Robert Garfield v. Blackrock Mortgage Ventures, LLC, Blackrock, Inc.; HC Partners LLC, Stanford L. Kurland, David A. Spector; Anne D. Mccallion, Matthew Botein, Farhad Nanji, Mark Wiedman, Joseph Mazella, And Andrew S. Chang

Frequently Asked Questions

1. WHAT IS THE PURPOSE OF THE NOTICE?

   The purpose of the Notice is to explain the Action, the terms of the proposed Settlement, and how the Settlement affects the legal rights of PennyMac stockholders and members of the Class (as defined below).

   In a class action, one or more people and/or entities who were stockholders at the time the claim arose sue on behalf of and for the benefit of the individual class members, seeking to enforce the class members’ legal rights.

   As described more fully in paragraph 30 below, Class Members have the right to object to the proposed Settlement and the application by Plaintiff’s counsel (the “Fee Application”) for an award of fees and expenses (the “Fee and Expense Award”). Class Members have the right to appear and be heard at the Settlement Hearing, which will be held before The Honorable Kathaleen St. J. McCormick on February 11, 2021, at 1:30 p.m., remotely by Zoom. The purpose of the Settlement Hearing to be held by the Court is to determine: (i) whether to certify the Class for settlement purposes only; (ii) whether Plaintiff and Plaintiff’s Counsel have adequately represented the Class; (iii) whether the proposed Settlement should be approved as fair, reasonable and adequate to the Class and in the best interests of the Class; (iv) whether all Settled Claims against the Released Persons should be dismissed with prejudice; (v) whether an Order and Final Judgment approving the Settlement should be entered; and (vi) whether and in what amount any Fee and Expense Award should be paid to Plaintiff’s Counsel out of the Settlement Amount.

   The Court has reserved the right to adjourn or continue the Settlement Hearing, including consideration of the application by Plaintiff’s counsel for a Fee and Expense Award, without further notice to you other than by announcement at the Settlement Hearing or any adjournment thereof, or notation on the docket in the Action. The Court has further reserved the right to approve the Settlement at or after the Settlement Hearing with such modifications as may be consented to by the Settling Parties and without further notice of any kind.

2. WHAT IS THIS CASE ABOUT? WHAT HAS HAPPENED SO FAR?

   THE FOLLOWING RECITATION DOES NOT CONSTITUTE FINDINGS OF THE COURT AND SHOULD NOT BE UNDERSTOOD AS AN EXPRESSION OF ANY OPINION OF THE COURT AS TO THE MERITS OF ANY CLAIMS OR DEFENSES BY ANY OF THE SETTLING PARTIES. IT IS BASED ON STATEMENTS OF THE PARTIES AND IS SENT FOR THE SOLE PURPOSE OF INFORMING YOU OF THE EXISTENCE OF THE ACTION AND OF A HEARING ON A PROPOSED SETTLEMENT SO THAT YOU MAY MAKE APPROPRIATE DECISIONS AS TO STEPS YOU MAY OR MAY NOT WISH TO TAKE IN RELATION TO THIS LITIGATION.

   On August 2, 2018, the company now known as PNMAC Holdings, Inc. (“Old PennyMac”) and New PennyMac entered into a Contribution Agreement and Plan of Merger (the “Reorganization Agreement”), pursuant to which Old PennyMac would reorganize under a new public holding company, eliminating its “Up-C” structure and transitioning from two classes of common stock to a single class of common stock (the “Reorganization”).

   On September 10, 2018, Plaintiff served Old PennyMac with a demand for inspection of books and records pursuant to Section 220 of the Delaware General Corporation Law (the “DGCL”) relating to the Reorganization (the “Section 220 Demand”).

   On October 24, 2018, Old PennyMac stockholders voted to approve the Reorganization, and on November 1, 2018, New PennyMac filed a Form 8-K memorializing the closing of the Reorganization. At the effective time of the Reorganization, shares of Class A common stock of Old PennyMac were converted on a one-to-one basis into shares of common stock of New PennyMac.

   On November 8, 2018, PennyMac produced documents to Plaintiff in response to the Section 220 Demand.

   On December 20, 2018, Plaintiff, a stockholder of the Company, filed in the Delaware Court of Chancery (the “Court”) a verified complaint (the “Complaint”) alleging that Defendants breached their fiduciary duties in connection with the Reorganization.

   On December 20, 2019, the Court issued its opinion denying Defendants’ Motion to Dismiss to Plaintiff’s Complaint. On January 20, 2020, the Court denied Defendants’ Motion for Reargument of Defendants’ Motion to Dismiss.

   On April 7, 2020, following a motion by the parties, the Court granted an amended scheduling order that provided for bifurcated discovery.

   On June 1, 2020, following the submission of mediation statements, the parties participated in an all-day remote mediation session with mediator David Murphy, Esq. of Phillips ADR. The mediation failed to produce a resolution.

   During the course of discovery, Defendants produced over 38,000 pages of documents to Plaintiff and each responded to over two dozen interrogatories.

   On August 28, 2020, following a series of telephonic discussions with counsel for Plaintiff and Defendants, mediator David Murphy issued a mediator’s recommendation to settle the action in exchange for a classwide payment of $6,850,000.00.

   On September 1, 2020, Plaintiff and Defendants agreed to the mediator’s recommendation.

   On September 8, 2020, the parties executed a binding term sheet (the “Term Sheet”) setting forth the general terms on which the parties have agreed to resolve the Action subject to Court approval.

   On October 9, 2020, the parties executed the Settlement Stipulation, setting forth the terms on which the parties agreed to resolve the Action subject to Court approval.

3. WHAT ARE THE TERMS OF THE SETTLEMENT?

   Set forth below is a summary of the principal terms of the proposed Settlement, as agreed to by the Settling Parties, subject to the approval of the Court. The following statements are a summary. Please refer to the Settlement Stipulation, which is publicly available as indicated in paragraph 32 below, for a full and complete statement of the terms of the Settlement.

   In consideration for the full and final release, settlement, dismissal, and discharge of any and all Settled Claims (defined below) against the Released Persons (defined below), Defendants and/or their insurers have agreed to pay $6,850,000.00 (the “Settlement Amount”) into a settlement account for distribution, after deducting any attorneys’ fees and expenses awarded by the Court and notice and other Administrative Costs, to members of the Class on a pro rata basis.

   For Class members who received their New PennyMac shares through Cede & Co., as nominee for the Depository Trust Company (“DTC” and “DTC Participants”), the Administrator shall send their portion of the Settlement proceeds to DTC for distribution. The Administrator shall instruct DTC Participants to distribute payments to DTC Participants in the same or a similar manner to that in which the DTC Participants received shares of New PennyMac in exchange for shares of Old PennyMac in connection with the Reorganization.

   For Class members who were holders of record, the Administrator shall send their payments to the address listed on the stockholder register or other relevant books and records of PennyMac.

4. WHAT ARE THE PARTIES’ REASONS FOR THE SETTLEMENT?

   The Settlement set forth in the Settlement Stipulation reflects the results of the Settling Parties’ negotiations and the terms of the Settlement Stipulation, and an agreement in principle was reached only after arm’s-length negotiations, with the assistance of a mediator, among the Settling Parties, who were all represented by counsel with extensive experience and expertise in stockholder class action litigation.

   Plaintiff believes that the Settled Claims had merit when filed and continue to have merit, and Plaintiff is settling the Settled Claims because he believes that the Settlement will provide substantial value to Class Members. Plaintiff has concluded that the Settlement is fair, reasonable, and in the best interests of Class Members, and that it is reasonable to pursue the Settlement based on the terms and procedures outlined herein.

   Defendants have denied, and continue to deny, all allegations of wrongdoing, fault, liability or damage with respect to all claims asserted or that could be asserted in the Action or any other action, in any court or tribunal, relating to the Reorganization, including any allegations that Defendants have committed any violations of law, that they have acted improperly in any way, and that they have any liability or owe any damages of any kind to Plaintiff and/or the Class. Defendants maintain that their conduct was at all times proper, in the best interests of PennyMac and its stockholders, and in compliance with applicable law, and that if the case proceeded to trial and a decision were issued by the Court, they would have prevailed on all claims asserted against them. Defendants further deny that they formed a control group and that there was any breach of fiduciary duties. Defendants affirmatively assert that the Reorganization provided PennyMac and its stockholders, including Plaintiff and the Class, with substantial benefits. Defendants also deny that PennyMac or its stockholders were harmed by any conduct of Defendants alleged in the Action or that could have been alleged in the Action. Each of the Defendants asserts that, at all relevant times, they acted in good faith and in a manner believed to be in the best interests of PennyMac and all of its stockholders. Defendants are entering into this Stipulation solely because the proposed Settlement would eliminate the distraction, burden and expense of further litigation.

5. WHAT WILL HAPPEN IF THE SETTLEMENT IS APPROVED? WHAT CLAIMS WILL THE SETTLEMENT RELEASE?

   If the Settlement is approved, the Court will enter the Order and Final Judgment approving the Settlement in accordance with the Settlement Stipulation, at which time the Action will be dismissed with prejudice on the merits.

   If the Settlement is approved, the Settled Claims against the Released Persons will be fully and finally released.

   “Settled Claims” means (i) any and all claims, demands, rights, liabilities, losses, obligations, duties, damages, costs, interests, debts, expenses, charges, interest, penalties, sanctions, fees, attorneys’ fees, actions, potential actions, causes of action, suits, agreements, judgments, decrees, matters, issues, and controversies of any kind, nature or description whatsoever; (ii) whether known or unknown, disclosed or undisclosed, accrued or unaccrued, apparent or not apparent, foreseen or unforeseen, matured or not matured, perfected or not perfected, choate or inchoate, suspected or unsuspected, liquidated or not liquidated, fixed or contingent, ripened or unripened, including any Unknown Claims; (iii) whether at law or equity, whether based on or arising under state, local, foreign, federal, statutory, regulatory, common, or other law or rule and upon any legal theory (including but not limited to any claims arising under the federal securities laws, including any claims arising under the Securities Exchange Act of 1934, as amended,) (iv) that previously existed, currently exist, or that exist as of the date of this Stipulation; (v) that were, could have been, or could now or in the future be asserted by the Releasing Persons against any or all of the Released Persons, in any federal or state court, or in any other court, tribunal, arbitration, proceeding, administrative agency, or other forum in the United States or elsewhere that arise out of or relate to its/her/his ownership of Company stock, its/her/his status as Company stockholders, or its/her/his Company stock holdings; and (vi) that are based upon, arise out of, relate to, concern or involve, in whole or in part, the claims and allegations that were or could have been alleged, asserted, claimed, or raised, in whole or in part, in the Action; provided, however, that the Settled Claims shall not include (x) any claims to enforce the Settlement or this Stipulation, or (y) any claims to enforce a final order and judgment entered by the Court.

   “Released Persons” means Defendants, Defendants’ Counsel, and each of their respective past, present or future subsidiaries, parents, divisions, affiliates, principals, and each of Defendants’ and Defendants’ Counsel’s respective present or former principals, assigns, successors, predecessors, joint venturers, assigns, officers, directors, underwriters, trustees, partners, members, agents, fiduciaries, contractors, employees, insurers, co-insurers, reinsurers, controlling shareholders, attorneys, accountants or auditors, financial or investment advisors or consultants, banks or investment bankers, personal or legal representatives, estates, heirs, related or affiliated entities, any firm, trust, corporation or entity in which a Defendant has or had a controlling interest during the Class Period; the spouses, members of the immediate families, representatives, and heirs of the Individual Defendants, as well as any trust of which Individual Defendant is a settlor or which is for the benefit of Individual Defendant and/or member(s) of his family, and each of the heirs, executors, administrators, predecessors, successors, and assigns of the foregoing.

6. WHO ARE THE MEMBERS OF THE CLASS?

   The Court has provisionally ordered that the Action be maintained as a non-opt-out class action pursuant to Court of Chancery Rule 23 on behalf of a class that includes all persons or entities who received common stock of New PennyMac in exchange for Class A common stock of Old PennyMac in connection with the transaction described in the Reorganization Agreement that closed on or about November 1, 2018 (the “Class”). The Class excludes the Defendants and all persons who were officers (as defined in 10 Del. C. § 3114(b) (“Officers”)) or directors of New PennyMac or Old PennyMac as of November 1, 2018.

7. HOW WILL THE ATTORNEYS BE PAID?

   Concurrent with seeking final approval of the Settlement, Plaintiff’s Counsel intends to make a Fee and Expense Application to the Court for a Fee and Expense Award in an aggregate amount of up to 25% of the Settlement Amount.

8. WHEN AND WHERE WILL THE SETTLEMENT HEARING BE HELD? DO I HAVE THE RIGHT TO APPEAR AT THE SETTLEMENT HEARING?

   The Court will consider the Settlement and all matters related to the Settlement, including the Fee Application, at the Settlement Hearing. The Settlement Hearing will be held before The Honorable Kathaleen St. J. McCormick on February 11, 2021 at 1:30 p.m., in the Court of Chancery remotely by Zoom².

   Any Class Member who objects to the Settlement or the Fee and Expense Application by Plaintiff’s Counsel, or who otherwise wishes to be heard, may appear in person or through his, her, or its attorney at the Settlement Hearing and present any evidence or argument that may be proper and relevant; provided, however, that no such person shall be heard or entitled to contest the approval of the terms and conditions of the Settlement, or, if approved, the Order and Final Judgment to be entered thereon, or the allowance of fees and expenses to Plaintiff’s Counsel, or otherwise be heard with respect to the matters considered at the Settlement Hearing unless, no later than ten (10) business days before the Settlement Hearing, such person files with the Register in Chancery, Court of Chancery, 500 North King Street, Wilmington, Delaware, 19801, the following: (a) proof of ownership of PennyMac stock and membership in the Class; (b) a written and signed notice of the Objector’s intention to appear, which states the name, address and telephone number of the Objector and, if represented, his, her, or its counsel; (c) a detailed statement of the objections to any matter before the Court; and (d) a detailed statement of all of the grounds thereon and the reasons for the Objector’s desire to appear and to be heard, as well as all documents or writings which the Objector desires the Court to consider. Any such filings with the Court must also be served upon each of the following counsel (by hand, first class U.S. mail, or express service/email) such that they are received no later than ten business days prior to the Settlement Hearing:

   Kurt M. Heyman, Esq.
   HEYMAN ENERIO GATTUSO & HIRZEL LLP
   300 Delaware Avenue, Suite 200
   Wilmington, Delaware 19801
   (302) 472-7300
   Counsel for Plaintiff

   Kenneth J. Nachbar, Esq.
   MORRIS NICHOLS ARSHT & TUNNELL
   1201 North Market Street, 16th Fl. Wilmington, Delaware 19801
   (302) 658-9200
   Counsel for Defendants PennyMac Financial Services, Inc., Stanford L. Kurland, David A. Spector, Anne D. McCallion, Matthew Botein, Farhad Nanji, Mark Wiedman, Joseph Mazzella, and Andrew S. Chang

   Kevin R. Shannon, Esq. Berton W. Ashman, Jr., Esq. Callan R. Jackson, Esq.
   POTTER ANDERSON & CORROON LLP
   1313 N. Market Street Hercules Plaza, 6th Floor Wilmington, Delaware 19801
   (302) 984-6000
   Counsel for Defendants BlackRock Mortgage Ventures, LLC and BlackRock, Inc.

   David E. Ross, Esq.
   S. Michael Sirkin, Esq. Anthony M. Calvano, Esq.
   ROSS ARONSTAM & MORITZ LLP
   100 South West Street, Suite 400
   Wilmington, DE 19801
   (302) 576-1600
   Counsel for Defendant HC Partners LLC

   Unless the Court otherwise directs, any person who fails to object in the manner prescribed above shall be deemed to have waived his, her, or its right to object and shall be forever barred from raising any objection to the Settlement or the application by Plaintiff’s Counsel for an award of attorneys’ fees and expenses, or any other matter related to the Settlement, in the Action or in any other action or proceeding.

   ² Log-in information will be made available on this website at least 48 hours before the Hearing.

9. CAN I SEE THE COURT FILE? WHOM SHOULD I CONTACT IF I HAVE QUESTIONS?

   The Notice does not purport to be a comprehensive description of the Action, the allegations related thereto, the terms of the Settlement, or the Settlement Hearing. For a more detailed statement of the matters involved in the Action, you may inspect the pleadings, the Settlement Stipulation, the Orders entered by the Court, and other papers filed in the Action at the Office of the Register in Chancery in the Court of Chancery of the State of Delaware, 500 North King Street, Wilmington, Delaware, 19801, during regular business hours of each business day. If you have questions regarding the Settlement, you may write or call Plaintiff’s Counsel: Jason M. Leviton, Block & Leviton LLP, 260 Franklin Street, Suite 1860, Boston, MA 02110, (617) 398-5600.

   DO NOT CALL OR WRITE THE COURT OR THE OFFICE OF THE REGISTER IN CHANCERY REGARDING THIS NOTICE

10. NOTICE TO PERSONS OR ENTITIES HOLDING RECORD OWNERSHIP ON BEHALF OF OTHERS

    Brokerage firms, banks, and other persons or entities who held shares of PennyMac common stock as record owners, but not as beneficial owners, are directed to either (a) promptly request from Angeion Group (PennyMac Securities Litigation Settlement Administrator, 1650 Arch Street, Suite 1650, Philadelphia, PA 19103 or info@PennyMacSecuritiesLitigation.com) sufficient copies of this Notice to forward to all such beneficial owners and after receipt of the requested copies promptly forward the copies of the Notice to all such beneficial owners; or (b) promptly provide a list of the names and addresses of all such beneficial owners to Angeion Group, after which Angeion Group will promptly send copies of the Notice to such beneficial owners. Copies of this Notice may be obtained by calling Angeion Group at (855) 485-0844.