NOTICE OF PENDENCY OF CLASS ACTION AND PROPOSED SETTLEMENT WITH REDIFECOM DEFENDANTS, MOTION FOR ATTORNEYS' FEES AND SETTLEMENT FAIRNESS HEARING
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
IN RE INITIAL PUBLIC OFFERING 21 MC 92 (SAS)
SECURITIES LITIGATION
This document relates to:
IN RE REDIFF.COM INDIA LTD. 01 CV 3020 (SAS)
SECURITIES LITIGATION
NOTICE OF PENDENCY OF CLASS ACTION AND PROPOSED SETTLEMENT
WITH REDIFECOM DEFENDANTS, MOTION FOR ATTORNEYS' FEES
AND SETTLEMENT FAIRNESS HEARING
IF YOU BOUGHT AMERICAN DEPOSITARY SHARES ("ADSs") OF REDIFF.COM
INDIA LTD. DURING THE TIME PERIOD BETWEEN JUNE 14, 2000 THROUGH
APRIL 4, 2001, INCLUSIVE, YOU COULD GET A PAYMENT FROM A CLASS
ACTION SETTLEMENT.
A federal court authorized this notice. This is not a solicitation from a lawyer.
A proposed settlement of part of this litigation (the "Settlement") will provide $2,500,000 for the
benefit of investors who bought American Depositary Shares ("ADSs") of Rediff.com India Ltd.
("Rediff') during the time period between June 14, 2000 through April 4, 2001, inclusive (the "Class
Period").
This lawsuit involves two general types of Claims: "Non-IPO Causes of Action," which involve
allegations of securities fraud claims based upon alleged misrepresentations concerning the business
of Rediff; and "IPO Causes of Action" which involve an alleged scheme to defraud the investing
public characterized by tie-in agreements , undisclosed compensation and analyst conflicts, for the
purpose of fraudulently driving up the price of stock in hundreds of companies in the immediate
aftermarket of their IPOs. The proposed Settlement resolves ALL the claims against certain
Defendants , referred to as the "Settling Defendants " or "Rediff Defendants " (consisting of Rediff and
its officers and directors , Ajit Balakrishnan , Nitin Gupta, Rajiv Warrier, and Richard Li). The
proposed Settlement would also dismiss, with prejudice , and provide a covenant not to sue on the
Non-IPO Causes of Action as against the "Underwriter Defendants " (Goldman Sachs (Asia) L.L.C.,
Goldman Sachs & Co., Robert Fleming, Inc., Credit Suisse First Boston Corp.), but the proposed
Settlement does NOT release or dismiss the IPO Causes of Action as against the Underwriter
Defendants.
Your legal rights are affected whether you act, or don't act. Read this notice carefully.YOUR LEGAL RIGHTS AND OPTIONS IN THIS SETTLEMENT
SUBMIT A CLAIM FORM The only way to get a payment.
BY SEPTEMBER 7, 2007
EXCLUDE YOURSELF BY Get no payment. This is the only option that allows you to ever be part of
JUNE 29, 2007 any other lawsuit against the Settling Defendants and the other Released
Parties about the Resolved Claims.
OBJECT BY JUNE 15, 2007 Write to the Court about why you do not like the Settlement.
GO TO A HEARING ON Ask to speak in Court about the Settlement.
JULY 12, 2007
DO NOTHING Get no payment. Give up rights.
These rights and options - and the deadlines to exercise them - are explained in this Notice.
The Court in charge of this case still has to decide whether to approve the Settlement.
Payments will be made if the Court approves the Settlement and after appeals are resolved.
Please be patient.
SUMMARY OF NOTICE
A. Statement of Plaintiff Recovery
Pursuant to the Settlement described herein, a Settlement Fund consisting of $2,500,000 in cash, plus
interest, has been established. Plaintiffs estimate that there were approximately 32.1 million Rediff ADSs
traded during the Class Period which may have been damaged. Plaintiffs estimate that the average recovery for
each allegedly damaged Rediff ADS under the Settlement is $0.081 before deduction of Court-awarded
attorneys' fees and expenses. A Class Member's actual recovery will be a proportion of the Net Settlement
Fund determined by that claimant's Recognized Claim as compared to the total Recognized Claims of all Class
Members who submit acceptable Proofs of Claim. Depending on the number of claims submitted, when during
the Class Period a Class Member purchased their Rediff ADSs, the purchase price paid, and whether those
ADSs were held at the end of the Class Period or sold during the Class Period and, if sold, when they were
sold and the amount received, an individual Class Member may receive more or less than this average amount.
See Understanding Your Payment beginning on page 14 for more information on your Recognized Claim.
B. Statement of Potential Outcome of Case
The parties disagree on both liability and damages and do not agree on the average amount of damages per
ADS that would be recoverable if Plaintiffs were to have prevailed on each claim alleged. Under the relevant
securities laws, a class member's recoverable damages are limited to losses that can be attributed to the alleged
violations. Losses which resulted from factors other than the alleged violations or misrepresentations, such as
from general business downturns, are not recoverable. Defendants have asserted that the decline in the price
of Rediff's ADSs from a high of $19.31 within days of the June 14, 2000 Initial Public Offering, to $14.38 the
next month, and to $3.58 by January 2001, all of which declines occurred before, and without, any
ascertainable "corrective" disclosure, resulted from factors other than the alleged violations or
misrepresentations and ommissions. Defendants further assert that the decline from $3.58 upon the release of
allegedly "corrective" information, to as low as $2.00 per ADS, was quickly reversed as the price of Rediff's
ADSs rose again to $3.25 within days thereafter. Defendants' arguments suggest that at most the damages
1 An allegedly damaged ADS might have been traded more than once during the Class Period, and the indicated average recovery
would be the total for all purchasers of that ADS.
2might be $0.33 per ADS ($3.58 - $3.25), so that the recovery of $0.08 per ADS would represent approximately
24% of the maximum damages, in the Settling Defendants' view. The Settling Defendants would further argue
that even the decline from $3.58 to $3.25 was attributable to other non-actionable reasons that were announced
contemporaneously with the allegedly corrective information, and that the $0.33 estimate greatly overstates
recoverable damages. In addition, all Defendants strongly deny that they are liable so that damages are
irrelevant and that there would be no recovery after trial.
Plaintiffs' Counsel have estimated that the Class has claims against all Defendants for alleged damages
totaling approximately $29 million in this case. Plaintiffs' Counsel contend that the Non-Settling Underwriter
Defendants bear a greater responsibility for the damages than the Settling Defendants. While Plaintiffs might
seek to show that the entire difference between the offering price and a Class Member's sale price is
recoverable under the Securities Act, the Defendants would attempt to show that other factors unrelated to the
alleged misstatements caused such losses. The Settling Defendants deny that they are liable to the Plaintiffs or
the Class and deny that Plaintiffs or the Class have suffered any damages. Plaintiffs' Counsel recognized that
in the absence of a settlement with the Settling Defendants there were risks that Plaintiffs and the Class could
have recovered nothing or substantially less than the amount of the Settlement being obtained from the Settling
Defendants.
C. Statement of Attorneys' Fees and Costs Sought
Plaintiffs' Counsel are moving the Court to award attorneys' fees not to exceed one-third (33%%) of the
Gross Settlement Fund, and for reimbursement of expenses incurred in connection with the prosecution of this
Action in the approximate amount of $110,000. The requested fees and expenses would amount to an average
of 2.90 per allegedly damaged ADS in total for fees and expenses. Plaintiffs' Counsel have expended
considerable time and effort in the prosecution of this litigation through the successful opposition to the
Defendants' motions to dismiss and in discovery. Plaintiffs' Counsel have worked on a contingent-fee basis,
and have advanced the expenses of the litigation, in the expectation that if they were successful in obtaining a
recovery for the Class they would be paid from such recovery. In this type of litigation it is customary for
counsel to be awarded a percentage of the common fund recovery as their attorneys' fees.
D. Further Information
Further information regarding the Action and this Notice may be obtained by contacting Plaintiffs'
Counsel: Victor E. Stewart, Esq. or Ian T. Stoll, Esq., Lovell Stewart Halebian LLP, 500 Fifth Avenue,
New York, NY 10110, Telephone: (212) 608-1900.
E. Reasons for the Settlement
The Plaintiffs' principal reason for the Settlement is the benefit to be provided to the Class now. This
benefit must be compared to the risk that no recovery might be achieved after a contested trial and likely
appeals, possibly years into the future.
For the Settling Defendants, who deny all allegations of wrongdoing or liability whatsoever, the principal
reason for the Settlement is to eliminate the expense, risks, and uncertainty of continuing to litigate this action.
[END OF COVER PAGE]TABLE OF CONTENTS
Page
SUMMARY OF NOTICE .................................................................................................................................2
A. Statement of Plaintiff Recovery ............................................................................................................... ..2
B. Statement of Potential Outcome of Case ................................................................................................. ..2
C. Statement of Attorneys ' Fees and Costs Sought ...................................................................................... ..3
D. Further Information ................................................................................................................................. ..3
E. Reasons for the Settlement ...................................................................................................................... ..3
BASIC INFORMATION ................................................................................................................................ ..5
1. Why did I get this Notice package ? ......................................................................................................... ..5
2. What is this lawsuit about ? ...................................................................................................................... ..5
3. Tell me more about this litigation ? .......................................................................................................... .. 6
4. Why is this a class action ? ....................................................................................................................... ..7
5. Why is there a Settlement ? ...................................................................................................................... ..7
6. Tell me more about the background to the Settlement ? ........................................................................... ..7
7. Tell me more as to the Non-Settling Defendants ' partial dismissal ? ....................................................... .. 8
WHO IS IN THE SETTLEMENT? ................................................................................................................ .. 8
8. How do I know if I am part of the Settlement ? ....................................................................................... .. 8
9. Are there exceptions to being included ? .................................................................................................. .. 8
10. What if I am still not sure if I am included ? ............................................................................................ .. 9
THE SETTLEMENT BENEFITS - WHAT YOU GET .................................................................................. ..9
11. What benefits does the Settlement provide? ............................................................................................ ..9
12. How much will my payment be? ............................................................................................................. ..9
HOW YOU GET A PAYMENT - SUBMITTING A PROOF OF CLAIM FORM ......................................... .. 9
13. How can I get a payment ? ....................................................................................................................... .. 9
14. When would I get my payment? .............................................................................................................. ..9
15. What am I giving up to get a payment or stay in the Class? ................................................................... 10
EXCLUDING YOURSELF FROM THE SETTLEMENT ............................................................................. 10
16. How do I get out of the proposed Settlement ? ........................................................................................ 11
17. If I do not exclude myself, can I sue the Settling Defendants and the other
Released Parties for the same thing later? ............................................................................................... 11
18. If I exclude myself, can I get money from the proposed Settlement ? ..................................................... 11
THE LAWYERS REPRESENTING YOU ...................................................................................................... 11
19. Do I have a lawyer in this case ? .............................................................................................................. 11
20. How will the lawyers be paid ? ................................................................................................................. 11
OBJECTING TO THE SETTLEMENT .......................................................................................................... 12
21. How do I tell the Court that I do not like the proposed Settlement ? ....................................................... 12
22. What is the difference between objecting and excluding ? ....................................................................... 13
THE COURT'S SETTLEMENT FAIRNESS HEARING .............................................................................. 13
23. When and where will the Court decide whether to approve the proposed Settlement ? ........................... 13
24. Do I have to come to the Settlement Fairness Hearing? .......................................................................... 13
25. May I speak at the Settlement Fairness Hearing? .................................................................................... 13
IF YOU DO NOTHING .................................................................................................................................. 14
26. What happens if I do nothing at all? ........................................................................................................ 14
GETTING MORE INFORMATION ............................................................................................................... 14
27. Are there more details about the proposed Settlement ? ........................................................................... 14
28. How do I get more information ? ............................................................................................................. 14
UNDERSTANDING YOUR PAYMENT ........................................................................................................ 14
29. How will my losses be calculated ? How does the Claims Administrator handle the situation
when the total claims exceed the money in the Settlement Fund? ........................................................... 14
30. How do I calculate what my payment might be? ..................................................................................... 17
SPECIAL NOTICE TO SECURITIES BROKERS AND OTHER NOMINEES ............................................ 20
4BASIC INFORMATION
1. Why did I get this Notice package?
You or someone in your family may have purchased American Depositary Shares ("ADSs") of Rediff.com
India Ltd ("Rediff") during the time period between June 14, 2000 through April 4, 2001, inclusive (the "Class
Period").
The Court directed that this Notice be sent to all Class Members because they have a right to know about
the proposed Settlement of this class action lawsuit, and about all of their options, before the Court decides
whether to approve the Settlement. If the Court approves the Settlement and after objections and appeals are
resolved, a claims administrator appointed by the Court will make the payments that the Settlement allows.
You will be informed of the progress of the Settlement.
This package explains the lawsuit, the Settlement, your legal rights, what benefits are available, who is
eligible for them, and how to get them.
The Court in charge of the case is the United States District Court for the Southern District of New York,
and the case is known as In re Rediffcom India Ltd. Securities Litigation, Case No. 01-CV-3020 (SAS). This
case is also part of a group of cases known as In re Initial Public Offering Securities Litigation, 21 MC 92
(SAS). U.S. District Judge Shira A. Scheindlin is presiding over both lawsuits.
The people who sued are called "Plaintiffs." And the persons and entities they sued are the "Defendants."
For purposes of this Notice, Rediff, Ajit Balakrishnan, Nitin Gupta, Rajiv Warner, and Richard Li are known
as the "Settling Defendants." The remaining Defendants are Goldman Sachs (Asia) L.L.C., Goldman Sachs &
Co., Robert Fleming, Inc., Credit Suisse First Boston Corp. and are known as the "Non-Settling Defendants"
or the "Underwriter Defendants."
2. What is this lawsuit about?
Generally, the Plaintiffs' Consolidated Amended Securities Class Action Complaint (the "Complaint") sets
forth ten alleged claims of violation of the federal securities laws.
The First through Sixth Claims are referred to as the "IPO Causes of Action" and relate to alleged IPO
"laddering," undisclosed compensation, tie-in agreements and analyst conflicts.
The Seventh through Tenth Claims are referred to as the "Non-IPO Causes of Action" and relate to alleged
misrepresentations and omissions regarding the business of Rediff in Rediff's Registration Statement and
subsequent public filings. See detailed discussion below.
The Non-IPO Causes of Action, and the alleged participation by the Settling Defendants in the IPO Causes
of Action, are the subject of the Settlement.
The Settling Defendants deny they did anything wrong. The Court did not decide which side was right.
But both the Plaintiffs and the Settling Defendants agreed to the Settlement to resolve the case and get benefits
to investors. The two sides disagree on whether and how much money could have been won if the investors
had won at a trial.
The Non-Settling Defendants are not a party to this Settlement. Nevertheless, as part of the Settlement, the
Non-IPO Causes of Action are also being dismissed as against the Non-Settling Defendants, with prejudice,
and Class Members shall be deemed by the Judgment in this Action to covenant not to sue the Underwriter
Defendants with respect to the Non-IPO Causes of Action, so that the Settling Defendants do not remain liable
to the Non-Settling Defendants for contractual indemnity claims that the Non-Settling Defendants may assert
against the Settling Defendants.The IPO Causes of Action are not being dismissed or released as against the Non-Settling Defendants and
will continue to be prosecuted as part of the consolidated action in In Re Initial Public Offering Securities
Litigation 21 MC 92 (SAS) (the "IPO Securities Litigation").
3. Tell me more about this litigation?
Beginning on or about April 4, 2001, several lawsuits - Khanna v. Rediff com India Ltd., et al., No. 01 Civ.
3020; Steinberg v. Rediff com India Ltd., et al., No. 01 Civ. 3471; Bhasin v. Rediff com India Ltd., et al.,
No. 01 Civ. 3593; Karakunnel, et al. v. Rediff com India Ltd., et al., No. 01 Civ. 3814; and Shives v. Bank of
America Securities LLC, et al., No. 01 Civ. 4956 - were filed in the United States District Court for the
Southern District of New York.
The first four cases alleged substantially identical misrepresentations and omissions in Rediff's
Registration Statement and a Prospectus dated June 13, 2000 . The Shives case did not allege any
misrepresentations or omissions in Rediff' s offering documents but asserted claims similar to those in the IPO
Securities Litigation.
The first four cases were initially assigned to the Honorable Richard Owen. In June of 2001, Drs. Khanna
and Desai moved to be appointed lead plaintiff. Without ruling on the motion, Judge Owen transferred the
cases to Judge Scheindlin for coordination with the IPO Securities Litigation.
In September of 2001 , Judge Scheindlin consolidated all five cases into the Khanna lawsuit and ordered
that the other four cases be administratively closed . In August 2003, Plaintiffs sought leave to file a
consolidated amended complaint . On November 20, 2003, Judge Scheindlin appointed Drs. Khanna and Desai
Lead Plaintiffs and gave them permission to file an amended complaint.
The Plaintiffs ' Complaint sets forth ten claims alleging that : i) the Rediff Defendants and the Underwriter
Defendants violated section 11 of the Securities Act of 1933 (the "Securities Act") with respect to alleged IPO
"laddering " and Undisclosed Compensation in connection with Rediff ' s IPO (First Claim); ii) the Rediff
Defendants violated section 10 (b) of the Securities Exchange Act of 1934 (the "Exchange Act"), as well as
Rule lob-5 promulgated thereunder, with respect to materially false and misleading statements and omissions
of material fact related to the same alleged misconduct (Fifth Claim); iii) the Individual Defendants violated
section 15 of the Securities Act and section 20 (a) of the Exchange Act, respectively, with respect to the same
alleged misconduct ( Second Claim and Sixth Claim); iv) the Underwriter Defendants violated section 10(b) of
the Exchange Act, as well as Rule lob-5 promulgated thereunder, with respect to deceptive and manipulative
practices relating to alleged IPO "laddering " and Undisclosed Compensation and materially false and
misleading statements and omissions of material fact relating to the same alleged misconduct (Third Claim and
Fourth Claim); v) the Rediff Defendants and the Underwriter Defendants violated section 11 of the Securities
Act as a result of allegedly false and misleading statements and omissions contained in the Registration
Statement with respect to the business of Rediff ( Seventh Claim); vi) the Individual Defendants violated
section 15 of the Securities Act with respect to the same alleged misconduct (Eighth Claim); vii) the Rediff
Defendants violated section 10 (b) and Rule lob - 5 with respect to allegedly false and misleading statements
and omissions made after the IPO (Ninth Claim); and viii) the Individual Defendants violated section 20(a) of
the Exchange Act with respect to such statements and omissions (Tenth Claim).
The Non-IPO Causes of Action, and the alleged participation by the Rediff Defendants in the IPO Causes
of Action, are the subject of the Settlement . Lovell Stewart Halebian LLP was appointed co-lead counsel for
Plaintiffs ' Non-IPO Causes of Action. Six firms were appointed as an executive committee of co-lead counsel
for Plaintiffs ' IPO Causes of Action. "Plaintiffs ' Counsel" means the law firm of Lovell Stewart Halebian LLP
for the purposes of the Non-IPO Causes of Action, and the six-firm IPO Executive Committee for the purposes
of the IPO Causes of Action.
Judge Scheindlin, on October 15, 2004 , denied motions to dismiss by all the Defendants . She held that the
officers and directors were not prejudiced by purported untimely service of process. She further found
6sufficiently pleaded the allegations in the Complaint concerning the IPO Causes of Action and, with respect to
the Non-IPO Causes of Action, found sufficiently pleaded allegations regarding (a) the misrepresentation of
the educational background of one of Rediff's directors, (b) misrepresentation of the expiration of advertising
contracts and (c) misrepresentations regarding Rediff's email system. She also found that the Complaint
sufficiently pleaded the legal requirements of scienter and loss causation.
Since that date, Plaintiffs and the Settling Defendants vigorously sought discovery from each other and
third parties. They reviewed hundreds of thousands of pages of documents and have conducted eight
depositions. The Plaintiffs moved for class certification and the Defendants have vehemently opposed.
4. Why is this a class action?
In a class action, one or more people called Class Representatives (in this case, Drs. Suresh Khanna and
Avinash Desai), sue on behalf of people who have similar claims. All these people are a Class or Class
Members. One court resolves the issues for all Class Members, except for those who exclude themselves from
the Class. Judge Scheindlin is in charge of this class action.
5. Why is there a Settlement?
The Court did not decide in favor of Plaintiffs or the Settling Defendants. The Plaintiffs think that if they
won a trial and every issue was decided in their favor, they might have claimed as much as $29 million. The
Defendants think the Plaintiffs would not have won anything from a trial. But there was no trial. Instead, both
sides agreed to a Settlement. Although the Court denied Defendants' Motion to Dismiss the Complaint, the
Court did not finally decide in favor of Plaintiffs or Defendants. Instead, both sides agreed to a Settlement.
That way, they avoid the risks and cost of a trial, and the people affected will get compensation. The Class
Representatives and their attorneys think the Settlement is best for all Class Members.
6. Tell me more about the background to the Settlement?
Plaintiffs' Counsel conducted an investigation relating to the events and transactions alleged in the
Complaint. Plaintiffs' Counsel analyzed evidence and researched the applicable law with respect to the claims
against the Settling Defendants and their potential defenses. Plaintiffs' Counsel and the Settling Defendants
conducted discussions and arms-length negotiations with the assistance of the Court's appointed mediator,
United States Magistrate Judge Henry Pitman. Plaintiffs' Counsel pursued a settlement with a view to
achieving the best relief possible consistent with the interest of the Class. The decision by Plaintiffs' Counsel
to enter into the Settlement was made with knowledge of the facts and circumstances underlying Plaintiffs'
claims and the strengths and weaknesses of those claims. Plaintiffs' Counsel took into account the substantial
expense and length of time necessary to further prosecute the lawsuit through a class motion, discovery, and
(if summary judgment were denied) trial, post-trial motions, and likely appeals.
Although Plaintiffs' continuing claims against the Non-Settling Defendants make it inadvisable to detail
all of the potential risks of continued prosecution, Plaintiffs' Counsel considered the risk and uncertainty of
ultimately prevailing at trial against the Settling Defendants in light of various factors. The discovery risks
included: (a) the difficulty of obtaining discovery in India, (b) the complexity of obtaining evidence from
entities abroad, and (c) diminishing memories with the passage of time. The legal risks included the defense
that some of the challenged statements and omissions were forward-looking, or otherwise subject to a legal
"safe harbor" or "truth-on-the-market" defense, and other affirmative defenses. The Settlement provides a
substantial cash benefit and avoids the risks that the Settling Defendants would prevail at trial.
It should be noted that the Plaintiffs and the Settling Defendants conducted multiple mediation sessions and
numerous telephone conferences with Magistrate Pitman. Plaintiffs' Counsel conducted discovery, reviewing
hundreds of thousands of pages of documents, interviewing numerous potential witnesses and deposing the
Settling Defendants from Mumbai, India (on two occasions), from Hong Kong and from New York.Based on all of the foregoing, Plaintiffs' Counsel, who have extensive experience in complex class
litigation and securities matters, believe that the Settlement provides concrete benefits now versus a highly
uncertain prospect of any monies from the Settling Defendants after several more years of class litigation,
motions, full discovery and possibly trial and appeals. Taking into consideration the significant uncertainties
in predicting the outcome of this complex litigation, Plaintiffs' Counsel believes that the Settlement confers
substantial and concrete benefits upon the Class. Plaintiffs' Counsel concluded that the proposed Settlement is
fair, reasonable and adequate to the Plaintiffs and the Class, and it is in the best interest of Plaintiffs and the
Class to enter into the Settlement.
The Settling Defendants deny all wrongdoing or liability. Thus, the Settlement is not evidence, admission
or concession of any fault or liability or damages by the Settling Defendants. The Settling Defendants do not
concede any inadequacy in any defense they asserted or intended to assert. The Settling Defendants, while
continuing to deny all allegations of wrongdoing or liability whatsoever, desired to settle and terminate all
existing and potential claims against them, without in any way acknowledging any fault or liability.
The Court has not determined the merits of the Plaintiffs' claims or the Settling Defendants defenses. This
Notice should not be construed to imply that there has been or would be any finding of violation of the law,
or that there would be any possible recovery if the lawsuit were not settled.
7. Tell me more as to the Non-Settling Defendants' partial dismissal?
An integral part of the Settlement is the extinguishment of all of the Non-IPO Causes of Action, even
against the Non-Settling Defendants. The reason for dismissing the Non-IPO Causes of Action as against the
Non-Settling Defendants is that Rediff had entered into an indemnity agreement with the Non-Settling
Defendants as part of its IPO underwriting. This agreement required Rediff, in certain instances, to pay any
damages assessed against the Non-Settling Defendants. Thus, in order for Rediff to obtain the peace it seeks
by agreeing to the Settlement, it has to be freed of the potential indemnification claims. The Judgment
dismissing the Non-IPO Causes of Action as against the Underwriter Defendants will also contain a "covenant
not to sue" prohibiting all Class Members from suing the Underwriter Defendants with respect to the Non-IPO
Causes of Action.
WHO IS IN THE SETTLEMENT?
To see if you will get money from this Settlement, you first have to decide if you are a Class Member.
8. How do I know if I am part of the Settlement?
Judge Scheindlin, in her Preliminary Approval Order In Connection With Settlement Proceedings, dated
March 30, 2007, directed, for the purposes of the proposed Settlement, that everyone who fits this description
is a Class Member: "all persons and entities who purchased the ADSs of Rediffcom India Ltd. during the time
period between June 14, 2000 through April 4, 2001, inclusive."
9. Are there exceptions to being included?
You are not a Class Member if you are: (a) a Settling Defendant; (b) an Underwriter Defendant; (c) any of
the officers and directors of Rediff and its subsidiaries and affiliates; (d) a member of the immediate family
(parents, spouses, siblings, and children) of any Individual Defendant; (e) an entity in which any Defendant
has a controlling interest; or (f) the legal representatives, heirs, successors-in-interest, or assigns of any
excluded party. Also excluded from the Class are any putative Class Members who exclude themselves by
submitting a timely request for exclusion in accordance with the requirements set forth in this Notice.If one of your mutual funds owns Rediff ADSs, that alone does not make you a Class Member. You are a
Class Member only if you purchased Rediff ADSs individually. Contact your broker to see if you have or held
Rediff ADSs.
If you sold Rediff ADSs during the Class Period, that alone does not make you a Class Member. You are
a Class Member only if you bought Rediff ADSs during the Class Period.
10. What if I am still not sure if I am included?
If you are still not sure whether you are included, you can ask for free help by contacting the Claims
Administrator by mail at: Rediff.com India Securities Litigation; c/o Berdon Claims Administration LLC;
P.O. Box 9014; Jericho, NY 11753-8914; by toll-free phone at: (800) 766-3330; by fax at: (516) 931-0810; or
by visiting the website at: www.berdonclaims.com . Alternatively, you can fill out and return the claim form
described in Question 13 to see if you qualify.
THE SETTLEMENT BENEFITS - WHAT YOU GET
11. What benefits does the Settlement provide?
In exchange for the Settlement and dismissal of the Action as against the Settling Defendants and the
dismissal of the Non-IPO Causes of Action as against the Non-Settling Defendants, the Settling Defendants
have agreed to create a $2,500,000 fund to be divided among all Class Members who submit a valid claim form.
12. How much will my payment be?
Your share of the fund will depend on the total Recognized Claims represented by the valid Proof of Claim
forms that Class Members send in, how many Rediff ADSs you bought, how much you paid for them, and
when you bought and whether or when you sold them, and, if so, for how much you sold them.
You can calculate your Recognized Claim in accordance with the formula shown below in the Plan of
Allocation. It is unlikely that you will get a payment for all of your Recognized Claim. After all Class
Members have sent in their Proof of Claim forms, the payment you get will be a part of the Net Settlement
Fund equal to your Recognized Claim divided by the total of everyone's Recognized Claims. See
Understanding Your Payment beginning on page 14 for more information on your Recognized Claim.
HOW YOU GET A PAYMENT - SUBMITTING A PROOF OF CLAIM FORM
13. How can I get a payment?
To qualify for a payment, you must send in a Proof of Claim form. The Proof of Claim form is included
with this Notice. You can also download a Proof of Claim form from the Claims Administrator's website at
www.berdonclaims.com . Read the instructions carefully, fill out the Proof of Claim form, include all the
documents the form asks for, sign it, and mail it postmarked no later than September 7, 2007.
14. When would I get my payment?
The Court will hold a Settlement Fairness Hearing on July 12, 2007, to decide whether to approve the
Settlement. If the Court approves the Settlement, there may be appeals after that. It is always uncertain whether
such appeals can be resolved, and resolving them can take time, perhaps more than a year. It also takes time
for all the Proofs of Claim to be processed. Please be patient.
915. What am I giving up to get a payment or stay in the Class?
Unless you exclude yourself, you are staying in the Class, and that means that, upon the "Effective Date,"
you will release all "Resolved Claims" (as defined below) against the "Released Parties" (as defined below).
In addition, all your Rediff Non-IPO Claims against the Underwriter Defendants will be dismissed with
prejudice and you will be prohibited by a covenant not to sue from suing the Underwriter Defendants with
respect to the Non-IPO Causes of Action.
"Resolved Claims" means any and all claims, debts, demands, rights or causes of action or liabilities
whatsoever (including, but not limited to, any claims for damages, interest, attorneys' fees, expert or consulting
fees, and any other costs, expenses or liability whatsoever), whether based on federal, state, local, statutory or
common law or any other law, rule or regulation, whether fixed or contingent, accrued or un-accrued,
liquidated or unliquidated, at law or in equity, matured or unmatured, whether class or individual in nature,
including both known claims and Unknown Claims (as defined below), (a) that have been asserted in this
Action by the Class Members or any of them against any of the Released Parties, or (b) that could have been
asserted in any forum by the Class Members or any of them against any of the Released Parties which arise
out of or are based upon the allegations, transactions, facts, matters or occurrences, representations or
omissions involved, set forth, or referred to in the Complaint and which relate in any way to the purchase of
Rediff ADSs during the Class Period; provided, however, that "Resolved Claims" does not mean or include the
IPO Causes of Action against the Underwriter Defendants. The Underwriter Defendants are not being released
from the IPO Causes of Action under this Stipulation. The Non-IPO Causes of Action are being dismissed as
against the Underwriter Defendants as provided for in the Stipulation. The Parties have agreed to release the
Settling Defendants from the Fifth and Sixth Causes of Action in their entirety.
"Released Parties" means, collectively, the Rediff Released Parties and the Insurer Released Parties as
defined below:
a. The Rediff Released Parties means the Settling Defendants, as well as their past, present, or future
parents, subsidiaries, divisions, affiliates, directors, employees, acquirers, partners, joint venturers, investors,
agents, accountants, auditors, attorneys, representatives, heirs, executors, administrators, predecessors,
successors and/or assigns. The Underwriter Defendants are not included among the Rediff Released Parties.
b. The Insurer Released Parties means the Insurers, as well as their past, present, or future parents,
subsidiaries, divisions, affiliates, directors, employees, acquirers, partners, joint venturers, investors, agents,
accountants, auditors, attorneys, representatives, heirs, executors, administrators, predecessors, successors
and/or assigns. The Underwriter Defendants are not included among the Insurer Released Parties.
The "Effective Date" will occur when an Order entered by the Court approving the Settlement becomes
final and not subject to appeal.
If you remain a member of the Class, all of the Court's orders will apply to you and legally bind you.
EXCLUDING YOURSELF FROM THE SETTLEMENT
If you do not want a payment from this Settlement, but you want to keep any right you may have to sue or
continue to sue the Settling Defendants and the other Released Parties on your own about the Resolved Claims,
then you must take steps to get out. This is called excluding yourself - or is sometimes referred to as "opting
out" of the Settlement Class. The Settling Defendants may withdraw from and terminate the Settlement if
putative Class Members who purchased in excess of a certain amount of Rediff ADSs exclude themselves from
the Class.
1016. How do I get out of the proposed Settlement?
To exclude yourself from the Settlement, you must send a letter by mail saying that you want to be
excluded from the In re Rediffcom India Ltd. Securities Litigation, 01 CV 3020 (SAS). Be sure to include your
name, address, telephone number, your signature and the date(s), price(s), and number(s) of all your purchases
and sales of Rediff ADSs during the Class Period. You must mail your exclusion request postmarked no later
than June 29, 2007 to:
Rediff.com India Securities Litigation Exclusions
c/o Berdon Claims Administration LLC
P.O. Box 9014
Jericho, NY 11753-8914
If you ask to be excluded, you will not get any Settlement payment, and you cannot object to the
Settlement. You will not be legally bound by anything that happens in this lawsuit. You may be able to sue
(or continue to sue) the Settling Defendants in the future.
17. If I do not exclude myself, can I sue the Settling Defendants and the other Released Parties for the
same thing later?
No. Unless you exclude yourself, you give up any rights to sue the Settling Defendants and the other
Released Parties for any and all Resolved Claims, and you covenant not to sue the Underwriter Defendants
with respect to the Non-IPO Causes of Action. If you have a pending lawsuit speak to your lawyer in that case
immediately. You must exclude yourself from this Class to continue your own lawsuit. Remember, the
exclusion deadline is June 29, 2007.
18. If I exclude myself, can I get money from the proposed Settlement?
No. If you exclude yourself, do not send in a Proof of Claim form to ask for any money. But, you may
exercise any right you may have to sue, continue to sue, or be part of a different lawsuit against the Settling
Defendants and the other Released Parties.
THE LAWYERS REPRESENTING YOU
19. Do I have a lawyer in this case?
The Court appointed the law firm of Lovell Stewart Halebian LLP, 500 Fifth Avenue, New York, NY
10110, Telephone: (212) 608-1900, to represent you and other Class Members with respect to the Non-IPO
Causes of Action. With respect to the IPO Causes of Action, the Court has appointed a six-member Plaintiffs'
Executive Committee to represent the Plaintiffs and Classes in In re Initial Public Offering Sec. Litig., 21 MC
92 (SAS).
You will not be charged for these lawyers. If you want to be represented by your own lawyer, you may hire
one at your own expense.
20. How will the lawyers be paid?
The law firm of Lovell Stewart Halebian LLP will ask the Court to approve payment of attorneys' fees for
Plaintiffs' Counsel from the Settlement Fund in an amount not greater than thirty-three and one-third percent
(33-1/3% or $833,333) of the Settlement Fund and for reimbursement of their expenses in an amount not to
exceed $110,000.00, plus interest at the same rate as earned by the Settlement Fund. The requested fees and
expenses would amount to an average of 2.90 per allegedly damaged ADS.
11Plaintiffs' Counsel expended considerable time and effort in the prosecution of this litigation, including
through the successful opposition to the Settling Defendants' motions to dismiss, and through discovery and
mediation efforts. Plaintiffs' Counsel worked wholly on a contingent-fee basis, and advanced the expenses of
the litigation, in the expectation that if they were successful in obtaining a recovery for the Class they would
be paid from such recovery. In this type of litigation it is customary for counsel to be awarded a percentage of
the common fund recovery as their attorneys' fees and reimbursement of expenses for investigating the facts,
litigating the case, and negotiating the Settlement.
Plaintiffs' Counsel, without further notice to the Class, will subsequently apply to the Court for payment
of the Claims Administrator's fees and expenses incurred in connection with giving notice, administering the
Settlement and distributing the Settlement proceeds to the members of the Class.
OBJECTING TO THE SETTLEMENT
You can tell the Court that you do not agree with the Settlement or some part of it.
21. How do I tell the Court that I do not like the proposed Settlement?
If you're a Class Member, you can object to the Settlement if you don't like any part of it. You can give
reasons why you think the Court should not approve it. The Court will consider your views. Additionally, at
the Settlement Fairness Hearing (described below), any Class Member who has not previously submitted a
request for exclusion from the Class may appear in person or by counsel and be heard to the extent allowed
by the Court in opposition to the fairness, reasonableness and adequacy of the Settlement, the Plan of
Allocation, or the motion for an award of attorneys' fees and reimbursement of expenses.
To object, you must send a letter saying that you object to the Settlement in In re Rediffcom India Ltd.
Securities Litigation, 01 CV 3020 (SAS). Be sure to include your name, address, telephone number, your
signature, and the reasons you object to the Settlement. Additionally, you should state if you or your
representative will appear at the Settlement Fairness Hearing and provide proof of Class membership, such as
a description of transactions involving Rediff ADSs during the Class Period. Mail the objection to the
following three different places postmarked no later than June 15, 2007:
COURT PLAINTIFFS ' COUNSEL DEFENDANTS' COUNSEL
Clerk of the Court Victor E. Stewart, Esq. Jayant Tambe, Esq.
United States District Court Ian T. Stoll, Esq. JONES DAY
Southern District of New York LOVELL STEWART 222 East 41s' Street
Daniel Patrick Moynihan HALEBIAN LLP New York, NY 10017
United States Courthouse 500 Fifth Avenue Telephone: (212) 326-3604
500 Pearl Street New York, NY 10110
New York, NY 10007 Telephone : ( 212) 608-1900
You do not need to go to the Settlement Fairness Hearing to have your written objection considered by the
Court. At the Settlement Fairness Hearing, any Class Member who has not previously submitted a request for
exclusion from the Class and who has complied with the procedures set out in this Question 21 and Question
25 for filing with the Court and providing to the counsel for Plaintiffs and Defendants a statement of an
intention to appear at the Settlement Fairness Hearing may also appear and be heard, to the extent allowed by
the Court, to state any objection to the Settlement, the Plan of Allocation or Plaintiffs' Counsel's motion for
an award of attorneys' fees and reimbursement of expenses. Any such objector may appear in person or
arrange, at that objector's expense, for a lawyer to represent the objector at the Settlement Fairness Hearing.
1222. What is the difference between objecting and excluding?
Objecting is simply telling the Court that you do not like something about the proposed Settlement. You
can object only if you stay in the Class. Excluding yourself is telling the Court that you do not want to be part
of the Class. If you exclude yourself, you have no basis to object because the case no longer affects you.
THE COURT'S SETTLEMENT FAIRNESS HEARING
The Court will hold a Settlement Fairness Hearing to decide whether to approve the proposed Settlement.
You may attend and you may ask to speak, but you do not have to.
23. When and where will the Court decide whether to approve the proposed Settlement?
The Court will hold a Settlement Fairness Hearing at 4:30 p . m. on July 12, 2007, at the United States
District Court for the Southern District of New York, 500 Pearl Street, New York, NY 10007. At the Settlement
Fairness Hearing , the Court will consider whether the Settlement is fair, reasonable and adequate . The Court
will also consider the proposed Plan of Allocation for the proceeds of the Settlement and the application of
Plaintiffs' Counsel for attorneys ' fees and reimbursement of expenses . The Court will take into consideration
any written objections filed in accordance with the instructions at Question 21. The Court also may listen to
people who have properly indicated, within the deadline identified above, an intention to speak at the
Settlement Fairness Hearing; but decisions regarding the conduct of the Settlement Fairness Hearing will be
made by the Court . See Question 25 for more information about speaking at the Settlement Fairness Hearing.
The Court may also decide how much to pay to Plaintiffs' Counsel . After the Settlement Fairness Hearing, the
Court will decide whether to approve the Settlement. We do not know how long these decisions will take.
You should be aware that the Court may change the date and time of the Settlement Fairness Hearing.
Thus , if you want to come to the Settlement Fairness Hearing , you should check with Plaintiffs ' Counsel
before coming to be sure that the date and/or time has not changed.
24. Do I have to come to the Settlement Fairness Hearing?
No. Plaintiffs ' Counsel will answer questions the Court may have . But, you are welcome to come at your
own expense . If you send an objection , you do not have to come to Court to talk about it. As long as you filed
your written objection on time, the Court will consider it. You may also pay your own lawyer to attend, but it
is not necessary . Class Members do not need to appear at the Settlement Fairness Hearing or take any other
action to indicate their approval.
25. May I speak at the Settlement Fairness Hearing?
If you object to the Settlement, you may ask the Court for permission to speak at the Settlement Fairness
Hearing . To do so , you must include with your objection ( see Question 21) a statement stating that it is your
"Notice of Intention to Appear in In re Rediff com India Ltd. Securities Litigation, 01 Civ 3020 (SAS)."
Persons who intend to object to the Settlement, the Plan of Allocation , and/or Plaintiffs' Counsel's application
for an award of attorneys ' fees and expenses and desire to present evidence at the Settlement Fairness Hearing
must include in their written objections the identity of any witnesses they may call to testify and exhibits they
intend to introduce into evidence at the Settlement Fairness Hearing . You cannot speak at the Settlement
Fairness Hearing if you excluded yourself from the Class or if you have not provided written notice of your
intention to speak at the Settlement Fairness Hearing by the deadline identified, and in accordance with the
procedures described in Question 21 and above in this paragraph.
13IF YOU DO NOTHING
26. What happens if I do nothing at all?
If you do nothing, you will get no money from this Settlement and you will be precluded from starting a
lawsuit, continuing with a lawsuit, or being part of any other lawsuit against the Settling Defendants and the
other Released Parties about the Resolved Claims in this case ever again, and you will have dismissed and
covenanted not to sue any of the Underwriter Defendants on any Rediff Non-IPO Causes of Action. To share
in the Net Settlement Fund you must submit a Proof of Claim form (see Question 13). To start, continue or be
a part of any other lawsuit against the Settling Defendants and the other Released Parties about the Resolved
Claims, or to sue the Underwriter Defendants about any Rediff Non-IPO Causes of Action in this case, you
must exclude yourself from this Class. See Question 16.
GETTING MORE INFORMATION
27. Are there more details about the proposed Settlement?
This Notice summarizes the proposed Settlement . More details are in a Stipulation and Agreement of
Settlement as amended and restated on February 15, 2007 (the "Stipulation"). You can get a copy of the
Stipulation by writing to Victor E. Stewart, Esq. or Ian T. Stoll, Esq ., Lovell Stewart Halebian LLP, 500 Fifth
Avenue , New York, NY 10110, Telephone : (212) 608-1900, or by visiting www.berdonclaims.com .
You can also contact the Claims Administrator by mail at: Rediff. com India Securities Litigation,
c/o Berdon Claims Administration LLC, P. O. Box 9014, Jericho , NY 11753-8914; by toll-free phone at:
(800) 766-3330 ; by fax at: (516) 931-0810 ; or visit the website at www.berdonclaims . com, where you will find
answers to common questions about the Settlement , a Proof of Claim form, plus other information to help you
determine whether you are a Class Member and whether you are eligible for a payment.
28. How do I get more information?
For even more detailed information concerning the matters involved in this Action, reference is made to
the pleadings , to the Stipulation , to the Orders entered by the Court and to the other papers filed in the Action,
which may be inspected at the Office of the Clerk of the United States District Court for the Southern District
of New York, Daniel Patrick Moynihan United States Courthouse , 500 Pearl Street, New York, NY 10007
during regular business hours.
UNDERSTANDING YOUR PAYMENT
29. How will my losses be calculated? How does the Claims Administrator handle the situation
when the total claims exceed the money in the Settlement Fund?
The Court has preliminarily approved a "Plan of Allocation of Net Settlement Fund Among Class
Members" which is applied by the Claims Administrator for determining individual losses , the portion of the
losses ascribable to the alleged misconduct and the allocation of funds to each claimant. This is how it works.
The $2,500,000 Cash Settlement Amount and the interest earned thereon shall be the Gross Settlement
Fund. The Gross Settlement Fund, less all taxes, approved costs, fees and expenses (the "Net Settlement
Fund") shall be distributed to members of the Class who submit acceptable Proofs of Claim ("Authorized
Claimants").
14The Claims Administrator shall determine each Authorized Claimant's pro rata share of the Net Settlement
Fund based upon each Authorized Claimant's "Recognized Claim" The Recognized Claim formula is not
intended to be an estimate of the amount of what a Class Member might have been able to recover after a trial;
nor is it an estimate of the amount that will be paid to Authorized Claimants pursuant to the Settlement. The
Recognized Claim formula is the basis upon which the Net Settlement Fund will be proportionately allocated
to the Authorized Claimants.
The following proposed Plan of Allocation reflects the Plaintiffs' allegations that the price of Rediff ADSs
was created and inflated artificially, by reason of allegedly false and misleading statements made by the
Defendants. The alleged artificial inflation began with the Registration Statement and Prospectus for the June 14,
2000 initial public offering of Rediff ADSs. The price of Rediff ADSs allegedly continued to be artificially
inflated thereafter (albeit at declining prices) through most of the Class Period. The alleged inflation dissipated
throughout the class period, most prominently on February 15, 2001 with a disclosure concerning Rediff's
email problems, which allegedly caused a 15% drop in the price of Rediff ADSs, and on March 22, 2001, with
a disclosure of the fact that Richard Li had not graduated from Stanford University, which allegedly caused a
little more than a 7% decline in the price of Rediff ADSs by the close of trading on April 4, 2001. In the
90-day period from April 4, 2001 to July 3, 2001 following the end of the Class Period, the price of Rediff
ADSs rebounded somewhat to an average of $2.69 per ADS. For purposes of allocating the Settlement's
proceeds, the following Plan of Allocation formulae consider the price of Rediff ADSs to have been inflated
by as much as 22% from the beginning of the Class Period on June 14, 2000 until March 22, 2001 and by as
much as 7% from March 22 through the close of trading on April 4, 2001, the end of the Class Period.
Recognized Claims will be calculated for purposes of the Settlement as follows, based upon two possible
time periods for the purchase of Rediff.com ADSs and four possible time periods for the sale (or retention) of
those Rediff.com ADSs :
PURCHASE PERIOD "A":
For Rediff ADSs purchased during the period between June 14, 2000 and March 22, 2001,
inclusive:
(a) Sale Period 1 - ADSs sold at a loss on or before the close of trading on March 22, 2001: an
Authorized Claimant's Recognized Claim shall be 10%2 of the difference between (i) 22% of the purchase
price paid (including commissions, etc.), minus (ii) 22% of the sales proceeds received (net of commissions, etc.);
(b) Sale Period 2 - ADSs sold at a loss during the period between March 23, 2001 and the close of
trading on April 4, 2001, inclusive: an Authorized Claimant's Recognized Claim shall mean the difference
between (i) 22% of the purchase price paid (including commissions, etc.), minus (ii) 7% of the sales proceeds
received (net of commissions, etc.);
(c) Sale Period 3 - ADSs sold at a loss during the period between April 5, 2001 and July 3, 2001
inclusive: an Authorized Claimant's Recognized Claim shall mean the lesser of: (i) 22% of the purchase price
paid (including commissions, etc.), or (ii) the purchase price paid (including commissions, etc.) less the sales
proceeds received (net of commissions, etc.); and
(d) Sale Period 4 - ADSs still held at the close of trading on July 3, 2001: an Authorized Claimant's
Recognized Claim shall mean the lesser of: (i) 22% of the purchase price paid (including commissions, etc.),
or (ii) the purchase price paid (including commissions, etc.) less $2.69 per ADS held at the close of trading on
July 3, 2001.
2 This discount reflects the relatively greater difficulty a claimant would face in proving that their loss was "caused" by Defendants'
alleged misstatements and omissions when both the purchase and sale prices were made at a time when similar or the same alleged
misstatements and omissions were prevalent.
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