In re System Software Associates, Inc. Securities...

Case 1:97-cv-00177 Document 142 Filed 05/30/2002 Page 1 of 27

UNITED STATES DISTRICT COURT-^"3-`- FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN .DIVISION MAY

UNITED STATES D15T ARRANIN RE: SYSTEM SOFTWARE ) R+CT CO l1R7-ASSOCIATES, INC. SECURITIES }LITIGATION, ) Master File No. 97 C 177

i )r )

Judge John W. DarrahTHIS DOCUMENT RELATES TO )ALL ACTIONS ) DOCKETED

JUN 0 4 2002I

NOTICE OF MOTION

ITo: Counsel on the Attached Certificate of Servi

f PLEASE TAKE NOVICE at on Monday, June 3, 2002 at 9:30 a.m., w all appear before

the Honorable Judge John W. Darrah, or anyjudge sitting in his stead, in Courtroom 1203 of the

United States District Court for the Northern District of Illinois, Eastern Division, 219 South

Dearborn Street, Chicago, Illinois and then and there present Plaintiffs' Motion for Preliminary

Approval of Proposed Class Action Settlement, a copy of which is hereby served upon you.

i

Dated: May 30, 2002 By: r Marvin A. Miller.Miller Faucher and Cafferty LLP30 North LaSalle StreetSuite 3200Chicago, Illinois 60602(312) 782-4880

ff One of Plaintiffs' Co-Liaison Counsel

I {


,r CERTIFICATE OF SERVICE

1, Marvin A. Miller, an attorney, hereby certify that I caused Plaintiffs' Notice ofMotion andMotion for Preliminary Approval of Proposed .Class Action Settlement to be served upon thefollowing by facsimile transmission this 30th day of May, 2002:

William P. SchumanMcDermott, Will & Emery

227 W. Monroe.St., Suite 4400Chicago, II, 60606-5096

Alan F. CurleyRobinson Curley & Clayton, P.C.

300 South Wacker DriveSuite 1700

Chicago, Illinois 60606

Marvin A. Miller

f


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UNITED STATES DISTRICT COUJEV I I—A 1:3FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION MAY 3 0 2002

IN RE: SYSTEM SOFTWARE ) JUDGE JOHN W. DARRAH

ASSOCIATES, INC. SECURITIES ) UNITED STATES DISTRICT COURT

+ LITIGATION, } Master File No. 97 C 177

Judge John W. DarrahTHIS DOCUMENT RELATES TO )ALL ACTIONS } DOCKETED

JUN 0 4 2002

PLAINTIFFS' MOTION FOR PRELIMINARYAPPROVAL OF PROPOSED CLASS ACTION SETTLEMENT

Plaintiffs, by their counsel and pursuant to Rule 23 (e) of the Federal Rules of Civil Procedure,

hereby move the Court for entry of an Order granting preliminary approval to a class action

settlement, scheduling a fairness hearing and providing for notice to the Class. In support thereof,I

Plaintiffs state as follows:

I On May 29, 2002, Lead Plaintiffs and Class Representatives, individually and on behalf of a

class of System Software, Inc. stock purchasers entered into a Stipulation of Settlement

('Stipulation') with certain defendants in the above-captioned actions, which is attached hereto. The

Stipulation provides for, among other things, the establishment of a Gross Settlement Fund in the

amount of $625,000 cash. A true and correct copy of the Stipulation of Settlement and

accompanying exhibits is annexed hereto.

WHEREFORE, Plaintiffs respectfully request that the Court: (1) grant preliminary approval

i to the proposed Settlement; (2) schedule a fairness hearing to consider granting final approval

pursuant to Rule 23 (e) of the Federal Rules of Civil. Procedure; (3) approve the form and content of

1

the Notice and Summary Notice; (4) direct that notice be provided to the Class; and (5) certify the

II

I


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Class for settlement purposes only. The proposed Preliminary Order In Connection With Settlement

^^ f

Proceedings is attached as an exhibit to the Stipulation.i!

i

Dated: May 30, 2002 By:

I Marvin A. MillerMiller Faucher and Cafferty LLP30 North LaSalle StreetSuite 3200 r`Chicago, Illinois 60602(312) 782-4880

One of Plaintiffs Co-Liaison Counsel

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Case 1:97-cv-00177 Document 142 Filed 05/30/2002 Page 6 of 27r

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UNITED STATES DISTRICT COURTFOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

IN RE SYSTEM SOFTWARE )ASSOCIATES, INC. SECURITIES ) Master File No. 97-C-177LITIGATION ,)

} Judge John W. Darrah}

THIS DOCUMENT RELATES TO: )ALL ACTIONS }

STIPULATION OF SETTLEMENT BETWEEN PLAINTIFFS AND DEFENDANTSROGER E. COVEY, JOSEPH J. SKADRA, TERENCE H. OSBORNE,

TERRY E. NOTARI AND LARRY J. FORD

IT IS HEREBY STIPULATED AND AGREED, by and among plaintiffs Albertf

Bachorowoski, Michael Connor, Lucian B. Cox, Catherine Drozd, Dennis W. Corbin, the Retsky

Family Limited Partnership, Hung A. Pham, Nathan Schleifer, Jaspal Singh, Ravinder Singh,

Donald J. Sorota, Kim Walter and Allen Goodcase (collectively, the "Plaintiffs"), individually

and as representatives of the Class, as defined below, and defendants Roger E. Covey, Joseph J.

Skadra, Terence H. Osborne, Terry E. Notari and Larry J. Ford (collectively, the "Defendants"),

by their duly authorized counsel, subject to the approval of the United States District Court for

the Northern District of Illinois (the "Court") pursuant to Rule 23(e) of the Federal Rules of Civil

Procedure, that the above-captioned action (the "Action") and all claims which have been

asserted therein with respect to the Defendants shall be and hereby are settled, compromised and

dismissed with prejudice hereof and without costs, upon and subject to the terms and conditions

set forth herein (the "Settlement").I

f^ STIPULATION OF SETTLEMENT Page 1

i


I. BACKGROUND OF THE ACTIONf

1. On January 9, 1997, a class action was filed in this Court entitled Cox v. System

Software Associates, Inc., Civil Action No. 97 C. 0177, on behalf of the named plaintiff and all

others similarly situated. Subsequently, other similar class actions were filed. By order of the

Court, these various class actions were consolidated - on March 12, 1997 under the caption In rei

System Software Associates, Inc. Securities Litigation, Master File No. 97-C-177. Plaintiffs in

the Action filed a Consolidated Amended Complaint on April 28, 1997, and a Second Amended

j Complaint on December 15, 1997 (the "Complaint'). On May 3, 2000, System Software

Associates, Inc. ("S SA" or the "Company'), one of the original defendants in the Action, filed

for bankruptcy protection under Chapter 11 of the U.S. bankruptcy laws, thereby invoking.the

automatic stay provision. SSA is not a party for purposes of this Stipulation.

2. The Complaint asserts claims for violations of Sections 10(b) and 20(a) of the

iSecurities Exchange Act of 1934, 15 U.S.C. §§ 78j(b) and 78t, and Rule lOb-5 promulgated

thereunder by the Securities and Exchange Commission, 17 C.F.R. 240.1 Ob-5, and violations of

state law (the "Class Claims"). The Class Claims contained in the Complaint were asserted on

behalf of all persons and entities who purchased the common stock of SSA from August 22,

1994 through January 7, 1997, excluding individuals included in a corresponding state class

settlement rrmached iii, teinberg v. System Sofcwar..e.Assoc., Inc., No. 97 CH 00287 (Cook Cty.),

and certain other persons as described in the Complaint. The Class Claims relate primarily to the

alleged artificial inflation of SSA's stock price during the period from August 22, 1994 through

January 7, 1997, which was allegedly caused by SSA's improper recognition of revenue,

3, On September 5, 2000, the Action was reassigned to the Honorable Judge John

W. Darrah where it is currently pending. By Order dated December d, 2000, Judge Darrah

iSTIPULATION OF SETTLEMENT Page 2


Y

granted Plaintiffs' Motion for Class Certification.._ In doing so, the Court certified a class defined

as all persons who purchased the common stock of SSA during the period from August 22, 1994

through and including November 20, 1994, and those persons who purchased common stock

during the period from November 21, 1994 through and including January 7, 1997 who sold such

stock prior to January 7, 1997 and who suffered damages as a result (the "Class"). Excluded

from the Class are the Defendants, members of the Defendants' immediate families, any entity in

which any Defendant has a controlling interest or which is a parent or subsidiary of or is

controlled by SSA, and officers, directors, affiliates, legal representatives, heirs, predecessors,

successors, and assigns of any excluded person or entity.

II. DEFINITIONS

4. In addition to the terms defined above, as used in this Stipulation and the related

documents annexed as exhibits (which are incorporated by reference), the following terms shall

have the meanings set forth below:

(a) "Authorized Claimant" means any Class Member who files a valid Proof

of Claim in such form, in such manner, and within the time limitation as set forth in the

Proof of Claim Form;

(b) "Class Member" means any potential member of the Class who does not

1110 a 4'allC u11U ililkC ly K^clu^s[ fur i Xclusiull iT^ill t11e (..1465, a6 jjL6 V iU ill 11C ! tiiJilC C l^ (

Pendency and Proposed Settlement of Class Action and Settlement HearingI

accompanying this Stipulation;

(c) "Class Period" means the period August 22, 1994 through January 7,

1997, inclusive;

ISTIPULATION OF SETTLEMENT Page 3

++ Case 1:97-cv-00177 Document 142 Filed 05/30/2002 Page 9 of 27

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(d) "Costs of Administration" means all costs and expenses incurred in

connection with the administration of the Settlement;

(e) "Costs of Notice" mean all costs and expenses incurred in discharging the

obligation to notify potential Class Members of the pending Action against, and

Settlement with, the Defendants either through direct mail or publication, as required by

the Court;

(f) "Effective Date" means the first business day after the date by which all of

the following shall have occurred: (i) all of the conditions to this Stipulation have been

met; (ii) a Preliminary Approval Order, as., described below, has been entered by the

Court; (iii) the Settlement is finally approved in all respects by the Court; (iv) an OrderI '

and Final Judgment, as defined below, has been entered by the Court and has not been

f vacated, reversed or modified in any material way upon appeal or otherwise; and (v) all

actual appeals or other appellate reviews have been exhausted and determined and the

time for any potential appeals or other further review has expired with the Order and

Final Judgment not having been vacated, reversed or modified in any material way;

(g) "Escrow Agent" means Cohen, Milstein, Hausfeld & Toll, P,L.L.C.;

(h) "Fee and Expense Award" means the attorneys' fees, expenses and costs

with interest thereon, allowed by the Court;

(i) "Material" and "substantial," insofar as those terms are used to refer to the

Settlement documents, shall include any adverse change in the rights or obligations of any

I Class Member, any Defendant, or any Released Persons as to which one or more of the

1Parties' consent is required and has not been obtained, including but not limited to, a

I

change in payment amounts or other obligations of the Settling Defendants, but shall not

STIPULATION OF SETTLEMENT Page 4I


include any immaterial or insubstantial modification of documents such as the insertion^F

of matter in blanks on forms, any change in the Plan of Distribution, or any other matter

relating solely to how the Settlement Fund.. is to be distributed among Class Members

and/or Plaintiffs' Counsel.

f {j) "Net Settlement Fund" means the Settlement Fund, minus the Fee and

Expense Award, Costs of Administration, -Costs of Notice and any applicable taxes;

(k) "Notice" means the Notice.. of Pendency and Proposed Settlement of Class

Action and Settlement Hearing, in the form substantially set forth below in Exhibit A-1,

to be distributed to Class Members;

I

(1) "Order and Final Judgment',' means the Order and Final Judgment to be

entered by the Court, which shall be in the . form substantially set forth in Exhibit B;I

(m) "Parties" means Plaintiffs and Defendants;I

+1 (n) "Plaintiffs' Co-Lead Counsel" means the firms of Cohen, Milstein,

Hausfeld & Toll, P.L.L.C.; Milberg Weiss Bershad Hynes & Lerach, LLP; and Wolf

Popper LLP;

(o) "Plaintiffs' Counsel" means counsel for Plaintiffs and the Class.

(p) "Plan of Allocation" means the terms and procedures for allocating the

1^C t ai Liiiiii( ilC 1'^liiU ,1.I:;L^ ,LAai::1L lic uaicti) iiiliUfl^„ uiii^ iii^iiltJLoLald iii. xV:;[

Fund to Authorized Claimants;

(q) "Preliminary Approval Order" means the Order to be entered by the Court,

ksubstantially in the form set forth as Exhibit. A, inter alia, preliminarily approving the

terms and conditions of the Settlement, directing that Notice be provided to the Class, and

scheduling a hearing concerning the final approval of the Settlement;

STIPULATION OF SETTLEMENT Page 5


(r) "Proof of Claim" means the Proof of Claim and Release and SubstituteJ

Form W-9 substantially in the form annexed as Exhibit A-2, which, upon approval of the

Court, will be distributed to Class Members with the Notice;

(s) "Released Claims" shall mean all actual and potential claims, liabilities,

demands, causes of action, or lawsuits by each and every class member against any and

all Released Persons, whether legal, equitable, statutory or of any other type or form, and

which were brought or potentially could have been brought in an individual,

representative or any other capacity, that relate to or arise out of the events, acts, or

omissions which were or could have been.. alleged in the Action against the Defendants;

(t) "Released Persons" shall mean each Defendant and his respective heirs,

executors and assigns;

(u) "Request for Exclusion" means a written request by any Class Member to

opt out of or otherwise be excluded from the Settlement, as provided in the Notice;

(v) "Settlement" means the terms and conditions set forth in this Stipulation;

(w) "Settlement Fund" means the. Settlement Sum, plus all interest earned

thereon;

(x) "Settlement Hearing" means the hearing held by the Court to consider

final approval of lids ,StAlielllt.11l pursuaat.to rederai Rule oz uivii ^roceciure 23(e);

(y) "Settlement Sum" means the cash sum of Six Hundred Twenty-Five

Thousand U.S. Dollars ($625,000), consisting of $445,000 contributed by defendants

Covey and Skadra, and $180,000 contributed by defendants Notari, Ford and Osborne;

(z) "Stipulation" means this Stipulation of Settlement and the Exhibits

attached and incorporated herein by reference; and



(aa) "Summary Notice" means the Summary Notice of Pendency and Proposed

Settlement of Class Action and Settlement Hearing, which is to be published in

accordance with the terms of the Preliminary Approval Order, which shall be in a form

substantially as set forth in Exhibit A-3.

III. SETTLEMENT PAYMENT

5. Subject to the terms and conditions of this Stipulation, within five (5) business

days after the execution of this Stipulation by all parties, defendants Covey and Skadra shall

transfer to the Escrow Agent for the benefit of the Class the cash sum of $445,000. Subject to

the terms and conditions of a previously-executed Memorandum of Understanding, defendants

Notari, Ford and Osborne have previously transferred to the Escrow Agent, for the benefit of the

Class, the cash sum of $180,000. That sum has been invested by the Escrow Agent in certificates

I,of deposit with interest accruing for the benefit of the Class pending distribution of the Net

Settlement Fund.

6. The Settlement Sum shall be invested by the Escrow Agent in United States

Government securities or certificates of deposit of one or more federally insured national banks

with assets of more than one billion dollars. Such interest shall accrue for the benefit of the

Class pending distribution of the Net Settlement Fund.

7. Upon the Eilective Date, Defendants. shall cease to have auy interest In the

Settlement Sum and there shall be no reversion or.return of the Settlement Sum to the

Defendants.

it 8. The Defendants, and their attorneys, will have no involvement in the drafting,

review, or selection of any instructions provided (or to be provided) to the Escrow Agent by the

Plaintiffs or Plaintiffs' Co-Lead Counsel. The Defendants, and their attorneys, are not



I

responsible or liable in any manner for any past, current, or future act or omission of the Escrow

Agent, the Plaintiffs, or Plaintiffs' Co-Lead Counsel, or any of them, relating to the Settlement

fSum after its , payment to the Escrow Agent. The Escrow Agent and the Defendants shall not be

liable or accountable for any loss in value or other loss or impairment of the Settlement Fund,

including any loss incurred in or resulting from the. investment or reinvestment thereof, except

the Escrow Agent may be liable for such loss or impairment as is attributable to its negligence or

its fraudulent or other willful misconduct.

IV. ADMINISTRATION AND DISPOSITION OF THE SETTLEMENT FUND

9. Plaintiffs' Co-Lead Counsel, or their authorized agents, acting on behalf of the

Class, and subject to such supervision and direction of the Court as maybe necessary or as

circumstances may require, shall administer and calculate the claims submitted by Class

Members and shall oversee distribution of the Net - Settlement Fund to Authorized Claimants.

10. The Settlement Fund shall be applied as follows:

(a) to pay the Fee and Expease.Award;

(b) to pay all the Costs of Notice;

(c) to pay all Costs of Administration;

(d) to pay any taxes owed by the Settlement Fund; and

w W66 iluUiC 41Q i 4LL SeLLAQ1rait i uad to AULiloriLeci Cla1fmuits

substantially in accordance with a Plan of Allocation to be described its the Notice and

approved by the Court.

11. Plaintiffs' Co-Lead Counsel shall have the sole responsibility for choosing and

supervising a claims administrator for the purpose of processing the claims against the

Settlement Fund, and payment of all Costs of Administration and Costs of Notice shall be paid



out of the Settlement Fund. Plaintiffs' Co-Lead Counsel shall have control over all

determinations pertaining to the acceptance or denial of claims, subject to the approval of the

Court. The Defendants will not have any responsibility for designing the Plan of Allocation or

for Plaintiffs' Counsels' determinations pertaining to the acceptance or denial of claims.

12. In order to receive a distribution from the Net Settlement Fund, a Class Member

must file a timely Proof of Claim substantially in the form of Exhibit A-2 or otherwise approved

by the Court. The Defendants shall not have any role in or responsibility for the form,

substance, method or manner of administration of the Settlement Fund or distribution of the Net

Settlement Fund to CIass Members. Distribution to the Class Members shall be made in

accordance with the Plan of Allocation set forth in .the Notice. Defendants shall have no

responsibility or liability for the administration & processing of claims or the allocation of the

Settlement Fund, including, without limitation, determinations as to the validity of Proofs of

Claim, distributions of the Net Settlement Fund, or any loss incurred in connection with the

activities of the claims administrator.

13. No person shall have any claim against Plaintiffs' Counsel or any claims

administrator, or other agent designated by Plaintiffs' Counsel, or Defendants, or their 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.

14. It is understood and agreed by the Parties that any proposed Plan of Allocation of

1 the Net Settlement Fund including, but not limited to, any adjustments to an Authorized

Claimant's claim set forth therein, is not a part of the Stipulation and is to be considered by the

Court separately from the Court's consideration_of'.the fairness, reasonableness and adequacy of

the Settlement set forth in the Stipulation, and any order or proceeding relating to the Plan of



G

Allocation shall not operate to terminate or cancel the Stipulation or affect the finality of the

Court's Order and Final Judgment approving the Stipulation and the Settlement set forth therein,

or any other orders entered pursuant to the Stipulation.

15. The Escrow Agent shall not disburse the Settlement Fund except as provided in

the Stipulation, by an order of the Court, or with the written agreement of counsel for Defendants

and Plaintiffs' Co-Lead Counsel,

16. All funds held by the Escrow Agent. shall be deemed and considered to be in

custodia legis of the Court, until such time as such funds shall be distributed pursuant to the

Stipulation and/or further order(s) of the Court.

17. The Escrow Agent shall maintain accurate records of all expenditures from the

Settlement Fund, and shall provide such records.to. Plaintiffs' Co-Lead Counsel upon request.

18. The Settlement Fund shall be treated as a "qualified settlement fund" within the

meaning of Treasury Regulations Section 1.468B.-1.. Plaintiffs' Co-Lead Counsel shall have the

sole power to designate the person or entity (other than the Defendants) to serve as the

"administrator" for tax purposes. Such administrator shall be responsible for making all

necessary or advisable elections to carry out the .intent of this provision, including a "relation-

back election" and the Defendants shall, as necessary, join in such elections. Plaintiffs' Co-Lead

Counsel, or their designated agent, shall be responsible for timely and properly preparing and

filing all informational and other tax returns required with respect to the Settlement Fund. All

taxes (including any interest or penalties) arising with respect to the income earned by the

k Settlement Fund, including any taxes or charges that may be imposed upon the Defendants withi

respect to any income earned by the Settlement Fund for any period during which the Settlement1

Fund does not qualify as a "qualified settlement fund" for Federal or state income tax purposes



and all other expenses and costs incurred in connection with the implementation of this provision

(including, without limitation, expenses of attorneys and/or accountants incurred in connection

with the preparation of required tax filings and returns) shall be paid out of the Settlement Fund.

Defendants shall not have any liability or responsibility for taxes or tax related expenses of the

Settlement Fund.

V. APPROVAL OF THE SETTLEMENT

19. Plaintiffs and Defendants shall jointly move the Court for preliminary approval of

this Settlement and for entry of the Preliminary Approval Order within fourteen (14) days of

execution of this Stipulation by all parties.

20. The Parties to this Stipulation agree to the entry of an Order and Final Judgment

Isubstantially in the form attached as Exhibit B hereto, and shall jointly move the Court for entry

jof the Order and Final Judgment. The Order andFinal Judgment shall, inter alia, dismiss with

prejudice all of the Released Claims against the Released Parties.

21. At the conclusion of the claims administration process, but not before the

Effective Date, Plaintiffs will seek approval of the Court to distribute the Net Settlement Fund to

the Class, in accordance with the Plan of Allocation, the terms and conditions of which are set

forth in the Notice.

VI. RELEASES

22. Upon the Effective Date, the Plaintiffs in their representative capacities and each

Class Member and their respective heirs, executors, administrators, representatives, agents,

successors and assigns shall be deemed to have, and by operation of the Order and Final

Judgment shall have, fully, finally, and forever released, relinquished and discharged the

Released Persons of and from any and all Released_ Claims, whether or not such Class Member



executes and delivers the Proof of Claim and Release.

23. Upon the Effective Date, the Released Persons shall be deemed to have, and by

operation of the Order and Final Judgment shall have, fully, finally, and forever released,

relinquished and discharged the Plaintiffs, all Class Members and Plaintiffs' counsel of and from

any and all claims arising out of, relating to, or in.connection with the institution, prosecution,

assertion, settlement or resolution of the Action or the Released Claims.

24. This Stipulation and the Settlement provided for herein are not to be construed to

release the liability of any party to the Action other than provided herein.

VII. ADDITIONAL CONDITIONS OF SETTLEMENT

25. In addition to the other terms and -conditions stated in this Stipulation, the

obligations of the parties hereto to consummate finally the Settlement in accordance with this

Stipulation are conditioned on the occurrence of each and every one of the following:

(a) Entry by the Court of an order materially similar to the Preliminary

Approval Order giving preliminary approval to the Settlement and authorizing notice of

the Settlement to be given to the Class;

(b) Entry by the Court of an order materially similar to the Order and Final

Judgment approving the Settlement as fair. and reasonable pursuant to Rule 23(a) and

approving the class notice procedures as satisfying all requirements of due process and

Rule 23(e) and dismissing with prejudice all claims asserted against the Released Parties

pursuant to Rule 54(b); and

(c) The occurrence of the Effective Date.

I



VIII. TERMINATION OF THE SETTLEMENT

26. Subject to the terms and provisions of this Stipulation, Plaintiffs' Co-Lead

Counsel and/or the Defendants shall have the right to terminate the Stipulation if any of the

conditions set forth in Section VII do not occur.

27. If Class Members who acquired SSA common stock during the Class Period,

which common stock on an aggregate basis amounts to more than two percent (2%) of SSA's

total outstanding shares as of January 7, 1997, timely file Requests for Exclusion in accordance

with the deadline set by the Court (or which are otherwise permitted by the Court), then the

Settling Defendants, at their sole discretion, have the option to withdraw from the Settlement.

This option, if exercised, must be exercised in writing no later than the later of: (i) five (5)

business days prior to the Settlement Hearing, or (ii) five (5) business days after the Court grants

any otherwise untimely Requests for exclusion and in doing so causes the 2% limit to be

exceeded. Plaintiffs' Counsel shall deliver copies of all Requests for Exclusion to counsel for

the Defendants as soon as practicable after such Requests for Exclusion are received.

28. In the event that the Settlement is terminated pursuant to ¶¶ 26 or 27, above,

written notice shall be provided by the terminating party to the Court and counsel for the non-

terminating party or parties.

29. In the event that this Stipulation is. terminated for any reason or that the Court

does not approve the Settlement, this Stipulation shall be deemed null and void, and shall have

no further force and effect with respect to any party in the Action and neither the Stipulation, the

exhibits hereto, nor the Settlement negotiations shall be used or referred to in the Action or in

any other actions or proceedings for any purpose.

30. In the event of termination of this .Stipulation, the Action shall thereupon revert

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Case 1:97-cv-00177 Document 142 Filed 05/30/2002 Page 19 of 27{

4

forthwith to its respective status prior to the date;:of the execution of the this Stipulation and shall

proceed as if the Stipulation, and related orders and papers had not been executed.

31. Within five (5) business days after the written notice provided for in 128 above,

the Defendants shall have returned to them their-respective contributions to the Settlement Sum,

plus all accrued interest on their respective contributions, less one-half of any Costs of Notice,

Costs of Administration, or fees already incurred on their respective contributions.

IX. ATTORNEYS' FEES AND EXPENSES

32. Counsel for the Plaintiffs will petition the Court for payment of the Fee and

Expense Award from the Settlement Fund. This will include accrued interest on such attorneys'

fees, costs and expenses (net of taxes) at the same rate and for the same period as earned by the

Settlement Fund (until paid), as awarded by the Court. The attorneys' fees, costs and

disbursements awarded to counsel for the Plaintiffs may only be paid from the Settlement Fund

after the Effective Date. Defendants agree not to object to this request and shall have no

responsibility for any payment of attorneys' fees and expenses to Plaintiffs' Counsel.

33. The attorneys' fees, expenses and - Posts, as awarded by the Court, shall be paid to

Plaintiffs' Counsel from the Settlement Fund, as ordered, immediately after the Court executes

an order awarding such fees and expenses. Plaintiffs' Co-Lead Counsel shall thereafter allocate

the attorneys' :fees amongst Plaintiff€s' Counsel in a manner in which they in good faith believe

reflects the contributions of such counsel to the prosecution and settlement of the Action. In the

event that the Effective Date does not occur, or the Order and Final Judgment is reversed or

modified, or the Stipulation is canceled or terminated for any other reason, and in the event that

the Fee and Expense Award has been paid to any - extent, then Plaintiffs' Counsel shall within

five (5) business days from receiving notice from. Defendants' counsel or from a court of

}4

{ STIPULATION OF SETTLEMENT Page 14I


i

appropriate jurisdiction, refund to the Settlement Fund the fees, expenses and costs previously

paid to them from the Settlement Fund plus interest. thereon (net of taxes) at the same rate as

earned on the Settlement Fund in an amount consistent with such reversal or modification. Each

such Plaintiffs' Counsel's law firm, as a condition of receiving such fees and expenses, on behalf

of itself and each partner and/or shareholder of it, agrees that the law firm and its partners and/or

shareholders are subject to the jurisdiction of the court for the purpose of enforcing the

provisions of this paragraph.

34. Any order or proceedings relating to.the Fee and Expense Application, or any

appeal from such an order, is not a material term of the Settlement and shall not operate to

terminate or cancel the Settlement, or affect or delay the finality of the Order and Final Judgment

approving the Settlement set forth herein. Neither.a modification nor reversal or appeal of any

Fee and Expense Award shall constitute grounds for cancellation or termination of the

Settlement.

X. MISCELLANEOUS PROVISIONS

35. This Stipulation shall in no event be construed or be deemed to be evidence or an

admission or a concession on the part of the Defendants of any fault or liability or damages

whatsoever. To the contrary, the Defendants have each vigorously denied any and all

wrongdoing of any kind whatsoever and have each vigorously denied any liability to the

i Plaintiffs or the Class in this Action. The Defendants do not concede any infirmity in the

defenses they had intended to assert in the Action, nor are any such defenses waived.

36. Counsel for the Plaintiffs have investigated the facts and circumstances

underlying the allegations against the Defendants-made in the Action. They have evaluated the

expense and length of time necessary to prosecute the Action against the Defendants, taking into

A ._



account the uncertainties of predicting the outcome of complex litigation such as this. They have

concluded that further proceedings against the Defendants will be protracted, complex and

expensive, that the outcome is uncertain, and that the financial resources of the Defendants are

limited. Based upon consideration of these facfors, Plaintiffs and their counsel have concluded

that it is desirable and in the best interests ofthe Class to settle the Action as to the Defendants,

and to release the Defendants as set forth in this Stipulation, which will result in substantial

benefits to the Class.

37. Plaintiffs reserve their right to proceed against any person or entity, other than the

Released Parties on any claims, demands, causes of action or liabilities of any nature which

Plaintiffs ever had, now have or hereafter may have against any individual or entity. Neither the

compromise and settlement set forth in the Stipulation or the Order and Final Judgment, nor any

covenant or agreement contained herein shall be_deemed to reduce, release or discharge any

claim, demand, cause of action or liability which any Class Member had, now has or may

hereafter have against such persons or entities.

38. All parties to this Stipulation agree to cooperate with one another in seeking Court

approval of the Stipulation and to use their best efforts to effect consummation of this Stipulation

and the Settlement provided for herein as expeditiously as possible. Each of the Parties will

exert every reasonable effort and will act reasonably and in good faith to agree upon and execute,

at the earliest practicable time, such other documentation as may be required in order to: (i)

implement the matters enumerated herein; (ii) obtain preliminary and final approval by the Court

of the Settlement upon the terms and conditions .set forth in this Stipulation; and (iii) secure

dismissal with prejudice of the Released Claims, without costs for any party as to each and every

Defendant. No Party to this stipulation shall seek to evade its good faith obligations to seek



' IL

approval and implementation of this Settlement by virtue of any rulings, orders, governmental

report, the results of the Proof of Claims process,.or other development, whether in the Action or

in any other Action, or otherwise, that might hereinafter occur and might be deemed to alter the

1

relative strengths of the Parties with respect to any claim or defense or their relative bargaining

power with respect to negotiating a settlement, other than as permitted in this Stipulation.

39. The Parties deem this Settlement to be fair and reasonable and have arrived at this

Settlement in aii a's-length negotiations taking into account all relevant present or potential

factors.

40. Defendants agree that the Action was filed in compliance with Rule 11 of the

Federal Rules of Civil Procedure and is being settled voluntarily after consultation with

competent legal counsel.

41. Without fiuther order of the Court, the parties may agree to reasonable extensions

of time to carry out any of the provisions of this Stipulation.

42. All of the exhibits to this Stipulation are an integral part of this Stipulation and

part of the agreement of the parties to this Stipulation.

43. This Stipulation and its terms shall be governed by the laws of the State of

Illinois, unless otherwise covered by federal law,.

44. This Stipulation shall be binding upon and inure to the benefit of the Parties

hereto and their respective heirs, executors, administrators, successors and assigns, and upon any

corporation or other entity into or with which any party hereto may merge or consolidate.

45. The waiver by one party of any breach of this Stipulation by another party shall

not be deemed a waiver of any other prior or subsequent breach of this Stipulation.

46. Plaintiffs and the Class Members expressly waive any and all rights or benefits


Case 1:97-cv-00177 Document 142 Filed 05/30/2002 Page 23 of 27i

they may now have, or in the future may have, under any law relating to the releases of unknown

claims, including without limitation Section 1542 of the California Civil Code, which provides:

A general release does not extend to the claims which the creditor does notknow or suspect exist in his favor at the time of executing the release,which if known by him must have materially affected his settlement withthe debtor.

Plaintiffs and each Class Member shall be deemed to have waived any and all provisions, rights

and benefits conferred by any law of any state or territory of the United States or any foreign

country, or any principle of common law, which is similar, comparable or equivalent in

substance or intent to Section 1542 of the California Civil Code.

47. The Court shall retain jurisdiction with respect to enforcement of the terms of the

Stipulation. All parties hereby agree to be bound by the determinations of the Court with respect

to interpretation of this Stipulation and will comply with such determinations.I

48. This Stipulation, and its exhibits, may be executed in one or more counterparts, all

of which together shall be one instrument, and all of which shall be considered duplicate

originals. The foregoing, including all exhibits, constitutes the entire agreement of the parties

with respect to the subject matter hereof and may not be modified or amended except in a writing

signed by all parties hereto. Counsel may sign the Stipulation on behalf of the Parties and



IN WITNESS WHEREOF, the Stipulation has been executed by the undersigned counsel

of record as of the dates set forth below:

Dated '^ Dated

oseph D Ament William P. SchumanMUCH SHELIST FREED DENENBERG MCDERMOTT, WILL & EMERYA.MENT & RUBENSTEIN, PC 227 West Monroe Street

200 North LaSalle Street, Suite 2100 Chicago, IL 60606Chicago, IL 60601

COUNSEL FOR DEFENDANTSMarvin A. Miller ROGER E. COVEY AND JOSEPH J.MILLER FAUCHER and CAFFERTY, LLP _ SKADRA30 North LaSalle StreetSuite 3200Chicago, IL 60602 Dated

PLAINTIFFS' LOCAL COUNSEL

Zf,

^ " Alan F. Curley

^-e _ ROBINSON CURLEY & CLAYTON, P.C.Herbert E. Milstein 300 South Wacker Drive, Suite 1700Mark S. Willis Chicago, IL 60606COHEN, MILSTEIN, HAUSFELD &TOLL, P.L.L.C. COUNSEL FOR DEFENDANTS1100 New York Avenue, N.W. TERENCE H. OSBORNE, TERRY E.West Tower, Suite 500 NOTARI, AND LARRY J. FORD

ashington, D.C. 20005-3934

0Sanfo d P. Dumain

C^Beth aswanMILBERG WEISS 13ERSHAD HYNES& LERACH LLPOne Pennsylvania PlazaN- , York, New York 10119

Ro i -rt M. KornreichWOLF POPPER LLP `---845 Third AvenueNew York, New York 10022

PLAINTIFFS' CO-LEAD COUNSELi





Dated Dated S-^ t -a ^-

Joseph D. Ament William P. SchumanMUCH SHELIST FREED DENENBERG MCDERMOTT, WILL & EMERYAMENT & RUBENSTEIN, PC 227 West Monroe Street

Chicago, IL 60601COUNSEL FOR DEFENDANTS

Marvin A. Miller ROGER E. COVEY AND JOSEPH J.MILLER FAUCHER and CAFFERTY, LLP SKADRA30 North LaSalle StreetSuite 3200Chicago, IL 60602 Dated

PLAINTIFFS' LOCAL COUNSELAlan F. CurleyROBINSON CURLEY & CLAYTON, P.C.

Herbert E. Milstein 300 South Wacker Drive, Suite 1700Mark S. Willis Chicago, IL 60606COHEN, MILSTEIN, HAUSFELD &TOLL, P.L.L.C. COUNSEL FOR DEFENDANTS1100 New York Avenue, N.W. TERENCE H. OSBORNE, TERRY E.West Tower, Suite 500 NOTARI, AND LARRY J. FORDWashington, D.C. 20005-3934

Sanford P. DumainBeth KaswanMILBERG WEISS BERSHAD HYNES& LERACH LLPOne Pennsylvania PlazaNew York, New York 10119

Robert M. KornreichWOLF POPPER LLP845 Third AvenueNew York, New York 10022

PLAINTIFFS' CO-LEAD COUNSEL





Dated Dated

Joseph D. Arnent Williarn P. SchumanMUCH SHELIST FREED DENENBERG MCDERMOTT, WILL & EMERYAMENT & RUBENSTEIN, PC 227 West Monroe Streetnnn 11 7 C„11. (fie.-„ F,s C',^j ',11 (!l'. (`l,;!`^nn TT

Ch' cago, IL, UU60 iCOUNSEL FOR DEFENDANTS

Marvin A. Miller ROGER E. COVEY AND JOSEPH J.MILLER FAUCHER and CAFFERTY, LLP SKADRA30 North LaSalle StreetSuite 3200Chicago, IL 60602 Dated Z d 2--

PLAINTIFFS' LOCAL COUNSELAlan F. CurleyROBINSON CURLEY & C AYTON, P.C.

Herbert E. Milstein 300 South Wacker Drive, Suite 1700Mark S. Willis Chicago, IL 60606COHEN, MILSTEIN, HAUSFELD &TOLL, P.L.L.C. COUNSEL FOR DEFENDANTS1100 New York Avenue, N.W. TERENCE H. OSBORNE, TERRY E.West Tower, Suite 500 NOTARI, AND LARRY J. FORDWashington, D.C. 20005-3934

Sanford P. DumainBeth KaswanMILBERG WEISS BERSHAD HYNES& LERACH LLPOne Pennsylvania PlazaNew York, New York 10119

1

Robert M. Kornreich

iWOLF POPPER LLP845 Third Avenue

J New York, New York 10022

fif PLAINTIFFS' CO-LEAD COUNSEL

ISTIPULATION OF SETTLEMENT page 19

± Case 1:97-cv-00177 Document 142 Filed 05/30/2002 Page 27 of 27

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