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Plan of Allocation

PLAN OF ALLOCATION OF NET SETTLEMENT FUND AMONG CLASS MEMBERS

If approved by the Court, the proposed plan of allocation developed by Lead Plaintiff’s damages consultant, as set forth below (the “Plan of Allocation”), will determine how the net proceeds of the Settlement will be distributed to Class Members who submit timely and valid Proofs of Claim. The Plan of Allocation is a matter separate and apart from the proposed Settlement, and any decision by the Court concerning the Plan of Allocation shall not affect the validity or finality of the proposed Settlement. The Court may approve the Plan of Allocation with or without modification agreed to among the settling parties, or another plan of allocation. Any Order(s) modifying the Plan of Allocation will be posted on this website.

 

 

GENERAL PROVISIONS

1. At this time, it is not possible to make any determination as to how much a Class Member may receive from the Settlement.

 

2. If approved by the Court at the Final Settlement Hearing, the proposed Settlement will create a “Settlement Fund” in the amount of $28,000,000, plus interest thereon. Defendants are not entitled to get back any portion of their contributions to the Settlement Fund once all of the conditions of the Settlement are satisfied and the Court’s Judgment approving the Settlement becomes Final. Defendants shall not have any liability, obligation, or responsibility for the administration of the Settlement or disbursement of the Net Settlement Fund or the Plan of Allocation.

 

3. As provided below, the Settlement Fund will be used to compensate eligible claimants who purchased or held SGLP common units traded on the National Association of Securities Dealers (“NASDAQ”) exchange between July 17, 2007, the date of SGLP’s initial public offering (“IPO”), and July 17, 2008.2 Only those Class Members who purchased or held SGLP common units during the Class Period (i.e., July 17, 2007 through and including July 17, 2008) AND WERE DAMAGED AS A RESULT, will be eligible to share in the distribution of the Net Settlement Fund. As mentioned previously, each person wishing to participate in the distribution must timely submit a valid Proof of Claim establishing membership in the Class, and including all the information and supporting documentation as requested therein, postmarked not later than October 15, 2011, to the address set forth above and in the Proof of Claim. Unless otherwise ordered by the Court, any Class Member who fails to submit a properly completed and signed Proof of Claim within such period, or such other period as may be ordered by the Court, shall be forever barred from receiving any payments pursuant to the Stipulation, but will in all other respects be bound by all of the terms of the Settlement, including the terms of the Judgment to be entered in the Litigation and will be barred from bringing any Released Claim against any Released Persons, including Unknown Claims (as those terms are defined in the Proof of Claim enclosed with the Notice and in the Stipulation dated May 3, 2011, which is available at www.SemGroupSecuritiesSettlement.com, or through the mail upon request).

 

4. The Court has reserved continuing jurisdiction to allow, disallow, or adjust the claim of any Class Member on equitable grounds. Each claimant is deemed to have submitted to the jurisdiction of the United States District Court for the Northern District of Oklahoma with respect to the claimant’s claim, and the claim will be subject to investigation and discovery under the Federal Rules of Civil Procedure, provided that such investigation and discovery shall be limited to that claimant’s status as a Class Member and the validity and amount of that claimant’s claim. No discovery shall be allowed on the merits of the Litigation.

 

5. Payment pursuant to the Plan of Allocation approved by the Court shall be conclusive against all Authorized Claimants. No person shall have any claim against any Defendants, any Defendant’s counsel, Lead Plaintiff, Lead Counsel, Liaison Counsel or the Claims Administrator or other agent designated by Lead Counsel or Liaison Counsel based on the distributions made substantially in accordance with the Stipulation and the Settlement contained therein, the Plan of Allocation, or further orders of the Court. All persons involved in the review, verification, calculation, tabulation, or any other aspect of the processing of the claims submitted in connection with the Settlement, or otherwise involved in the administration or taxation of the Settlement Fund or the Net Settlement Fund shall be released and discharged from any and all claims arising out of such involvement (except as provided in the Stipulation), and all Class Members, whether or not they are to receive payment from the Net Settlement Fund, will be barred from making any further claim against the Net Settlement Fund beyond the amount allocated to them as provided in any distribution orders entered by the Court.

 

6. PLEASE NOTE: Persons and entities that are excluded from the Class by definition (as set forth in Question 6 of the Notice) or that properly exclude themselves from the Class in accordance with the requirements for exclusion set forth in the Notice are not eligible to receive a distribution from the Net Settlement Fund and should not submit a Proof of Claim.

 

7. A “Recognized Loss Amount” will be calculated for each purchase of SGLP common units made during the Class Period, that is listed in the Proof of Claim and for which adequate documentation is provided. The calculation of the Recognized Loss Amount will depend upon several factors, including (i) when the claimant purchased his, her, or its SGLP common units and (ii) whether the claimant held such SGLP common units until the conclusion of the Class Period or sold the common units during the Class Period, and if so, when they were sold. The total of a claimant’s Recognized Loss Amounts as calculated pursuant to the Plan of Allocation shall be the claimant’s “Recognized Claim.”

 

8. The objective of the Plan of Allocation is to equitably distribute the Net Settlement Fund to those Class Members who suffered economic losses as a result of the alleged violations of the federal securities laws, as opposed to losses caused by market and industry factors or company‐specific factors not related to those alleged violations. To that end, the Plan of Allocation reflects an analysis by Lead Plaintiff’s damages consultant which included a review of publicly available information regarding SGLP and statistical analyses of the price movements of SGLP common units and the price performance of relevant market and industry indices during the Class Period.

 

9. The Plan of Allocation generally measures the amount of loss that a Class Member can claim for purposes of making pro rata allocations of the Net Settlement Fund to Authorized Claimants. The Plan of Allocation is not a formal damage analysis. Recognized Loss Amounts are based on the change in the level of alleged artificial inflation in the price of SGLP common units at the time of purchase and at the time of sale. In this case, Lead Plaintiff alleged that Defendants made false statements and omitted material facts from July 17, 2007, the date of SGLP’s IPO, through and including July 17, 2008, which had the effect of artificially inflating the prices of SGLP common units. Defendants deny all such allegations. The proposed Plan of Allocation reflects Lead Plaintiff’s allegations that the price of SGLP common units was artificially inflated during the Class Period due to Defendants’ misrepresentations and/or omissions.

 

10. In order to have recoverable damages, disclosure of the truth concerning the alleged misrepresentations must be the cause of the decline in the price of the SGLP common units. According to Lead Plaintiff’s allegations, corrective disclosures caused the removal of artificial inflation from the price of SGLP common units on July 17, 2008 and July 18, 2008. Accordingly, in order to have a Recognized Loss Amount:

a. SGLP common units purchased from July 17, 2007 through July 16, 2008 must be held until at least the opening of trading on July 17, 2008, which was the first day the market prices reflected the first corrective disclosure; and

b. SGLP common units purchased after the opening of trading on July 17, 2008, must be either sold at a loss on July 17, 2008 or held until the opening of trading on July 18, 2008, the date of the second corrective disclosure.

 

11. To the extent a claimant does not satisfy either of the conditions set forth in the preceding paragraph, the claimant’s Recognized Loss Amount for those transactions will be zero.

 

12. To the extent a claimant had a market gain from his, her or its overall transactions in SGLP common units during the Class Period, subject to paragraph 21 below, the claimant’s Recognized Claim will be zero. Such claimants will, in any event, still be bound by the Settlement.

 

13. A claimant’s Recognized Loss Amount for each transaction in SGLP common units (other than from public offerings) will be the greater of the claimant’s Recognized Loss Amount calculated separately under Section 10(b) and Section 11(e) (i.e., 16(c) and 16(d) below, respectively).

 

 

 

CALCULATING YOUR RECOGNIZED LOSS AMOUNTS

14. In the calculations below, if a Recognized Loss Amount calculates to a negative number, that Recognized Loss Amount shall be zero.

 

15. Lead Plaintiff’s damages consultant has estimated, based on currently available information that, throughout the Class Period, the price of SGLP common units was inflated by a constant dollar amount until portions of inflation were removed by the corrective disclosures described above.

 

16. SGLP Common Units:

(a) For SGLP common units purchased in SGLP’s initial offering on or about July 17, 2007 at $22.00 per common unit and SGLP’s secondary offering on or about February 14, 2008 at $23.90 per common unit, the Recognized Loss Amount shall be calculated based upon the Section 11(e) Recognized Loss Amount Calculation described below in 16(d).3

(b) For SGLP common units purchased between SGLP’s initial offering on July 17, 2007 and July 17, 2008, inclusive, (excluding the secondary public offering, February 14, 2008), the Recognized Loss Amount shall be calculated based upon the maximum of (i) the Section 10(b) Recognized Loss Amount Calculation described below in 16(c); and (ii) the Section 11(e) Recognized Loss Amount Calculation described below in 16(d), whichever is greater.

 

(c) Section 10(b) Recognized Loss Amount:

1. For SGLP common units purchased between July 17, 2007 and July 16, 2008, inclusive, and:

(i) Sold prior to the close of trading on July 16, 2008, the Recognized Loss Amount is $0.00.

(ii) Sold at a loss on July 17, 2008, the Recognized Loss Amount shall be the lesser of: (i) $11.73 (representing the abnormal price decline in SGLP common units on July 17, 2008); (ii) the purchase price minus the sale price; or (iii) $22.80 (the closing price on July 16, 2008) minus the sale price.

(iii) Sold at a loss between July 18, 2008 and October 15, 2008 (the close of the 90‐day look‐back period),4 the Recognized Loss Amount shall be the lesser of: (i) $14.59 (representing the total abnormal price decline in SGLP common units on July 17, 2008 and July 18, 2008); (ii) the purchase price minus the sale price; or (iii) the purchase price minus the average closing price between July 18, 2008 and the date of sale as shown on Table A.

(iv) Held as of the close of trading on October 15, 2008, the Recognized Loss Amount shall be the lesser of: (i) $14.59; or (ii) the purchase price minus $8.17, the average closing price between July 18, 2008 and October 15, 2008 as shown at the end of Table A.

2. For each unit of SGLP common units purchased on July 17, 2008, and:

(i) Sold at a loss prior to the close of trading on July 17, 2008, the Recognized Loss Amount shall be the lesser of: (i) $11.73 (representing the abnormal price decline in SGLP common units on July 17, 2008); or (ii) the purchase price minus the sale price.

(ii) Sold at a loss between July 18, 2008 and October 15, 2008 (the close of the 90‐day look‐back period), the Recognized Loss Amount shall be the lesser of: (i) the minimum of $11.73 or the purchase price minus $11.00 (the closing price on July 17, 2008) plus $2.86 (representing the abnormal price decline in SGLP common units on July 18, 2008); (ii) purchase price minus the sale price; or (iii) the purchase price minus the average closing price between July 18, 2008 and the date of sale as shown on Table A.

(iii) Held as of the close of trading on October 15, 2008, the Recognized Loss Amount shall be the lesser of: (i) the minimum of $11.73 or the purchase price minus $11.00 (the closing price on July 17, 2008) plus$2.86 (representing the abnormal price decline in SGLP common units on July 18, 2008); or (ii) the purchase price minus $8.17, the average closing price between July 18, 2008 and October 15, 2008 as shown at the end of Table A.

 

(d) Section 11(e) Recognized Loss Amount:

1. For SGLP common units purchased between July 17, 2007 and July 16, 2008, inclusive and:

(i) Sold prior to the close of trading on July 16, 2008, the Recognized Loss Amount is $0.00.

(ii) Sold at a loss on July 17, 2008, the Recognized Loss Amount shall be the lesser of: (i) $11.73 (representing the abnormal price decline in SGLP common units on July 17, 2008); (ii) the lower of the issue price5 or purchase price minus the sale price; or (iii) $22.80 (the closing price on July 16, 2008) minus the sale price.

(iii) Sold at a loss between July 18, 2008 and July 17, 2009,6 the Recognized Loss Amount shall be the lesser of: (i) $14.59 (representing the total abnormal price decline in SGLP common units on July 17, 2008 and July 18, 2008); or (ii) the lower of the issue price or purchase price minus the sale price.

(iv) Held as of the close of trading on July 17, 2009 and later sold, the Recognized Loss Amount shall be the lesser of: (i) $14.59; or (ii) the issue price minus the greater of the sale price or $5.88 (the closing price of SGLP common units on the date of Lead Plaintiff’s Complaint, July 17, 2009).

(v) Held as of the close of trading on July 17, 2009 and not subsequently sold, the Recognized Loss Amount shall be the lesser of: (i) $14.59 (representing the total abnormal price decline in SGLP common units on July 17, 2008 and July 18, 2008); or (ii) the lower of the issue price or purchase price minus $5.88 (the closing price of SGLP common units on the date of Lead Plaintiff’s Complaint, July 17, 2009).

 

2. For SGLP common units purchased on July 17, 2008 and:

(i) Sold at a loss prior to the close of trading on July 17, 2008, the Recognized Loss Amount shall be the lesser of: (i) $11.73 (representing the abnormal price decline in SGLP common units on July 17, 2008); or (ii) the lower of issue price or purchase price minus the sale price.

(ii) Sold at a loss between July 18, 2008 and July 17, 2009, the Recognized Loss Amount shall be the lesser of: (i) the minimum of $11.73 or the purchase price minus $11.00 (the closing price on July 17, 2008) plus $2.86 (representing the abnormal price decline in SGLP common units on July 18, 2008); or (ii) the lower

of the issue price or purchase price minus the sale price.

(iii) Held as of the close of trading on July 17, 2009 and later sold, the Recognized Loss Amount shall be the lesser of: (i) the minimum of $11.73 or the purchase price minus $11.00 (the closing price on July 17,2008) plus $2.86 (representing the abnormal price decline in SGLP common units on July 18, 2008); or (ii) the issue price minus the greater of the sale price or $5.88 (the closing price of SGLP common units on the date of Lead Plaintiff’s Complaint, July 17, 2009).

(iv) Held as of the close of trading on July 17, 2009 and not subsequently sold, the Recognized Loss Amount shall be the lesser of: (i) the minimum of $11.73 or the purchase price minus $11.00 (the closing price on July 17, 2008) plus $2.86 (representing the abnormal price decline in SGLP common units on July 18, 2008); or (ii) the lower of the issue price or purchase price minus $5.88 (the closing price of SGLP common units on the date of Lead Plaintiff’s Complaint, July 17, 2009).

 

 

ADDITIONAL PROVISIONS

 

17. As set forth above, the Net Settlement Fund will be allocated among all eligible Class Members who are Authorized Claimants. Each Authorized Claimant’s Recognized Claim shall be the total of his, her or its Recognized Loss Amounts. Please Note: An Authorized Claimant’s Recognized Claim 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. To the extent there are sufficient funds in the Net Settlement Fund, each Authorized Claimant will receive an amount equal to the Authorized Claimant’s Recognized Claim. If, however, the amount in the Net Settlement Fund is not sufficient to permit payment of the total Recognized Claim of each Authorized Claimant, then each Authorized Claimant shall be paid the percentage of the Net Settlement Fund that each Authorized Claimant’s Recognized Claim bears to the total Recognized Claims of all Authorized Claimants (i.e., “pro rata share”). Payment in this manner shall be deemed conclusive against all Authorized Claimants. No distribution will be made on a claim where the potential distribution amount is less than ten dollars ($10.00) in cash.

 

18. If a Class Member has more than one transaction in SGLP common units during the Class Period, all purchases and sales of SGLP common units shall be matched on a First‐In‐First‐Out (“FIFO”) basis. Class Period sales will be matched against purchases in chronological order, beginning with the earliest purchase made during the Class Period.

 

19. Purchases and sales of SGLP common units shall be deemed to have occurred on the “contract” or “trade” date as opposed to the “settlement” or “payment” date. The receipt or grant by gift, inheritance or operation of law of SGLP common units during the Class Period shall not be deemed a purchase or sale of these SGLP common units for the calculation of an Authorized Claimant’s Recognized Loss Amounts nor shall such receipt or grant be deemed an assignment of any claim relating to the purchase of such SGLP common units unless (i) the donor or decedent purchased or otherwise acquired the SGLP common units during the Class Period; (ii) no Proof of Claim was submitted by or on behalf of the donor or decedent, or by anyone else with respect to such SGLP common units; and (iii) it is specifically so provided in the instrument of gift or assignment.

 

20. The date of covering a “short sale” is deemed to be the date of purchase of SGLP common units. The date of a “short sale” is deemed to be the date of sale of SGLP common units. However, the Recognized Loss Amount on “short sales” shall be $0.00.

 

21. If a claimant had a market gain from his, her or its overall transactions in SGLP common units during the Class Period, the value of his, her or its Recognized Loss Amount will be $0.00. To the extent a claimant suffered an overall market loss on his, her or its overall transactions in SGLP common units during the Class Period, but that market loss was less than the Recognized Claim calculated above, then the claimant’s Recognized Claim shall be limited to the amount of the actual market loss.

 

22. If any funds remain in the Net Settlement Fund after the initial distribution because of uncashed distributions or other reasons, then, after the Claims Administrator has made reasonable and diligent efforts to have Authorized Claimants cash their distribution checks, any balance remaining in the Net Settlement Fund one (1) year after the initial distribution shall be redistributed to Class Members who have cashed their initial distributions and who would receive at least $10.00 from such redistribution based on their Recognized Claim, after payment of any unpaid costs or fees incurred in administering the Net Settlement Fund. If any funds remain in the Net Settlement Fund after such redistribution, additional redistributions shall occur thereafter in six‐month intervals until Lead Counsel, in consultation with the Claims Administrator, determine that a redistribution is not cost effective, at which time the balance of the Net Settlement Fund will be donated to non‐sectarian, not‐for‐profit 501(c)(3) organization(s) designated by Lead Counsel subject to approval by the Court.

 

23. The Plan of Allocation is a matter separate and apart from the proposed Settlement, and any decision by the Court concerning the Plan of Allocation shall not affect the validity or finality of the proposed Settlement. The Court may approve the Plan of Allocation with or without modifications agreed to among the settling parties, or another plan of allocation, without further notice to Class Members.

 

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2 In February 2009, SGLP’s common units were de‐listed from NASDAQ.

3 Calculation of damages under Section 12(a)(2) is identical to calculation of damages under Section 11. Additionally, as liability under Section 12(a)(2) is limited to the sellers of the security and the statute also requires privity between the buyer and the seller, damages under Section 12(a)(2) are also limited to SGLP common units purchased in the initial public offering and the secondary offering.

4 The Private Securities Litigation Reform Act of 1995 (the “PSLRA”) provides for a 90‐day look‐back period which is incorporated into the calculation of the Section 10(b) Recognized Loss Amount. Under this provision, losses on securities purchased during the Class Period and held as of the end of the PSLRA 90‐day look‐back period cannot exceed the difference between the purchase price paid and the average price during the PSLRA 90‐day look‐back period. Losses on securities purchased during the Class Period and sold during the PSLRA 90‐day look‐back period cannot exceed the difference between the purchase price paid during the Class Period and the rolling average of the closing stock prices during the PSLRA 90‐day look‐back period as of the date of sale.

5 The “Issue Price” is $22.00 for common units purchased in SGLP’s initial offering on July 17, 2007 and $23.90 for common units purchased in SGLP’s secondary offering on February 14, 2008.

6 July 17, 2009 is the date of Lead Plaintiff’s Complaint.

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