Pemstar Securities Fraud Class Action Settled

Go here for the proof of claim form.

PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR RIGHTS MAY BE AFFECTED BY PROCEEDINGS IN THIS LITIGATION. PLEASE NOTE THAT IF YOU ARE A SETTLEMENT CLASS MEMBER, YOU MAY BE ENTITLED TO SHARE IN THE PROCEEDS OF THE SETTLEMENT DESCRIBED IN THIS SETTLEMENT NOTICE. TO CLAIM YOUR SHARE OF THIS FUND, YOU MUST SUBMIT A VALID PROOF OF CLAIM POSTMARKED ON OR BEFORE JUNE 30, 2005.

This Notice has been sent to you pursuant to Rule 23 of the Federal Rules of Civil Procedure and an Order of the United States District Court for the District of Minnesota (the "Court"). The purpose of this Notice is to inform you of the proposed Settlement of the above-captioned consolidated class action litigation (the "Litigation") and of the hearing to be held by the Court to consider the fairness, reasonableness, and adequacy of the Settlement. This Notice describes the rights you may have in connection with the Settlement and what steps you may take in relation to the Settlement and this Litigation.

The proposed Settlement creates a fund in the amount of $12,000,000 in cash (the "Settlement") and will include interest that accrues on the fund prior to distribution. Based on Lead Counsel’s estimate of the number of shares entitled to participate in the Settlement and the anticipated number of claims to be submitted by Settlement Class Members (as defined below), the average distribution per share would be approximately $1.00 before deduction of Court-approved fees and expenses. However, your actual recovery from this fund will depend on a number of variables, including the number of Claimants, the number of shares you purchased, the expense of administering the claims process, and the timing of our purchases and sales, if any.

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Lead Plaintiffs and Defendants do not agree on the average amount of damages per share that would be recoverable if Lead Plaintiffs were to have prevailed on each claim asserted in the Litigation. The issues on which the Parties disagree include: (1) the appropriate economic model for determining the amount by which PEMSTAR common stock was allegedly artificially inflated (if at all) during the Class Period; (2) the amount by which PEMSTAR common stock was allegedly artificially inflated (if at all) during the Class Period; (3) the effect of various market forces influencing the trading price of PEMSTAR common stock at various times during the Class Period; (4) the extent to which external factors, such as general market conditions, influenced the trading price of PEMSTAR common stock at various times during the Class Period; (5) the extent to which the various statements that Lead Plaintiffs alleged were materially false or misleading influenced (if at all) the trading price of PEMSTAR common stock at various times during the Class Period; (6) the extent to which the various allegedly adverse material facts that Lead Plaintiffs alleged were not disclosed influenced (if at all) the trading price of PEMSTAR common stock at various times during the Class Period; and (7) whether the allegedly false and misleading statements made or the adverse facts that were not disclosed were false, material, or otherwise actionable under the federal securities laws.

Lead Plaintiffs believe that the proposed Settlement is a good recovery and is in the best interests of the Settlement Class (as defined below). Because of the risks associated with continuing to litigate and proceeding to trial, there was a danger that Lead Plaintiffs would not have prevailed on any of their claims, in which case the Settlement Class would receive nothing. For example, Lead Plaintiffs faced the possibility that all or many of the claims in this case could have been dismissed. In addition, the amount of damages recoverable by the Settlement Class was and is challenged by Defendants. Recoverable damages in this case are limited to losses caused by conduct actionable under applicable law and, had the Litigation gone to trial, Defendants intended to assert that all or most of the losses of Settlement Class Members were caused by non-actionable market, industry, or general economic factors. Defendants would also assert

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that throughout the Settlement Class Period the uncertainties and risks associated with PEMSTAR’s stock and egistration Statement were fully and adequately disclosed.

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Plaintiffs’ Counsel have not received any payment for their services in conducting this Litigation on behalf of the Lead Plaintiffs and the Members of the Settlement Class, nor have they been reimbursed for their out-of-pocket expenditures. If the Settlement is approved by the Court, counsel for the Lead Plaintiffs will apply to the Court for attorneys’ fees up to 25% of the settlement proceeds and reimbursement of expenses incurred not to exceed $600,000, and the Lead Plaintiffs may seek up to $20,000 each in reimbursement of their expenses (including lost wages) incurred in prosecuting the Litigation on behalf of the Settlement Class to be paid from the Settlement Fund. If the amount requested by counsel is approved by the Court, the average cost per share would be $0.30.

This Notice is not an expression of any opinion by the Court about the merits of any of the claims or defenses asserted by any party in this Litigation or the fairness or adequacy of the proposed Settlement.

For further information regarding this Settlement you may contact: Garrett D. Blanchfield, Jr., Esquire, First National Bank Building, 332 Minnesota Street, St. Paul, MN 55101, Telephone: 651/287-2100, 651/287-2103, or Rick Nelson, Lerach Coughlin Stoia Geller Rudman & Robbins LLP, 401 B Street, Suite 1600, San Diego, CA 92101, Telephone: 800/449-4900. Please do not call any representative of PEMSTAR or the Court.

I. NOTICE OF HEARING ON PROPOSED SETTLEMENT

A settlement hearing (the "Settlement Hearing") will be held on May 26, 2005, at 9:30 a.m. before the Hon. Donovan W. Frank, in Courtroom 2, Seventh Floor of the United States District Court for the District of Minnesota, 316 North Robert Street, St. Paul, Minnesota 55101. The purpose of the Settlement Hearing will be to determine: (1) whether the Settlement consisting of $12,000,000 in cash plus accrued interest should be approved as fair, just, reasonable, and adequate to the Settlement Class; (2) whether the proposed plan to distribute the settlement proceeds (the "Plan of Allocation") is fair, just, reasonable, and adequate; (3) whether the application by plaintiffs’ counsel and Lead Plaintiffs for an award of attorneys’ fees and reimbursement of expenses should be approved; (4) whether the Litigation should be dismissed with prejudice. The Court may adjourn or continue the Settlement Hearing without further notice to the Settlement Class.

II. DEFINITIONS USED IN THIS NOTICE

1. "Authorized Claimant" means any Claimant (as defined below) whose claim for recovery has been allowed ursuant to the terms of the Stipulation or by order of the Court.

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2. "Claimant" means any Settlement Class Member who files a Proof of Claim in such form and manner, and within uch time, as the Court shall prescribe.

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3. "Claims Administrator" means the firm of Gilardi & Co. LLC.

4. "Defendants" means PEMSTAR, Allen J. Berning, William Kullback, Robert R. Murphy, Steve V. Petracca, Marlene Shurson (who was substituted for her deceased husband, Karl D. Shurson), Robert D. Ahmann, Hargopal Singh, illiam B. Leary, Thomas A. Burton, Bruce M. Jaffe, and Gregory S. Lea.

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5. "Lead Plaintiffs" means Keith Hewlett, Jr., and Keith Hewlett, Sr.

6. "Parties" means, collectively, each of the Defendants and the Lead Plaintiffs on behalf of themselves and the Members of the Settlement Class.

7. "Person" means an individual, corporation, partnership, limited partnership, association, joint stock company, estate, legal representative, trust, unincorporated association, government or any political subdivision or agency thereof, nd any business or legal entity and their spouses, heirs, predecessors, successors, representatives, or assignees.

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8. "Plaintiffs’ Lead Counsel" or "Plaintiffs’ Settlement Counsel" means Reed R. Kathrein and Stanley S. Mallison, Lerach Coughlin Stoia Geller Rudman & Robbins LLP, 100 Pine Street, Suite 2600, San Francisco, CA 94111, and William S. Lerach, Keith F. Park and Darren J. Robbins, Lerach Coughlin Stoia Geller Rudman & Robbins LLP, 401 B Street, Suite 1600, San Diego, CA 92101. Plaintiffs’ Lead Counsel are acting on behalf of all Lead Plaintiffs, all Named Plaintiffs, all Settlement Class Members, and all plaintiffs’ counsel in the Actions.

9. "Plan of Allocation" means a plan or formula of allocation of the Settlement Fund whereby the Settlement Fund shall be distributed to Authorized Claimants after payment of expenses of notice and administration of the Settlement, Taxes and Tax Expenses and such attorneys’ fees, costs, expenses and interest as may be awarded by the Court. Any Plan of Allocation is not part of the Stipulation and Defendants shall have no responsibility or liability with respect thereto.

10. "Related Parties" means all Defendants, their parents, subsidiaries, affiliates, current and former officers, directors, employees, attorneys, counsel, accountants, agents, insurers, and representatives of each of the foregoing, and he predecessors, successors, heirs, executors, administrators, assigns, and immediate families of each of the foregoing.

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11. "Released Claims" means collectively any and all claims, including both known or Unknown Claims, arising out of or related directly or indirectly, in any way, to both (1) the purchase or sale of PEMSTAR common stock during the Class Period and (2) the allegations set forth or that could have been set forth in this case.

12. "Released Defendants’ Claims" means any and all claims, including both known claims and Unknown Claims, arising out of or related, directly or indirectly, in any way, to this Litigation by the Defendants or their Related Parties against any of the Lead Plaintiffs, Named Plaintiffs, or their attorneys, which arise out of or relate directly to the institution, prosecution, or settlement of the Litigation (except for claims to enforce the Settlement).

13. "Released Parties" means each and all of the Defendants and their Related Parties.

14. "Settlement Class" means all persons who purchased or acquired shares of PEMSTAR common stock during the period from June 8, 2001, through May 3, 2002, inclusive, (the "Class Period"), and who suffered a loss with respect to such shares. Excluded from the Settlement Class are the Individual Defendants, their heirs, affiliates, successors, and ssigns, and the current or former officers and directors of PEMSTAR.

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15. "Settlement Class Member" or "Member of the Settlement Class" mean a Person who falls within the definition of he Settlement Class as set forth above.

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16. The "Settlement Fund" means (a) the principal amount of Twelve Million Dollars ($12,000,000), which will be deposited into an escrow account pursuant to Paragraph 2.1 of the Stipulation, and (b) any interest that has accrued or shall accrue on such principal amount following payment pursuant to Paragraph 2.1 of the Stipulation.

17. "Unknown Claims" means any and all Released Claims which any Lead Plaintiff, Named Plaintiff, or Settlement Class Member does not know or suspect to exist in his, her, or its favor at the time of the release of the Released Parties, and any Released Defendants’ Claims which any Defendant does not know or suspect to exist in his, her or its favor, which if known by him, her or it might have affected his, her or its decision(s) with respect to the Settlement. With respect to any and all Released Claims, the parties stipulate and agree that upon the Effective Date, the Lead Plaintiffs and Named Plaintiffs shall expressly, and, subject to Paragraph 4.1 of the Stipulation, each Settlement Class Member shall be deemed to have, and by operation of the Judgment shall have, expressly waived any and all provisions, rights and benefits conferred by any law of any state or territory of the United States, or principle of common law, which is similar, omparable, or equivalent to Cal. Civ. Code § 1542, which provides:

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Lead Plaintiffs and Defendants acknowledge, and the Settlement Class Members by operation of law shall be deemed to have acknowledged, that the inclusion of "Unknown Claims" in the definition of Released Claims was separately argained for and was a key element of the Settlement.

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III. THE LITIGATION

On or after July 24, 2002, the following actions were filed in this Court as proposed class actions on behalf of certain persons who purchased the common stock of PEMSTAR:

Matt L. Brody v. PEMSTAR, Inc., et al., Civil Action No. 02-1821 (DWF/SRN);

Dennis J. Frank v. PEMSTAR, Inc., et al., Civil Action No. 02-2987 (DWF/SRN);

Richard Gregory v. PEMSTAR, Inc., et al., Civil Action No. 02-3480 (DWF/SRN);

Ken Ogden v. PEMSTAR, Inc., et al., Civil Action No. 02-3549 (DWF/SRN);

Mark L. Cunningham v. PEMSTAR, Inc., et al., Civil Action No. 02-3540 (DWF/SRN);

Lorraine Ziemba v. PEMSTAR, Inc., et al., Civil Action No. 02-2970 (DWF/SRN); and

Alfred Joyce v. PEMSTAR, Inc., et al., Civil Action No. 02-3573 (DWF/SRN).

(collectively the "Actions").

On July 24, 2002, pursuant to the Private Securities Litigation Reform Act of 1995 (the "PSLRA"), notice was published over a widely circulated national business-oriented wire service advising members of the putative class that any utative class member had the right to file a motion to be appointed lead plaintiff in the Actions.

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On October 9, 2002, the Court ordered the Actions consolidated for all purposes under the caption In re PEMSTAR, Inc. Securities Litigation, Case No. 02-1821 DWF/SRN (the "Consolidated Action"), appointed Matt L. Brody, Keith Hewlett, Jr. and Keith Hewlett, Sr., as Lead Plaintiffs, approved Lead Plaintiffs’ selection of Lead Counsel and Liaison Counsel, and provided for the filing of a consolidated amended complaint. The Actions and the Consolidated Action are referred to collectively as the "Consolidated Actions" or the "Litigation".

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Thereafter, plaintiffs filed the Amended Consolidated Class Action Complaint on or about January 7, 2003. On January 13, 2003, plaintiffs filed the [Corrected] Consolidated Complaint. The [Corrected] Consolidated Complaint asserted violations of Sections 10(b), 11, 15 and 20(a) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rule l0b-5 promulgated thereunder. The [Corrected] Consolidated Complaint named PEMSTAR, Berning, Kullback, Murphy, Petracca, Shurson, Ahmann, Singh, Leary, Burton, Jaffe, and Lea as defendants and alleged that material facts concerning PEMSTAR’s goodwill valuation, inventory, and accounts receivable, were misstated or omitted from various public statements, including PEMSTAR’s June 7, 2001, Registration Statement for its secondary offering, made during the Class Period (as defined above). The [Corrected] Consolidated Complaint claimed that the alleged misrepresentations and omissions caused the price of PEMSTAR stock to be artificially inflated during the Class Period to the alleged injury and damage of the plaintiffs and the Settlement Class (as defined above).

On July 25, 2003, Defendants moved to dismiss the [Corrected] Consolidated Complaint with prejudice. Lead Plaintiffs opposed Defendants’ motion, and it was denied by this Court on August 15, 2003. On December 23, 2004, Plaintiffs filed the [Corrected] Interlineated Amended Consolidated Complaint (the "Complaint"), and Defendants moved to dismiss certain claims and Defendants from the Complaint on January 8, 2005. While this motion was pending, the Parties reached an agreement in principle on January 20, 2005, to settle the Litigation on terms set forth fully herein.

IV. CLAIMS OF THE LEAD PLAINTIFFS AND BENEFITS OF SETTLEMENT

Lead Plaintiffs believe that the Complaint states valid claims against Defendants and that the Court would deny Defendants’ Motion to Dismiss. Further, Lead Plaintiffs believe that the claims asserted in the Litigation have merit and that the information gained in discovery to date supports the claims. However, Lead Plaintiffs recognize and acknowledge the expense and length of continued proceedings necessary to prosecute the Litigation against Defendants through ongoing discovery, trial, and appeal. Lead Plaintiffs also have taken into account the uncertain outcome and the risk of any litigation, especially in complex litigation such as the Litigation, as well as the difficulties and delays inherent in such litigation. Lead Plaintiffs also are mindful of the inherent problems of proof under the federal securities laws and possible defenses to the claims asserted in the Litigation. Plaintiffs’ Lead Counsel are also aware of the difficulty in proving damages and that such damages could have been limited. Lead Plaintiffs believe that the settlement set forth in the Stipulation confers substantial benefits upon the Settlement Class. Based on their evaluation, Lead Plaintiffs have determined that the settlement set forth in the Stipulation is in the best interests of the Lead Plaintiffs and the Settlement Class.

V. DEFENDANTS’ REASONS FOR SETTLEMENT AND DENIALS OF WRONGDOING AND LIABILITY

Defendants believe that the Complaint will be dismissed as to certain defendants because it fails to specify the allegations against certain Defendants as required by the PSLRA, because it has failed to plead loss causation, and because the Lead Plaintiffs do not have standing to bring a Section 11 claim. For that reason, and others set forth in Defendants’ Motion to Dismiss, Defendants believe there is a good possibility that the Court, if it heard and considered Defendants’ Motion to Dismiss, would dismiss most or all of the claims of the Complaint. Additionally, Defendants deny any and all allegations of wrongdoing or liability pleaded against them in the Complaint, and any of the other complaints filed by plaintiffs in these Actions. Defendants believe that if the Court denied Defendants’ pending Motion to Dismiss and allowed the case to proceed, they would have meritorious defenses to the claims asserted against them in the Complaint, as well as defenses to the alleged damages relating to such claims.

Nonetheless, Defendants believe that there is risk that the Court would deny Defendants’ Motion to Dismiss. Further, Defendants believe there is a risk that a future summary judgment motion may be denied by the Court, thus resulting in a trial on this matter. Defendants conclude that further conduct of the Litigation would be protracted and expensive and want the Consolidated Actions fully and finally settled in the manner and upon the terms and conditions set forth in the Stipulation in order to limit further expense and to permit the operation of PEMSTAR’s business without further diversion related to the Litigation. Defendants take into account the uncertainty and risks of litigation, especially in a complex action such as this, as well as the difficulties and delays inherent in such litigation. Thus, Defendants conclude that it is desirable and beneficial to them that the Litigation be settled in the manner and upon the terms and conditions set forth in the Stipulation. The Stipulation shall not be construed or deemed to be evidence of an admission or concession by any Defendant with respect to any claim of any fault or liability or wrongdoing or damage whatsoever.

VI. TERMS OF THE PROPOSED SETTLEMENT

Defendants have paid or caused to be paid into an escrow account, pursuant to the terms of the Stipulation, dated as of March 14, 2005, cash in the amount of $12,000,000, which has been earning and will continue to earn interest for the benefit of the Settlement Class.

A portion of the settlement proceeds will be used for certain administrative expenses, including costs of printing and mailing this Notice, the cost of publishing a summary notice in a widely circulated newspaper, payment of any taxes assessed against the Settlement Fund and costs associated with the processing of claims submitted. In addition, as explained below, a portion of the Settlement Fund may be awarded by the Court to counsel for plaintiffs and the Lead Plaintiffs as attorneys’ fees and for reimbursement of out-of-pocket expenses. The balance of the Settlement Fund (the

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"Net Settlement Fund") will be distributed according to the Plan of Allocation described below to Settlement Class Members who submit valid and timely Proof of Claim forms.

VII. THE RIGHTS OF CLASS MEMBERS

If you are a Settlement Class Member, you may receive the benefit of and you will be bound by the terms of the proposed Settlement described in Section VI of this Notice, upon approval of it by the Court.

If you are a Settlement Class Member, you have the following options:

(a) You may file a Proof of Claim and Release as described below. If you choose this option, you will share in the proceeds of the proposed Settlement if your claim is timely and valid and if the proposed Settlement is finally approved by the Court, and you will be bound by the Judgment and release described below.

(b) If you do not wish to be included in the Settlement Class and you do not wish to participate in the proposed Settlement described in this Notice, you may request to be excluded. To do so, you must submit a request to be excluded in writing, postmarked no later than May 5, 2005, setting forth: (a) your name, address and telephone number; (b) the number of shares of PEMSTAR common stock purchased and the number of shares sold during the Class Period and the dates and prices of such purchase(s) and/or sale(s); and (c) that you wish to be excluded from the Settlement Class. The exclusion request should be addressed as follows:

PEMSTAR Inc. Securities Litigation Claims Administrator c/o Gilardi & Co. LLC P.O. Box 5100 Larkspur, CA 94977-5100

NO REQUEST FOR EXCLUSION WILL BE CONSIDERED VALID UNLESS ALL OF THE INFORMATION DESCRIBED BOVE IS INCLUDED IN ANY SUCH REQUEST.

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If you validly request exclusion from the Settlement Class, (a) you will not share in the proceeds of the Settlement described herein, (b) you will not be bound by any judgment entered in the Litigation, and (c) you will not be precluded, by reason of your decision to request exclusion from the Settlement Class, from otherwise prosecuting an individual claim, if imely, against Defendants based on the matters complained of in the Litigation.

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If you do not request in writing to be excluded from the Settlement Class as set forth in this Paragraph, you will be bound by any and all determinations or judgments in the Litigation in connection with the settlement entered into or approved by the Court, whether favorable or unfavorable to the Settlement Class, and you shall be deemed to have, and by operation of the Judgment shall have fully released all of the Released Claims against the Released Parties, whether or not you submit a valid Proof of Claim.

(c) You may object to the Settlement and/or the application of plaintiffs’ counsel and Lead Plaintiffs for an award of attorneys’ fees and reimbursement of expenses in the manner set forth below. The filing of a Proof of Claim and Release by a Settlement Class Member does not preclude a Settlement Class Member from objecting to the Settlement. However, if your objection is rejected you will be bound by the Settlement and the Judgment just as if you had not objected.

(d) You may do nothing at all. If you choose this option, you will not share in the proceeds of the Settlement, but you will be bound by any judgment entered by the Court, and you shall be deemed to have, and by operation of the Judgment hall have, fully released all of the Released Claims against the Released Parties.

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If you are a Settlement Class Member, you may, but are not required to, enter an appearance through counsel of your own choosing at your own expense. If you do not do so, you will be represented by Plaintiffs’ Settlement Counsel: Garrett D. Blanchfield, Jr., Esquire, First National Bank Building, 332 Minnesota Street, St. Paul, MN 55101, or Reed R. Kathrein, Lerach Coughlin Stoia Geller Rudman & Robbins LLP, 401 B Street, Suite 1600, San Diego, CA 92101.

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VIII. PLAN OF ALLOCATION

The Net Settlement Fund will be distributed to Authorized Claimants under the Plan of Allocation described below. The Plan of Allocation provides that you will be eligible to participate in the distribution of the Settlement Fund only if you ave a net loss on all transactions in PEMSTAR common stock during the Class Period.

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For purposes of determining the amount an Authorized Claimant may recover under the Plan of Allocation, Plaintiffs’ Lead Counsel have consulted with their damage consultants. The Plan of Allocation reflects an assessment of the damages that could have been recovered as well as Plaintiffs’ Lead Counsel’s assessment of the likelihood of stablishing liability for various periods of the Class Period.

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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 claim, as defined below. If, however, the amount in the Net Settlement Fund is not sufficient to permit payment of the total claim of each Authorized Claimant, then each Authorized Claimant shall be paid

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the percentage of the Net Settlement Fund that each Authorized Claimant’s claim bears to the total of the claims of all uthorized Claimants. Payment in this manner shall be deemed conclusive against all Authorized Claimants.

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The total of all profits shall be subtracted from the total of all losses from transactions during the Class Period to determine if a Settlement Class Member has a claim. Only if a Settlement Class Member had a net loss, after all profits from transactions in PEMSTAR stock during the Class Period are subtracted from all losses, will such Settlement Class ember be eligible to receive a distribution from the Net Settlement Fund.

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The Plan of Allocation is as follows:

1. For shares of Pemstar common stock that were purchased or otherwise acquired on June 8, 2001 through May 3, 2002, and

(a) sold prior to May 4, 2002, the claim per share is ten percent (10%) of the difference between the purchase price and the sales price;

(b) retained at the end of May 3, 2002, the claim per share is the lesser of (i) the purchase price less $2.84 (the closing price on May 6, 2002) or $4.29 (May 6, 2002 price decline).

The date of purchase or sale is the "contract" or "trade" date as distinguished from the "settlement" date.

For Settlement Class Members who held shares at the beginning of an applicable period or made multiple purchases or sales during the Class Period, the first-in, first-out ("FIFO") method will be applied to such holdings, purchases and sales for purposes of calculating a claim. Under the FIFO method, sales of shares during the Class Period will be matched, in chronological order, first against shares held at the beginning of the Class Period. The remaining sales of shares during the Settlement Class Period will then be matched, in chronological order, against shares purchased during he Class Period.

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A Settlement Class Member will be eligible to receive a distribution from the Net Settlement Fund only if a Settlement Class Member had a net loss, after all profits from transactions in PEMSTAR common stock during the Class Period are subtracted from all losses. However, losses from sales of shares purchased prior to the start of the Class Period will not e used in the calculation of such net loss.

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The Court has reserved jurisdiction to allow, disallow, or adjust the claim of any Settlement Class Member on quitable grounds.

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Payment pursuant to the Plan of Allocation set forth above shall be conclusive against all Authorized Claimants. No Person shall have any claim against Plaintiffs’ Settlement Counsel or any claims administrator or Defendants or agent designated by Plaintiffs’ Settlement Counsel or Defendants or Defendants’ counsel based on distributions made substantially in accordance with the Stipulation and the Settlement contained therein, the Plan of Allocation, or further orders of the Court. All Settlement Class Members who fail to complete and file a valid and timely Proof of Claim and Release shall be barred from participating in distributions from the Net Settlement Fund (unless otherwise ordered by the Court), but otherwise shall be bound by all of the terms of the Stipulation, including the terms of any judgment entered and he releases given.

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IX. PARTICIPATION IN THE CLASS

If you fall within the definition of the Settlement Class, you are a Settlement Class Member unless you elect to be excluded from the Settlement Class. If you do not request to be excluded from the Settlement Class, you will be bound by ny judgment entered with respect to the Settlement in the Litigation whether or not you file a Proof of Claim and Release.

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TO PARTICIPATE IN THE DISTRIBUTION OF THE NET SETTLEMENT FUND, YOU MUST TIMELY COMPLETE AND RETURN THE PROOF OF CLAIM AND RELEASE FORM THAT ACCOMPANIES THIS NOTICE. The Proof of Claim and Release must be postmarked on or before June 30, 2005, and delivered to the Claims Administrator at the address below. Unless the Court orders otherwise, if you do not timely submit a valid Proof of Claim, you will be barred from receiving any payments from the Net Settlement Fund, but will in all other respects be bound by the provisions of the tipulation and the Judgment.

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X. DISMISSAL AND RELEASES

If the proposed Settlement is approved, the Court will enter a Final Judgment and Order of Dismissal ("Judgment"). The Judgment will dismiss the Released Claims with prejudice as to all Defendants. The Judgment will provide that all Settlement Class Members shall be deemed to have released and forever discharged all Released Claims (to the extent Members of the Settlement Class have such claims) against all Released Parties and that the Defendants shall be deemed to have released and discharged all Settlement Class Members and plaintiffs’ counsel from all Defendants’ Released Claims.

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XI. APPLICATION FOR FEES, EXPENSES, AND AWARDS

At the Settlement Hearing, counsel for Lead Plaintiffs will request the Court to award attorneys’ fees of up to 25% of the Settlement Fund, plus reimbursement of the expenses, not to exceed $600,000, which were incurred in connection with the Litigation, plus interest thereon. Lead Plaintiffs may seek up to $20,000 each in reimbursement for expenses (including lost wages) incurred in prosecuting the Litigation on behalf of the Settlement Class. Any fees and expenses awarded by the Court shall be payable from the Settlement Settlement Fund. Settlement Class Members are not personally liable for any such fees, expenses, or compensation.

To date, plaintiffs’ counsel have not received any payment for their services in conducting this Litigation on behalf of Lead Plaintiffs and the Members of the Settlement Class, nor have counsel been reimbursed for their out-of-pocket expenses. The fee requested by plaintiffs’ counsel would compensate counsel for their efforts in achieving the Settlement Fund for the benefit of the Settlement Class, and for their risk in undertaking this representation on a contingency basis. The fee requested is within the range of fees awarded to plaintiffs’ counsel under similar circumstances in litigation of this type.

XII. CONDITIONS FOR SETTLEMENT

The Settlement is conditioned upon the occurrence of certain events described in the Stipulation. Those events include, among other things: (1) entry of the Judgment by the Court, as provided for in the Stipulation; and (2) expiration of the time to appeal from or alter or amend the Judgment. If, for any reason, any one of the conditions described in the Stipulation is not met, the Stipulation might be terminated and, if terminated, will become null and void, and the parties to the Stipulation will be restored to their respective positions as of January 19, 2005.

XIII. THE RIGHT TO BE HEARD AT THE HEARING

Any Settlement Class Member who does not validly and timely request to be excluded from the Settlement Class, and who objects to any aspect of the Settlement, the Plan of Allocation, or the application for attorneys’ fees, costs and expenses, may appear and be heard at the Settlement Hearing. Any such Person must submit and serve a written notice f objection, to be received on or before May 5, 2005, by each of the following:

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GARRETT D. BLANCHFIELD, JR. REINHARDT WENDORF & BLANCHFIELD 1250 First National Bank Building 332 Minnesota Street St. Paul, MN 55101 Telephone: 651/287-2100 Liaison Counsel for Lead Plaintiffs and the Settlement Class

LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP                                       Reed R. Kathrein 401 B Street, Suite 1600 San Diego, CA 92101 Telephone: 619/231-1058 Lead Counsel for Plaintiffs and the Settlement Class

DORSEY & WHITNEY LLP PETER W. CARTER 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402-1498 Telephone: 612/340-2600 Counsel for Defendants

The notice of objection must demonstrate the objecting Person’s membership in the Settlement Class, including the number of shares of PEMSTAR common stock purchased and sold during the Class Period, and contain a statement of the reasons for objection. Only Settlement Class Members who have submitted written notices of objection in this manner will be entitled to be heard at the Settlement Hearing, unless the Court orders otherwise.

XIV. SPECIAL NOTICE TO NOMINEES

If you purchased any PEMSTAR common stock during the Class Period as nominee for a beneficial owner, then, within ten (10) days after you receive this Notice, you must either: (1) send a copy of this Notice and the Proof of Claim and Release by first class mail to all such Persons; or (2) provide a list of the names and addresses of such Persons to he Claims Administrator:

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PEMSTAR Inc. Securities Litigation Claims Administrator c/o Gilardi & Co. LLC P.O. Box 5100 Larkspur, CA 94977-5100

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If you choose to mail the Notice and Proof of Claim and Release yourself, you may obtain from the Claims Administrator without cost to you) as many additional copies of these documents as you will need to complete the mailing.

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Regardless of whether you choose to complete the mailing yourself or elect to have the mailing performed for you, you may obtain reimbursement for or advancement of reasonable administrative costs actually incurred or expected to be incurred in connection with forwarding the Notice and Proof of Claim and Release and which would not have been incurred but for the obligation to forward the Notice and Proof of Claim and Release, upon submission of appropriate documentation to the Claims Administrator.

XV. EXAMINATION OF PAPERS

This Notice is a summary and does not describe all of the details of the Stipulation. For full details of the matters discussed in this Notice, you may review the Stipulation filed with the Court, which may be inspected during business hours, at the office of the Clerk of the Court, United States District Court for the District of Minnesota, 700 Federal uilding, 316 North Robert Street, St. Paul, Minnesota 55101.

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If you have any questions about the settlement of the Litigation, you may contact Plaintiffs’ Settlement Counsel by writing: