EXHIBIT 10.19
MEMORANDUM OF UNDERSTANDING
This will confirm the essential terms of our agreement in principle,
reached on December 7, 1998, to effectuate settlement of In Re Command Systems
Inc. Securities Litigation, File No. 98-CIV-3279(AGS) in the United States
District Court for the Southern District of New York (the "Litigation"). This
agreement is subject to the execution of a Definitive Settlement Agreement and
final judicial approval pursuant to the Federal Rules of Civil Procedure. It is
our mutual intention to work expeditiously and in good faith toward consummation
of settlement on the terms set forth below.
The undersigned Defendants will cause a cash payment of $5,750,000 to be
paid into a fund (the "Settlement Fund"), in full settlement of all class and
individual claims which are or could be asserted in the Litigation against any
Defendant. The payments into the Settlement Fund shall be made in the following
manner: (1) within five days after the Court signs an order preliminarily
approving the Definitive Settlement Agreement and scheduling a final approval
hearing, the sum of $50,000 shall be deposited into an interest-bearing escrow
account, to be used to the extent necessary to pay reasonable expenses incurred
in the preparation, mailing and publication of such notice of settlement as the
Court may direct; (2) within five days after judicial approval of the Definitive
Settlement Agreement has become final, either through appeal or the expiration
of the time therefor, the sum of $5,700,000 shall be placed in escrow, together
with interest thereon at the 30-day Treasury Bill rate from the date the
District Court enters a order preliminarily approving the Definitive Settlement
Agreement. No monies shall be disbursed from the Settlement Fund without Court
approval, or, with respect to the initial deposit
of $50,000 only, the consent of the defendants. All interest earned on the
Settlement Fund shall become a part thereof.
Upon execution of the Definitive Settlement Agreement, this Memorandum
will be superseded thereby and have no further force or effect.
Defendants' counsel shall cooperate in such discovery, to be mutually
agreed-upon, as may be reasonably sought by Plaintiffs' counsel in connection
with the settlement. Plaintiffs' counsel and Defendants' counsel will cooperate
in the approval process so as to effectuate settlement on the terms stated in
this Memorandum.
In entering into this settlement, all Defendants vigorously deny any
wrongdoing or liability to any person or entity whatsoever, and maintain their
conduct at all times has been legal and proper. Execution of this Memorandum
does not imply that there has been any finding of any violation of law by any
person or entity, or that recovery could be had in any amount should the
Litigation not be settled.
If the Definitive Settlement Agreement is not executed, or if final
judicial approval thereof is not obtained, all parties shall be returned to
their status quo prior to the execution of this Memorandum, except that any sums
reasonably expended from the Settlement Fund to pay for notice of the settlement
need not be returned. The Definitive Settlement Agreement shall also contain a
provision giving Defendants the option of withdrawing from the settlement if
members of the class owning more than a specified percentage of Command Systems
securities (to be
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mutually agreed-upon as part of the Definitive Settlement Agreement) exercise
their right to opt out of the settlement.
Among other things, the settlement shall be presented to the Court on
behalf of a class (the "Class") defined as all persons who purchased the common
stock of Command Systems during the period March 12, 1998 through April 29,
1998, inclusive (the "Class Period"). Excluded from the Class are: the named
Defendants; the heirs and the members of the immediate family of any individual
Defendant; the subsidiaries, affiliates, officers and directors of Command
Systems, Xxxxx & Company and Xxxxx Brown Xxxxxx & Company, LLC; and the
successors or assigns of any Defendant.
The Settlement Fund, less deductions approved by the Court for
Plaintiffs' counsel's fees and litigation expenses, and settlement
administration expenses, shall be distributed pro rata to those members of the
Class filing approved claims.
At the final approval hearing in the District Court, Plaintiffs' counsel
will petition the Court for reasonable fees and litigation expenses to be
awarded by the Court, all of which shall be paid out of the Settlement Fund.
All settlement administration expenses also shall be paid out of the Settlement
Fund, in an amount approved by the Court.
The final judgment and order shall contain full and complete releases as
to all Defendants named in the Litigation, and to all selling shareholders in
the Company's March 1998 initial public offering (collectively the "Releasees"),
and as to all current and former officers, directors,
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employees, agents, accountants, underwriters, auditors, investment bankers,
attorneys, parents, subsidiaries, affiliates, representatives, heirs, executors,
successors and assigns of any Defendant or Releasee, with respect to each and
every class and individual claim, known and unknown, which was or could have
been asserted against any Defendant in the Litigation or in any other court or
forum in connection with, arising out of or in any way related to the acts,
facts, transactions, occurrences, representations, omissions or the subject
matters alleged or referred to in the Litigation.
Nothing in this Memorandum is or shall be construed to be an admission
by any Defendant or other person of any wrongdoing or liability whatsoever.
Neither this Memorandum, nor any term thereof, may be offered or received in
evidence in any proceeding or utilized in any manner as an admission or
implication of liability or fault on the part of any Defendant or other person.
Dated: 12/7/98 /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx, Esq.
For Defendant Command Systems Inc. and Individual
Defendants Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxx, Xxxx X.X.
Xxxxxxx, Xxxxx X. Xxxxx, Xxxxxx X. Xxxxxxx and
Xxxxxxx X. Xxxxxxx
Dated: 12/7/98 /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx, Esq.
Lead Counsel for Plaintiffs and the Class
Dated: 12/7/98 /s/ Xxxxxx Xxxx
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Xxxxxx Xxxx, Esq.
On Behalf of Plaintiffs
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