ 8 .3, or in
the alternative, Cole National, on behalf of all Defendants, has decided to proceed with th e
settlement, notwithstanding the number of shares purchased by Class Members who file vali d
and timely requests for exclusion from the Settlement Class ;
(d) The Court has entered the Judgment in the form of Exhibit B ; and
(e) The Judgment has become Final, as defined in 1 1 .7, above .
8 .2 Upon the occurrence of the Effective Date, any and all remaining interest or right
of Defendants in or to the Settlement Fund shall be absolutely and forever extinguished .
8 .3 If, before the Settlement Hearing, Persons who otherwise would be Members o f
the Settlement Class have timely requested exclusion ("Requests for Exclusion") from the
Settlement Class in accordance with the provisions of the Notice Order and the Notice given
pursuant thereto, and such Persons in the aggregate purchased a number of shares during the
Class Period in an amount greater than the sum specified in a separate Supplemental Agreement
between the Parties, then Cole National, on behalf of all Defendants, shall have the option to
terminate this Stipulation in accordance with the procedures set forth in the Supplementa l
CLI-1092073v2 22
Agreement . The Supplemental Agreement will not be filed with the Court unless and until a
dispute among the parties concerning its interpretation or application arises and in that event i t
shall be filed and maintained with the Court under seal . Copies of all Requests for Exclusion
received, together with copies of all written revocations of Requests for Exclusion, shall be
delivered to counsel for Defendants no later than five court days before the Settlement Hearing .
8.4 If any of the conditions specified in ¶ 8 .1 are not met, then the Stipulation shall b e
canceled and terminated unless Lead Counsel and counsel for Defendants mutually agree i n
writing to proceed with the Stipulation .
8.5 Unless otherwise ordered by the Court, in the event the Stipulation shal l
terminate, or be canceled, or shall not become effective for any reason, then within five (5 )
business days after written notification of such event is sent by counsel for Defendants or Lea d
Counsel to the Escrow Agent, the contents of the Escrow Account (including accrued interest )
plus any amount then remaining in the Notice and Administration Fund (including accrue d
interest) less expenses and any costs which either have been paid pursuant to ¶ 3 .1 hereto or have
been incurred but not paid and are determined to be chargeable to the Notice and Administratio n
Fund, shall be refunded by the Escrow Agent to the entity that made the payment on behalf o f
Cole National pursuant to written instructions from counsel for Cole National . In such even t
Cole National shall be entitled to any tax refund owing to the Settlement Fund . At the request of
Cole National, the Escrow Agent or its designee shall apply for any such refund and pay the
proceeds, after deduction of any fees or expenses incurred in connection with such application(s )
for refund, to Cole National .
8 .6 In the event that the Stipulation is not approved by the Court, or is approved onl y
subject to conditions and/or modifications that are not acceptable to both Lead Counsel an d
CL1-1092073v2 23
counsel for Defendants, or the settlement set forth in the Stipulation is terminated or otherwis e
fails to become effective in accordance with its terms, the Settling Parties shall be restored t o
their respective positions in the Litigation as of immediately prior to the execution of the parties '
Memorandum of Understanding to settle the Litigation . In such event, the terms and provision s
of the Stipulation , with the exception of ¶¶ 2.4-2.9, 7 .2, 8 .4-8 .7, 9 .2-9 .3, and 9 .9-9 .13 herein ,
shall have no further force and effect with respect to the Settling Parties and shall not be used i n
this Litigation or in any other proceeding for any purpose and any Judgment or Order (including ,
without limitation, any order of class certification) entered by the Court in accordance with th e
terms of the Stipulation shall be treated as vacated , nunc }fir tuns . No order of the Court or
modification or reversal on appeal of any order of the Court concerning the Plan of Allocation o r
the Fee and Expense Award shall constitute grounds for cancellation or termination of th e
Stipulation .
8 .7 If the Effective Date does not occur , or if the Stipulation is terminated pursuant t o
its terms, neither the Lead Plaintiff nor any of her counsel shall have any obligation to repay an y
amounts actually and properly disbursed from the Notice and Administration Fund . In addition,
any expenses already incurred and properly chargeable to the Notice and Administration Fun d
pursuant to ¶ 3 .1 hereof at the time of such termination or cancellation but which have not bee n
paid, shall be paid by the Escrow Agent in accordance with the terms of the Stipulation befor e
the balance is refunded under ¶ 8 .5 above.
9 . Miscellaneous Provisions .
9.1 The Settling Parties (a) acknowledge that it is their intent to consummate thi s
agreement; and (b) agree to cooperate to the extent necessary to effectuate and implement al l
terms and conditions of the Stipulation and to exercise their best efforts to accomplish th e
foregoing terms and conditions of the Stipulation .
CLI-1092073v2 24
9.2 Before Lead Plaintiff or her attorneys issue any press release, the proposed pres s
release will be given to Cole National for approval. The press release will not be issued unles s
Cole National consents in writing to its issuance ; Cole National will not unreasonably withhol d
that consent . While retaining its right to deny that the claims advanced in the Litigation wer e
meritorious, Cole National in any statement made to any media representative (whether or no t
for attribution) will not deny that, based upon the publicly available information at the time, th e
Litigation was filed in good faith and with an adequate basis in fact to comply with Rule 11 ,
Federal Rules of Civil Procedure, and is being settled voluntarily after consultation wit h
competent legal counsel . Cole National may issue a press release announcing the sett lement but
may not contradict the foregoing language .
9.3 Neither the Stipulation nor the Settlement, nor any act performed or documen t
executed pursuant to or in furtherance of the Stipulation or the Settlement : (i) is or may be
deemed to be or may be used as an admission of, or evidence of, the validity of any Release d
Claim, or of any wrongdoing or liability of the Defendants ; or (ii) is or may be deemed to be or
may be used as an admission of, or evidence of, any fault or omission of any of the Defendant s
in any civil, criminal or administrative proceeding in any court, administrative agency or othe r
tribunal, other than in such proceedings as may be necessary to consummate or enforce th e
Stipulation, the Settlement or the Judgment, except that the Defendants may file the Stipulatio n
and/or the Judgment in any action that may be brought against them to support a defense ,
counterclaim or cross-claim based on principles of res 'udJ icata , collateral estoppel, release, good
faith settlement, judgment bar or reduction or any other theory of claim preclusion or issue
preclusion or similar defense, counterclaim or cross-claim . The Defendants have denied and
continue to deny each and all of the claims alleged in the Litigation .
CLI-1092073v2 25
9.4 The Settling Parties and their counsel, and each of them, agree, to the exten t
permitted by law, that all agreements made and orders entered during the course of the Litigatio n
relating to the confidentiality of information shall survive this Stipulation .
9.5 All of the Exhibits to the Stipulation are mate rial and integral parts hereof and are
fully incorporated herein by this reference .
9 .6 The Stipulation may be amended or modified only by a written instrument signed
by or on behalfof all Settling Part ies or their respective successors - in-interest .
9 .7 The Stipulation and the Exhibits attached hereto and the Supplemental Agreemen t
regarding requests for exclusion constitute the entire agreement among the parties hereto and n o
representations, warranties or inducements have been made to any party concerning the
Stipulation or its Exhibits other than the representations, warranties and covenants contained an d
memorialized in such documents .
9.8 Lead Counsel, on behalf of the Settlement Class, are expressly authorized by th e
Lead Plaintiff to take all appropriate action required or permitted to be taken by the Settlemen t
Class pursuant to the Stipulation to effectuate its terms and also are expressly authorized to ente r
into any modifications or amendments to the Stipulation on behalf of the Settlement Class that
they deem approp riate .
9 .9 Each counsel or other Person executing the Stipulation or any of its Exhibits o n
behalf of any party hereto hereby warrants that such person has the full authority to do so .
9.10 The Stipulation may be executed in one or more counterparts . All executed
counterparts and each of them shall be deemed to be one and the same instrument . Counsel for
the parties to the Stipulation shall exchange among themselves original signed counterparts and a
complete set of original executed counterparts shall be filed with the Court .
CLI-1092073v2 26
9.11 The Stipulation shall be binding upon, and inure to the benefit of, the successor s
and assigns of the parties hereto .
9.12 The Court shall retain jurisdiction with respect to implementing and enforcing the
terms of the Stipulation, and all parties hereto submit to the jurisdiction of the Court for purpose s
of implementing and enforcing the settlement embodied in the Stipulation .
9.13 The Stipulation and the Exhibits hereto shall be considered to have bee n
negotiated, executed and delivered, and to be wholly performed, in the State of Ohio, and th e
rights and obligations of the parties to the Stipulation shall be construed and enforced i n
accordance with, and governed by, the internal, substantive laws of the State of Ohio withou t
giving effect to that State's choice of law principles .
CLI-1092073v2 27
IN WITNESS WHEREOF, the parties hereto have caused the Stipulation to be executed
by their duly authorized attorneys .
DATED : July-3 200 3
Liaison Counse for Pla ffs
R. Eric Kennedy (0006174)Daniel P . Goetz (0065549WEISMAN, KENNEDY &BERRIS CO ., L.P .A.1600 Midland Building101 Prospect Avenue, WestCleveland, OH 44115Telephone: (216) 781-1111Facsimile : (216) 781-6474E-mail : [email protected]
Lead Counselfor Plaintiff VijaySherma , on behalf of herself and
all thers similarly situate
Aw11h . 6 N-drew L. Barroway
Katharine M. RyanSCHIFFRIN & BARROWAY, LLPThree Bala Plaza EastSuite 400Bala Cynwyd, PA 19004Telephone: (610) 667-7706Facsimile: (610) 667-705 6E-mail : [email protected]
ex 00.--For Defendants Cole NationalCorporation , Jeffrey Cole,Larry Pollock, and Lawrence Hyat t
John M . Newman, Jr . (0005763)Mark Herrmann (0043751)JONES DAYNorth Point901 Lakeside AvenueCleveland, OH 44114Telephone : (216) 586-3939Facsimile : (216) 579-021 2E-mail : mhannesday gpjn
"r Defendant Thomas T.S. Kaung
Steven D. CundraO'ROURKE & CUNDRA818 18th Street, N .W .Suite 800Washington, DC 20037-1420Telephone : (202) 861-2350Facsimile : (202) 861-2352E-mail : scundra@ommlaw .com
CLI-1092073v2 28
CERTIFICATE OF SERVIC E
A copy of the foregoing has been sent by first-class mail, postage prepaid , on this 15th
day of July 2003, to :
R. Eric KennedyDaniel P . GoetzWEISMAN, KENNEDY & BERRIS CO ., L.P.A .1600 Midland Building101 Prospect Avenue, WestCleveland , OH 44115Liaison Counsel for Plaintiffs
Andrew L. BarrowayKatharine M. RyanSCHIFFRIN & BARROWAY, LLPThree Bala Plaza East , Suite 400Bala Cynwyd, PA 19004Lead Counsel for Plaintiff Vijay Sherma, on behalfof herselfand all others similarly situated
Steven D. CundraO'ROURKE & CUNDRA818 18th Street , N.W., Suite 800Washington , DC 20037-142 0Counsel for Defendant Thomas T.S. Kaung
Attorney for Defendants Cole NationalCorporation , Jeffrey Cole,Larry Pollock, and Lawrence Hyatt
IN THE UNITED STATES DISTRICT COURTFOR THE NORTHERN DISTRICT OF OHIO
EASTERN DIVISIO N
VIJAY SHERMA, on behalf of herselfand all others similarly situated,
Plaintiff,
Case No . 1 :02cv2397
Judge John R. Adam s
V .
COLE NATIONAL CORPORATION,et al.,
Defendants .
[PROPOSED] ORDER PRELIMINARILY APPROVINGSETTLEMENT AND PROVIDING FOR NOTICE
WHEREAS, an action is pending before the Court titled Vijay Sherma v . Cole National
Corporation, et al . , Case No . 1 :02cv2397 (the "Litigation) ;
WHEREAS, the parties having applied, pursuant to Rule 23(e), Fed . R. Civ . P., for an
order approving the settlement of this Litigation, in accordance with a Stipulation of Settlement
dated as of July 3, 2003, (the "Stipulation"), which, together with the exhibits annexed thereto
sets forth the terms and conditions for a proposed settlement of the Litigation ("Propose d
Settlement") and for dismissal of the Litigation with prejudice upon the terms and conditions set
forth therein ; and the Court having read and considered the Stipulation and the exhibits annexed
thereto; and
CLI-I092185v2
WHEREAS, all defined terms contained herein shall have the same meanings as set fort h
in the Stipulation ;
NOW THEREFORE, IT IS HEREBY ORDERED :
1 . For purposes of the Proposed Settlement, the Court hereby certifies a Settlemen t
Class defined as all persons who purchased the common stock of Cole National during the period
beginning January 31, 1998, through and including May 16, 2003, excluding Defendants, any
entity in which a Defendant has a controlling interest or is a parent or subsidiary of or is
controlled by Cole National, Cole National's officers and directors, and the legal representatives,
heirs, predecessors, successors, and assigns of any such excluded party . Also excluded from the
Settlement Class are those persons who timely and validly request exclusion from the Settlemen t
Class pursuant to the "Notice of Pendency of Class Action, Proposed Settlement of Class Action ,
and Settlement Hearing" ("Notice") to be sent to the Class .
2. The Court finds, for purposes of the Proposed Settlement, that (i) the members of
the Class (as defined above) are so numerous that joinder of all members is impracticable ; (ii)
there are questions of law and fact common to the Class, including, inter alia, whether alleged
statements by the defendants were materially false or misleading, and made with scienter, and
whether allegedly false or misleading statements artificially inflated the market price of Cole
National common stock during the Class Period ; (iii) the claims of the named plaintiff as
asserted in her complaint are typical of the claims of the Class ; (iv) the Lead Plaintiff has
retained experienced and competent counsel and has fairly and adequately protected the interests
of the Class; (v) the questions of law and fact common to the Class predominate over any
questions affecting only individual members of the Class ; and (vi) a class action is superior to
other available methods for the fair and efficient adjudication of the controversy. The Court
CLI-1092195v2 2
hereby preliminarily approves the Stipulation and the Proposed Settlement as being fair, just,
reasonable, and adequate .
3 . A hearing (the "Settlement Hearing") shall be held before this Court on
, 2003, at _.m. at the United States District Court, Northern District of Ohio ,
Eastern Division, 586 United States Courthouse, Federal Building, Two South Main Street,
Akron, Ohio 44308 - 1813, to determine whether the Proposed Settlement is fair, reasonable an d
adequate and should be approved by the Court ; whether a judgment as provided in ¶ 1 .9 of the
Stipulation should be entered herein; whether the proposed Plan of Allocation should b e
approved ; and further to determine the amount of the Fee and Expense Award . The Court may
adjourn the Settlement Hearing without further notice to members of the Settlement Class other
than an announcement in open court at the time set for the Settlement Hearing or at an y
adjournment thereof
4. The Court approves, as to form and content, the Notice, the Proof of Claim an d
Release form (the "Proof of Claim"), and the Summary Notice annexed as Exhibits A-1, A-2 and
A-3 hereto and finds that the mailing and distribution of the Notice and publishing of the
Summary Notice substantially in the manner and form set forth in ¶ 5 of this Order meet the
requirements of Rule 23 of the Federal Rules of Civil Procedure and due process, and are the
best notice practicable under the circumstances and shall constitute due and sufficient notice t o
all persons entitled thereto .
5 . Lead Counsel is hereby authorized to retain the firm of The Garden City Group ,
Inc. ("Claims Administrator") to supervise and administer the notice procedure as well as th e
processing of claims as more fully set forth below. The Claims Administrator shall be
responsible for the receipt of all responses from Settlement Class Members and shall preserve al l
CL[-1092185v2 3
Proofs of Claim and any and all other written communications from Settlement Class Members ,
nominees, or any other person in response to the Notice or Summary Notice until one year
following the date of distribution of the proceeds of the Settlement to the Settlement Clas s
Members or pursuant to further order of the Court . The Defendants shall cooperate in makin g
Cole National's transfer records and shareholder information reasonably available, withou t
charge to any party, to Lead Counsel or the Claims Administrator for the purposes of identifyin g
and giving notice to the Class .
(a) Not later than , 2003 (the "Notice Date"), Plaintiffs '
Settlement Counsel shall cause a copy of the Notice and the Proof of Claim, substantially in th e
form annexed as Exhibits A-1 and A-2 , to be mailed by first class mail to all Settlement Clas s
Members who can be identified with reasonable effort.
(b) Not later than , 2003 , Plaintiffs' Settlement Counsel shal l
cause the Summary Notice to be published once in the national edition of the Wall Street
Journal ; and
(c) At least seven (7) days before the Settlement Hearing, Plaintiffs '
Settlement Counsel shall serve on counsel for a ll Defendants and file with the Court proof, by
affidavit or declaration, of such mailing and publishing.
6 . Nominees who purchased the common stock of Cole National during the perio d
beginning January 31, 1998, through and including May 16, 2003 , inclusive , shall send the
Notice and the Proof of Claim to all beneficial owners of such Cole National stock within te n
(10) days after receipt thereof, or send a list of the names and addresses of such beneficia l
owners to the Claims Administrator within ten (10) days after receipt thereof in which event th e
Claims Administrator shall promptly mail the Notice and Proof of Claim to such beneficial
CLI-10923 85v2 4
owners . Nominees may seek reimbursement from the Claims Administrator for their reasonable
expenses incurred in complying with this Order .
7. Any Person who desires to request exclusion from the Settlement Class shall do
so within the time set forth and in the manner described in the Notice . Unless the Court orders
otherwise, no request for exclusion shall be valid unless it is made within the time set forth and
in the manner described in the Notice .
8. All Members of the Settlement Class shall be bound by all determinations and
judgments in the Litigation concerning the Proposed Settlement, whether favorable or
unfavorable to the Settlement Class . Any member of the Settlement Class who does not properly
and timely request exclusion shall be included in the Settlement Class and shall be bound by any
judgment entered in the Litigation .
9 . Settlement Class Members who wish to participate in the Settlement shall
complete and submit Proof of Claim forms in accordance with the instructions contained therein .
Unless the Court orders otherwise, all Proof of Claim forms must be filed no later than ninety
(90) days from the Notice Date . Any Settlement Class Member who does not submit a properly
completed Proof of Claim within the time provided for, shall be barred from sharing in the
distribution of the proceeds of the Settlement Fund, unless otherwise ordered by the Court .
10. Any member of the Settlement Class may enter an appearance in the Litigation, at
his, her or its own expense, individually or through counsel of his, her or its own choice .
Members who do not enter an appearance will be represented by Plaintiffs Lead Counsel .
11 . Pending final determination of whether the Proposed Settlement should be
approved, neither the Lead Plaintiff nor any Settlement Class Member, either directly,
representatively, or in any other capacity, shall commence or prosecute against any of th e
CL[-1092185v2
Defendants, any action or proceeding in any court or tribunal asserting any of the Release d
Claims .
12. Any Member of the Se tt lement Class may appear and show cause if he , she, or i t
has any reason why the Proposed Settlement should or should not be approved as fair, reasonable
and adequate, or why a judgment should or should not be entered thereon, why the Plan of
Allocation should or should not be approved, or why the Fee and Expense Application should or
should not be granted ; provided, however, that no Settlement Class Member or any other person
shall be heard or entitled to contest the approval of the terms and conditions of the Proposed
Settlement or, if approved, the Judgment to be entered thereon approving the same, or the order
approving the Plan of Allocation, or the Fee and Expense Award, unless on or before
2003, that person (i) has served by hand or by first class mail written objections
and copies of any papers and briefs to be offered in support of the objection upon Andrew L .
Barroway and Katharine M . Ryan, Schiffrin & Barroway, LLP, Three Bala Plaza East, Suite 400,
Bala Cynwyd, Pennsylvania 19004 ; John M. Newman, Jr . and Mark Herrmann, Jones Day,
North Point, 901 Lakeside Avenue, Cleveland, Ohio 44114 ; and Steven D. Cundra, O'Rourke &
Cundra, 818 18th Street, N .W., Suite 800, Washington, DC 20006, and (ii) filed those objections,
papers, and briefs with the Clerk of the United States District Court for the Northern District of
Ohio, Eastern Division . Any member of the Settlement Class who does not make his, her or its
objection on a timely basis and in the manner provided shall be deemed to have waived such
objection and shall forever be foreclosed from making any objection to the fairness or adequacy
of the Proposed Settlement, the Plan of Allocation, and the Fee and Expense Award, unless
otherwise ordered by the Court .
CLI-1092185v2 6
13 . The passage of title and ownership of the Settlement Fund to the Escrow Agent i n
accordance with the terms and obligations of the Stipulation is approved . No person that is not a
Settlement Class Member or counsel to the Lead Plaintiff shall have any right to any portion of,
or to share in the distribution of, the Settlement Fund unless otherwise ordered by the Court o r
otherwise provided in the Stipulation .
14. All funds held in the Escrow Account shall be deemed and considered to be i n
custodia legis of the Court, and shall remain subject to the jurisdiction of the Court , until such
time as such funds shall be distributed pursuant to the Stipulation and/or further order(s) of th e
Court .
15 . All papers in support of the Proposed Settlement, the Plan of Allocation, and th e
Fee and Expense Application shall be filed and served seven days before the Settlement Hearing .
16. At or after the Settlement Hearing, the Court shall determine whether the Plan o f
Allocation proposed by Plaintiffs' Settlement Counsel, and the Fee and Expense Application,
shall be approved .
17 . All reasonable costs incurred in identifying and notifying Settlement Clas s
Members, as well as administering the Settlement Fund, shall be paid as set forth in the
Stipulation.
18 . The Court retains j uri sdiction to consider all further applications arising out of or
connected with the Proposed Settlement . The Court may approve the Proposed Settlement, wit h
such modifications as may be agreed to by the Settling Parties, if appropriate, without furthe r
notice to the Settlement Class .
19. If the Settlement shall not be approved or consummated for any reason
whatsoever, the Settlement and all proceedings had in connection therewith shall be without
CLI-1092185v2 7
prejudice to the status -quo ante rights of the parties to the Litigation , except as otherwise set forth
in the Stipulation .
DATED: July _, 2003THE HONORABLE JOHN R. ADAMSUNITED STATES DISTRICT JUDGE
CLI-1092185v2
IN THE UNITED STATES DISTRICT COURTFOR THE NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
VIJAY SHERMA, on behalf of herselfand all others similarly situated ,
Plaintiff,
Case No. 1 :02cv2397
Judge John R . Adams
V ,
COLE NATIONAL CORPORATION,
et al.,
Defendants .
NOTICE OF PENDENCY OF CLASS ACTION, PROPOSEDSETTLEMENT OF CLASS ACTION, AND SETTLEMENT HEARIN G
CLI-1092531 v2
TO : ALL PERSONS WHO PURCHASED THE COMMON STOCK OF COLE NATIONA LCORPORATION ("COLE NATIONAL") DURING THE PERIOD JANUARY 31, 1998,THROUGH MAY 16, 2003, INCLUSIVE .
PLEASE READ THIS NOTICE CAREFULLY . THIS NOTICE RELATES TO APROPOSED SETTLEMENT OF THIS CLASS ACTION AND, IF YOU ARE ACLASS MEMBER, CONTAINS IMPORTANT INFORMATION AS TO YOURRIGHTS CONCERNING THE SETTLEMENT AS FURTHER DESCRIBED BELOW .
SPECIAL NOTICE TO ALL BANKS, BROKERAGE FIRMS, INSTITUTIONS ANDOTHER NOMINEES: IF YOU PURCHASED COLE NATIONAL STOCK BETWEENJANUARY 31, 1998, AND MAY 16, 2003, FOR THE ACCOUNT OF ANOTHERPERSON OR ENTITY, THE COURT HAS DIRECTED THAT YOU TRANSMITTHIS DOCUMENT TO SUCH PERSON OR ENTITY, OR PROVIDE THE NAMESAND ADDRESSES OF SUCH BENEFICIARIES TO THE CLAIMSADMINISTRATOR. PLEASE SEE SECTION X FOR MORE INFORMATION .
YOU ARE HEREBY NOTIFIED, pursuant to Rule 23 of the Federal Rules of Civi l
Procedure, and an Order of the United States District Court for the Northern District of Ohio ,
Eastern Division (the "Court" ), that a settlement (the "Settlement ") in the amount of Fiv e
Million , Three Hundred Seventy-Five Thousand Dollars ($5,375,000) of the captioned litigation
(the "Litigation") has been reached by the parties on terms set forth in a Stipulation of Settlemen t
dated as of July 3, 2003 (" Stipulation ") . The settlement is subject to approval by the Cour t
following a hearing and, if approved, will result in (a) creating a settlement fund ("Settlemen t
Fund"), which shall be disbursed as set forth below ; and (b) dismissing the Litigation and th e
release of the Released Claims (as defined below) as against the Defendants and other Release d
Persons (as defined below) .
This Notice is not intended to be, and should not be construed as, an expression of an y
opinion by the Court with respect to the truth of the allegations in the Litigation or the merits o f
the claims or defenses asserted . This Notice is to advise you of the proposed Settlement of th e
Litigation and of your rights in connection with the Settlement .
CL I-1092531 v2 2
I . DEFINITIONS
As used in this Notice, the following terms have the meanings specified below :
1 . "Cole National" means Cole National Corporation.
2. "Defendants" means Cole National Corporation, Jeffrey Cole, Larry Pollock ,
Lawrence Hyatt, and Thomas T .S . Kaung .
"Individual Defendants " means, as the context requires , Jeffrey Cole, Larry
Pollock, Lawrence Hyatt, and Thomas T.S. Kaung .
4. "Related Parties" means each of a Defendant's past or present directors, officers ,
controlling shareholders, attorneys, accountants, auditors, banks or investment bankers, advisors,
personal or legal representatives, predecessors, successors, parents, subsidiaries, divisions, joint
ventures, assigns, spouses, heirs, associates, related or affiliated entities, any entity in which a
Defendant has a controlling interest, any members of Defendants' immediate families, or any
trust of which any Defendant is the settlor or which is for the benefit of any Defendant and/or
member(s) of his family or any past or present officer or director of each of the foregoing
entities .
5. "Released Persons" means each and all of the Defendants and each and all of their
respective Related Parties .
6. "Representative Plaintiff' or "Lead Plaintiff' means Vijay Sherma .
7 . "Settlement Class" means all persons who purchased the common stock of Col e
National during the period beginning January 31, 1998, through and including May 16, 2003,
inclusive. Excluded from the Class are the Defendants, any entity in which a Defendant has a
controlling interest or is a parent or subsidiary of or is controlled by Cole National, Col e
National's officers and directors, and the legal representatives, heirs, predecessors, successor s
CL[-1092531v2
and assigns of any such excluded party. Also excluded from the Settlement Class are thos e
persons who timely and validly request exclusion from the Settlement Class pursuant to th e
Notice to be sent to the Class .
8 . "Settlement Class Period" means the period commencing on January 31, 1998 ,
through and including May 16, 2003 .
9 . "Settlement Class Member(s)" means all member(s) of the Settlement Class .
II . THE LITIGATION
On December 6, 2002, a complaint was filed in the United States District Court for th e
Northern District of Ohio, Eastern Division (the "Court"), as a proposed class action on behalf of
persons who purchased common stock of Cole National Corporation ("Cole National") during a
defined period of time .
On June 25, 2003, a consolidated, amended class action complaint in the litigation (th e
"Complaint ") was filed with the Court : Vijay Sherma v . Cole National Corporation, et al. , Case
No. 1 :02cv2397. The Complaint generally alleges, among other things, that defendants issued
materially false and misleading financial statements and other statements regarding Col e
National's financial condition during the purported class period . The Complaint further alleges
that the Lead Plaintiff and the Settlement Class Members purchased the common stock of Col e
National at prices that were artificially inflated as a result of Defendants' alleged
misrepresentations and omissions, purportedly in violation of §§ 10(b) and 20(a) of the Securitie s
Exchange Act of 1934 and Rule I Ob-5 promulgated thereunder. The Class, for purposes of this
Stipulation and Settlement only, consists of all persons who purchased the common stock o f
Cole National between January 31, 1998, and May 16, 2003, inclusive (the "Class Period") .
Excluded from the Class are the Defendants (as defined herein), any entity in which a Defendan t
has a controlling interest or is a parent or subsidiary of or is controlled by Cole National, Cole
CL[-?092531v2 4
National's officers and directors, and the legal representatives, heirs, predecessors, successors
and assigns of any such excluded party (the "Class") . The Complaint names as Defendants Col e
National Corporation, Jeffrey Cole, Larry Pollock, Lawrence Hyatt, and Thomas T .S. Kaung .
III . PRETRIAL PROCEEDINGS AND DISCOVERY IN THE LITIGATIO N
A . Pretrial Proceedings .
On February 25, 2003, the Court entered an order appointing Vijay Sherma as Lead
Plaintiff and approving Schiffrin & Barroway, LLP, as Lead Counsel ("Lead Counsel") an d
Weisman, Kennedy and Berris Co., LPA, as Liaison Counsel . On June 25, 2003, Lead Plaintiff
filed a consolidated, amended class action complaint.
B . Discovery, Investigation And Research .
Counsel for the Lead Plaintiff has conducted discovery and investigation of the claim s
pleaded in the Litigation . This discovery and investigation has included, inter alia, (i) inspection
and analysis of approximately six thousand pages of documents produced by Defendants; (ii)
inspection and analysis of documents produced by nonparties, including, among others ,
regulatory agencies , Cole National's competitors , and securities analysts ; ( iii) consultation with
experts ; (iv) review of public filings, annual reports, and other public statements ; (v) interview s
of percipient witnesses ; and (vi) research of the applicable law with respect to the claims asserted
in the Complaint and the potential defenses thereto .
IV. CLAIMS OF THE LEAD PLAINTIFF AND THE SETTLEMENT CLASS ANDBENEFITS OF SETTLEMENT
The Lead Plaintiff believes that the claims asserted in the Litigation have merit and tha t
the evidence developed to date and the applicable law supports the claims asserted . Lead
Counsel for the Lead Plaintiff recognize and acknowledge, however, the expense and length o f
continued proceedings necessary to prosecute the Litigation against the Defendants through tria l
CLI-1092531v2
and through appeals . Lead Counsel for the Lead Plaintiff also have taken into account th e
uncertain outcome and the risk of any litigation, especially in complex actions such as this
Litigation, as well as the difficulties and delays inherent in such litigation . Lead Counsel for the
Lead Plaintiff also are mindful of the inherent problems of proof under and possible defenses t o
the federal securities law violations asserted in the Complaint . Lead Counsel for the Lead
Plaintiff believe that the settlement set forth in the Stipulation confers substantial benefits upo n
the Settlement Class and each of the Settlement Class Members . Based on their investigatio n
and evaluation, Lead Counsel for the Lead Plaintiff has determined that the settlement set fort h
in the Stipulation is fair, reasonable , and adequate and is in the best interests of the Lead Plaintiff
and the Settlement Class and each of the Settlement Class Members .
V . DEFENDANTS' DENIALS OF WRONGDOING AND LIABILITY
The Defendants have denied and continue to deny each and all of the claims an d
contentions alleged by the Lead Plaintiff in the Litigation . The Defendants also have denied and
continue to deny, j rntealia, that they made any material misstatements or omissions with
scienter, that the price of Cole National common stock was artificially inflated by reason o f
alleged misrepresentations, nondisclosures or otherwise, or that the Lead Plaintiff or the
Settlement Class were harmed in any way by the conduct alleged in the Complaint .
Nonetheless, the Defendants have concluded that it is desirable that the Litigation be full y
and finally settled in the manner and upon the terms and conditions set forth in this Stipulation to
limit further expense, inconvenience and distraction, to dispose of burdensome and protracted
litigation, and to permit the operation of Cole National's business without further expensive
litigation and the distraction and diversion of Cole National's executive personnel with respect to
matters in issue in the Litigation . The Defendants also have taken into account the uncertainty
and risks inherent in any litigation, especially in complex cases like this Litigation. The
CLI-109253 I v2 6
Defendants have, therefore, determined that it is desirable and beneficial to them that th e
Litigation be settled in the manner and upon the terms and conditions set forth in this Stipulation.
There has been no adverse determination by any Court as to the merits of the claims asserted b y
the Lead Plaintiff against the Defendants . THIS NOTICE DOES NOT IMPLY THAT THERE
HAS BEEN OR WOULD BE ANY FINDING OF WRONGDOING OR THAT RECOVER Y
COULD BE HAD IN ANY AMOUNT IF THE LITIGATION WERE NOT SETTLED .
VI . THE RIGHTS OF SETTLEMENT CLASS MEMBER S
If you are a Settlement Class Member, you may receive the benefit of, and you will b e
bound by, the terms of the proposed Settlement described in Part VII of this Notice, upon
approval of the Settlement by the Court .
If you are eligible to be a member of the Settlement Class (that is , if you purchased Cole
National stock in the period of January 31, 1998, through May 16, 2003, inclusive), you have th e
following options :
1 . You may file a Proof of Claim and Release ("Proof of Claim") as desc ribed
below. If you choose this option, you will remain a member of the Settlement Class, you wil l
share in the proceeds of the proposed Settlement if your claim is timely and valid and if th e
proposed Settlement is finally approved by the Court, and you will be bound by the Judgment
and Release described below .
2. If you do not wish to part icipate in the proposed Settlement described in thi s
Notice, and thus do not wish to be included in the Settlement Class, you may request to b e
excluded . To do so, you must so state in writing no later than , 2003 . You must set
forth the name of this Litigation ( Vijay Sherma v . Cole National Co><poration, et al., Case No .
1 :02cv2397), your name , address and telephone number, and the name and address of the record
owner of Cole National stock if different from your own. You must also set forth the number o f
CLI-1092531 v2 7
shares of Cole National common stock purchased and sold during the Settlement Class Perio d
and the dates and prices of such purchase(s) and sale(s) . The exclusion request should b e
addressed as follows :
In re Cole National Corporation Securities LitigationThe Garden City Group, Inc .Attention: Claims AdministratorPost Office Box 9000, No . 6116Merrick, NY 11566-900 0
NO REQUEST FOR EXCLUSION WILL BE CONSIDERED VALID UNLESS ALL OF TH E
INFORMATION DESCRIBED ABOVE IS INCLUDED IN ANY SUCH REQUEST .
If you validly request exclusion from the Settlement Class, (a) you will be excluded fro m
the Settlement Class , (b) you will not share in the proceeds of the Settlement described herein ,
(c) you will not be bound by any judgment entered in the Litigation, and (d) you will not b e
precluded from prosecuting an individual claim at your own expense, if that claim is timely ,
against the Released Persons based on the matters complained of in the Litigation .
If you do not request to be excluded from the Settlement Class, you will be boun d
by any and all determinations made or judgments entered by the Court in the Litigation in
connection with the Settlement, whether favorable or unfavorable to the Settlement Class ,
including , without limitation, the Judgment desc ribed in Section VII ¶ 4, below.
4. If you do not request to be excluded from the Settlement Class, you may object t o
the Settlement, the Plan of Allocation of the Settlement Fund and/or the application of Plaintiffs '
counsel for an award of attorneys' fees and reimbursement of expenses in the manner set forth
below. The filing of a Proof of Claim by a Settlement Class Member does not preclude a
Settlement Class Member from objecting to the Settlement , the Plan of Allocation or the Awar d
of Fees and Expenses . If your objection is rejected, however, you will be bound by the
Settlement and the Judgment just as if you had not objected .
CLI-1092531 v2
You may do nothing at all . If you choose this option , you will not share in th e
proceeds of the Settlement, but you will be bound by any judgment entered by the Court .
6 . If you are a member of the Settlement Class, you may, but are not required to ,
enter an appearance through counsel of your own choosing at your own expense . If you do no t
do so, you will be represented by counsel for the Lead Plaintiff : Andrew L . Barroway and
Katharine M. Ryan, SCHIFFRIN & BARROWAY, LLP, Three Bala Plaza East, Suite 400, Bal a
Cynwyd, Pennsylvania 19004, and R. Eric Kennedy and Dan iel P. Goetz, WEISMAN,
KENNEDY & BERRIS CO ., L.P .A., 1600 Midland Building, 101 Prospect Avenue, West ,
Cleveland, Ohio 44114 .
VII . THE PROPOSED SETTLEMENT
The Settlement is embodied in the Stipulation, which is on file with the Court. The Lead
Counsel for the Lead Plaintiff, on the basis of, among other things, a thorough investigation of
the facts and the law relating to the acts, events and conduct complained of, and the subjec t
matter of the Litigation, have concluded that the proposed Settlement is fair to and in the bes t
interests of the Settlement Class . While the Defendants deny all charges of wrongdoing an d
deny liability, they have agreed to settle the Litigation on the basis proposed to put to rest al l
further controversy and to avoid substantial expenses and the inconvenience and distraction o f
burdensome and protracted litigation .
The following description of the proposed Settlement is only a summary; refer to the tex t
of the Stipulation, on file with the Court , for a full statement of its provisions :
The Settlement Fund consists of $5,375 ,000 in cash, plus interest thereon ,
deposited into an interest bearing escrow account for the benefit of the Settlement Clas s
Members .
CLI -1092531 v2 9
2 . Upon approval of the Stipulation by the Court and entry of a judgment that
becomes a final judgment and upon satisfaction of the other conditions to the Settlement ,
described below, the Settlement Fund will be distributed as follows :
(a) To pay Lead Plaintiffs attorneys' fees, expenses and costs (the "Fee and
Expense Award"), if and to the extent allowed by the Court ;
(b) To pay all the costs and expenses reasonably and actually incurred i n
connection with providing Notice to the members of the Settlement Class, locating Clas s
Members, soliciting Class claims, assisting with the filing of claims, and administering th e
settlement on behalf of the Settlement Class, and processing Proofs of Claim ; and
(c) To pay the reasonable costs incurred in preparing any tax returns require d
to be filed on behalf of the Settlement Fund as well as the taxes (and any interest and penaltie s
determined to be due thereon) owed by reason of the earnings of the Settlement Fund, including
all Taxes and Tax Expenses as defined in the Stipulation.
3 . Subject to the approval by the Court of the Plan of Allocation described below ,
the balance of the Settlement Fund (the "Net Settlement Fund") shall be distributed to Settlemen t
Class Members who submit valid, timely Proofs of Claim ("Authorized Claimants") as follows :
(a) Each person claiming to be an Authorized Claimant shall be required t o
submit a separate Proof of Claim (which shall include a general release of the Defendants and th e
other Released Persons in the form set forth in the Proof of Claim accompanying this Notice )
signed under penalty of perjury and supported by such documents as specified in the Proof o f
Claim as are reasonably available to the Authorized Claimant .
(b) All Proofs of Claim must be postmarked or received by ,
2003 . Unless otherwise ordered by the Court, any Settlement Class member who fails to submi t
a valid Proof of Claim within that period, or such other period as may be ordered by the Court ,
CLI-1092531 v2 10
shall be forever barred from receiving any payments pursuant to the Stipulation, but will in al l
other respects be subject to the provisions of the Stipulation and the final judgment entered b y
the Court .
(c) To the extent there are sufficient funds in the Net Settlement Fund, eac h
Authorized Claimant will receive an amount equal to the Authorized Claimant's Recognize d
Claim, as defined below. If, however, the amount in the Net Settlement Fund is not sufficient t o
permit payment of the total Claim of each Authorized Claimant, then each Authorized Claiman t
shall be paid that percentage of the Net Settlement Fund that each Authorized Claimant's Claim
is of the total of the Claims of all Authorized Claimants . A "Claim" will be computed as follows :
(d) Plan Of Allocation Of Settlement Proceeds Among Class Member s
The $5,375,000 Cash Settlement Amount and the interest ea rned thereon shall be the
Settlement Fund . The Settlement Fund, less all taxes, costs, fees, and expenses shall be
distributed to members of the Settlement Class who submit acceptable Proofs of Claim.
The Claims Administrator shall determine each Authorized Claimant's vro rata share o f
the Settlement Fund based upon each Authorized Claimant 's "Recognized Claim." The
Recognized Claim formula is not intended to be an estimate of the amount that a Settlemen t
Class Member might be able to recover after a trial ; nor is it an estimate of the amount that wil l
be paid to Authorized Claimants pursuant to the Settlement . The Recognized Claim formula i s
the basis upon which the Settlement Fund will be proportionately allocated to the Authorize d
Claimants .
The following proposed Plan of Allocation reflects the proposition that the decrease in
the price of Cole National common stock occurring upon the disclosures made by Cole National
on November 26, 2002, and May 19, 2003, reflected the elimination of the artificial inflation that
the defendants' alleged misrepresentations may have caused . On November 26, 2002, Cole
CLI-1092531 v2 I 1
National's stock closed at $11 .09 per share, a $1 .25 drop. On May 19, 2003, after Cole National
announced its restated financial results, the Company's stock price dropped another $0 .25 per
share to close at $8 .00. The total of these drops, $1 .50, is the maximum loss that will b e
recognized for purposes of the Plan of Allocation .
"Recognized Claims" will be calculated for purposes of the Settlement as follows :
A. For Authorized Claimants who purchased shares of Cole National common stockbetween January 31, 1998 , and November 25, 2002 :
If such shares were sold between November 26, 2002, and August 15,2003, the minimum of:
a. The difference between purchase price and sales price, if suchdifference is positive ; or
b. $1 .25 per share .
2. If such shares were still held as of August 15, 2003, the minimum o f
a. The difference between purchase price and the average price ofCole National between May 19, 2003, and August 15, 20031 ; or
b . $1.50 per share .
B. For Authorized Claimants who purchased shares of Cole National common stockbetween November 26, 2002, and May 16, 2003 :
If such shares were sold between May 19, 2003, and August 15, 2003, theminimum of.
a. The difference between purchase price and sales price, if suchdifference is positive ; or
b. $0.25 per share .
Pursuant to Section 21(D)(e)(1) of the Private Securities Litigation Reform Act of 1995,"in any private action arising under this title in which the plaintiff seeks to establishdamages by reference to the market price of a security, the award of damages to theplaintiff shall not exceed the difference between the purchase or sale price paid orreceived, as appropriate, by the plaintiff for the subject security and the mean tradingprice of that security during the 90-day period beginning on the date on which theinformation correcting the misstatement or omission that is the basis for the action isdisseminated." The 90-day period beginning on May 19, 2003 ends on August 15, 2003 .
CLI-7092531 v2 12
2 . If such shares were still held as of August 15, 2003, the minimum of:
a. The difference between purchase price and the average price ofCole National between May 19, 2003, and August 15, 2003 ; or
b . $0.25 per share .
3 . Purchases during the Class Period will be matched against sales during theClass Period on a first in during the Class Period, first out during the ClassPeriod basis . Transactions resulting in a gain shall not be included .
4. Each Authorized Claimant shall be allocated a pro rata share of theSettlement Fund based on his, her, or its Recognized Claim as comparedto the total Recognized Claims of all Authorized Claimants .
(e) Although the settlement proceeds are being allocated among the
Settlement Class Members based on the formula stated above, it should not be assumed that a n
Authorized Claimant's Recognized Claim is equal to the amount of damages, if any, which coul d
have been recovered had this Litigation been fully tried instead of settled. The amount o f
damages which plaintiffs could prove, if any, is a matter of serious dispute, and the Settlement's
use of the formula set forth above does not constitute a concession, finding or admission that any
damages could be proven or that provable damages, if any, would be commensurate with a
Claim. No determination has been made by the Court as to whether y Settlement Class
Member suffered damages, or as to the proper measure of any damages . The determination of
damages, like the determination of liability, is a complicated and uncertain process, typically
involving conflicting expert opinions . During the course of the Litigation, the Defendants, in
addition to denying any liability, denied that the Settlement Class Members suffered any legally
compensable harm. This Settlement avoids the risks to the Class that liability or damages might
not have been proven at trial .
(f) Payment pursuant to the Plan of Allocation set forth above shall b e
conclusive against all Authorized Claimants. No Person shall have any claim against counsel for
Lead Plaintiff or any claims administrator or other agent designated by counsel for Lead Plaintiff
CL1-1 0925 3 1 v2 13
based on distributions made substantially in accordance with the Stipulation and the Settlement
contained therein, the Plan of Allocation, or further orders of the Court . All Settlement Class
Members who fail to complete and file a valid and timely Proof of Claim shall be barred fro m
participating in distributions from the Settlement Fund (unless otherwise ordered by the Court) ,
but otherwise shall be bound by all of the terms of the Stipulation, including the terms of any
judgment entered and the releases given .
4. If the Proposed Settlement is approved by the Court, the Court will enter a
Judgment which will dismiss the Litigation as against Defendants with prejudice, and bar an d
permanently enjoin the Lead Plaintiff and each Settlement Class Member, whether or not suc h
Settlement Class Member has submitted a Proof of Claim, from prosecuting the Released Claim s
(defined below) against the Released Persons, and any such Settlement Class Member shall b e
conclusively deemed to have released any and all such Released Claims against the Release d
Persons. The judgment will also discharge the Defendants from all claims for contribution tha t
have been, or may later be, brought that are based upon, relate to, or arise out of the Release d
Claims. The Court shall retain jurisdiction over implementing the Settlement, disposing of th e
Settlement Fund, hearing and determining applications for attorneys' fees, costs, interest ,
expenses (including fees and costs of experts and/or consultants) ,and enforcing an d
administering the Stipulation, including any releases executed in connection therewith .
5 . As used above, the "Released Claims" shall mean any and all claims or causes o f
action, including "Unknown Claims" as defined below, demands, rights, liabilities and causes o f
action of every nature and description whatsoever, known or unknown, asserted or that might
have been asserted (including, without limitation, claims for negligence, gross negligence ,
breach of duty of care and/or breach of duty of loyalty, fraud, breach of fiduciary duty, o r
violations of any state or federal statutes, rules or regulations) in the Litigation by the Lea d
CLI-1092531 v2 14
Plaintiff or the Settlement Class Members, or any of them, against the Released Persons base d
upon, arising from, or related to (a) the purchase of Cole National common stock by the Lea d
Plaintiff or a Settlement Class Member during the Settlement Class Period or (b) the subjec t
matter of this litigation .
"Unknown Claims" as used in the above de finition of Released Claims me ans any
Released Claims that any Lead Plaintiff or Settlement Class Member does not know or suspect t o
exist in his, her or its favor at the time of the release of the Released Persons which, if known by
him, her or it, might have affected his, her or its settlement with and release of the Release d
Persons, or might have affected his, her or its decision not to object to this Settlement . With
respect to any and all Released Claims, when the Settlement becomes effective, the Lea d
Plaintiff and each of the Settlement Class Members shall be deemed to have, and by operation o f
the Judgment shall have, expressly waived and relinquished, to the fullest extent permitted b y
law, the provisions, rights and benefits of § 1542 of the California Civil Code, which provides :
A general release does not extend to claims which the creditor doesnot know or suspect to exist in his favor at the time of executingthe release, which if known by him must have materially affectedhis settlement with the debtor .
When the Settlement becomes effective, the Lead Plaintiff and the Settlement Class Member s
shall be deemed to have, and by operation of the Judgment shall have waived any and all
provisions, rights and benefits conferred by any law of any state or territory of the United States,
or principle of common law, which is similar, comparable or equivalent to § 1542 of the
California Civil Code . The Lead Plaintiff and Settlement Class Members may hereafter discover
facts in addition to or different from those which he, she or it now knows or believes to be true
with respect to the subject matter of the Released Claims, but the Lead Plaintiff and eac h
Settlement Class Member, when the Settlement becomes effective, shall be deemed to have, an d
CLI-1092531v2 15
by operation of the Judgment shall have, fully, finally and forever settled and released any an d
all Released Claims, known or unknown, suspected or unsuspected, contingent or non-
contingent, whether or not concealed or hidden, which now exist, or heretofore have existe d
upon any theory of law or equity now existing or coming into existence in the future, including ,
without limitation, conduct which is negligent, intentional, with or without malice, or a breach o f
any duty, law or rule, without regard to the subsequent discovery or existence of such different o r
additional facts .
VIII . STATEMENT OF PLAINTIFF RECOVERY
Pursuant to the Settlement described herein, Defendants have paid $5,375,000 into a
Settlement Fund for the benefit of the Class herein . Lead Plaintiff estimates that there were
approximately 19.7 million shares of Cole National common stock traded on the New York
Stock Exchange during the Class Period which Plaintiff alleges may have been damaged as a
result of the alleged wrongdoing described at paragraph IV above . Lead Plaintiff estimates that
the average recovery per allegedly damaged share of Cole National common stock under the
Settlement is $0.27 for each such share, before deduction of Court awarded attorneys fees an d
expenses . Depending on the number of claims submitted, when during the Class Period a Clas s
Member purchased his or her shares of Cole National common stock, and whether those share s
were held at the end of the Class Period or sold during the Class Period, and if sold, when they
were sold, an individual Class Member may receive more or less than this average amount .
Under the relevant securities laws, a claimant ' s recoverable damages are limited to th e
losses attributable to the alleged securities law violations . Losses which resulted from factors
other than an alleged securities law violation are not recoverable from the Settlement Fund . For
purposes of the Settlement herein, a Class Member's distribution from the Net Settlement Fun d
CLI-1092531 v2 16
will be governed by the proposed Plan of Allocation described at paragraph VII above, or suc h
other Plan of Allocation as may be approved by the Court .
IX. STATEMENT OF ATTORNEYS' FEES AND COSTS SOUGH T
Plaintiffs' Counsel intend to apply for fees of up to one-third of the Settlement Fund, an d
for reimbursement of expenses incurred in connection with the prosecution of this Action in th e
approximate amount of $50,000 . The requested fees and expenses would amount to an averag e
of $0.08 per allegedly damaged share in total for fees and expenses . Plaintiffs' Counsel's time
and effort in the prosecution of this litigation is on a contingent fee basis, and Plaintiffs' Counse l
have advanced the expenses of the litigation, in the expectation that if they were successful i n
obtaining a recovery for the Class they would be paid from such recovery . In this type o f
litigation it is customary for counsel to be awarded a percentage of the common fund recovery a s
their attorneys' fees .
X. NOTICE TO BANKS . BROKERS . AND OTHER NOMINEE S
Banks, brokerage firms, institutions, and other persons who are nominees who purchase d
the common stock of Cole National for the beneficial interest of other persons as of any day fro m
January 31, 1998 through and including May 6, 2003, are requested within ten (10) days of
receipt of this Notice (1) to provide the Claims Administrator the names and addresses of suc h
beneficial purchasers, or (2) to forward a copy of the Notice to each such beneficial purchase r
and provide the Claims Administrator with written confirmation that the Notice has been s o
forwarded. You are entitled to reimbursement from the Settlement Fund of your reasonabl e
expenses incurred in complying with this provision upon submission of appropriate
documentation. Additional copies of the Notice may be obtained from the Claims Administrator
for forwarding to such beneficial owners . All such correspondence to the Claims Administrator
should be addressed as follows :
CL[-1092531 v2 17
In re Cole National Corporation Securities Litigationc/o The Garden City Group, Inc .Claims AdministratorPost Office Box 9000, No . 6116Merrick, NY 11566-900 0
XI . THE HEARING
A hearing (the "Hearing") will be held before the Honorable John R . Adams, United
States District Judge, at the United States District Court, Northern District of Ohio, Easter n
Division, 586 United States Courthouse, Federal Building, Two South Main Street, Akron, Ohio ,
at _.m. on , 2003, for the purpose of determining whether the proposed
Settlement is fair, reasonable and adequate and whether it should be approved by the Court and
whether Judgment should be entered dismissing the Litigation with prejudice as against
Defendants . The Hearing may be adjourned from time to time by the Court at the Hearing or any
adjourned session thereof without further notice .
Any member of the Class who has not requested exclusion may appear at the Hearing t o
show cause why the proposed Settlement should not be approved, the Litigation should not be
dismissed with prejudice as against the Defendants, and to present any opposition to the Plan of
Allocation or the application of counsel for Lead Plaintiff for attorneys' fees and expenses ;
provided, however, that no such person shall be heard, unless his or her objection or opposition
is made in writing and is filed, together with copies of all other papers and briefs to be submitted
by him or her to the Court at the hearing, with the Court no later than , 2003, and
showing due proof of service on :
CLI-1092531 v2 18
Andrew L . BarrowayKatharine M. RyanSCHIFFRIN & BARROWAY, LLPThree Bala Plaza Eas tSuite 400Bala Cynwyd, PA 19004
Lead Counsel for Plaintiff
R . Eric KennedyDaniel P . GoetzWEISMAN, KENNEDY & BERRIS CO ., L .P.A .1600 Midland Building101 Prospect Avenue, WestCleveland, OH 4411 4
Liaison Counsel for Plaintiff
John M. Newman, Jr.Mark HerrmannJONES DAYNorth Point901 Lakeside AvenueCleveland, OH 4411 4
Counsel for Defendants Cole National Corporation,Jeffrey Cole, Larry Pollock, and Lawrence Hyatt
and
Steven D . CundraO'ROURKE & CUNDRA818 18th Street, N.W .Suite 800Washington , DC 20037-1420
Counselfor Defendant Thomas T.S. Kaung
Unless otherwise ordered by the Court, any member of the Settlement Class who does not make
his or her objection or opposition on a timely basis and in the manner provided shall be deeme d
to have waived all objections and opposition to the fairness, reasonableness and adequacy of the
proposed Settlement, the Plan of Allocation, and the request of counsel for Lead Plaintiffs fo r
attorneys' fees and expenses .
CLI-1092531v2 19
XII . EXAMINATION OF PAPERS AND INQUIRIE S
This notice contains only a summary of the terms of the proposed Settlement . For a more
detailed statement of the matters involved in the Litigation, refer to the pleadings, to the
Stipulation, and to other papers filed in this action which may be inspected at the Office of the
Clerk of the United States District Court, Northern District of Ohio, Eastern Division, 586
United States Courthouse, Federal Building, Two South Main Street, Akron, Ohio 44308-1813
during business hours of each business day .
Inquiries regarding the Litigation should be addressed as follows :
In re Cole National Co oration Securities Litigationc/o The Garden City Group, Inc .Post Office Box 9000, No . 6116Merrick, NY 11566-9000
DO NOT CONTACT THE COURT OR THECLERK'S OFFICE REGARDING THIS NOTICE .
DATED : .2003BY ORDER OF THE COURT,UNITED STATES DISTRICT COURT,NORTHERN DISTRICT OF OHI O
CLI-1092531 v2 20
IN THE UNITED STATES DISTRICT COURTFOR THE NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
VIJAY SHERMA, on behalf of herselfand all others similarly situated,
Plaintiff,
Case No. 1 :02cv239 7
Judge John R . Adams
V.
COLE NATIONAL CORPORATION,et al.,
Defendants .
PROOF OF CLAIM AND RELEASE
CLf-1092592v2
GENERAL INSTRUCTION S
To recover as a member of the Settlement Class (as defined in the Notice o f
Pendency of Class Action, Proposed Settlement of Class Action, and Settlement Hearing
("Notice")) in the action entitled Viiay Sherma v . Cole National Corporation, et al. , (the
"Litigation"), you must complete and, on page _ hereof, sign this Proof of Claim and Release .
If you fail to file a properly completed, signed and addressed (as set forth in paragraph 3 below )
Proof of Claim and Release , your claim may be rejected and you may be precluded from an y
recovery from the Settlement Fund created in connection with the proposed settlement of th e
Litigation .
2. Submission of this Proof of Claim and Release, however, does not assure that yo u
will share in the proceeds of settlement in the Litigation .
YOUR COMPLETED AND SIGNED PROOF OF CLAIM AND RELEAS E
FORM MUST BE POSTMARKED ON OR BEFORE , 2003, ADDRESSED AS
FOLLOWS:
In re Cole National Corporation Securities LitigationThe Garden City Group, Inc .Attention: Claims AdministratorPost Office Box 9000, No . 6116Merrick, NY 11566-900 0
4 . If you are a member of the Settlement Class and you do not properly and timel y
request exclusion in connection with the proposed settlement, you will be bound by the terms of
any judgment entered in the Litigation, WHETHER OR NOT YOU SUBMIT A PROOF O F
CLAIM AND RELEASE.
If you are NOT a member of the Settlement Class, DO NOT submit a Proof o f
Claim and Release form .
CL]-1092592v2 2
CLAIMANT IDENTIFICATIO N
1 . "Cole National" means Cole National Corporation and all of its predecessors ,
successors, parents, subsidiaries, divisions and related or affiliated entities .
2 . "Defendants" means Cole National Corporation, Jeffrey Cole, Larry Pollock ,
Lawrence Hyatt, and Thomas T .S. Kaung.
3 . "Individual Defend ants" means, as the context requires, Jeffrey Cole, Larry
Pollock, Lawrence Hyatt, and Thomas T .S. Kaung .
4. If you purchased Cole National stock and held the certificate(s) in your name, you
are the beneficial purchaser as well as the record purchaser . If, however, you purchased Col e
National stock and the certificate(s) were registered in the name of a third party, such as a
nominee or brokerage firm, you are the beneficial purchaser and the third party is the recor d
purchaser.
5 . Use Part I of this form entitled "Claimant Identification" to identify each
purchaser of record ("nominee") if different from the beneficial purchaser of Cole National stoc k
that forms the basis of this claim . THIS CLAIM MUST BE FILED BY THE ACTUAL
BENEFICIAL PURCHASER OR PURCHASERS, OR THE LEGAL REPRESENTATIVE O F
SUCH PURCHASER OR PURCHASERS, OF THE COLE NATIONAL STOCK UPO N
WHICH THIS CLAIM IS BASED.
6. All joint purchasers must sign this claim. Executors, administrators, guardians ,
conservators and trustees must complete and sign this claim on behalf of persons represented b y
them; documentation establishing their authority must accompany this claim ; and their titles or
capacities must be stated . The Social Security (or taxpayer identification) number and telephone
number of the beneficial owner may be used in verifying the claim. Failure to provide the
foregoing information could delay verification of your claim or result in rejection of the claim .
CL!-1092592v2 3
CLAIM FORM
Use Part II of this form entitled "Schedule of Transactions in Cole National
Common Stock" to supply all required details of your transaction(s) in Cole National stock. If
you need more space or additional schedules, attach separate sheets giving all of the required
information in substantially the same form. Sign and print or type your name on each additional
sheet.
2 . On the schedules, provide all of the requested information with respect to all o f
your purchases and all of your sales of Cole National common stock which took place at any
time beginning January 31, 1998, through and including May 16, 2003 (the "Settlement Class
Period"), whether such transactions resulted in a profit or a loss . Failure to report all such
transactions may result in the rejection of your claim .
3 . List each transaction in the Settlement Class Period separately and i n
chronological order, by trade date, beginning with the earliest . You must accurately provide th e
month, day and year of each transaction you list .
4. The date of covering a "short sale" is deemed to be the date of purchase of Cole
National common stock. The date of a "short sale" is deemed to be the date of sale of Col e
co-insurers, reinsurers, controlling shareholders, attorneys, accountants, auditors, banks o r
investment bankers, advisors, personal or legal representatives, predecessors, successors, parents ,
subsidiaries, divisions, joint ventures, assigns , spouses , heirs, associates , related or affiliated
entities, any entity in which a Person has a controlling interest, any members of their immediat e
families, or any trust of which any Defendant is the settlor or which is for the benefit of an y
Defendant and/or member(s) of his family or any past or present officer or director of each of th e
foregoing entities ("Released Persons") .
"Released Claims" means any and all claims or causes of action, including "Unknown
Claims" as defined below, demands, rights , liabilities and causes of action of every nature and
Ci.E-1092592v2 7
description whatsoever, known or unknown, asserted or that might have been asserte d
(including, without limitation, claims for negligence, gross negligence, breach of duty of care
and/or breach of duty of loyalty, fraud, breach of fiduciary duty, or violations of any state o r
federal statutes, rules or regulations) in the Litigation by the Lead Plaintiff or the Settlement
Class Members, or any of them, against the Released Persons based upon, arising from, or
related to (a) the purchase of Cole National common stock by the Lead Plaintiff or a Settlement
Class Member during the Settlement Class Period or (b) the subject matter of this litigation .
B . "Unknown Claims," as used in the definition of Released Claims above, mean s
any Released Claims which the Lead Plaintiff or Settlement Class Member does not know o r
suspect to exist in his, her or its favor at the time of the release of the Released Persons which, i f
known by him, her or it, might have affected his, her or its settlement with and release of the
Released Persons, or might have affected his, her or its decision not to object to this settlement .
With respect to any and all Released Claims, the Settling Part ies stipulate and agree that, upon
the Effective Date, the Lead Plaintiff and each of the Settlement Class Members shall be deeme d
to have, and by operation of the Judgment shall have, expressly waived and relinquished, to th e
fullest extent permitted by law , the provisions, rights and benefits of § 1542 of the Californi a
Civil Code, 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 if known by him must have materially affected his settlement withthe debtor.
The Lead Plaintiff and the Settlement Class Members, upon the Effective Date, shall be deeme d
to have, and by operation of the Judgment shall have, waived any and all provisions, rights an d
benefits conferred by any law of any state or territory of the United States, or principle o f
common law, which is similar, comparable or equivalent to § 1542 of the California Civil Code .
CLI-1092592v2 8
The Lead Plaintiff and Se tt lement Class Members may hereafter discover facts in addition to or
different from those which he, she or it now knows or believes to be true with respect to th e
subject matter of the Released Claims, but the Lead Plaintiff and each Settlement Class Member ,
upon the Effective Date, shall be deemed to have, and by operation of the Judgment shall have ,
fully, finally and forever settled and released any and all Released Claims, known or unknown ,
suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden ,
which now exist, or heretofore have existed upon any theory of law or equity now existing or
coming into existence in the future, including, without limitation, conduct which is negligent,
intentional, with or without malice, or a breach of any duty, law or rule, without regard to the
subsequent discovery or existence of such different or additional facts .
C. This release shall be of no force or effect unless and until the Court approves th e
Stipulation of Settlement and the Stipulation becomes effective as to all Defendants on th e
Effective Date (as defined in the Stipulation) .
D . I (we) hereby warrant and represent that I (we) have not assigned or transferred or
purported to assign or transfer, voluntarily or involuntarily, any matter released pursuant to thi s
release or any part or portion thereof.
E. I (we) hereby warrant and represent that I (we) have included information about
all of my (our) transactions in Cole National common stock that occurred during the Settlemen t
Class Period as well as the number of shares of Cole National common stock held by me (us) a t
commencement of trading on January 31, 1998, and at the close of trading on May 16, 2003 .
F. If I am signing on behalf of someone else, I hereby certify and warrant that I am
authorized to make this Proof of Claim and Release .
CLI-1092592v2 9
G. I (we) certify that I am (we are) not subject to backup withholding under the
provisions of Section 3406 (a) (1) (c) of the Internal Revenue Code .
Note: If you have been notified by the Internal Revenue Service that you are subject to
backup withholding, please strike out the language that you are not subject to
backup withholding in the certification above.
I declare under penalty of perjury under the laws of the United States of America that the
foregoing information supplied by the undersigned is true and correct and that this Proof of
Claim and Release form was executed this day o f
(month) (year)in
(City, State, Country )
(Sign your name here )
(Type or print your name here)
(Capacity of persons signing, e .g., BeneficialPurchaser, Executor or Administrator)
SIGNIFICANT AMOUNT OF TIME .
THANK YOU FOR YOUR PATIENCE .
Reminder Checklist:
I . Please sign the above release and declaration .
2. Remember to attach supporting documentation, if available .
3 . Do not send original or copies of stock certificates.
4. Keep a copy of your claim form for your records .
ACCURATE CLAIMS PROCESSING TAKES A
CLI-1092592v2 10
5. If you desire an acknowledgement of receipt of your claim form, please send itCertified Mail, Return Receipt Requested .
6. If you move, please send us your new address.
CLI-1092592v2 11
IN THE UNITED STATES DISTRICT COURTFOR THE NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
VIJAY SHERMA, on behalf of herselfand all others similarly situated,
Case No . 1 :02cv2397
Judge John R. AdamsPlaintiff,
V .
COLE NATIONAL CORPORATION,et al.,
Defendants .
SUMMARY NOTICE FOR PUBLICATIO N
CL[-1092517v2
TO : ALL PERSONS WHO PURCHASED COLE NATIONAL CORPORATION ("COLENATIONAL") COMMON STOCK DURING THE PERIOD BEGINNING JANUARY31, 1998, THROUGH MAY 16, 2003, INCLUSIVE :
YOU ARE HEREBY NOTIFIED, pursuant to an Order of the United States Distric t
Court for the Northern District of Ohio, that a hearing will be held on , 2003, at
a.m. before the Honorable John R . Adams at the United States District Courthouse,
Northern District of Ohio, Eastern Division, 586 United States Courthouse, Federal Building ,
Two South Main Street, Akron, Ohio 44308-1813, to determine (1) whether the proposed
settlement of the above-captioned Litigation for the cash sum of $5,375,000 should be approve d
by the Court as fair, reasonable and adequate ; (2) whether, thereafter, this Litigation should be
dismissed on the merits and with prejudice as set forth in the Stipulation of Settlement dated a s
of July 3, 2003, on file with the Court ; (3) whether the Plan of Allocation should be approved ;
and (4) the reasonableness of the application of plaintiffs' counsel for the payment of attorneys '
fees and reimbursement of costs and expenses incurred in connection with this Litigation ,
together with interest thereon .
If you purchased the common stock of Cole National during the period beginnin g
January 31, 1998, through May 16, 2003, inclusive, your rights may be affected by thi s
Litigation and the settlement thereof. If you have not received a detailed Notice of Pendency o f
Class Action, Proposed Settlement of Class Action, and Settlement Hearing, and a copy of th e
Proof of Claim and Release, you may obtain copies by writing to Vijay Sherma v . Cole Nationa l
Corporation, et al. , c/o The Garden City Group, Inc ., Attention : Claims Administrator, Post
Office Box 9000, No . 6116, Merrick, New York 11566-9000 . If you are a Settlement Class
Member, to share in the distribution of the Net Settlement Fund, you must submit a Proof o f
Claim and Release no later than , 2003, establishing that you are entitled t o
CLi-1092517v2 2
recovery. You will be bound by any judgment rendered in the Litigation unless you submit a
request to be excluded, in writing, to the above address, postmarked no later than
2003 .
Counsel representing the parties in this litigation are :
Andrew L . BarrowayKatharine M. RyanSCHIFFRIN & BARROWAY, LLPThree Bala Plaza EastSuite 400Bala Cynwyd, PA 19004
Lead Counselfor Plaintiff
R. Eric KennedyDaniel P . GoetzWEISMAN, KENNEDY & BERRIS CO., L.P .A.1600 Midland Buildin g101 Prospect Avenue, WestCleveland, OH 44114
Liaison Counselfor Plaintiff
and
John M. Newman, Jr .Mark HerrmannJONES DAYNorth Point901 Lakeside AvenueCleveland, OH 4411 4
Counsel for Defendant Cole National and certain individual defendant s
and
Steven D. CundraO'ROURKE & CUNDRA818 1Sth Street, N .W .Suite 800Washington , DC 20037-1420
Counsel for Defendant Thomas T.S. Kaung
CL1-i0925 7v2 3
PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFIC E
REGARDING THIS NOTICE .
DATED: , 2003 BY ORDER OF THE COURTUNITED STATES DISTRICT COUR TNORTHERN DISTRICT OF OHI O
CLi-1092517v2 4
IN THE UNITED STATES DISTRICT COURTFOR THE NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
VIJAY SHERMA, on behalf of herselfand all others similarly situated,
Plaintiff,
Case No . I :02cv2397
Judge John R. Adams
V .
COLE NATIONAL CORPORATION,et al.,
Defendants .
[PROPOSED] FINAL JUDGMENT OFDISMISSAL WITH PREJUDICE
CLI-] 092629v2
This matter having come before the Court for hearing, pursuant to the Order of thi s
Court, dated , 2003 , on the application of the part ies for approval of the settlemen t
set forth in the Stipulation of Settlement , dated as of July 3, 2003, (" Stipulation "), and due and
adequate notice having been given the Settlement Class as required in said Order, and the Court
having considered all papers filed and proceedings had herein and otherwise being full y
informed in the premises and good cause appearing therefor, IT IS HEREBY ORDERED ,
ADJUDGED AND DECREED that :
This Judgment hereby incorporates by reference the definitions in the Stipulation ,
and all terms used herein shall have the same meanings as set forth in the Stipulation .
2 . This Court has jurisdiction over the subject matter of the Litigation and over al l
parties to the Litigation, including all members of the Settlement Class .
This action is properly and finally certified as a class action for purposes o f
settlement under Rules 23(a) and (b)(3) of the Federal Rules of Civil Procedure . The Court finds
that (i) the members of the Class are so numerous that joinder of all members is impracticable ;
(ii) there are questions of law and fact common to the Class, including inter alia, whether allege d
statements by the Defendants were mate rially false or misleading and made with scienter, and
whether allegedly false or misleading statements artificially inflated the market price of Cole
National common stock during the Class Period ; (iii) the claims of the Lead Plaintiff as asserted
in her complaint are typical of the claims of the Class ; (iv) the Lead Plaintiff has retained
experienced and competent counsel and has fairly and adequately protected the interests of th e
Class; (v) the questions of law and fact common to the Class predominate over any question s
affecting only individual members of the Class; and (vi ) a class action is superior to other
available methods for the fair and efficient adjudication of the controversy .
CLI-1092629v2 2
4. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, this Court hereb y
approves the Settlement set forth in the Stipulation and finds that said Settlement is, in al l
respects , fair, reasonable and adequate to the Settlement Class .
5 . Except as to any individual claim of those persons who have validly and timel y
requested exclusion from the Settlement Class, this Court hereby dismisses on the merits an d
with prejudice and without costs (except as otherwise provided in the Stipulation) the Litigatio n
against the Defendants. Those persons who have validly and timely requested exclusion fro m
the Settlement Class shall not participate in the proceeds of the Settlement hereby approved o r
receive any benefits thereunder .
6. The Court finds that the Settlement set forth in the Stipulation is in all respect s
fair, reasonable and adequate to the Settlement Class and the Defendants, and the parties to th e
Stipulation are hereby directed to consummate the Settlement in accordance with the terms of the
Stipulation .
7. Upon the Effective Date, each and every Released Claim of the Lead Plaintiff and
each and every Settlement Class Member, whether or not such Lead Plaintiff or Settlement Clas s
Member has filed a Proof of Claim and Release, shall be deemed to be conclusively released a s
against the Released Persons . "Released Claims" means any and all claims or causes of action ,
including "Unknown Claims" as defined in ¶ 1 .22 of the Stipulation , demands, rights , liabilities
and causes of action of every nature and description whatsoever, known or unknown, asserted o r
that might have been asserted (including, without limitation, claims for negligence, gross
negligence, breach of duty of care and/or breach of duty of loyalty, fraud, breach of fiduciary
duty, or violations of any state or federal statutes, rules or regulations) in the Litigation by th e
Lead Plaintiff or the Settlement Class Members, or any of them, against the Released Person s
CL[-] 092629v2
based upon, arising from or related to (a) the purchase of Cole National common stock by th e
Lead Plaintiff or a Settlement Class Member during the Settlement Class Period or (b) the
subject matter of this litigation .
All Settlement Class Members are hereby forever barred and enjoined fro m
prosecuting, either directly or in any other capacity, the Released Claims against any of the
Released Persons .
9. Upon the Effective Date, each of the Released Persons shall be deemed to have ,
and by operation of this Judgment shall have, fully, finally and forever released, relinquished and
discharged each and all of the Settlement Class Members and Lead Counsel to the Lead Plaintiff
from all claims (including "Unknown Claims"), arising out of, relating to, or in connection wit h
the institution, prosecution, assertion or resolution of the Litigation or the Released Claims .
10. In accordance with Section 4(f)(7)(A) of the Private Secu rities Litigation Reform
Act of 1995, 15 U.S.C. § 78u-4(f)(7)(A), each of the Defendants is by virtue of the Settlement
discharged from all claims for contribution that have been or may hereafter be brought by or o n
behalf of any of the Non-Settling Defendants based upon, relating to, or arising out of th e
Released Claims. Accordingly, (a) the Non-Settling Defendants are hereby permanently barred ,
enjoined, and restrained from commencing, prosecuting, or asserting any such claim fo r
contribution against any Defendant based upon, relating to, or arising out of the Release d
Claims, and (b) the Defendants are hereby permanently barred, enjoined, and restrained fro m
commencing, prosecuting, or asserting any claim for contribution against the Non-Settlin g
Defendants based upon, relating to, or arising out of the Released Claims . For purposes of thi s
paragraph 10 and the following paragraphs 11-13, "Non-Settling Defendants" shall include any
CL1-1092629v2 4
person who Lead Plaintiff or any Settlement Class Member may hereafter sue on any clai m
based upon, relating to, or arising out of the Released Claims .
11 . In accordance with otherwise applicable federal and state law, and in light of th e
Settlement, (a) the Non-Settling Defendants are hereby permanently barred, enjoined, an d
restrained from commencing, prosecuting, or asserting any other claim, however styled, whethe r
for indemnification, contribution, or otherwise, and whether arising under state, federal, o r
common law, against the Defendants based upon, arising out of, or relating to the Release d
Claims; and (b) the Defendants are hereby permanently barred, enjoined, and restrained fro m
commencing , prosecuting, or asse rt ing any other claim , however styled whether for
indemnification, contribution, or otherwise, and whether arising under state, federal, or commo n
law against Non-Settling Defendants based upon, arising out of, or relating to the Released
Claims .
12 . In accordance with Section 4(a)(7)(B) of the Reform Act, 15 U .S .C. § 78u-
4(f)(7)(B), otherwise applicable federal and state law, and paragraph 5 .4 of the Stipulation, any
final verdict or judgment that may be obtained by or on behalf of the Lead Plaintiff or an y
Settlement Class Member shall be reduced by the greater of (a) an amount that corresponds t o
the percentage of responsibility, if any, of the Released Persons for the claims asserted by or o n
behalf of the Lead Plaintiff and the Settlement Class, or (b) the value of the consideration paid b y
or on behalf of the Released Persons to the Lead Plaintiff and the Settlement Class in connectio n
with the Settlement .
13 . Any judgment Lead Plaintiff or any Settlement Class Member may obtain agains t
any Non-Settling Defendant shall be reduced or credited (up to the amount of such judgment) b y
an amount equal to the amount of any final non-appealable judgment which such Non-Settling
CLI-1092629v2
Defendant may obtain against any of the Defendants based upon, arising out of or relating to th e
Settled Claims .
14. The Notice of Pendency of Class Action, Proposed Settlement of Class Action ,
and Settlement Hearing (the "Notice") given to the Settlement Class was the best notic e
practicable under the circumstances, including individual notice to all members of the Settlemen t
Class who could be identified through reasonable effort . The Notice provided due and adequate
notice of the proceedings and of the matters set forth therein, including the proposed Settlemen t
set forth in the Stipulation, to all persons entitled to such Notice, and said Notice fully satisfie d
the requirements of Rule 23 of the Federal Rules of Civil Procedure and the requirements of du e
process .
15 . Without affecting the finality of this Judgment in any way, this Court hereb y
retains continuing jurisdiction over (a) implementation of this Settlement and any award or
distribution of the Settlement Fund, including interest earned thereon ; (b) disposition of the
Settlement Fund ; (c) hearing and determining applications for attorneys' fees, costs, interest and
expenses (including fees and costs of experts and/or consultants) in the Litigation; and (d) all
parties hereto for the purpose of enforcing and administering the Stipulation .
16. The Settlement shall not be deemed to constitute an admission of liability or
wrongdoing on the part of any of the Defendants .
17 . 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 .
18 . In the event the Settlement does not become effective in accordance with th e
terms of the Stipulation or in the event the Settlement Fund or any portion thereof is returned t o
Cole National, then this Judgment shall be rendered null and void to the extent provided by an d
cL1-10926292 6
in accordance with the Stipulation and shall be vacated and, in such event, all orders entered an d
releases delivered in connection herewith shall be null and void to the extent provided by and i n
accordance with the Stipulation .
IT IS SO ORDERED.
DATED: , 2003THE HONORABLE JOHN R. ADAMSUNITED STATES DISTRICT JUDGE
CL[-1092629v2 7
Cole National CorporationLitigation Settlement Fund
Section 1 .468B-1Relation Back Election
Pursuant to Treasury Regulation Section 1 .468B-1(j)(2), the transferor(s) and the administrator
of the Cole National Corporation Litigation Settlement Fund (the "Fund") hereby elect to treat
the fund as coming into existence on July 9, 2003, the earliest date of a transfer to the fund . On
July 9, 2003, this transferor caused Five Million, Three Hundred Seventy-Five Thousand Dollars
($5,375,000) to be transferred to the fund .
Qualified Settlement Fund : Cole National Corporation Litigation Settlement Fund
Address : The Garden City Group, Inc .Attention: Claims AdministratorPost Office Box 9000, No. 6116Merrick, NY 11566-900 0
