STIPULATION AND AGREEMENT OF SETTLEMENT
Exhibit
10.14
UNITED
STATES DISTRICT COURT
DISTRICT
OF MASSACHUSETTS
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In
re VASO ACTIVE PHARMACEUTICALS
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SECURITIES
LITIGATION
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Master Docket No. 0410708-RCL
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This
Document Relates To:
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ALL
ACTIONS
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This
Stipulation and Agreement of Settlement dated as of September 21, 2005 (the
“Stipulation”) is made and entered into by and among Lead Plaintiffs, Xxxxx
Xxxx, Xxxxxxx Xxxxx and Xxx Xxxxxx, on behalf of the Class (as hereinafter
defined) (collectively referred to hereinafter as the “Plaintiffs”), and
Defendants, Vaso Active Pharmaceuticals, Inc. (“Vaso” or the “Company”),
Xxxx
X.
Masiz (“Masiz”), Xxxxxxx
X. Xxxxxx (“Xxxxxx”), Xxxxxx
Xxxxxxxxxx (“Xxxxxxxxxx”), Xxxxx
X.
Shear, (“Shear”), Xxxx
Xxxxx (“Xxxxx”), Xxxxx
X.
Xxxxxxxxx (“Xxxxxxxxx”), Xxxxxxx
X. Xxxxx (“Xxxxx”), Xxxxxx
X.
Xxxxxxxx (“Xxxxxxxx”) and Xxxxxxx Davidson Securities Corp. (“Xxxxxxx”)
(collectively hereinafter referred to as the “Defendants”), by and through their
respective counsel.
WHEREAS:
A. The
following securities actions have been filed against Vaso and certain of its
present or former officers and directors, and Xxxxxxx:
36
1
Xxxxxx
X.
Xxxxx v. Vaso Active Pharmaceuticals, Inc., Xxxxxxx X. Xxxxxx, Xxxx X. Masiz,
No. 04-10708 (RCL); Xxxxxxxxxxx
Xxxxx v. Vaso Active Pharmaceuticals, Inc., Xxxxxxx X. Xxxxxx, Xxxx X. Masiz,
04-10763 (RCL); Kourish Alipor v. Vaso Active Pharmaceuticals, Inc., Xxxxxxx
X.
Xxxxxx, Xxxx X. Masiz, No. 04-10877 (RCL); Modhi Xxxx v. Vaso Active
Pharmaceuticals, Inc., Xxxxxxx X. Xxxxxx, Xxxx X. Masiz, No. 04-10789 (RCL);
Xxxxxxx Xxxxxxx v. Vaso Active Pharmaceuticals, Inc., et al., Civ. No. 04-10720
(RCL) (D. Mass.); Xxx Xxxxxxxxx, et al. v. Vaso Active Pharmaceuticals, Inc.,
et
al., Civ. No. 04-10808 (RCL) (D. Mass.); Xxxx Xxxxxx v. Vaso Active
Pharmaceuticals, Inc., et al., Civ. No. 04-10819 (RCL) (D. Mass.); Xxxxxx Xxxxxx
v. Vaso Active Pharmaceuticals, Inc., et al., Civ . No. 04-10851 (RCL); Xxxx
X.
Xxxxxxx v. Vaso Active Pharmaceuticals, Inc., et al., Civ. No. 04-10948 (RCL);
Xxx X. Turret Sep-Xxx Dated 01/24/02 v. Vaso Active Pharmaceuticals, Inc.,
et
al., Civ. No. 04-10980 (RCL); Xxxxxxx Xxxxxx v. Vaso Active Pharmaceuticals,
Inc., et al., Civ. No. 04-11100 (RCL); Xxxxx Xxxxxxxxxxx v. Vaso Active
Pharmaceuticals, Inc., et al., Civ. No. 04-11101 (RCL); and Xxxxxxx Xxxxxxxx
v.
Vaso Active Pharmaceuticals, Inc., et al., Civ. No. 04-11221 (RCL)
B. This
Stipulation is intended to fully, finally, and forever resolve, discharge and
settle the actions and all Released Claims, as defined herein, with prejudice
and without costs, against the Released Parties, as defined herein.
C.
By
Order
dated May 11, 2004, the Court consolidated all of the above-captioned actions
into In
re
Vaso Active Pharmaceuticals Sec. Litig., No.
04-10708 (RCL) (the “Action”).
D. By
Order
dated November 4, 2004, the Court appointed Xxxxx Xxxx, Xxxxxxx Xxxxx, and
Xxx
X. Xxxxxx as the Lead Plaintiffs, Schiffrin & Barroway, LLP as Lead Counsel,
and Xxxxxxx, Xxxxx & Xxxx as Local Counsel for the Class;
E. On
December 3, 2004, Lead Plaintiffs filed the Consolidated Amended Class Action
Complaint (the “Complaint”). The Complaint alleges, among other things, that
Defendants
(as defined herein) represented in the Registration Statements filed in
connection with Vaso’s December 2003 Initial Public Offering (the “IPO”) that
Vaso had begun marketing and was preparing for the commercial launch of three
products that had received FDA approval. The Complaint alleges further that
based on these representations, Defendants conducted an IPO which permitted
it
to raise millions of dollars in capital. The Complaint alleges further that
these representations continued throughout the Class Period, artificially
inflating the value of its Class A common stock, when in fact, Vaso had not
received any approval from the FDA for the marketing or sale of any of the
three
products. With respect to Defendant Xxxxxxx, the Underwriter for the IPO, the
Complaint alleges that Xxxxxxx had a duty to promptly disseminate truthful
and
accurate information with respect to Vaso and its affairs, failed to fulfill
that duty, and caused the materially false and misleading Registration Statement
to be delivered to potential and actual purchasers of Vaso common stock in
connection with offers and sales thereof. The Complaint alleges that Defendants
made these misrepresentations in violation of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated under Section 10(b),
and Sections 11 and 15 of the Securities Act of 1933.
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F. On
January 20, 2005, Defendants filed Answers to the Complaint denying the
substance of these allegations.
G. Beginning
in April 2005, the Plaintiffs, Defendant Vaso, and the Individual Defendants
entered into negotiations for a possible resolution of the Action. Soon
thereafter, Plaintiffs and Defendant Xxxxxxx also entered into negotiations
for
a possible resolution of the Action.
H. On
May
25, 2005, Lead Plaintiffs conducted an interview of Defendant Xxxxxxxxxx, the
President and Chief Financial Officer of Vaso, concerning the financial status
of the Company. Defendant Xxxxxxx also produced information concerning its
financial condition.
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I. Lead
Plaintiffs and Lead Counsel recognize the burden, expense, risks and uncertain
outcome of litigating this Action further, and Lead Plaintiffs, on behalf of
themselves and other members of the Class desire to settle their claims against
the Released Parties, on terms and conditions hereafter set forth and deem
said
Settlement to be fair, reasonable, adequate and in the best interest of the
Class.
J. The
Defendants do not admit the allegations of the Complaint. Defendants have
concluded that it is desirable and beneficial to them that the Action and any
Released Claims, including Unknown Claims (as defined herein), be fully and
finally settled on the terms and conditions set forth herein. In determining
to
enter into the Stipulation, the Defendants have considered a number of issues,
including the burden, expense, risks, delays and uncertain outcome of any
litigation.
K. The
parties have engaged in extensive discussions and arm’s length negotiations with
respect to a compromise and settlement of the Plaintiffs’ claims against the
Released Parties, as hereafter defined, with a view toward settling the issues
in dispute and achieving the best relief possible consistent with the interests
of the Class. In agreeing to this Settlement, Plaintiffs do not concede that
any
infirmities exist in their claims, nor do Defendants concede any infirmities
in
their defenses to such claims, or that the claims are valid or have merit;
and
L. Based
upon their investigation and discovery, Lead Counsel concludes that the terms
and conditions of this Stipulation are fair, reasonable and adequate to Lead
Plaintiffs and the Class, and Lead Plaintiffs have agreed to settle the claims
raised in the Action pursuant to the terms and provisions of this Stipulation,
after considering: (a) the Defendants’ financial condition and inability to
either contribute any cash amount to a settlement or to satisfy a verdict;
(b)
the benefit that Lead Plaintiffs and the Class will receive from the Settlement;
and (c) the desirability of permitting the Settlement to be consummated as
provided by the terms of this Stipulation.
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M. Upon
and
subject to the terms and conditions hereto, this Stipulation is entered into
at
the same time as the stipulation reflecting the settlement of the Federal
Derivative Action (as defined herein) (the “Federal Derivative Stipulation”),
which is subject to approval by the Court after notice and hearing. Provided,
however, the Courts’ approval of the Federal Derivative Stipulation is not a
condition of the Court’s approval of the Settlement of the Action. In addition,
upon and subject to the terms and conditions hereto, this Stipulation has been
negotiated in conjunction with the dismissal with prejudice of the State Court
Derivative Action (as defined below). The parties to the State Court Derivative
Action will enter into a stipulation for the dismissal with prejudice of the
action following the Court’s approval of the settlement of the Federal
Derivative Action.
NOW
THEREFORE,
without
any admission or concession on the part of Plaintiffs of any lack of merit
of
the Action or of any fact alleged in the Action, whatsoever, and without any
admission or concession of any liability or wrongdoing, or lack of merit in
the
defenses, or with respect to the merit of any fact alleged by Plaintiffs,
whatsoever, by the Defendants, it is hereby STIPULATED
AND AGREED,
subject
to approval of the Court, in consideration of the benefits flowing to the
parties hereto from the Settlement, that all Released Claims (as defined herein)
as against the Released Parties (as defined herein) shall be fully and forever
comprised, settled, released and dismissed with prejudice, upon and subject
to
the following terms and conditions:
5
DEFINITIONS
1. As
used
in this Stipulation, the following terms shall have the following
meanings:
(a) “Authorized
Claimant” means a Class Member (as defined below), who submits a timely and
valid Proof of Claim and Release in such form and manner, and within such time
as specified herein, to the Claims Administrator (as defined
below).
(b) “Claims
Administrator” means A.B. Data, Ltd. (“A.B. Data”), which shall administer the
Settlement and also act as Escrow Agent.
(c) “Class”
and “Class Members” mean: (i) All
persons and entities who purchased or otherwise acquired Vaso Class A common
stock on the open market during the period December 9, 2003 through March
31,
2004 (the “Class Period”); and (ii) all persons and entities who purchased or
otherwise acquired shares of Vaso Class A common stock in connection with
the
Company’s initial public offering on or about December 9, 2003 (the “IPO”) (the
“Class” and, with respect to individual members of the Class, “Class Members”).
Excluded
from the Class are Defendants, the officers and directors of the Company,
members of Defendants’ immediate families and their legal representatives,
heirs, successors or assigns and any entity in which Defendants have or had
a
controlling interest. Also excluded from the Class are any Class Members
who
timely and validly request exclusion from the Class pursuant to the Joint
Notice
of Proposed Settlement of Class Action and Derivative Action, Application
for
Attorneys’ Fees and Expenses, and Settlement Fairness Hearings.
(d) “Court”
means the United States District Court for the District of
Massachusetts.
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(e) “Defendants”
means Vaso, Masiz, Carter,
Frattaroli,
Shear,
Fromm,
Strasnick,
Adams,
Xxxxxxxx
and Xxxxxxx.
(f) “Defendants’
Counsel” means the law firms of Xxxxxxxx Xxxxxx LLP, Xxxxxx Xxxxxx Xxxxxxxxx
Xxxx and Xxxx LLP, and Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP.
(g) “Defendants’
Derivative Counsel” means the law firms of Xxxxxxxx Xxxxxx LLP, Xxxxxx Xxxxxx
Xxxxxxxxx Xxxx and Xxxx LLP, and Young Xxxxxxx Stargatt & Xxxxxx,
LLP.
(h) “Effective
Date of Settlement” or “Effective Date” means the date defined in paragraph 39
of the Stipulation.
(i) “Federal
Derivative Action” means In
re
Vaso Active Derivative Litig., Master
Docket No. 04-10792 (RCL) (D. Mass.).
(j) “Final
Judgment and Order” means the order to be entered by the Court approving the
Settlement, in the form attached hereto as Exhibit B.
(k) “Gross
Settlement Fund” and “Settlement Fund” mean the One Million One Hundred and
Twenty-Five Thousand Dollars ($1,125,000) (the “Settlement Cash”), contributed
by Vaso’s insurers and Xxxxxxx, plus any interest earned thereon, and $750,000
face amount of two year 5% subordinated callable notes convertible at $1.75
per
share (with full dilution protection), that Defendant Vaso agrees to contribute
to the Settlement (the “Settlement Notes”).
(l) “Individual
Defendants” means Masiz, Carter,
Frattaroli,
Shear,
Fromm,
Strasnick,
Adams,
and Xxxxxxxx.
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(m) “Lead
Plaintiffs” means Xxxxx Xxxx, Xxxxxxx Xxxxx and Xxx Xxxxxx.
(n) “Lead
Counsel” means the law firm of Schiffrin & Barroway, LLP.
(o) “Net
Settlement Fund” means the Gross Settlement Fund, as defined herein, net of any
taxes, as referred to in paragraph 12, on the income thereof, and net of any
funds or notes used to pay (i) the notice and administrative costs referred
to
in paragraph 14, and (ii) the attorneys’ fees and expense award referred to in
paragraphs 15-17.
(p) “Notice”
means the Joint Notice of Proposed Settlement of Class Action and Derivative
Action, Application for Attorneys’ Fees and Expenses, and Settlement Fairness
Hearings which is to be sent to Class Members and current shareholders
substantially in the form attached hereto as Exhibit A-1.
(q) “Person”
means any individual, corporation, partnership, association, affiliate, joint
stock company, trust, estate, unincorporated association, government and any
political subdivision thereof, and any other type of legal or political
entity.
(r) “Plaintiffs’
Counsel” means Lead Counsel and all other counsel representing Plaintiffs in the
Action.
(s) “Plaintiffs’
Derivative Counsel” means Barrett, Johnston, & Parsley, Robbins, Umeda &
Xxxx, LLP and Xxxxxxxx & Sherwood.
(t) “Preliminary
Approval Order” means the order preliminarily approving the Settlement and
directing notice thereof to the Class, which order is in the form attached
hereto as Exhibit A.
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(u) “Proof
of
Claim” means the proposed Proof of Claim and Release in the form attached as
Exhibit A-2.
(v) “Publication
Notice” means the Summary Notice of Proposed Settlement of Class Action and
Derivative Action and Settlement Hearings for publication in the form attached
as Exhibit A-3.
(w) “Released
Parties” means the
Defendants and their respective present, former, and future officers and
directors, parents, and controlling shareholders (including
but not limited to Biochemics, Inc.),
and
their respective present and former subsidiaries,
affiliates, divisions, and any of the officers, directors, partners, members,
employees, principals, agents, associates, representatives, attorneys, advisors,
investment advisors, auditors, fiduciaries, accountants, predecessors,
administrators, executors, heirs, successors and assigns of each of them,
and
any other Person
in
which any of the foregoing has or had a controlling interest or which is
or was
related to or affiliated with any of the foregoing, any insurer who contributes
to or reimburses the
Defendants for a portion of its or their contributions to the settlement
and who
receives a release from the Defendants in connection with the
Settlement,
and
any
members of Defendants’ immediate families, or any trust of which any Defendant
is the settlor or which is for the benefit of any Defendant and/or member(s)
of
the Defendant’s family.
(x) “Released
Claims” means any
and
all claims, debts, demands, rights or causes of action or liabilities
(including, but not limited to, any claims for damages, interest, attorneys’
fees, expert or consulting fees, and any other costs, expenses or liability),
whether based on federal, state, local, statutory or common law or any other
law, rule or regulation, whether fixed or contingent, accrued or not accrued,
liquidated or not liquidated, at law or in equity, matured or un-matured,
whether class or individual in nature, including both known claims and Unknown
Claims (as defined below), (i) that have been asserted in this Action by
the
Class Members or any of them against any of the Released Parties, or (ii)
that
could have been asserted in any forum by the Class Members or any of them
against any of the Released Parties which arise out of or are based upon
or
relate
in any way to the
allegations, transactions, facts, matters or occurrences, representations
or
omissions involved, set forth or referred to in the Complaint and relate
to the
purchase or acquisition of shares of Vaso Class A common stock
in the
IPO or
during
the Class Period.
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(y) “Settlement”
means the settlement contemplated by this Stipulation.
(z) “Settled
Defendants’ Claims” means any and all claims, rights or causes of action or
liabilities, whether based on federal, state, local, statutory or common law
or
any other law, rule or regulation, including both known claims and Unknown
Claims, that have been or could have been asserted in the Action or any forum
by
the Defendants, their attorneys, or any of them or the successors and assigns
of
any of them against the Lead Plaintiffs, Class Members or their attorneys,
which
arise out of or relate in any way to the institution, prosecution, or settlement
of the Action (except for claims to enforce the Settlement).
(aa) “State
Court Derivative Action” means Weymouth
v. Masiz et. al. C.A.
No.
602-N (Del. Chancery Ct.), which is being voluntarily dismissed with prejudice
as part of the resolution of the Federal Derivative Action.
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(bb) “Unknown
Claims” means any and all Released Claims, which the Lead Plaintiffs,
Plaintiffs’ Counsel, or any Class Member do not know or suspect to exist in his,
her or its favor at the time of the release of the Released Parties, and any
Settled 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. All Class Members
who do not exclude themselves from the Class and this Settlement will be deemed
to expressly waive any and all rights under any statute or common law principles
that would limit the effect of the foregoing releases to those claims actually
known or suspected at the time of execution of this Stipulation, including,
but
not limited to Section 1542 of the Civil Code of the State of California, which
provides:
A
general
release does not extend to claims which the creditor does not know or suspect
to
exist in his favor at the time of executing the release, which if known by
him
must have materially affected his settlement with the debtor.
Lead
Plaintiffs and Defendants acknowledge, and Class Members by operation of law
shall be deemed to have acknowledged, that the inclusion of “Unknown Claims” in
the definition of Released Claims and Settled Defendants’ Claims was separately
bargained for and was a key element of the Settlement.
DEFENDANTS
DO NOT ADMIT ANY
WRONGDOING
OR LIABILITY
2. The
Defendants have denied, and continue to deny that they have engaged in any
wrongdoing or otherwise committed any violation of federal or state securities
laws or other laws and are entering into this Stipulation solely to eliminate
the burden and expense of litigation. The Defendants make no admission of
liability or any fact alleged in the Action. In addition, Lead Plaintiffs do
not
concede that any infirmities exist in their claims, nor do Defendants concede
any infirmities in their defenses to such claims.
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SCOPE
AND EFFECT OF SETTLEMENT
3. The
obligations incurred pursuant to this Stipulation shall be in full and final
disposition of the Action as against the Defendants and any and all Released
Claims against any and all Released Parties.
4. Upon
the
Effective Date of this Settlement, Lead Plaintiffs and each Class Member, on
behalf of themselves, and each of their representatives, heirs, executors,
administrators, trustees, estates, predecessors, successors, parents,
subsidiaries, affiliates, custodians, agents, and assigns and any Persons they
represent, shall be (i) conclusively deemed to have fully, finally and forever
settled, released, relinquished and discharged with prejudice all Released
Claims against the Released Parties; (ii) conclusively deemed to have covenanted
not to xxx the Released Parties in any action alleging any Released Claims;
and
(iii) forever barred from asserting any Released Claims against any of the
Released Parties.
5. If
the
Settlement is approved by the Court, the Final Judgment and Order will dismiss
the Action as against the Defendants with prejudice, and will bar and
permanently enjoin Lead Plaintiffs and each Class Member, regardless of whether
such Lead Plaintiff or Class Member has submitted a Proof of Claim, from
prosecuting the Released Claims against any of the Released
Parties.
THE
SETTLEMENT CONSIDERATION
6. In
full
and final settlement of the claims in this Action, Vaso shall cause its insurer
to pay $1,100,000 in cash and Xxxxxxx will pay $25,000 in cash (collectively
with the $1,100,000 in cash, the “Settlement Cash”) pursuant to paragraph 6(a)
below. Vaso will also contribute the “Settlement Notes” (collectively, the
Settlement Cash with any interest thereon, and the Settlement Notes, shall
be
referred to as the “Gross Settlement Fund” or the “Settlement Fund”) as provided
below in paragraph 6(e).
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(a) Within
ten (10) business days from the date of the Court’s entry of the Preliminary
Approval Order, Vaso shall cause its insurer to deposit $1,100,000 in cash
into
an interest bearing Escrow Account (the “Settlement Fund”) and Xxxxxxx shall pay
$25,000 into the Settlement Fund. Interest earned on the Settlement Fund
while
held in escrow shall accrue for the benefit of the ultimate recipients
of the
Settlement Fund. The
parties
acknowledge that the portion of the Settlement Cash contributed by Vaso
represents proceeds of available Directors and Officers Liability Insurance
which does not constitute property of Vaso, or any estate thereof in the
event
of a bankruptcy, pursuant to 11 U.S.C. § 541.
(b) $100,000
of the $1,125,000 Settlement Cash shall be allocated for the express purpose
of
providing notice of the Settlement in this Action and in the Derivative Action
and to administer the Settlement Fund (the “Notice and Administration Fund”),
pursuant to the terms of the Preliminary Approval Order entered in this Action.
Any portion of the Notice and Administration Fund which is not required for
the
payment of Notice costs and to administer the Settlement Fund will be returned
to the Gross Settlement Fund. Any notice and administrative costs in excess
of
$100,000 shall be paid from the Gross Settlement Fund upon Court
approval.
(c) With
respect to the Settlement Notes, in accordance with the timetable described
in
(d) below, the Class shall receive the Settlement Notes, less any notes awarded
by the Court and issued by Vaso to Lead Counsel as attorneys’ fees (the “Net
Settlement Notes”).
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(d) The
Settlement Notes shall be convertible duly and validly issued fully paid,
non-assessable, and free from all liens and encumbrances. In
the
event Vaso intends to convert the Settlement Notes, Vaso shall provide Lead
Counsel with as much notice as practicable.
(e) Subsequent
to the Effective Date, Vaso shall issue and deliver the Net Settlement Notes,
if
any, to the Authorized Claimants, in whole or in part, within ten (10) business
days of receipt of written instructions from the Claims Administrator in
accordance with paragraph 32 below and the signing of the Class Distribution
Order (as defined herein) authorizing the allocation. Vaso shall bear all costs
of issuing such notes, including the costs associated with registering (if
necessary), printing and issuing the notes, as well as any costs necessary
to
make the notes freely tradable.
(f) The
parties stipulate, and shall ask the Court to find in the Final Judgment and
Order, among other things, that the issuance of notes in consideration of this
Settlement is in reliance upon and subject to the exemption from registration
under Section 3(a)(10) of the Securities Act of 1933 and any applicable
provisions of state securities laws and is based on this Court’s approval of the
note issuance and Settlement as fair, both substantively and procedurally,
to
those to whom the notes will be issued. In the event the note issuance is not
exempt from registration under the Securities Act of 1933 or any state
securities laws, Vaso will pay all expenses necessary to register the notes
accordingly.
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7. Vaso
warrants that, as of the date of this Stipulation, it is not insolvent, nor
will
payment of its portion of the Settlement Cash or distribution of the Settlement
Notes render Vaso insolvent within the meaning of and/or for the purposes of
the
United States Bankruptcy Code. In
the
event any case is commenced pursuant to either Chapter 7 or Chapter 11 of the
Bankruptcy Code in which Vaso is the debtor, whether any such proceeding is
commenced voluntarily or involuntarily (the “Bankruptcy Proceeding”), Vaso will
not contend that there was no consideration provided for any portion of the
Gross Settlement Fund paid by Vaso, any insurance carrier or any other defendant
based upon Defendants’ failure to admit liability or wrongdoing in connection
with Plaintiffs’ claims against Defendants. In the event a Bankruptcy Proceeding
is commenced, Vaso will consent to the modification of the automatic stay
provisions of the Bankruptcy Code (11 U.S.C. § 362) to the extent necessary to
effectuate the terms of this Stipulation. In addition, if
a case
is commenced with respect to Vaso under the United States (Bankruptcy) Code,
or
a trustee, receiver or conservator is appointed under any similar law, and
in
the event of the entry of a final order of a court of competent jurisdiction
determining the payment of the Gross Settlement Fund and any accrued interest,
or any portion thereof, to be a preference, voidable transfer, fraudulent
transfer or similar transaction, and that any of these findings preclude payment
of the $1,100,000 by Vaso’s Officers and Director’s Policy, then, at the
election of Lead Counsel, the parties shall jointly move the Court to vacate
and
set aside the releases given and Final Judgment and Order entered in favor
of
the Defendants pursuant to this Stipulation, and the Stipulation shall be null
and void, and the parties hereto shall be restored to their respective positions
in the litigation immediately prior to June 1, 2005.
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8. No
part
of the Gross Settlement Fund shall constitute, nor shall it be construed or
treated as constituting, a payment in lieu of fines, penalties, forfeitures
or
punitive recoveries.
9. Upon
the
Effective Date, all remaining interest or right of each of the Defendants in
the
Gross Settlement Fund shall be absolutely and forever extinguished except as
provided in this Stipulation.
THE
SETTLEMENT FUND
10. All
funds
held in the Escrow Account shall remain subject to the jurisdiction of the
Court
until such time as the funds shall be distributed to the Class or returned
to
the payors pursuant to this Stipulation and/or further order of the Court.
Any
funds in excess of $100,000 shall be invested in short term United States Agency
or Treasury Securities, and shall collect and reinvest all interest accrued
thereon. In the event any funds held in the Escrow Account are less than
$100,000, then such amount may be held in an interest bearing account of the
Escrow Agent, insured by the FDIC. The Defendants, the Released Parties, and
their respective Counsel shall bear no risk related to the investment of the
Settlement Fund.
11. Subject
to further order and/or directions as may be made by the Court or pursuant
to
written direction by the parties to this Stipulation, the Claims Administrator
is authorized to execute such transactions on behalf of the Lead Plaintiffs
and
the Class as are consistent with the terms of this Stipulation.
TAX
TREATMENT OF THE SETTLEMENT FUND
12. (a) The
parties hereto agree that the Settlement Fund is intended to be a Qualified
Settlement Fund within the meaning of Treasury Regulation § 1.468B-1. The Claims
Administrator and, as required, the parties hereto shall jointly and timely
make
such elections as necessary or advisable to carry out the provisions of this
paragraph 12(a), including the “relation-back election” (as defined in Treasury
Regulation §1.468B-1) back to the earliest permitted date. Such elections shall
be made in compliance with the procedures and requirements contained in such
regulations. It shall be the responsibility of the Claims Administrator to
timely and properly prepare and deliver the necessary documentation for
signature by all necessary parties, and thereafter to cause the appropriate
filing to occur.
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(b) For
the
purposes of § 1.468B of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder, the “administrator” as defined in
§1.468B-2(k)(3) shall be A.B. Data. The Claims Administrator shall timely and
properly file informational and other tax returns necessary or advisable with
respect to the Settlement Fund (including without limitation the returns
described in Treasury Regulation §1.468B-2(k and l)), if applicable. Defendants
Vaso and Xxxxxxx agree to provide promptly to A.B. Data the statement described
in Treasury Regulation §1.468B-3(e). Such returns (as well as the election
described in paragraph 12(a)) shall be consistent with this paragraph 12 and
in
all events shall reflect that all taxes (including any estimated taxes, interest
or penalties) on the income earned by the Settlement Fund shall be paid out
of
the Settlement Fund as provided in paragraph 12(c) hereof.
(c)
All
(i)
taxes (including any estimated taxes, interest or penalties) arising with
respect to the income earned by the Settlement Fund, including any taxes or
tax
detriments that may be imposed upon Defendants or the Released Parties with
respect to any income earned by the Settlement Fund for any period during which
the Settlement Fund does not qualify as a “qualified settlement fund” for
federal or state income tax purposes (“Taxes”), and (ii) expenses and costs
incurred in connection with the operation and implementation of this paragraph
12 (including, without limitation, expenses of tax attorneys and/or accountants
and mailing and distribution costs and expenses relating to filing (or failing
to file) the returns described in this paragraph 12) (“Tax Expenses”), shall be
paid out of the Settlement Fund. In all events the Defendants, the Released
Parties, their respective Counsel, and their insurers shall have no liability
or
responsibility for the Taxes or the Tax Expenses or the filing of any tax
returns or other documents with the Internal Revenue Service or any other state
or local taxing authority. The Settlement Fund shall indemnify and hold
Defendants, the Released Parties, their respective Counsel and their insurers
harmless for Taxes and Tax Expenses (including, without limitation, taxes
payable by reason of any such indemnification). Further, Taxes and Tax Expenses
shall be treated as, and considered to be, a cost of administration of the
settlement and shall be timely paid by the Claims Administrator out of the
Net
Settlement Fund without prior order from the Court and the Claims Administrator
shall be obligated (notwithstanding anything herein to the contrary) to withhold
from distribution to Class Members any funds necessary to pay such amounts
including the establishment of adequate reserves for any Taxes and Tax Expenses
(as well as any amounts that may be required to be withheld under Treasury
Regulation §1.468B-2(1) and (2)); Defendants, the Released Parties, their
respective Counsel, and their insurers are not responsible and shall have no
liability therefore or for any reporting requirements that may relate
thereto.
17
(d) The
parties hereto agree to cooperate with the Claims Administrator, each other,
and
their tax attorneys and accountants to the extent reasonably necessary to carry
out the provisions of this paragraph 12.
SETTLEMENT
DISBURSEMENTS
13. All
costs
of administering this Settlement and the settlement of the Derivative Action,
including but not limited to the Joint Notice of Proposed Settlement of Class
Action and Derivative Action, Application for Attorneys’ Fees and Expenses, and
Settlement Fairness Hearings, administering and distributing the Gross
Settlement Fund, and taxes and other expenses, are the sole responsibility
of
the Plaintiffs and shall be paid out of the Gross Settlement Fund, as provided
herein. The remainder of the Gross Settlement Fund after the payment of the
above amounts, as well as attorneys’ fees and expenses shall constitute the “Net
Settlement Fund,” which shall be distributed to the Authorized Claimants.
COSTS
OF NOTICE AND CLAIMS ADMINISTRATION
14. A
portion
of the Settlement Fund shall be used to pay costs and expenses in providing
proper Notice of Settlement in this Action and in the Derivative Action, the
fees and expenses of the Claims Administrator, the costs and expenses of
administering this Settlement, including without limitation, costs and expenses
necessary to secure court approval of the Stipulation, such as expert
affidavits, and the processing and payment of claims, and all taxes. Notice
and
administration costs and the fees of the Claims Administrator, up to $100,000,
shall be advanced from the Settlement Fund, following entry of the Preliminary
Approval Order as provided in paragraph 6(b). Costs exceeding $100,000 shall
be
paid from the Settlement Fund after the Effective Date upon Court
approval.
18
ATTORNEYS’
FEES
15. A
portion
of the Gross Settlement Fund shall be used to pay the attorneys’ fees of
Plaintiffs’ Counsel and to reimburse them for expenses and costs, including the
fees and expenses of experts and consultants, in an amount to be approved by
the
Court.
16. Lead
Counsel will apply to the Court for an award from the Gross Settlement Fund
of
attorneys’ fees not to exceed twenty-five percent (25%) of the Gross Settlement
Fund, including twenty-five percent (25%) of the Settlement Cash and twenty-five
percent (25%) of the Gross Settlement Notes, and reimbursement of expenses,
plus
interest. Lead Counsel shall decide the allocation of attorneys’ fees among all
Plaintiffs’ Counsel. Lead Counsel shall not seek attorneys’ fees from any other
source other than the Gross Settlement Fund. It is further understood and agreed
that Lead Plaintiffs and the Class expressly waive any and all rights to recover
or seek any attorneys’ fees, expenses or costs from the Defendants, the Released
Parties, and their Counsel in connection with the Action, aside from any
application that they may make in the Court for an award from the Gross
Settlement Fund. Any appeal relating solely to the award of attorneys’ fees or
expenses shall not affect the occurrence of the Effective Date.
17. The
attorneys’ fees, expenses and costs, including any Settlement Notes awarded,
shall be payable to Lead Counsel from the Gross Settlement Fund and issued
to
Lead Counsel by Vaso immediately following the entry of the Court’s Order
awarding attorneys’ fees and expenses. No later than 60 days following entry of
the Preliminary Approval Order, Vaso shall advise Lead Counsel of the number
of
days advance notice that will be required for receipt of instructions for
issuance of the Settlement Cash and Settlement Notes in order to wire such
Settlement Cash and issue any Settlement Notes awarded as attorneys’ fees
immediately following the entry of the Court’s Order awarding attorneys’ fees
and expenses. If the Effective Date does not occur, or the judgment and/or
order
making such fee and expense award is reversed or modified, or the Stipulation
is
canceled or terminated for any other reason, or if the dismissal with prejudice
of the Action does not become final (any such occurrence being a “Reimbursement
Event”), Lead Counsel shall within ten (10) business days after receiving
written notice from Defendants’ Counsel or from a court of appropriate
jurisdiction of any Reimbursement Event, refund to the Gross Settlement Fund,
the fees, expenses and costs previously paid to it, plus the interest earned
therefrom, in an amount consistent with such Reimbursement Event. Furthermore,
Lead Counsel as a condition of receiving such fees, expenses and costs, on
behalf of itself and each partner, agrees that the law firm and its partners
are
subject to the jurisdiction of the Court for the purpose of enforcing the
provisions of this paragraph.
19
18. The
Released Parties, the Defendants’ and Counsel for any of the Released Parties or
the Defendants shall not have any responsibility for, and no liability
whatsoever with respect to any payment to Lead Counsel or any other counsel
or
Person who receives payment from the Gross Settlement Fund or claims entitlement
to receive such payment.
19. The
procedure for the allowance or disallowance by the Court of any attorneys’ fees,
costs and expenses, including the fees of experts and consultants to be paid
out
of the Gross Settlement Fund, are not part of the Settlement set forth in the
Stipulation and are 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 proceedings relating solely to the
payment of any fees, costs or expenses, or any fee and/or expense application,
or any appeal from any order relating thereto or reversal or modification
thereto shall not operate to terminate or cancel the Stipulation or affect
or
delay the finality of the judgment approving the Stipulation and the settlement
of the Action set forth herein.
20
ADMINISTRATION
20. The
Claims Administrator shall administer the Settlement subject to the jurisdiction
of the Court. Except as stated in this paragraph, the Defendants, the Released
Parties and their respective Counsel shall have no responsibility for the
administration of the Settlement and shall have no liability to Lead Plaintiffs
or the Class in connection with such administration of the Settlement. Vaso,
within three (3) business days following the Preliminary Approval Order, shall
provide to the Claims Administrator Vaso’s
transfer records showing names and addresses of record transferees of Vaso
Class
A common stock during the Class Period for the purpose of giving the best notice
practicable to Class Members.
21. No
Authorized Claimant shall have any claim against the Lead Plaintiffs or Lead
Counsel based on any distributions made in accordance with or as contemplated
by
this Stipulation, and in no event shall any Authorized Claimant have any claim
against any Defendant, Released Party or Counsel for any Defendant or Released
Party in connection with any distributions or use of any portion of the
Settlement Fund at such time as any portion of the Settlement Fund is delivered
to the Escrow Account.
21
22. Subsequent
to the Effective Date, Lead Counsel will apply to the Court, on notice to
Defendants’ Counsel, for an Order (the “Class Distribution Order”) approving the
Claims Administrator’s administrative determinations concerning the acceptance
and/or rejection of the claims submitted in accordance herewith and approving
any fees and expenses not previously applied for, including the fees and
expenses of the Claims Administrator, and directing payment of the Net
Settlement Fund to Authorized Claimants.
DISTRIBUTION
TO AUTHORIZED CLAIMANTS
23. The
Claims Administrator shall determine each Authorized Claimant’s pro rata
share of
the Net Settlement Fund based upon each Authorized Claimant’s Recognized Claim
(as defined in the Plan of Allocation described in the Notice annexed hereto
as
Exhibit A-1, or in such other Plan of Allocation as the Court
approves).
24. The
Plan
of Allocation proposed in the Notice is not a necessary term of this Stipulation
and it is not a condition of this Settlement that the Plan of Allocation be
approved as long as the Plan of Allocation to be used to distribute the
Settlement has been approved by the Court.
25. Each
Authorized Claimant shall be allocated a pro rata
share of
the Net Settlement Fund based on his, her or its Recognized Claim compared
to
the total Recognized Claims of all Authorized Claimants. Lead Counsel shall
have
the discretion to request the Court to preclude recovery by Authorized Claimants
who will receive less than $10 or less than $8 face value in Settlement Notes
as
their pro rata share of the Net Settlement Fund. The Defendants shall have
no
interest in the Settlement Fund from and after the Effective Date. The
Defendants, the Released Parties, and their respective Counsel shall have no
involvement in or responsibility for reviewing or challenging the distributions
of the proceeds of the Net Settlement Fund to Authorized Claimants.
22
26. Any
Class
Member who does not submit a timely and valid Proof of Claim will not be an
Authorized Claimant entitled to receive any of the proceeds from the Net
Settlement Fund, but will otherwise be bound by all of the terms of this
Stipulation, including the terms of the Final Judgment and Order to be entered
in the Action and the releases provided for herein and in such Final Judgment
and Order.
27. Except
for their obligation to cause payment of the Settlement Cash and to contribute
and distribute the Settlement Notes, and to cooperate in the production of
information with respect to the identification of Class Members from Vaso’s
shareholder transfer records, as provided herein, Defendants and the Released
Parties, and their respective Counsel shall have no liability, obligation or
responsibility for the administration or disbursement of the Net Settlement
Fund. Lead Counsel shall have the right, but not the obligation, to direct
the
Claims Administrator to waive what they deem to be formal or technical defects
in any Proof of Claim submitted in the interests of achieving substantial
justice.
28.
For
purposes of determining the extent, if any, to which a Class Member shall be
entitled to be treated as an “Authorized Claimant”, the following conditions
shall apply:
(a) Each
Class Member shall be required to submit a Proof of Claim (see attached Exhibit
A-2), supported by such documents as are designated therein, including proof
of
the claimant’s loss, or such other documents or proof as Lead Counsel, in their
discretion, may deem acceptable;
23
(b) All
Proofs of Claim must be submitted by the date specified in the Notice unless
such period is extended by Order of the Court. Any Class Member who fails to
submit a Proof of Claim by such date shall be forever barred from receiving
any
payment pursuant to this Stipulation (unless, by Order of the Court a later
submitted Proof of Claim by such Class Member is approved), but shall in all
other respects be bound by all of the terms of this Stipulation, including
the
terms of the Final Judgment and Order to be entered in the Action. Provided
that
it is received before the motion for the Class Distribution Order is filed,
a
Proof of Claim shall be deemed to have been submitted when posted, if received
with a postmark indicated on the envelope and if mailed by first-class mail
and
addressed in accordance with the instructions thereon. In all other cases,
the
Proof of Claim shall be deemed to have been submitted when actually received
by
the Claims Administrator;
(c) Each
Proof of Claim shall be submitted to and reviewed by the Claims Administrator,
under the supervision of Lead Counsel, who shall determine in accordance with
this Stipulation and the Plan of Allocation the extent, if any, to which each
claim shall be allowed, subject to review by the Court pursuant to subparagraph
(e) below;
(d) Proofs
of
Claim that do not meet the submission requirements may be rejected. Prior to
rejection of a Proof of Claim, the Claims Administrator shall communicate with
the claimant in order to remedy the curable deficiencies in the Proof of Claims
submitted. The Claims Administrator, under supervision of Lead Counsel, shall
notify, in a timely fashion and in writing, all claimants whose Proofs of Claim
they propose to reject in whole or in part, setting forth the reasons therefore,
and shall indicate in such notice that the claimant whose claim is to be
rejected has the right to a review by the Court or its designee if the claimant
so desires and complies with the requirements of subparagraph (e)
below;
24
(e) If
any
claimant whose claim has been rejected in whole or in part desires to contest
such rejection, the claimant must, within twenty (20) calendar days after the
date of mailing of the notice required in subparagraph (d) above, serve upon
the
Claims Administrator a notice and statement of reasons indicating the claimant’s
grounds for contesting the rejection along with any supporting documentation,
and requesting a review thereof by the Court or its designee. If a dispute
concerning a claim cannot be otherwise resolved, Lead Counsel shall thereafter
present the request for review to the Court or the Court’s designee as ordered
by the Court; and
(f) The
administrative determinations of the Claims Administrator accepting and
rejecting claims shall be presented to the Court, on notice to Defendants’
Counsel, for approval by the Court or its designee in the Class Distribution
Order.
29. Each
claimant shall be deemed to have submitted to the jurisdiction of the Court
with
respect to the claimant’s claim and with respect to the release provided for in
this Stipulation and the Final Judgment and Order.
30. Payment
pursuant to this Stipulation and the Class Distribution Order shall be deemed
final and conclusive against all Class Members. All Class Members whose claims
are not payable pursuant to this Stipulation and the Class Distribution Order
shall be barred from participating in distributions from the Net Settlement
Fund, but otherwise shall be bound by all of the terms of this Stipulation,
including the terms of the Final Judgment and Order to be entered in the Action
and the releases provided for herein, and shall be barred from bringing any
action against the Released Parties concerning the Released Claims.
25
31. The
Net
Settlement Fund shall be distributed to Authorized Claimants by the Claims
Administrator only after the Effective Date and after: (i) all Claims have
been
processed, and all claimants whose Claims have been rejected or disallowed,
in
whole or in part, have been notified and provided the opportunity to be heard
concerning such rejection or disallowance; (ii) all objections with respect
to
all rejected or disallowed claims have been resolved by the Court, and all
appeals therefrom have been resolved or the time for all potential appeals
therefrom has expired; (iii) all matters with respect to attorneys’ fees, costs,
and disbursements have been resolved by the Court, all appeals therefrom have
been resolved or the time for all potential appeals therefrom has expired;
and
(iv) all costs of administration have been paid.
32. The
Claims Administrator shall calculate the number of Settlement Notes to be
distributed to the Class Members. Upon completion of the calculations, the
Claims Administrator shall advise Vaso’s Counsel and Lead Counsel of the number
of Settlement Notes to be distributed to each Class Member. Vaso’s Counsel shall
thereafter, promptly upon receipt of that information, distribute the Settlement
Notes to the Claims Administrator, to distribute to the Class Members in
accordance with paragraph 6(e).
33. If
any
portion of the Net Settlement Fund, either cash or notes, remain in the Net
Settlement Fund by reason of return mail, uncashed checks or otherwise,
including the return of certificates of Vaso notes, then the following steps
shall be taken one (1) year after the initial distribution of the Net Settlement
Fund:
26
(a) The
Claims Administrator shall confirm that it has made all reasonable and diligent
efforts to have Authorized Claimants who are entitled to participate in the
distribution of the Net Settlement Fund cash their distribution checks or claim
ownership of their notes;
(b) The
Claims Administrator, proportionate to the initial distribution, shall
re-distribute
the remaining Net Settlement Fund, after payment of any unpaid costs or fees
incurred in administering the Net Settlement Fund for such re-distribution,
to
Class Members who have cashed their checks and who would receive at least $10.00
or $8 face amount in Settlement Notes if Lead Counsel determines that the
benefit to the Class outweighs the cost of the re-distribution;
(c) If
after
six months after such re-distribution any funds shall remain in the Net
Settlement Fund, Lead Counsel shall make an application to the Court to
distribute the sum of the unpaid residue to a charity selected by Lead
Counsel.
PRELIMINARY
APPROVAL ORDER
34. Promptly
following the execution of this Stipulation, the parties shall file this
Stipulation and all of its Exhibits along with an application for the
Preliminary Approval Order in the form annexed hereto as Exhibit A.
TERMS
OF FINAL JUDGMENT AND ORDER
35. If
the
Settlement is approved by the Court, counsel for the parties shall request
that
the Court enter a Final Judgment and Order in the form annexed hereto as Exhibit
B.
27
RIGHT
OF EXCLUSION AND OBJECTION
36. Any
Person may seek to be excluded from the Class and the Settlement provided for
by
this Stipulation by submitting a written request for exclusion, which request
must state the dates during the Class Period on which the Person purchased
Vaso
shares, the number and price of such shares so purchased or acquired, and the
date, number and price of the sale of such shares so purchased or acquired.
Any
request for exclusion must be submitted to the Claims Administrator fourteen
(14) days before the Final Settlement Hearing Date established by the Court.
Any
Person so excluded shall not be bound by the terms of the Stipulation, nor
entitled to any of its benefits, and shall not be bound by any Final Judgment
and Order and/or other order of the Court entered herein, whether pursuant
to
this Stipulation or otherwise.
37. Any
Class
Member who does not exclude himself, herself, or itself from the Class and
the
Settlement shall have the right to submit written objections concerning the
Settlement, the Plan of Allocation, and/or Lead Counsel’s application for
attorneys’ fees, expenses and costs, which objections shall state all of the
reasons for the objections (e.g.,
a mere
statement that “I object” shall not be deemed sufficient). Any written
objections, and any briefs, affidavits or other evidence submitted in support
thereof must be filed with the Clerk of the Court by the date set forth in
the
Court’s Preliminary Approval Order. All Persons desiring to attend the Final
Settlement Hearing and be heard as objectors must have filed written objections
as provided herein, as a condition of appearing and being heard at such hearing.
Any Class Member who does not timely file written objections pursuant to this
paragraph and the Notice shall not be permitted to object at the Final
Settlement Hearing, and shall be foreclosed from objecting to, challenging
or
otherwise seeking review of the Settlement, the Plan of Allocation, or
application for attorneys’ fees and reimbursement of expenses by appeal or
otherwise, in the Action, unless permitted to do so by the Court.
28
SUPPLEMENTAL
AGREEMENT
38. Simultaneously
herewith, Lead Counsel and Defendants’ Counsel are executing a “Supplemental
Agreement” setting forth certain conditions under which this Settlement may be
terminated at the sole election of Vaso based on the extent to which Persons
request exclusion from the Class and the Settlement. The Supplemental Agreement
shall not be filed prior to the deadline for submitting exclusion requests
unless a dispute arises as to its terms. In the event of termination of this
Settlement pursuant to the Supplemental Agreement, this Stipulation shall become
null and void and of no further force and effect and the provisions of paragraph
42 shall apply. Notwithstanding the foregoing, this Stipulation shall not become
null and void as a result of the election by Vaso to exercise its option to
terminate the Settlement pursuant to the Supplemental Agreement until the
conditions set forth in the Supplemental Agreement have been
satisfied.
EFFECTIVE
DATE OF SETTLEMENT, WAIVER OR TERMINATION
39. The
Effective Date of Settlement shall be the date when all the following shall
have
occurred:
(a) The
Settlement has not been terminated under paragraphs 38 or 41; and
(b) Approval
by the Court of the Settlement, following notice to the Class and a hearing,
as
prescribed by Rule 23 of the Federal Rules of Civil Procedure; and the entry
of
the Final Judgment and Order in the form set forth in Exhibit B hereto;
and
29
(c) The
later
of (i) the expiration of any time for appeal or review of such Final Judgment
and Order with no appeal or review having been noticed; or (ii) if any appeal
is
taken and not dismissed, after such Final Judgment and Order is upheld on appeal
in all material respects and is no longer subject to review upon appeal or
review by writ of certiorari or otherwise. The appeal of an order solely
relating to the award of attorneys’ fees and expenses shall not prevent the
Effective Date from occurring except as to any obligation concerning the payment
of such fees and expenses, as long as there is no appeal of the Final Judgment
and Order approving the Settlement.
40. Upon
occurrence of the Effective Date, any and all remaining interest or right of
the
Defendants in or to the Gross Settlement Fund, if any, shall be absolutely
and
forever extinguished except as provided in this Stipulation.
41. Defendants’
Counsel or Lead Counsel shall have the unconditional right to terminate the
Settlement and this Stipulation if (a) the Court enters a preliminary approval
order that is not in the form annexed hereto as Exhibit A hereto except as
such
order is consented to by all parties in writing or on the record (in which
case
such order shall be regarded as the Preliminary Approval Order); (b) the Court
enters a Final Judgment and Order in the Action that is not in the form set
forth in Exhibit B annexed hereto except as such Final Judgment and Order is
consented to by all parties in writing or on the record (in which case such
order shall be regarded as the Final Judgment and Order); or (c) the Court
enters a Final Judgment and Order and appellate review is sought and, on such
appeal, the Final Judgment and Order is reversed or materially modified.
Defendants’ Counsel or Lead Counsel shall provide written notice of their intent
to terminate the Settlement and this Stipulation to all other parties hereto
within thirty (30) calendar days of the occurrence of any of the events
referenced above in this paragraph. For purposes of this provision, a
disallowance or modification limited solely to the award of attorneys’ fees,
costs and expenses requested by Lead Counsel shall not be deemed a modification
or disapproval of the Settlement or Final Judgment and Order.
30
42. Except
as
otherwise provided herein, in the event the Settlement is terminated or if
the
Effective Date does not occur for any reason, then the Settlement shall be
without force and effect upon the rights of the parties, none of its terms
shall
be effective or enforceable, and no findings or orders in respect thereto
(including any findings or orders relative to a settlement class) shall be
used
in any proceedings. In such event: (1)
the
balance remaining in the Settlement Fund, less any costs incurred in excess
of
the Notice and Administration Fund, and any unused or uncommitted portion of
the
Notice and Administration Fund, if any, less a reserve for any taxes owed
thereon, or accrued but unpaid expenses of the Claims Administrator, shall
be
refunded to the payor along with any interest accrued thereon, and the Parties
shall be restored to their respective positions in the Action as of June 1,
2005. Defendants shall not be entitled to a refund of the used portion of the
Notice and Administration Fund, the reserve for taxes owed on the Settlement
Fund, or any accrued but unpaid expenses of the Claims Administrator; and (2)
the
settlement documents,
including this Stipulation, shall be null and void, and inadmissible in any
proceeding before any tribunal.
31
NO
ADMISSION OF WRONGDOING
43.
This
Stipulation, whether or not consummated, and any negotiations, proceedings
or
findings taken pursuant to it:
(a) Shall
not
be offered or received against the Defendants, the Released Parties, or counsel
to any of them as evidence of, or construed as, or deemed to be, evidence of
any
presumption, concession, or admission by any of the Defendants with respect
to
any fact or issue whatsoever, including any claim of the existence of a class,
alleged by Lead Plaintiffs, the validity of any claim that had been or could
have been asserted in the Action or in any litigation, the truth of any fact
alleged, or the deficiency of any defense that has been or could have been
asserted in the Action or in any litigation, or of any liability, negligence,
fault, or wrongdoing of the Defendants;
(b) Shall
not
be offered or received against the Defendants, the Released Parties, Lead
Plaintiffs, the Class, or counsel to any of them, as evidence of a presumption,
concession or admission of any fault, misrepresentation or omission with respect
to any statement or written document approved or made by any Defendant, the
Lead
Plaintiffs or the Class;
(c) Shall
not
be offered or received against the Defendants, the Released Parties, the Lead
Plaintiffs, the Class, or counsel to any of them, as evidence of a presumption,
concession or admission with respect to any liability, negligence, fault or
wrongdoing, or in any way referred to for any other reason as against any of
the
parties to this Stipulation, in any other civil, criminal or administrative
action or proceeding, other than such proceedings as may be necessary to
effectuate the provisions of this Stipulation; provided, however, that if this
Stipulation is approved by the Court, the Released Parties may refer to it
to
effectuate the liability protection granted them hereunder;
32
(d) Shall
not
be construed against the Defendants, the Released Parties, the Lead Plaintiffs,
the Class, or counsel to any of them, as an admission or concession that the
consideration to be given hereunder represents the amount which could be or
would have been recovered after trial; and,
(e) Shall
not
be construed as or received in evidence as an admission, concession or
presumption against the Lead Plaintiffs, the Class, any Class Member, or counsel
to any of them, that any of their claims are without merit or that damages
recoverable under the Complaint would not have exceeded the Gross Settlement
Fund;
(f) Shall
not
be construed as or received in evidence as an admission, concession or
presumption against the Defendants, the Released Parties, or counsel to any
of
them that Lead Plaintiffs or the Class have suffered any damage or that the
consideration to be given hereunder represents the amount of any judgment that
would have been awarded to Lead Plaintiffs or the Class after a trial;
and
(g)
Shall
not
be construed against the Defendants, the Released Parties, the Lead Plaintiffs
or the Class as an admission or concession that any alleged class exists or
should be subject to certification under Rule 23 of the Federal Rules of Civil
Procedure.
MISCELLANEOUS
PROVISIONS
44. Nothing
provided herein, to the extent permitted by law, shall prevent the Defendants
or
any Released Party from filing the Stipulation and/or Final Judgment and Order
in any other action that may be brought against them in order to support a
defense or counterclaim based on principles of res judicata, collateral
estoppel, release, good faith settlement, judgment bar or reduction or any
theory of claim preclusion or issue preclusion or similar defense or
counterclaim.
33
45. All
of
the exhibits attached hereto are hereby incorporated by reference as though
fully set forth herein.
46. The
parties to this Stipulation intend the Settlement to be a final and complete
resolution of all disputes asserted or which could be asserted by the Class
Members against the Released Parties with respect to the Released Claims.
Accordingly, the Lead Plaintiffs, by their counsel, on behalf of the Class,
and
the Defendants agree not to assert in any forum that the litigation was brought
by Plaintiffs or defended by the Defendants in bad faith or without a reasonable
basis. The parties hereto shall assert no claims of any violation of Rule 11
of
the Federal Rules of Civil Procedure relating to the prosecution, defense,
or
settlement of the Action. The parties hereto agree that the amount paid and
the
other terms of the Settlement were negotiated at arm’s length and in good faith
by the parties, and reflect a Settlement that was reached voluntarily after
consultation with experienced legal counsel.
47. This
Stipulation may not be modified or amended, nor may any of its provisions be
waived except by a writing signed by all parties hereto or their
successors-in-interest, or an agreement of all parties on the record of the
Court.
48. The
headings herein are used for the purpose of convenience only and are not meant
to have legal effect.
49. The
administration and consummation of the Settlement as embodied in this
Stipulation shall be under the authority of the Court and the Court shall retain
jurisdiction for the purpose of entering orders providing for awards of
attorneys’ fees, expenses and costs to Lead Counsel and enforcing the terms of
this Stipulation.
34
50. The
waiver of any breach of this Stipulation shall not be deemed a waiver of any
other prior or subsequent breach of this Stipulation.
51. This
Stipulation and the exhibits attached hereto, and the Supplemental Agreement,
constitute the entire agreement among the parties hereto concerning the
Settlement of the Action, and no representations, warranties, or inducements
have been made by any party hereto concerning this Stipulation or its exhibits
other than those contained and memorialized in such documents.
52. This
Stipulation may be executed in one or more counterparts and by facsimile. All
executed counterparts and each of them shall be deemed to be one and the same
instrument provided that counsel for the parties to this Stipulation shall
exchange among themselves original signed counterparts.
53. This
Stipulation shall be binding upon, and inure to the benefit of, the successors
and assigns of the parties hereto, provided that no assignment by any party
hereto shall operate to relieve such party of its obligations thereunder. The
construction, interpretation, operation, effect and validity of this
Stipulation, and all documents necessary to effectuate it, shall be governed
by
the internal laws of the Commonwealth of Massachusetts without regard to
conflicts of laws, except to the extent that federal law requires that federal
law governs.
54. This
Stipulation shall not be construed more strictly against one party than another
merely by virtue of the fact that it, or any part of it, may have been prepared
by counsel for one of the parties, it being recognized that it is the result
of
arm’s length negotiations between the parties and all parties hereto have
contributed substantially and materially to the preparation of this
Stipulation.
35
55. All
counsel and any other Person executing this Stipulation and any of the exhibits
hereto, or any related settlement documents, warrant and represent that they
have the full authority to do so and that they have the authority to take
appropriate action required or permitted to be taken pursuant to the Stipulation
to effectuate its terms.
56. Lead
Counsel and Defendants’ Counsel agree to cooperate fully with one another in
seeking Court approval of the Preliminary Approval Order, the Stipulation,
and
to promptly agree upon and execute all such other documentation as may be
reasonably required to obtain final approval by the Court of the
Settlement.
57. None
of
the Plaintiffs nor Defendants, nor counsel for any of them, will make any public
statement or comment to the press, either directly or indirectly, regarding
the
Action, Settlement or Stipulation which disparages the other or the merits
of
the claims or defenses which were or could have been asserted in the
Action.
IN
WITNESS WHEREOF,
the
parties hereto, intending to be legally bound hereby, have caused this
Stipulation, to be executed on September 21, 2005, by their duly authorized
attorneys, as of the day and year first above written.
/s/
Xxx X. Xxxxxxx
SCHIFFRIN
& BARROWAY, LLP
XXXXX
XXXXXXX
XXX
X.
XXXXXXX
000
Xxxx
xx Xxxxxxx Xxxx
Xxxxxx,
XX 00000
Phone:
(000) 000-0000
Facsimile:
(000) 000-0000
36
Lead
Counsel
/s/
Xxxxxxx X. Xxxxx/XX
XXXXXXXX
XXXXXX LLP
XXXXXXX
X. XXXXX
0000
X
Xxxxxx XX, Xxxxx 000
Xxxxxxxxxx,
XX 00000
Phone:
(000) 000-0000
Facsimile:
(000) 000-0000
/s/
Xxxxxxx X. Xxxxxxxxx
XXXXXX
XXXXXX XXXXXXXXX XXXX AND XXXX LLP
XXXXXXX
X. XXXXXX
XXXXXXX
X. XXXXXXXXX
00
Xxxxx
Xxxxxx
Xxxxxx,
XX 00000
Phone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attorneys
for Defendant Vaso and Masiz, Frattaroli,
Shear,
Xxxxx,
Strasnick,
Adams,
and Xxxxxxxx
/s/
Xxxx Xxxx
XXXXXXXXX
TRAURIG
XXXX
XXXX
(BBO# 629577)
XXX
XXX
(BBO# 647224)
Xxx
Xxxxxxxxxxxxx Xxxxx, 00xx
Xxxxx
Xxxxxx,
XX 00000
Phone
(000) 000-0000
Facsimile
(000) 000-0000
Attorneys
for Defendant Xxxxxx
/s/
Xxxxxxx X. Xxxxxxx
SICHENZIA
XXXX XXXXXXXX XXXXXXX LLP
XXXXXXX
X. XXXXXXX, XX.
0000
Xxxxxx xx xxx Xxxxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Phone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attorneys
for Defendant Xxxxxxx Davidson Securities, Inc.
37
