Exhibit 99(2)
CROP GROWERS CORPORATION SECURITIES LITIGATION
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding ("MOU") contains the principal terms of a
settlement (the "Settlement") between XXXX XXXXXXXXXX, XXXX X. XXXXX and CROP
GROWERS CORPORATION, and plaintiffs (on behalf of a class of purchasers of
securities during the period February 13, 1995 and May 16, 1995, inclusive) in
the In re CROP GROWERS CORPORATION SECURITIES LITIGATION, Master File No.
CV-95-58-GF-PGH (the "Action"). This Memorandum of Understanding Settlement
Agreement has been reached in principal as of February 28, 1997.
1. Plaintiffs and Defendants (collectively, the "Parties") will cooperate
in good faith to expeditiously prepare a stipulation of settlement embodying
this MOU, and will jointly seek preliminary approval of the Settlement and
approve of notice as soon as practicable but no later than March 31, 1997.
2. Defendants will cause to be paid $2.5 million in settlement of all
claims in the above Action into an escrow fund located in California and
controlled by Xxxxxxx Xxxxx Xxxxxxx Xxxxx & Xxxxxx LLP ("Xxxxxxx Xxxxx")
(subject to Court oversight) by the later of (i) May 1 1997 or (ii) 10 days
following preliminary approval of the Settlement by the Court.
3. If the foregoing payment is deposited in the Xxxxxxx Xxxxx Xxxxxxx
escrow account by the later of May 1, 1997 or 10 days following preliminary
approval of the Court ("the date of the required deposit"), no interest shall
accrue. If the full $2.5 million is not deposited by such date as set forth in
PARA2, interest shall accrue at the rate of 9% beginning at such date.
Plaintiffs may terminate the Settlement if the full $2.5 million is not
deposited within 60 days from the date of the required deposit.
4. In consideration of the payment set forth in paragraph 2, plaintiffs
agree to dismiss with prejudice all claims in the Action, and to execute
releases as to each of the Defendants as to all claims that were or could have
been alleged in the Action.
5. While retaining their right to deny liability, defendants will agree
that, based upon the publicly available information at the time, the Action was
filed in good faith and with an adequate basis in fact, was not frivolous, and
is being settled voluntarily by Defendants after consultation with competent
legal counsel. The releases between the parties will include releases of all
counsel in the Action. The settling parties shall agree that the litigation was
resolved in good faith following substantial discovery and arms-length
bargaining, and is in the best interest of Crop Growers and its shareholders.
6. The Settlement is conditional upon receiving final judicial approval
of all settlement terms.
7. The Settlement will not be conditioned upon the obtaining of or any
judicial approval of any releases between or among the settling Defendants
and/or any third parties. No such releases will be contained in the Stipulation
of Settlement or referred to in the Final Judgement approving the settlement.
8. Any attorney's fees and expenses awarded plaintiffs' counsel by the
Court shall be paid to plaintiffs' counsel, out of the escrowed funds,
immediately upon final award by the Court, notwithstanding the potential for
appeal or appeal by any objector or any other person, or collateral attack on
the Settlement or any part thereof, subject to plaintiffs' counsel's several
obligation to make appropriate refunds or repayments to the Settlement Fund plus
interest at the same rate as earned on the escrow account if, and when, as a
result of any appeal and/or further proceedings on remand, or successful
collateral attack, the fee award or expense reimbursement is reduced or the
Settlement is overturned/set aside.
9. The Settlement will be non-recapture, i.e., it is not a claims made
settlement. Defendants will have no ability to get back any of the settlement
monies. The settlement claims process will be administered by Xxxxxxx & Co. and
Defendants will have no involvement in reviewing or challenging claims. All
fees and expenses incurred by Xxxxxxx & Co. in the administration of the
Settlement shall be paid out of the settlement fund.
10. If shareholders representing 10% or more of the total outstanding
shares that were purchased by class members during the class period request
exclusion from the class (i.e., "opt-out"), then Defendants shall have the
option of terminating this agreement within 7 business days following receipt of
by counsel to Defendants written notification from Xxxxxxx & Co. of the total
number of requests for exclusion. If Defendants so terminate the settlement,
all monies paid, and any other consideration tendered by Defendants pursuant to
the settlement, shall be returned to Defendants within 10 days of such notice
being sent to Xxxxxxx Xxxxx together with the actual interest thereon less the
cost of notice to the class. If such funds are not returned within such 10 day
period, interest will accrue thereon at 5% for the first thirty days and 9% for
any time period thereafter until the date the money is returned to Defendants.
These provisions shall apply whether or not a distribution of the case proceeds
has already been made to plaintiffs' counsel.
11. If the Settlement is terminated, or not judicially approved, the
Settlement Fund, plus interest, less the cost of notice to the class, shall be
returned to the respective payors of those funds.
12. This MOU may be executed in separate counterparts.
AGREED TO ON THIS 28th DAY OF FEBRUARY, 1997.
DATED: 2-28-97 XXXXXXX XXXXX XXXXXXX
XXXXX & XXXXXX LLP
XXXXXXX X. XXXXXXXX
XXXXXX X. XXXXXXXX
XXXXX X. XXXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxx
XXXXXXX X. XXXXXXXX
000 Xxxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Telephone: 619/000-0000
Lead Counsel for Plaintiffs
XXXXXXXX LAW FIRM
X. X. XXXXXXXX, XX.
0 X. Xxxx Xxxxxx Xxxxx
Xxxxx 0
Xxxxxx, XX 00000
Telephone: 406/000-0000
LAW OFFICES OF XXXXXX X.
XXXXX, XX.
XXXXXX X. XXXXX, XX.
519 Allegheny Building
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telephone: 412/000-0000
Attorneys for Plaintiffs
DATED: 2-28-97 XXXXXX & XXXXXXX LLP
J XXXXX XXXXXXX
/s/J Xxxxx Xxxxxxx
J XXXXX XXXXXXX
Pillsbury Center South
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-1498
Telephone: 612/000-0000
Attorney for Defendants
