MBI EY Securities Litigation

The Court directed that the Notice be mailed to you because you or someone in your family or an investment account for which you serve as a custodian may have purchased or otherwise acquired MBI common stock in or traceable to the Secondary Offering. The Court has directed that the Notice be sent because, as a potential EY Settlement Class Member, you have a right to know about your options before the Court rules on the proposed EY Settlement. Additionally, you have the right to understand how this class action lawsuit may generally affect your legal rights.

The purpose of the Notice is to inform you of the existence of this case, that it is a class action, how you might be affected, and how to exclude yourself from the Class if you wish to so do. It is also being sent to inform you of the terms of the Settlement and of a hearing to be held by the Court to consider the fairness, reasonableness, and adequacy of the EY Settlement (the “Settlement Hearing”). See FAQ 10 for details about the Settlement Hearing, including the date and location of the hearing.

The issuance of the Notice is not an expression of any opinion by the Court concerning the merits of any claim in the Action, and the Court has not yet decided whether to approve the Settlement.

To view a copy of the Notice, click here.

This case is a securities class action and is known as Special Situations Funds III QP, L.P. v. Marrone Bio Innovations, Inc., et al., Master No. 2:14-cv-2571-MCE-KJN. The Court in charge of the case is the United States District Court for the Eastern District of California, and the presiding judge is the Honorable Morrison C. England, Jr.

If you are a member of the EY Settlement Class, you are subject to the Settlement, unless you timely request to be excluded. The EY Settlement Class consists of:

All persons or entities who or which purchased or otherwise acquired MBI common stock directly in or traceable to the Company’s secondary offering pursuant to MBI’s Form S-1 Registration Statement, dated May 16, 2014, and its Prospectus dated June 5, 2014, and were damaged thereby.

Excluded from the EY Settlement Class are the Settling Defendant; members of the Immediate Family of each of the Individual Defendants; the Officers and/or directors of MBI during the Settlement Class Period; and any firm, trust, corporation, or other entity in which any Settling Defendant has or had a controlling interest. Also excluded from the Settlement Class are any persons or entities that exclude themselves by submitting a request for exclusion in accordance with the requirements set forth in the Notice.

PLEASE NOTE: RECEIPT OF THE NOTICE DOES NOT MEAN THAT YOU ARE AN EY SETTLEMENT CLASS MEMBER OR THAT YOU WILL BE ENTITLED TO RECEIVE MONEY FROM THE SETTLEMENT. IF YOU SUBMITTED A CLAIM FORM THAT WAS APPROVED FOR PAYMENT IN CONNECTION WITH THE MBI SETTLEMENT, DO NOT SUBMIT ANOTHER FORM. IF YOU HAVE NOT PREVIOUSLY SUBMITTED A CLAIM FORM AND WISH TO BE ELIGIBLE TO PARTICIPATE IN THE DISTRIBUTION OF PROCEEDS FROM THE SETTLEMENT, YOU ARE REQUIRED TO SUBMIT A CLAIM FORM POSTMARKED NO LATER THAN MAY 6, 2019.

Lead Plaintiffs and Lead Counsel believe that the claims asserted against EY have merit. They recognize, however, the expense and length of continued proceedings necessary to pursue their claims against EY through trial and appeals, as well as the very substantial risks they would face in establishing liability and damages. Such risks include the potential challenges associated with proving that there were material misstatements and omissions in the Secondary Offering documents at issue, that EY failed to conduct adequate due diligence, and class-wide damages. Lead Plaintiffs would have to prevail at several stage—including motions for summary judgment and trial, and if they prevailed on those, on the appeal that would likely follow. Thus, there were very significant risks attendant to the continued prosecution of the claims against EY. Moreover, EY was the beneficiary of a statutory judgment reduction that would significantly reduce any eventual judgment against it by operation of law.

In light of these risks, the immediacy of the cash recovery, and the significant cash recovery on behalf of the members of the EY Settlement Class in connection with the earlier MBI Settlement, Lead Plaintiffs and Lead Counsel believe that the proposed EY Settlement is an excellent result, and is in the best interests of the EY Settlement Class.

EY has agreed to the EY Settlement solely to eliminate the burden and expense of continued litigation. EY denies the claims asserted against it in the Action and denies having engaged in any wrongdoing or violation of law of any kind whatsoever, including, but not limited to any assertion that its audit of the year end 2013 financial statements of Marrone were not performed in full compliance with applicable PCAOB standards.

If there were no settlement and Lead Plaintiffs failed to establish any essential legal or factual element of their claims against EY, neither Lead Plaintiffs nor the other members of the EY Settlement Class would recover anything from EY. Also, if EY was successful in proving any of their defenses, either at summary judgment, at trial or on appeal, the EY Settlement Class could recover substantially less than the amount provided in the Settlement, or nothing at all. Finally, even if Lead Plaintiffs and the EY Settlement Class were successful in securing a final, non-appealable judgment against EY after trial, EY would still benefit from a statutory judgment reduction that would substantially deplete any recovery on behalf the EY Settlement Class.

As an EY Settlement Class Member, you are represented by Lead Plaintiffs and Lead Counsel, unless you enter an appearance through counsel of your own choice at your own expense. You are not required to retain your own counsel. EY Settlement Class Members may enter an appearance through an attorney if they so desire, but such counsel must file and serve a notice of appearance as provided in FAQ 10 and will be retained at the individual EY Settlement Class Member’s expense.

If you are an EY Settlement Class Member and you do not exclude yourself from the EY Settlement Class, you will be bound by any orders issued by the Court. If the EY Settlement is approved, the Court will enter a judgment (the “Judgment”). The Judgment will provide that, upon the Effective Date of the EY Settlement, Lead Plaintiffs and each of the other EY Settlement Class Members, on behalf of themselves and their respective heirs, executors, administrators, predecessors, successors, and assigns, in their capacities as such, will have fully, finally, and forever compromised, settled, released, resolved, relinquished, waived, and discharged each and every Released Lead Plaintiffs’ Claim against EY and EY’s Releasees, and will forever be barred and enjoined from prosecuting any or all of the Released Lead Plaintiffs’ Claims against any of EY’s Releasees.

At this time, it is not possible to make any determination as to how much any individual EY Settlement Class Member may receive from the proceeds of the Settlement achieved.

The Proceeds of the EY Settlement will be distributed in accordance with the Plan of Allocation that was previously mailed to you in connection with the notice of the settlement achieved with the MBI Defendants, which was approved by the Court on September 27, 2016. The amounts to be distributed to individual EY Settlement Class Members from the EY Settlement under the Plan of Allocation will depend on a variety of factors, including:

• The number of other EY Settlement Class Members who submit claims against the Settlement Fund;
• The number of shares of MBI common stock in or traceable to the Secondary Offering you purchased;
• The prices and dates of those purchases; and
• The prices and dates of any sales of such common stock.

The Plan of Allocation approved by the Court will be utilized for determining the allocation of the Net Settlement Fund to EY Settlement Class Members subject to the following modifications: (i) the Net Settlement Fund shall be added to “Fund #2: The Secondary Fund” referred to in Paragraph 57(b) of the Proposed Plan of Allocation, solely for distribution to Authorized Claimants who are EY Settlement Class Members; and (ii) the date “August 1, 2016” in Paragraph 66(D) of the Proposed Plan of Allocation shall be superseded and replaced by “May 24, 2019.”

To eligible for a payment from the proceeds of the EY Settlement, you must be a member of the EY Settlement Class and have either (i) previously submitted a claim form in connection with the previously announced MBI Settlement in this Action (meaning you are considered a “Prior Approved Claimant” under the EY Stipulation), or (ii) complete and return a Proof of Claim Form postmarked no later than May 6, 2019. You may obtain a Proof of Claim Form here or by calling 1-855-907-3227. If you request exclusion from the Class, you will not be able to receive a payment from the Net Settlement Fund.

NOTE: If you submitted a Claim Form that was approved for payment from the Secondary Class in connection with the MBI Settlement, DO NOT submit another form.

Court-appointed Lead Counsel, Lowenstein Sandler LLP, have been prosecuting this Action on a wholly contingent basis since its inception in 2014 and have advanced the funds to pay expenses necessarily incurred to prosecute the Action. Before final approval of the EY Settlement, Lead Counsel will apply to the Court for an award of attorneys’ fees in an amount not to exceed 33% of the Settlement Fund. At the same time, Lead Counsel will apply for reimbursement of Litigation Expenses paid or incurred in connection with the institution, prosecution, and resolution of the Action, in an amount not to exceed $120,000, which may include an application for reimbursement of the reasonable costs and expenses incurred by Lead Plaintiffs directly related to its representation of the EY Settlement Class. The Court will determine the amount of any award of attorneys’ fees or reimbursement of Litigation Expenses. Such sums as may be approved by the Court will be paid from the Settlement Fund. EY Settlement Class Members are not personally liable for any such fees or expenses.

Each EY Settlement Class Member will be bound by all determinations and judgments in this lawsuit, whether favorable or unfavorable, unless such person or entity mails or delivers a written Request for Exclusion from the EY Settlement Class, addressed to MBI EY Securities Litigation, c/o Epiq, P.O. Box 3219, Portland, OR 97208-3219. The exclusion request must be received no later than June 27, 2019. You will not be able to exclude yourself from the EY Settlement Class after that date. Each Request for Exclusion must:

1. State the name, address, and telephone number of the person or entity requesting exclusion, and in the case of entities the name and telephone number of the appropriate contact person;
2. State that such person or entity “requests exclusion from the EY Settlement Class in Special Situations Funds III QP, L.P. v. Marrone Bio Innovations, Inc., et al., Master No. 2:14-cv-2571-MCE-KJN”;
3. State the number of shares of MBI common stock that the person or entity requesting exclusion purchased, acquired, and/or sold, as well as the number of shares, dates, and prices for each such purchase and/or sale; and
4. Be signed by the person or entity requesting exclusion or an authorized representative.

A Request for Exclusion shall not be valid and effective unless it provides all the information called for above and is received within the time stated above, or is otherwise accepted by the Court. Lead Counsel may, at their discretion, request from any person or entity requesting exclusion documentation sufficient to prove his, her or its purchases and/or sales of MBI common stock.

If you do not want to be part of the EY Settlement Class, you must follow these instructions for exclusion even if you have pending, or later file, another lawsuit, arbitration, or other proceeding relating to any Released Lead Plaintiffs’ Claim against any of EY’s Releasees.

If you ask to be excluded from the EY Settlement Class, you will not be eligible to receive any payment from the Net Settlement Fund.

EY has the right to terminate the EY Settlement if valid requests for exclusion are received from persons and entities entitled to be members of the EY Settlement Class in an amount that exceeds an amount agreed to by Lead Plaintiffs and EY.

The Settlement Hearing will be held on July 11, 2019, at 2:00 p.m., before the Honorable Morrison C. England, Jr., at the United States District Court for the Eastern District of California, Robert T. Matsui United States Court House, Courtroom 7, 501 I Street, Sacramento, California, 95814. The Court reserves the right to approve the EY Settlement and/or Lead Counsel’s motion for an award of attorneys’ fees and reimbursement of Litigation Expenses and/or any other matter related to the EY Settlement at or after the Settlement Hearing without further notice to the members of the Settlement Class. Please check this website for updates.

EY Settlement Class Members do not need to attend the Settlement Hearing. The Court will consider any submission made in accordance with the provisions below even if an EY Settlement Class Member does not attend the hearing. Participation in the EY Settlement is not conditioned on attendance at the Settlement Hearing.

Any EY Settlement Class Member who or which does not request exclusion may object to the Settlement and/or Lead Counsel’s motion for an award of attorneys’ fees and reimbursement of Litigation Expenses. Objections must be in writing. You must file any written objection, together with copies of all other papers and briefs supporting the objection, with the Clerk’s Office at the United States District Court for the Eastern District of California at the address set forth below on or before June 27, 2019. You must also serve the papers on Lead Counsel and on EY’s counsel at the addresses set forth below so that the papers are received on or before June 27, 2019.

Any objection (a) must state the name, address, and telephone number of the person or entity objecting and must be signed by the objector; (b) must contain a statement of the EY Settlement Class Member’s objection or objections, and the specific reasons for each objection, including any legal and evidentiary support the EY Settlement Class Member wishes to bring to the Court’s attention; and (c) must include documents sufficient to prove membership in the EY Settlement Class, including the number of shares of MBI common stock that the objecting Settlement Class Member purchased and/or sold, as well as the dates and prices of each such purchase and sale.

Documents sufficient to prove membership in the EY Settlement Class include brokerage statements, confirmation slips, or authorized statements from a broker containing the transaction and holding information found in a confirmation slip or account statement. You may not object to the EY Settlement and/or Lead Counsel’s motion for attorneys’ fees and reimbursement of Litigation Expenses if you exclude yourself from the EY Settlement Class or if you are not a member of the EY Settlement Class.

You may file a written objection without appearing at the Settlement Hearing. You may not, however, appear at the Settlement Hearing to present your objection unless you first file and serve a written objection in accordance with the procedures described above, unless the Court orders otherwise.

If you wish to be heard orally at the hearing in opposition to the approval of the EY Settlement and/or Lead Counsel’s motion for an award of attorneys’ fees and reimbursement of Litigation Expenses, and if you timely file and serve a written objection as described above, you must also file a notice of appearance with the Clerk’s Office and serve it on Lead Counsel and EY’s counsel at the addresses set forth above so that it is received on or before June 27, 2019. Persons who intend to object and desire to present evidence at the Settlement Hearing must include in their written objection or notice of appearance the identity of any witnesses they may call to testify and exhibits they intend to introduce into evidence at the hearing. Such persons may be heard orally at the discretion of the Court.

You are not required to hire an attorney to represent you in making written objections or in appearing at the Settlement Hearing. However, if you decide to hire an attorney, it will be at your own expense, and that attorney must file a notice of appearance with the Court and serve it on Lead Counsel and EY’s counsel at the addresses set forth above so that the notice is received on or before June 27, 2019.

The Settlement Hearing may be adjourned by the Court without further written notice to the EY Settlement Class. If you intend to attend the Settlement Hearing, you should confirm the date and time with Lead Counsel.

Unless the Court orders otherwise, any EY Settlement Class Member who does not object in the manner described above will be deemed to have waived any objection and shall be forever foreclosed from making any objection to the proposed Settlement and/or Lead Counsel’s motion for an award of attorneys’ fees and reimbursement of Litigation Expenses. EY Settlement Class Members do not need to appear at the Settlement Hearing or take any other action to indicate their approval.