ÿþ<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> <title>Qiao Xing Securities Litigation Settlement</title> <style type="text/css"> <!-- .box1 { border: 1px solid #7F7F7F; margin: 2px; } .regButton { font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 12px; font-weight: bold; color: #FFFFFF; text-decoration: none; } .closeButton { color: #003366; } .question { font-weight: bold; color: #339999; } --> </style> <style type="text/css"> <!-- body { margin-left: 0px; margin-top: 0px; margin-right: 0px; margin-bottom: 0px; background-color: #FFFFFF; } body,td,th { font-size: 12px; } .style23 {font-size: 13px} --> </style> <link href="cStyles.css" rel="stylesheet" type="text/css"> <style type="text/css"> <!-- .style24 { color: #FFFFFF; font-weight: bold; } --> </style> </head> <body> <span class="title1"></span> <table width="100%" border="0" cellpadding="0" cellspacing="0"> <tr> <td align="left" valign="top" bgcolor="#698059"> <div align="left" class="Banner1"> Qiao Xing Securities Litigation <br /> <span class="title2">Settlement Information Website</span><br> </div> </td> </tr> <tr> <td valign="top" bgcolor="#FFFFFF"> <table width="100%" border="0" cellpadding="0" cellspacing="0" bgcolor="#000000"> <tr> <td> <img src="images/spacer.gif" width="1" height="1"></td> </tr> </table> <table width="100%" border="0" cellpadding="8" cellspacing="0"> <tr valign="top"> <td width="115" height="500" bgcolor="#D8E6CF"> <table width="100%" border="0" cellpadding="6" cellspacing="0" id="menu"> <tr> <td> <a href="index.htm" class="link2">Home</a></td> </tr> <tr> <td> <a href="pdfs/Notice.pdf" target=_blank class="link2">Notice of Pendency and Proposed Settlement of Class Action</a></td> </tr> <tr> <td> <a href="pdfs/ClaimForm.pdf" target=_blank class="link2">Proof of Claim and Release</a></td> </tr> <tr> <td> <a href="faq.htm" class="link2">Frequently Asked Questions</a></td> </tr> <tr> <td> <a href="docs.htm" class="link2">Court Documents</a></td> </tr> <tr> <td> <a href="EFILE.xls" class="link2" target=_blank>Broker Template</a></td> </tr> <tr> <td> <a href="pdfs/Acceptable_Supporting_Documentation.pdf" target=_blank class="link2">List of Acceptable Documentation</a></td> </tr> <tr> <td> <a href="contact.htm" class="link2">Contact Information</a></td> </tr> <tr> <td> <img src="images/spacer.gif" alt="blank" name="blank" width="115" height="1" id="blank"></td> </tr> </table> <p> &nbsp;</p> </td> <td> <table width="95%" border="0" align="center" cellpadding="0" cellspacing="0"> <tr> <td width=700> <p class="title1" align="center"> <a name="top"></a>QIAO XING SECURITIES LITIGATION SETTLEMENT </p> <p> Welcome to the Qiao Xing Securities Litigation class action settlement website. <br /> <br /> Please read this information carefully. If you are a Settlement Class Member (as defined below), your rights will be affected by these proceedings and you may be entitled to receive benefits under a proposed settlement. </p> <blockquote> <b>If you bought common stock or traded in options of Qiao Xing Universal Telephone, Inc. ( Qiao Xing or the  Company ) on the Nasdaq Global Select Market between June 30, 2004 and July 16, 2007, inclusive, you may be entitled to receive a payment from this proposed class action settlement.</b></blockquote> <p class="title3" align="center"> Securities Brokers and other Nominees: Please see instructions at the end of the Notice. </p> <p> <b>Settlement Fairness Hearing</b></p> <p align="justify"> The Court will hold a Settlement Fairness Hearing at <b>3:00 p.m.</b> on <b>July 11, 2008</b>, at the United States District Court, Southern District of New York, Daniel Patrick Moynihan United States Courthouse, Courtroom 11B, 500 Pearl Street, New York, New York to determine whether the proposed settlement is fair, reasonable and adequate, and also to consider the proposed Plan of Allocation for the distribution of the settlement and the application of Lead Counsel for attorneys fees and reimbursement of expenses. <br /> <br /> </p> <table width="100%" border="0" align="center" cellpadding="0" cellspacing="0" id="Table5" height="0"> <tr> <td colspan="" rowspan="3" style="width: 347px"> <p align="justify"> <b>Lead Plaintiffs Allegations</b> </p> <p align="justify"> During the Class Period, Qiao Xing filed Form 20-F Annual Reports and Form 14-A Proxy Statements for the fiscal years 2003, 2004, and 2005 with the Securities and Exchange Commission ( SEC ). These reports provided information regarding Qiao Xing s net income, net sales, and total assets for the fiscal years 2003, 2004 and 2005. <br /> <br /> Qiao Xing was the owner of its subsidiary Qiao Xing Mobile ( QXM ). QXM, in turn, owns a 90% share in CECT. The value placed on CECT is reflected on QXM s balance sheet, and QXM s value is reflected on Qiao Xing s financial statements. An incorrect valuation of CECT will therefore have an effect on Qiao Xing s financial statements. QXM s registration statement, first filed on April 17, 2007, reported the accounting irregularities involving the revaluation of acquired assets and the recognition of deferred tax assets and liabilities of CECT. </p> </td> <td style="width: 5px"> &nbsp;&nbsp;</td> <td> <table border="0" align="right" cellpadding="1" cellspacing="0" bgcolor="#000000" id="Table6"> <tr> <td> <table border="0" cellpadding="1" cellspacing="0" bgcolor="#ffffdd" id="Table7"> <tbody> <tr> <td> <table border="0" cellspacing="0" cellpadding="5" id="Table8"> <tr> <td colspan="2" bgcolor="#698059"> <div align="center" class="style24"> IMPORTANT DATES &amp; DEADLINES</div> </td> </tr> <tr valign="top" bgcolor="#ffffdd"> <td width="98" class="style13"> File a Claim:</td> <td width="174" valign="middle" class="style13"> Postmarked not later than July 21, 2008 </td> </tr> <tr valign="top" bgcolor="#ffffdd"> <td class="style13"> Opt-Out/Exclusion: </td> <td valign="middle" class="style13"> Postmarked no later than June 16, 2008</td> </tr> <tr valign="top" bgcolor="#ffffdd"> <td width="98" class="style13"> File an Objection:</td> <td width="174" valign="middle" class="style13"> Postmarked no later than June 20, 2008 </td> </tr> <tr valign="top" bgcolor="#ffffdd"> <td width="98" class="style13"> Claim Submission:</td> <td width="174" valign="middle" class="style13"> Postmarked no later than June 16, 2008 </td> </tr> <tr valign="top" bgcolor="#ffffdd"> <td width="98" class="style13"> Fairness Hearing: </td> <td width="174" valign="middle" class="style13"> July 11, 2008 </td> </tr> </table> </td> </tr> </tr> </table> </td> </tr> </table> </td> </tr> </table> <p align="justify"> On July 17, 2007, the Company announced that  it filed with [the] SEC a Form 20-F to release its 2006 annual report and to restate its financial data for years 2005, 2004 and 2003 (the  Restatement ). As a result of the Restatement, Qiao Xing common stock dropped.<br /> <br /> Lead Plaintiff alleges that by publishing financial statements that both overvalued CECT and led to other issues that were the subject of the Restatement, Qiao Xing issued materially false and misleading statements to the investing public in 2003, 2004, and 2005, in violation of the Exchange Act, and had knowledge of the events giving rise to the Restatement by at least April 17, 2007. Lead Plaintiff alleges that these misstatements caused the price of Qiao Xing common stock to be artificially inflated, and had the market known of the true financial condition of Qiao Xing at that time, Lead Plaintiff and the other Settlement Class Members would not have traded their Qiao Xing securities during the Class Period at the artificially inflated prices at which they did, and would not have suffered losses when the inflation was removed from the stock. Hence, Lead Plaintiff alleges Settlement Class Members were damaged when the stock price dropped on July 17, 2007. <br /> <br /> Defendants have vigorously denied, and continue to deny, that they have committed any violation of the federal securities laws or other laws, and have vigorously denied and continue to deny all allegations of wrongdoing or liability whatsoever with respect to the allegations above, including any and all claims of wrongdoing or liability alleged or asserted in the allegations above. Defendants state that they are agreeing to this Settlement solely because it will eliminate the substantial burden, expense and uncertainties of further litigation and the concomitant distraction of resources and efforts from their businesses. </p> <p align="justify"> <b>Terms of the Settlement</b></p> <p align="justify"> Defendants have agreed to create a Gross Settlement Fund of $2,400,000 for the benefit of Settlement Class Members. The balance of the fund, plus accrued interest, after deduction of taxes, administration costs (including the costs of publishing this notice) and Court-awarded attorneys fees and expenses, will be allocated proportionately among all Settlement Class Members who send in a valid Proof of Claim and Release form ( Proof of Claim ). </p> <p align="justify"> <b>The Rights of the Settlement Class Members</b></p> <p align="justify"> If you are a Settlement Class Member, you have the following options: </p> <div align="justify"> <ul> <li>If you wish to remain a member of the Class, you may share in the proceeds of the Settlement, provided that you submit an acceptable Proof of Claim and Release by following the instructions in the Notice at the link on the left and refer to Question 9. If you submit a valid Proof of Claim form, you WILL be bound by this Settlement and you WILL be entitled to a share of the Settlement Fund. In order to be eligible to receive any distribution from the Settlement Fund, you must send a properly executed Proof of Claim by first class mail postmarked not later than <b>July 21, 2008</b> to the Claims Administrator.<br /><br /></li> <li>If you do not wish to remain a member of the Class, you may exclude yourself from the Class by following the instructions in the Notice at the link on the left and refer to Question 12. Persons or entities who exclude themselves from the Class will NOT be bound by this Settlement, but will NOT receive any share of the Settlement Fund. If you are a Settlement Class Member and you do not properly exclude yourself from the Class, you will be bound by the Settlement and the Order and Final Judgment of the Court, even if you do not submit a Proof of Claim. To exclude yourself from the Settlement Class, you must send a signed letter by mail to the Claims Administrator postmarked no later than <b>June 16, 2008</b>.<br /><br /></li> <li>If you object to the Settlement or to Lead Counsel s application for fees and expenses, but do not exclude yourself from the Class, you may present your objections under the procedures described in the Notice at the link on the left and refer to Question 16. To object, you must submit a signed letter which must be sent to the Court and Counsel postmarked no later than <b>June 20, 2008</b>.</li> </ul> </div> <p align="justify"> <b>Claims Submission and Settlement Administration</b></p> <p align="justify"> The Claims Administrator will notify in writing all Settlement Class Members whose Proofs of Claim they propose to reject, in whole or in part, setting forth the reasons for the proposed rejection.<br /> <br /> Any Settlement Class Member who does not submit a timely and valid Proof of Claim will not be entitled to receive proceeds from the Net Settlement Fund, but WILL be bound by the terms of the Stipulation and Agreement of Settlement, including the covenants and releases barring any action against the Release Parties concerning the Settled Claims unless you filed a timely exclusion.<br /> <br /> All inquiries concerning the Notice or the Proof of Claim form by Settlement Class Members should be made to the Claims Administrator in writing and not to the Court. </p> <p align="justify"> <b>Further Information</b> </p> <p align="justify"> Further information regarding the Action and the Notice may be obtained by clicking on the  Contact Information link at the left. </p> <p align="justify"> </p> <p align="justify"> <p align="center"> </td> </tr> </table> </td> </tr> </table> <tr> <td align="center" valign="top" bgcolor="#003366"> <img src="images/spacer.gif" width="1" height="1"></td> </tr> </body> </html>