Exhibit 10.4
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
IN RE: FIRSTPLUS FINANCIAL ) )
GROUP, INC. SECURITIES )
LITIGATION ) Civil Action No. 3:98-CV-2551-M
)
)
STIPULATION AND AGREEMENT OF SETTLEMENT
This Stipulation and Agreement of Settlement dated as of July 30, 2003
(the "Stipulation"), subject to the approval of the Court pursuant to Rule 23 of
the Federal Rules of Civil Procedure, is made and entered into by and among the
following Parties: (1) Class Representative Xxxxxx X. Xxxxxxx, III, individually
and on behalf of all Class Members (as hereinafter defined); (2) Defendants
FirstPlus Financial Group, Inc. ("FirstPlus"), Xxxxxx X. Xxxxxxxx and Xxxx X.
Xxxxx (collectively, the "Defendants"); and (3) Defendants' primary insurance
carrier, National Union Fire Insurance Company of Pittsburgh, PA ("National
Union").
WHEREAS
I. THE LITIGATION.
A. Beginning on or about October 29, 1998, and thereafter, twenty-three
(23) proposed class actions alleging violations of federal securities laws were
filed in the United States District Court for the Northern District of Texas and
were subsequently consolidated under the above caption In re: FirstPlus
Financial Group, Inc. Securities Litigation, No. 3:98-CV-2551-M, and are
hereinafter referred to as the "Action."
B. On September 12, 2000, the Court appointed Dr. Xxxxx Xxxx, for the
Rich Family Trust, Xxxxxx Xxxxx and Xxxxx X. Xxxxxxx-Xxxx as lead plaintiffs
(the "Lead Plaintiffs"). On
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September 12, 2000, the Court also appointed the law firms of Xxxxxxx Xxxxx
Xxxxxxx Xxxxx & Xxxxxx LLP and Sirota & Sirota LLP as Co-Lead Counsel, and
Xxxxxxx & Xxxx, PLLC as Local Counsel. On May 16, 2002, the Court granted Xxxxxx
Xxxxx permission to withdraw as lead plaintiff, and on June 24, 2002, the Court
granted Xxxxx X. Xxxxxxx-Xxxx permission to withdraw as lead plaintiff. On May
24, 2002, the Court appointed Xxxxxx X. Xxxxxxx, III as a lead plaintiff in this
Action.
C. On October 27, 2000, a Consolidated Amended Complaint (the
"Complaint") was filed for violations of federal securities laws, which alleged
violations of Sections 11, 12 and 15 of the Securities Act of 1933 ("Securities
Act") and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934
("Exchange Act"), and Rule 10b-5 promulgated thereunder, against Defendants
FirstPlus, Xxxxxx X. Xxxxxxxx, Xxxx X. Xxxxx and Xxxxxxx X. Xxxxx. The Complaint
generally alleged, among other things, that Defendants issued false and
misleading financial statements, press releases and other statements regarding
FirstPlus' financial condition during the Class Period (as hereinafter defined)
in a scheme to artificially inflate the value of FirstPlus' securities. The
Complaint was brought on behalf of all persons who purchased or otherwise
acquired FirstPlus stock during the period from August 19, 1996 through November
2, 1998 (the "Class Period"), including those persons who acquired FirstPlus
stock in connection with FirstPlus' secondary offering of stock and/or
FirstPlus' acquisitions of National Loan, Inc., Capital Direct, Modem Finance
Company, Western Interstate BanCorp., Freedom Mortgage Corp. and Southern
Management Corp.
D. Defendants filed motions to dismiss the Complaint. On September 28,
2001, the Court issued an Order granting in part and denying in part Defendants'
motions.
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The Court granted Defendant Xxxxxxx X. Xxxxx'x motion to dismiss and
dismissed the allegations against Xx. Xxxxx with prejudice. The Court also
dismissed with prejudice the claims asserted under the Securities Act that were
based on the August 28, 1998 S-4 Registration Statement, Prospectus and Proxy
Statement regarding the proposed acquisition of Life Financial Corporation, and
the January 7, 1998 and August 21, 1998 S-8 Registration Statement for
FirstPlus' stock options. The Court denied Defendants' motions to dismiss in all
other respects.
E. On October 23, 2002, the Court denied lead plaintiffs' motion for
class certification to the extent that it sought to have Xx. Xxxxx X. Xxxx
appointed as a class representative but granted lead plaintiffs' motion in all
other respects, ordering that this Action shall be maintained as a class action
pursuant to Rule 23(a) and 23(b)(3) of the Federal Rules of Civil Procedure and
appointing lead plaintiff Xxxxxx X. Xxxxxxx XXX (the "Class Representative") as
the representative for the Class (as hereinafter defined).
F. National Union issued Directors, Officers and Corporate Liability
Insurance Policy No. 000-00-00 to FirstPlus for the period December 12, 1997
through December 12, 1999 (the "D&O Policy"), under which Defendants have
claimed a right to payment of Loss (as defined by the D&O Policy) including the
advancement of defense costs for the claims asserted against them in the Action
and funds under the D&O Policy to contribute towards the Settlement of the
Action. National Union has disputed Defendants' entitlement under the D&O
Policy, issued a reservation of rights and initiated proceedings before the
American Arbitration Association ("AAA") regarding the existence of coverage
under the D&O Policy with respect to the Action (the "AAA Coverage Proceeding").
II. DEFENDANTS' DENIALS OF WRONGDOING AND LIABILITY.
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G. Defendants have strenuously denied, and continue strenuously to deny
each and every allegation of liability and any wrongdoing whatsoever made
against them in this Action. Defendants also have strenuously denied and
continue to strenuously deny the allegations that the Class Representative or
the Class Members have suffered damages, that the price of FirstPlus stock was
artificially inflated by reason of alleged acts, misrepresentations, omissions
or otherwise, and/or that the Class Representative or Class Members were harmed
by the conduct alleged in the Complaint. This Stipulation shall in no event be
construed or deemed to be evidence of or an admission or concession on the part
of any Defendant with respect to any claim or of any fault or liability or
wrongdoing or damage whatsoever, or any infirmity in the defenses that the
Defendants have asserted.
H. Nonetheless, without admitting any wrongdoing or liability
whatsoever, Defendants have entered into this Stipulation solely for the purpose
of avoiding the continuing additional expense, inconvenience and distraction of
this burdensome litigation and to avoid the risks inherent in any lawsuit,
especially in complex cases like this Action. By doing so, Defendants desire to
settle, compromise and terminate this Action, and to put to rest forever all
claims that have been or could have been asserted against them in or relating to
this Action.
III. CLAIMS OF THE CLASS REPRESENTATIVE AND BENEFITS OF THE SETTLEMENT.
I. The Class Representative and Plaintiffs' Co-Lead Counsel believe
that the claims asserted in the Action have merit. However, Plaintiffs' Co-Lead
Counsel recognize and acknowledge the expense and length of continued
proceedings necessary to prosecute the Action against Defendants through trial
and appeals. The Class Representative and Plaintiffs' Co-Lead Counsel have also
taken into account the uncertain outcome and the risk of any litigation,
especially in complex cases such as this Action, as well as the difficulties and
delays inherent in
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such litigation. The Class Representative and Plaintiffs' Co-Lead Counsel are
also mindful of the inherent problems of proof under and possible defenses to
the federal securities law violations asserted in the Action. The Class
Representative and Plaintiffs' Co-Lead Counsel also are cognizant of the
difficulty of collecting a judgment should the Plaintiffs prevail at trial,
especially in light of the dispute over Defendants' insurance coverage for the
claims asserted in this Action. The Class Representative and Plaintiffs' Co-Lead
Counsel believe that the Settlement set forth in the Stipulation confers
substantial benefit upon the Class Members. Based on their evaluation, the Class
Representative and Plaintiffs' Co-Lead Counsel have determined that the
Settlement set forth in the Stipulation is in the best interests of the Class
Representative and the Class Members.
X. The Parties hereto, by their counsel, have conducted discussions and
arm's length negotiations with respect to a compromise and settlement of the
Action with a view to settling the issues in dispute, including the insurance
coverage dispute under the D&O Policy for this Action.
NOW THEREFORE, without any admission or concession on the part of the
Class Representative of any lack of merit of the Action whatsoever, without any
admission or concession on the part of Defendants of any liability or wrongdoing
or lack of merit in their defenses whatsoever, without any admission or
concession on the part of Defendants of any lack of merit in their rights under
the D&O Policy, and without any admission or concession on the part of National
Union of any liability or wrongdoing or lack of merit in their defenses under
the D&O Policy, it is hereby STIPULATED AND AGREED, by and among the Parties to
this Stipulation, subject to approval of the Court pursuant to Rule 23(e) of the
Federal Rules of Civil Procedure, in consideration of the benefits flowing to
the Parties hereto from the Settlement, that
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all Settled Claims (as defined below) as against the Released Parties (as
defined below) and all claims between Defendants and National Union with respect
to coverage under the D&O Policy for Defendants for claims asserted in the
Action shall be compromised, settled, released and dismissed with prejudice,
upon and subject to the following terms and conditions:
CERTAIN DEFINITIONS
1. As used in this Stipulation and the exhibits attached hereto, the
following terms shall have the following meanings:
(a) "Assignment Agreement" means the Assignment and Assumption
Agreement attached hereto as Exhibit D.
(b) "Authorized Claimant" means a Class Member who submits a
timely and valid Proof of Claim form to the Claims Administrator.
(c) "Capital Lending" means Capital Lending Strategies, LLC, a
Texas limited liability company.
(d) "Certificate" means the certificate issued by Capital
Lending representing 580 Common Units (as defined below) of Capital Lending (the
"Escrow Fund") to be transferred by FirstPlus to the Escrow Agent(s), subject to
the Escrow Agreement.
(e) "Claimant" means a person or entity who submits a Proof of
Claim form to the Claims Administrator.
(f) "Claims Administrator" means the firm of Xxxxxxx & Co. LLC,
which shall administer the Settlement.
(g) "Class" means all persons or entities who purchased or
otherwise acquired FirstPlus stock during the period from August 19, 1996
through and including November 2, 1998, including those persons or entities who
acquired FirstPlus stock in connection with
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FirstPlus' secondary offering of stock and/or FirstPlus' acquisitions of
National Loan, Inc., Capital Direct, Modern Finance Company, Western Interstate
BanCorp., Freedom Mortgage Corp. and Southern Management Corp. Excluded from the
Class are the Defendants and members of the immediate families (parents,
spouses, siblings, and children) of any of the Individual Defendants, any trust
in which either FirstPlus or any Individual Defendant is the settlor or which is
for the benefit of FirstPlus, any Individual Defendant and/or members of the
immediate family of any Individual Defendant, and the legal representatives,
heirs, successors or assigns of any of the Defendants and any entity in which
any of the Defendants have or had a controlling interest. Also excluded from the
Class are any putative Class Members who exclude themselves by filing a request
for exclusion in accordance with the requirements set forth in the Notice.
(h) "Class Member" means a person or entity who falls within
the definition of "Class" as set forth in paragraph 1(g) of the Stipulation and
who has not submitted a valid request for exclusion.
(i) "Class Period" means the period of time from August 19,
1996 through and including November 2, 1998.
(j) "Class Representative" means Xxxxxx X. Xxxxxxx, III.
(k) "Common Units" means the current outstanding ownership
interests of Capital Lending as of the date of this Stipulation.
(1) "Defendants" means FirstPlus, Xxxxxx X. Xxxxxxxx, Xxxx X.
Xxxxx and former Defendant Xxxxxxx X. Xxxxx.
(m) "Defendants' Counsel" means the law firm of Xxxxxx and
Xxxxx, L.L.P.
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(n) "Effective Date of Settlement" or "Effective Date" means
the date upon which the Settlement contemplated by this Stipulation shall become
effective, as set forth in paragraph 25 below.
(o) "Escrow Agent(s)" means the Escrow Agent(s) designated
pursuant to the Escrow Agreement or their successor(s).
(p) "Escrow Agreement" means the Escrow Agreement attached
hereto as Exhibit C.
(q) "Escrow Fund" means the Certificate transferred by
FirstPlus to the Escrow Agent(s), subject to the Escrow Agreement.
(r) "Holder" means an Authorized Claimant entitled to receive
Registrable Securities as defined in the Registration Rights Agreement.
(s) "Individual Defendants" means Xxxxxx X. Xxxxxxxx, Xxxx X.
Xxxxx and former Defendant Xxxxxxx X. Xxxxx.
(t) "Notice" means the Notice of Pendency of Class Action,
Hearing On Proposed Settlement and Attorneys' Fee Petition and Right to Share in
Settlement Fund, which is to be sent to Class Members substantially in the form
attached hereto as Exhibit 1 to Exhibit A.
(u) "Order and Final Judgment" means the proposed order to be
entered approving the Settlement substantially in the form attached hereto as
Exhibit B.
(v) "Plaintiffs' Co-Lead Counsel" means the law firms of
Xxxxxxx Xxxxx Xxxxxxx Xxxxx & Xxxxxx LLP and Sirota & Sirota LLP.
(w) "Plaintiffs' Counsel" means all counsel of record for any
Plaintiffs in the Action.
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(x) "Plan of Allocation" means a plan or formula for
distributing the Settlement Fund to Authorized Claimants as described in
paragraph VII. of the Notice annexed hereto as Exhibit 1 to Exhibit A.
(y) "Preliminary Approval Order" means the proposed order
preliminarily approving the Settlement and directing Notice thereof to the Class
substantially in the form attached hereto as Exhibit A.
(z) "Proof of Claim" means a Proof of Claim and Release in the
form attached hereto as Exhibit 2 to Exhibit A.
(aa) "Publication Notice" means the summary notice of proposed
Settlement and hearing for publication substantially in the form attached as
Exhibit 3 to Exhibit A.
(bb) "Registrable Securities" means the securities as defined
in the Registration Rights Agreement attached hereto as Exhibit E.
(cc) "Registration Rights Agreement" means the Registration
Rights Agreement attached hereto as Exhibit E.
(dd) "Released Parties" means Defendants and each of their
current and former directors, officers, employees, attorneys, accountants,
agents, subsidiaries, parents, affiliates, insurers, co-insurers, heirs,
executors, administrators, predecessors, successors, assigns, financial
advisors, banks, investment bankers, underwriters, representatives, associates,
trustees, general and limited partners and partnerships, consultants, auditors,
divisions, joint venturers, related or affiliated entities, any entity in which
a Defendant has or had a controlling interest, and members of the immediate
families (parents, spouses, siblings, and children) of any of the Individual
Defendants, any trust of which either FirstPlus or any of the Individual
Defendants is the settlor
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or which is for the benefit of FirstPlus, any of the Individual Defendants
and/or members of the immediate families of any of the Individual Defendants.
(ee) "Settled Claims" means any and all complaints, actions,
suits, claims, demands, rights, liabilities, obligations, controversies,
promises, agreements, damages, costs, losses, attorneys' fees, expenses and/or
causes of action, of every nature and description whatsoever, whether class or
individual in nature, whether known or unknown, including without limitation
Unknown Claims (as defined below), direct or derivative, contingent or
non-contingent, suspected or unsuspected, accrued or not accrued, at law or in
equity, concealed or hidden, and/or that were asserted or that could have been
asserted (including, without limitation, claims for negligence, gross
negligence, breach of duty of care and/or breach of duty of loyalty, fraud,
breach of fiduciary duty, or violations of any state, federal and/or foreign
common law, statutes, rules or regulations, including alleged violations in
connection with FirstPlus' secondary offering or its acquisitions of National
Loan, Inc., Capital Direct, Modern Finance Company, Western Interstate BanCorp,
Freedom Mortgage Corp. and Southern Management Corp.) that the Class
Representative, Lead Plaintiffs, and/or Class Members or any of them in the past
had, now have, or might in the future have against the Released Parties or any
of them (whether directly, derivatively, representatively or in any other
capacity) which arise out of, are or could have been asserted based upon, or
relate in any way to: (a) any purchase or acquisition of FirstPlus stock during
the Class Period; and (b) the transactions, facts, matters, occurrences,
circumstances, acts, representations, disclosures, statements, omissions, and/or
failures to disclose or act that were or could have been asserted in the Action,
including the allegations in the original complaints and the Xxxx plaint filed
in this Action; and/or (c) the defense, settlement or resolution of the Action
or the Settled Claims. Provided, however, that the definition of Settled Claims
shall not impair or
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restrict the rights of the Parties to enforce the Settlement set forth in this
Stipulation, including all agreements in the Exhibits attached hereto.
(ff) "Settlement" means the settlement contemplated by this
Stipulation.
(gg) "Settlement Fairness Hearing" means the final settlement
hearing to be held by the Court to determine, among other things, the fairness,
reasonableness and adequacy of the Settlement.
(hh) "Settlement Fund" means: (1) the principal amount of Five
Million Dollars ($5,000,000) in cash to be paid to Plaintiffs' Co-Lead Counsel,
to be held in escrow, pursuant to paragraph 5(a) of this Stipulation, plus any
accrued interest; and (2) 580 Common Units of Capital Lending represented by the
Certificate to be delivered by FirstPlus (the "Escrow Fund") to the Escrow
Agent(s), subject to the Escrow Agreement, pursuant to paragraph 5(b) of this
Stipulation; and (3) any cash distributions that may become available in
connection with the Certificate held in the Escrow Fund.
(ii) "Unknown Claims" means any and all Settled Claims which
the Class Representative, Lead Plaintiffs, and/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, which if known by him, her or it might have affected his, her
or its decision(s) with respect to the Settlement. With respect to any and all
Settled Claims, the Parties stipulate and agree that upon the Effective Date,
the Class Representative, shall expressly, and each Lead Plaintiff and Class
Member shall be deemed to have, and by operation of the Order and Final Judgment
shall have, expressly waived any and all provisions, rights and benefits
conferred by any law of any state or territory of the United States, or
principle of common law, which is similar, comparable, or equivalent to Cal.
Civ. Code ss. 1542, which provides:
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A general release does not extend to claims which the creditor
does nor 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.
The Class Representative acknowledges, and Lead Plaintiffs and Class Members, by
operation of law shall be deemed to have acknowledged, that the inclusion of
"Unknown Claims" in the definition of Settled Claims was separately bargained
for and was a key element of the Settlement. The Class Representative, Lead
Plaintiffs or any Class Members may hereafter discover facts in addition to or
different from those which he, she or it now knows or believes to be true with
respect to the subject matter of the Settled Claims, but the Class
Representative, intends and the Lead Plaintiffs and Class Members are deemed to
intend, the release of the Settled Claims to be effective without regard to the
subsequent discovery or existence of such different or additional facts and that
it extends to Unknown Claims. The release of the Settled Claims is intended to
be a full and binding release of all Settled Claims, including Unknown Claims,
and shall be construed broadly to effect that purpose.
SCOPE AND EFFECT OF SETTLEMENT AND RELEASES
2. The obligations incurred pursuant to this Stipulation shall be
in full and final disposition of: (1) the Action and any and all Settled Claims
as against all Released Parties; and (2) and any and all claims between
Defendants and National Union with respect to coverage under the D&O Policy for
Defendants for claims in the Action, except for the preserved right for
Defendants to recover Future Defense Costs under paragraph 6(b) below and except
as set forth in paragraph 4(a) below.
3. (a) Pursuant to the Order and Final Judgment, upon the
Effective Date of this Settlement, the Class Representative, Lead Plaintiffs and
Class Members on behalf of themselves, their heirs, executors, administrators,
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 12
attorneys, agents, successors and assigns shall be deemed to have, and by
operation of the Order and Final Judgment shall have, with respect to each and
every Settled Claim, fully, finally and forever released, relinquished and
discharged, and shall forever be enjoined from prosecuting, any Settled Claims
against any of the Released Parties. Such release and bar from prosecution shall
be effective whether or not such Class Member submits a Proof of Claim.
(b) Pursuant to the Order and Final Judgment, upon the
Effective Date of this Settlement, the Class Representative, on behalf of
himself, and the Class Members, Lead Plaintiffs, Escrow Agents and Plaintiffs'
Counsel shall dismiss the Action (including the Complaint and the complaints in
each of the original twenty-three suits) with prejudice to re-filing of the
claims and causes of action asserted therein.
(c) Pursuant to the Order and Final Judgment, upon the
Effective Date of this Settlement, each of the Released Parties shall be deemed
to have, and by operation of the Order and Final Judgment shall have, fully,
finally and forever released, relinquished and discharged each and all of the
Class Representative, Lead Plaintiffs and Class Members from all claims,
including Unknown Claims, which arise out of, are or could have been asserted
based upon, or relate in any way to the institution, prosecution, settlement or
resolution of the Action or the Settled Claims.
4. (a) In consideration of the payments set forth in paragraph 6
below, the adequacy of which is hereby acknowledged, except for the preserved
right to recover Future Defense Costs under paragraph 6(b) of this Stipulation,
Defendants, on behalf of themselves and the Released Parties, hereby release and
forever discharge National Union and its current and former directors, officers,
employees, attorneys, accountants, agents, subsidiaries, parents, affiliates,
insurers, co-insurers, reinsurers, predecessors, successors, assigns,
underwriters,
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representatives, associates and trustees ("National Union Related Parties"),
from any and all complaints, actions, suits, claims, demands, rights,
liabilities, obligations, controversies, promises, agreements, damages, costs,
losses, attorneys' fees, expenses and/or causes of action, of every nature and
description whatsoever, whether known or unknown, direct or derivative,
contingent or non-contingent, suspected or unsuspected, accrued or not accrued,
at law or in equity, which they may have had, have now, or may have in the
future based upon, arising out of, or in any way related to the Settlement or
coverage for Defendants under the D&O Policy for the Action; provided, however,
that Defendants and National Union agree that the releases set forth above in
favor of National Union and the National Union Related Parties are specific
releases and not policy releases, are not applicable to, and do not affect in
any way, any rights, benefits or coverage for Defendants under the D&O Policy
for Claims (as defined in the D&O Policy) by persons and/or entities who request
exclusion from the Class, and they further agree that nothing shall impair or
restrict the rights of the Parties to enforce the Settlement set forth in this
Stipulation.
(b) For good and valuable consideration, the adequacy of which
is hereby acknowledged, National Union, on behalf of itself and the National
Union Related Parties, hereby releases and forever discharges the Released
Parties from any and all complaints, actions, suits, claims, demands, rights,
liabilities, obligations, controversies, promises, agreements, damages, costs,
losses, attorneys' fees, expenses, and/or causes of action, of every nature and
description whatsoever, whether known or unknown, direct or derivative,
contingent or non-contingent, suspected or unsuspected, accrued or not accrued,
at law or in equity, which they may have had, have now or may have in the future
based upon, arising out of, or in any way related to the Settlement or coverage
for Defendants under the D&O Policy for the Action;
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provided, however, that Defendants and National Union agree that the releases
set forth in favor of the Released Parties are specific releases and not general
releases, and are not applicable to, and do not affect in any way, any of
National Union's rights and defenses regarding coverage that may be available
for Defendants under the D&O Policy for Claims (as defined in the D&O Policy) by
persons and/or entities who request exclusion from the Class, and they further
agree that nothing shall impair or restrict the rights of the Pasties to enforce
the Settlement set forth in this Stipulation.
(c) Pursuant to the Order and Final Judgment, upon the
Effective Date of this Settlement, National Union, on behalf of itself and the
National Union Related Parties, shall withdraw the AAA Coverage Proceeding with
prejudice.
THE SETTLEMENT CONSIDERATION
5. The Settlement Fund.
The principal amount of Five Million Dollars ($5,000,000) in
cash and a Certificate representing 580 Common Units, which represents ten
percent (10%) of the current outstanding Common Units of Capital Lending, shall
constitute the Settlement Fund as follows:
a) Cash Settlement. Within forty-five (45) days after the
entry of the Preliminary Approval Order, National Union, on behalf of
Defendants, shall pay or cause to be paid Five Million Dollars ($5,000,000) into
an interest bearing account maintained by Plaintiffs' Co-Lead Counsel in escrow.
(b) Equity Settlement.
(1) Within thirty (30) days of entry of the Order and
Final Judgment, (i) FirstPlus shall deliver the Certificate or cause the
Certificate, duly endorsed and medallion signature guaranteed or accompanied by
stock powers duly endorsed in blank and medallion
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signature guaranteed, to be delivered to the Escrow Agent(s) (the "Escrow Fund")
on behalf of the Authorized Claimants; (ii) FirstPlus, the Class Representative
and Plaintiffs' Co-Lead Counsel shall execute and deliver the Assignment
Agreement; (iii) FirstPlus, the Class Representative, Plaintiffs' Co-Lead
Counsel and the Escrow Agent(s) shall execute and deliver the Escrow Agreement;
and (iv) the Class Representative and Plaintiffs' Co-Lead Counsel shall execute
and deliver, and FirstPlus shall cause Capital Lending to execute and deliver,
the Registration Rights Agreement.
(2) The transfer of the Certificate by FirstPlus to
the Escrow Agent(s) and the transfer of interests in the Escrow Fund will be
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), under Section 3(a)(10) thereof The Certificate
and the Common Units represented therein will NOT be freely tradeable and shall
bear a Securities Act restrictive legend.
(3) The Common Units have not been valued and they
may have no value. Defendants and Capital Lending do not represent or guarantee
that such Common Units have any value or will have any value in the future.
(c) The Individual Defendants shall have no responsibility for
the payment of any of the Settlement Fund.
6. Defense Costs.
(a) Outstanding Defense Costs. National Union shall have paid
directly to Defendants' Counsel, the following amounts on or before the dates
specified: (i) $125,000.00 on or before March 21, 2003; (ii) $125,000.00 on or
before April 21, 2003; and (iii) $1,215,000.00 on or before June 3, 2003; as a
compromise and settlement with respect to all invoices that have been submitted
to National Union for payment as of March 18, 2003, for defense costs incurred
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in connection with defending the Defendants in the Action ("Outstanding Defense
Costs"). The Class Representative, Lead Plaintiffs, Class Members, Escrow Agents
and Plaintiffs' Counsel have no obligation for any defense costs.
(b) Future Defense Costs. National Union shall continue to pay
all forthcoming invoices for defense costs incurred in connection with this
Action submitted to National Union for payment after March 18, 2003 in an amount
not to exceed $35,000.00 incurred by Defendants, within thirty (30) days of the
receipt of such invoices by National Union, including but not limited to, all
invoices to be submitted by Defendants' Counsel and the law firm of Jenkens &
Xxxxxxxxx, P.C., corporate counsel for FirstPlus which is assisting with the
equity portion of the Settlement ("Future Defense Costs").
THE SETTLEMENT FUND TO BE HELD
BY PLAINTIFFS' CO-LEAD COUNSEL
7. (a) Any sums required to be held in escrow hereunder shall be
held jointly by Plaintiffs' Co-Lead Counsel (Xxxxxxx Xxxxx Xxxxxxx Xxxxx &
Xxxxxx LLP and Sirota & Sirota LLP) as the escrow agents for the Settlement
Fund.
(b) Defendants and Defendants' Counsel shall not be responsible
for or liable for any acts of Plaintiffs' Co-Lead Counsel.
(c) Plaintiffs' Co-Lead Counsel shall not disburse the
Settlement Fund except as provided in the Stipulation, or by an order of the
Court.
(d) All funds held by Plaintiffs' Co-Lead Counsel shall be
deemed to be in the custody of the Court and shall remain subject to the
jurisdiction of the Court until such time as the funds shall be distributed or
returned to the person(s) paying the same pursuant to this Stipulation and/or
further order of the Court.
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(e) Plaintiffs' Co-Lead Counsel shall invest any funds in
excess of $100,000 in short term United States Agency or Treasury Securities,
and shall collect and reinvest all interest accrued thereon. Any funds held in
escrow in an amount of less than $100,000 may be held in an interest-bearing
bank account insured by the FDIC. Defendants shall bear no risks related to the
investment of the Settlement Fund.
(f) Within ten (10) days after payment of the cash portion of
the Settlement Fund to Plaintiffs' Co-Lead Counsel pursuant to paragraph 5(a)
hereof, Plaintiffs' Co-Lead Counsel may establish a "Class Notice and
Administration Fund" and may deposit up to $100,000 from the Settlement Fund in
it. The Class Notice and Administration Fund may be used by Plaintiffs' Co-Lead
Counsel to pay costs and expenses reasonably and actually incurred in connection
with providing Notice to the Class, locating Class Members, soliciting Class
claims, assisting with the filing of claims, administering and distributing the
Settlement Fund to Authorized Claimants, processing Proof of Claim and Release
forms, and paying escrow fees and costs, if any. The Class Notice and
Administration Fund may also be invested and earn interest as provided for in
paragraph 7(e) of this Stipulation. In the event the Settlement is terminated,
cancelled or withdrawn, or does not become effective for any reason whatsoever,
the cash settlement amount referenced in paragraph 5(a), plus all interest, less
all reasonable expenses actually incurred or due and owing from the Class Notice
and Administration Fund, shall be promptly refunded directly to National Union.
TAXES
8. (a) Cash Settlement. For purposes of this paragraph 8,
references to the Settlement Fund shall include both the cash portion of the
Settlement Fund and the Class Notice and Administration Fund and shall include
any earnings thereon.
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 18
(b) The Parties hereto agree that the Settlement Fund shall be
a Qualified Settlement Fund within the meaning of Treasury Regulation ss.
1.468B-1 and that Plaintiffs' Co-Lead Counsel, as administrators of the
Settlement Fund within the meaning of Treasury Regulation ss. 1.468B-2(k)(3),
shall be responsible for filing all required tax reports and returns for the
Settlement Fund and paying from the Settlement Fund any Taxes owed with respect
to the Settlement Fund. The Parties hereto further agree to cooperate with each
other and each other's agents to the extent reasonably necessary to carry out
the provisions of this paragraph 8(b).
(c) All (i) taxes (including but not limited to any estimated
taxes, interest or penalties) arising with respect to the income of the
Settlement Fund and (ii) expenses and costs incurred in connection with the
taxation of the Settlement Fund (including, without limitation, expenses of tax
attorneys and accountants) (collectively "Taxes") shall be a liability solely
of, and paid out of, the Settlement Fund, shall be considered to be a cost of
administration of the Settlement, shall be timely paid to the appropriate
government authorities by Plaintiffs' Co-Lead Counsel without prior order of the
Court, and Defendants shall have no liability or responsibility for such Taxes,
costs and expenses.
(d) Plaintiffs' Co-Lead Counsel shall timely make such relation
back election described in the Treasury Regulations promulgated under Section
468B of the Internal Revenue Code of 1986, as amended, as any Party hereto may
request.
9. (a) Equity Settlement. For purposes of this paragraph 9,
references to the Escrow Fund shall be the Certificate held in escrow pursuant
to the Escrow Agreement attached hereto as Exhibit C.
(b) The Parties hereto agree that the Escrow Fund shall be a
Qualified Settlement Fund within the meaning of Treasury Regulation ss. 1.468B-1
and that the Escrow
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 19
Agent(s), as the administrator of the Escrow Fund within the meaning of Treasury
Regulation ss. 1.468B-2(k)(3), shall be responsible for filing all required tax
reports and returns for the Escrow Fund and paying any Taxes owed with respect
to the Escrow Fund. The Parties hereto further agree to cooperate with each
other and each other's agents to the extent reasonably necessary to carry out
the provisions of this paragraph 9(b).
(c) All (i) taxes (including but not limited to any estimated
taxes, interest or penalties) arising with respect to the income of the Escrow
Fund and (ii) expenses and costs incurred in connection with the taxation of the
Escrow Fund (including, without limitation, expenses of tax attorneys and
accountants) (collectively "Taxes") shall be a liability solely of, and paid out
of, the Settlement Fund, shall be considered to be a cost of administration of
the Settlement, shall be timely paid to the appropriate government authorities
by the Escrow Agent(s) without prior order of the Court and neither Defendants
nor Capital Lending shall have any liability or responsibility for such Taxes,
costs and expenses.
(d) The Escrow Agent(s) shall timely make such relation back
election described in the Treasury Regulations promulgated under Section 468B of
the Internal Revenue Code of 1986, as amended, as any Party hereto may request.
ATTORNEYS' FEES AND EXPENSES
10. (a) Plaintiffs' Co-Lead Counsel may apply for and receive an
award of attorneys' fees and reimbursement of expenses from the Settlement Fund
in such amounts as may be approved by the Court. Such attorneys' fees, expenses,
and interest as are awarded by the Court shall be payable from the Settlement
Fund to Plaintiffs' Co-Lead Counsel immediately upon award, notwithstanding the
existence of any timely filed objections thereto, or potential for appeal
therefrom, or collateral attack on the Settlement or any part thereof. Provided,
however,
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 20
that 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 Plaintiffs' attorneys' fees and
expenses have been paid to any extent, then Plaintiffs' Counsel shall, within
five (5) business days after Plaintiffs' Co-Lead Counsel receives written notice
from Defendants' Counsel or National Union, refund to National Union the fees
and expenses previously paid to them from the Settlement Fund (plus interest
thereon at the same rate had such amounts remained in the Settlement Fund) in an
amount consistent with such reversal or modification. In the event the order
awarding attorneys' fees and expenses is reversed or modified, Plaintiffs'
Counsel shall refund to the Settlement Fund such fees and expenses previously
paid to them pursuant to such award, plus interest thereon at the same rate as
earned on the Settlement Fund, in an amount consistent with such reversal or
modification. Each such 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 or any successor firm(s), and each of its partners and/or
shareholders are subject to the jurisdiction of the Court for enforcing the
provisions of this paragraph 10.
(b) Defendants shall have no responsibility for, and no
liability whatsoever with respect to the allocation among Plaintiffs' Counsel
and/or any other person who may assert any claim to any fee or expense award
that may be payable from the Settlement Fund and that the Court may make in this
Action.
(c) All such Court-awarded attorneys' fees and expenses shall
be paid solely from the Settlement Fund, and Defendants shall have no liability
or responsibility to pay any such attorneys' fees and expenses. Denial by the
Court, in whole or in part, of any such
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 21
application shall not be grounds to set aside or terminate the Settlement, or to
affect or delay the finality of the Order and Final Judgment approving the
Settlement.
ADMINISTRATION AND
DISTRIBUTION OF SETTLEMENT FUND
11. The Claims Administrator shall administer distribution of the
Settlement Fund under Plaintiffs' Co-Lead Counsel's supervision and subject to
the jurisdiction of the Court. Defendant FirstPlus shall consent to its Transfer
Agent providing to the Claims Administrator Defendant FirstPlus' shareholder
lists solely for purposes of providing Notice to the Class. The Class
Representative agrees that Defendant FirstPlus' shareholder lists will not be
used for any purposes other than providing Notice to the Class for purposes of
this Settlement and will otherwise not be disclosed to any other persons. All
reasonable costs associated with obtaining the shareholder lists shall be paid
from the Class Notice and Administration Fund and Defendants shall have no
liability to the Class in connection with such shareholder lists. Within ninety
(90) days after final disbursement of the Net Settlement Fund (defined below),
the Claims Administrator will return FirstPlus' shareholder lists and all copies
made of all or any portion of such lists to FirstPlus.
12. Plaintiffs' Co-Lead Counsel shall be responsible for
supervising the administration of the Settlement, disbursement of the Settlement
Fund by the Claims Administrator and obligations of the Escrow Agent(s) under
the Escrow Agreement. The Released Parties and Capital Lending shall not have
any responsibility for or liability whatsoever with respect to the
administration of the Settlement or the Escrow Fund, the providing of Notice,
the investment or distribution of the Settlement Fund, the determination,
administration, or calculation of claims, the payment or withholding of Taxes,
the obligations of and the performance of the Escrow Agent(s) under the Escrow
Agreement, the payment of any fees and
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 22
expenses of the Escrow Agent(s) or under the Escrow Agreement, or any losses
incurred in connection therewith.
13. The Claims Administrator shall determine each Authorized
Claimant's pro rata share of the Net Settlement Fund (defined below) for the
cash portion of the Settlement and allocation, if any, of Registrable Securities
to Holders for the equity portion of the Settlement based upon each Authorized
Claimant's Authorized Claim (as defined in the Plan of Allocation described in
paragraph VII. of the Notice annexed as Exhibit 1 to Exhibit A, or in such other
Plan of Allocation as the Court approves) and shall notify the Escrow Agent(s)
and Plaintiffs' Co-Lead Counsel of the allocation, if any, of the Registrable
Securities to Holders. Except to the extent set forth in Exhibits C, D and E
hereto with respect to the equity portion of the Settlement, the Plan of
Allocation was determined by Plaintiffs' Co-Lead Counsel. Neither Defendants nor
Capital Lending take any position with respect to how the Plan of Allocation was
calculated, or its effect on the fairness to any Authorized Claimant, other than
to deny that FirstPlus shares were artificially inflated by Defendants' conduct
and to deny any wrongdoing.
14. The Net Settlement Fund (defined below) for the cash portion of
the Settlement shall be distributed to Authorized Claimants and Registrable
Securities, if any, for the equity portion of the Settlement shall be allocated
to Holders only after the Effective Date and after: (i) all Proofs of Claim have
been processed, and all Claimants whose Proofs of Claim 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 Proofs of Claim have been resolved, and
all appeals therefrom have been resolved or the time therefor has expired; (iii)
all matters with respect to attorneys' fees, costs, and disbursements have been
resolved, all appeals therefrom have been resolved or the time therefor
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 23
has expired; and (iv) all costs of administration, including Taxes, have been
paid. The Net Settlement Fund shall be distributed to Authorized Claimants in
accordance with the terms of the Stipulation, the Plan of Allocation approved by
the Court, and such further orders of the Court as may be necessary.
15. Allocation of the Cash Settlement.
(a) The cash portion of the Settlement Fund shall be applied as
follows:
(1) To pay all the costs and expenses reasonably and
actually incurred in connection with providing Notice to the Class, locating
Class Members, soliciting Class claims, assisting with the filing of claims,
administering and distributing the Settlement Fund to Authorized Claimants,
processing Proof of Claim forms, and paying escrow fees and costs;
(2) To pay the Taxes and Tax expenses described in
paragraph 8 above;
(3) To pay Plaintiffs' Co-Lead Counsel's attorneys'
fees and expenses, to the extent allowed by the Court; and
(4) To distribute the balance of the cash potion of
the Settlement Fund (the "Net Settlement Fund") to Authorized Claimants as
allowed by the Stipulation, the Plan of Allocation, or the Court.
(b) The Plan of Allocation as to the cash portion of the
Settlement proposed in the Notice is not a necessary term of this Stipulation
and it is not a condition of this Stipulation that the Plan of Allocation as to
the cash portion of the Settlement be approved.
(c) With respect to the cash portion of the Settlement Fund,
each Authorized Claimant shall be allocated a pro rata share of the Net
Settlement Fund based on his, her or its Authorized Claim compared to the total
Authorized Claims of all Authorized Claimants.
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 24
Defendants shall have no responsibility or liability for any distributions of
cash made or not made.
(d) If there is any balance remaining in the Net Settlement
Fund after six months following the final distribution of the settlement
proceeds (whether by reason of tax refunds, uncashed checks or otherwise),
Plaintiffs' Co-Lead Counsel. shall reallocate such balance among Authorized
Claimants in an equitable and economic fashion. In the event it is not
economically feasible to distribute such balance among Authorized Claimants,
Plaintiffs' Co-Lead Counsel will seek leave of the Court to make a cy pres
distribution of such funds.
16. Allocation of Equity Settlement.
(a) The Escrow Fund in connection with the equity portion of
the Settlement, will be distributed in the form of either cash or Registrable
Securities at the time and in the manner determined by Plaintiffs' Co-Lead
Counsel in accordance with the Escrow Agreement. With respect to the
distribution of cash, if any, in connection with the equity portion of the
Settlement, such cash will be deposited into the Settlement Fund and distributed
to Authorized Claimants on a pro rata basis in accordance with paragraph 15
above. With respect to the distribution of Registrable Securities, if any, each
Authorized Claimant who constitutes a Holder shall be allocated Registrable
Securities in proportion to the Authorized Claimant's Authorized Claim as
determined by the Claims Administrator. A Holder is an Authorized Claimant whose
fro rata share of Registrable Securities under the plan of allocation is at
least one full share. No fractional shares will be issued. No Authorized
Claimant shall have any title to, right to, possession of, management of, or
control of, any portion of the Escrow Fund. No certificate or other instrument
representing, or other evidence of ownership of or interest in, the Escrow Fund
or any portion of the Escrow Fund shall be issued. Neither Defendants nor
Capital Lending shall
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 25
have any responsibility or liability for any allocations of Registrable
Securities made or not made.
(b) Except as provided for herein and by the Assignment
Agreement and the Registration Rights Agreement, neither FirstPlus nor Capital
Lending, nor any successor entity to FirstPlus or Capital Lending shall be
responsible for any payment to the Escrow Agent(s) or the Escrow Fund, including
payment for compensation for duties performed under the Escrow Agreement or
Registration Rights Agreement by the Escrow Agent(s), or reimbursement for
out-of-pocket expenses incurred in connection with services rendered as Escrow
Agent(s).
(c) No recourse:
(i) for any payment with respect to the Escrow
Fund or any portion of the Escrow Fund,
(ii) for any claim based on or otherwise in
respect of the Escrow Fund or any portion of
the Escrow Fund,
(iii) under or upon any obligation, covenant or
agreement of FirstPlus or Capital Lending in
the Escrow Agreement or Registration Rights
Agreement or in any subsequent agreement or
in the Escrow Fund or any portion of the
Escrow Fund, or
(iv) because of the creation of any indebtedness
represented by the Escrow Fund or any
portion of the Escrow Fund,
shall be had against any incorporator, member, manager, stockholder, officer or
director, as such, past, present or future, of FirstPlus or Capital Lending or
any incorporator, member, manager, stockholder, officer or director, as such,
past, present or future, of any successor entity to FirstPlus or Capital
Lending, either directly or through FirstPlus, Capital Lending or any successor
entity to FirstPlus or Capital Lending, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, except as expressly
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 26
provided in the Assignment Agreement, the Registration Rights Agreement and/or
herein specifically with respect to such person or entity.
17. 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 2 to Exhibit A), including the agreements of the
Class Members in the Proof of Claim relating to Capital Lending and the equity
portion of the Settlement Fund, supported by such documents as are designated
therein, including proof of the Claimant's loss, or such other documents or
proof as Plaintiffs' Co-Lead Counsel, in their discretion, may deem acceptable;
(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 and
the Settlement including the terms of the Order and Final Judgment to be entered
in the Action and the releases provided for herein, and will be barred from
bringing any action against the Released Parties concerning the Settled Claims.
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 Plaintiffs' Co-Lead Counsel,
who shall determine in
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 27
accordance with this Stipulation the extent, if any, to which each Proof of
Claim shall be allowed;
(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 Proofs of Claim submitted. The Claims Administrator, under
supervision of Plaintiffs' Co-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 therefor, and shall indicate in such
notice that the Claimant whose claim is to be rejected has the right to review
by the Court if the Claimant so desires and complies with the requirements of
subparagraph 17(e) below;
(e) If any Claimant whose Proof of Claim has been rejected in
whole or in part desires to contest such rejection, the Claimant must, within
twenty (20) 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. If a dispute concerning a Proof of Claim cannot be
otherwise resolved, Plaintiffs' Co-Lead Counsel shall thereafter present the
request for review to the Court.
18. Any Class Member who does not submit a valid Proof of Claim
will not be entitled to receive any of the proceeds from the Settlement Fund but
will otherwise be bound by all of the terms of this Stipulation and the
Settlement, including the terms of the Order and Final Judgment to be entered in
the Action and the releases provided for herein, and will be barred from
bringing any action against the Released Parties concerning the Settled Claims.
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 28
19. Each Claimant shall be deemed to have submitted to the
jurisdiction of the Court with respect to the Claimant's claim, and the Proof of
Claim will be subject to investigation and discovery under the Federal Rules of
Civil Procedure, provided that such investigation and discovery shall be limited
to that Claimant's status as a Class Member and the validity and amount of the
Claimant's Proof of Claim. No discovery shall be allowed on the merits of the
Action or Settlement in connection with processing of the Proofs of Claim.
20. Distributions pursuant to this Stipulation shall be deemed
final and conclusive against all Class Members. All Class Members whose Proofs
of Claim are not approved shall be barred from participating in distributions
from the Settlement Fund, but otherwise shall be bound by all of the terms of
this Stipulation and the Settlement, including the terms of the Order and Final
Judgment to be entered in the Action and the releases provided for herein, and
will be barred from bringing any action against the Released Parties concerning
the Settled Claims.
21. All proceedings with respect to the administration, processing
and determination of Proofs of Claim described by paragraphs 17-20 of this
Stipulation and the determination of all controversies relating thereto,
including disputed questions of law and fact with respect to the validity of
Proofs of Claim, shall be subject to the jurisdiction of the Court.
TERMS OF PRELIMINARY APPROVAL ORDER
22. Promptly after this Stipulation has been fully executed,
Plaintiffs' Co-Lead Counsel and Defendants' Counsel jointly shall apply to the
Court for entry of a Preliminary Approval Order, substantially in the form
annexed hereto as Exhibit A.
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 29
TERMS OF ORDER AND FINAL JUDGMENT
23. If the Settlement contemplated by this Stipulation is approved by
the Court, Plaintiffs' Co-Lead Counsel and Defendants' Counsel shall request
that the Court enter an Order and Final Judgment substantially in the form
annexed hereto as Exhibit B.
SUPPLEMENTAL AGREEMENT
24. Simultaneously herewith, Plaintiffs' Co-Lead Counsel, Defendants'
Counsel and National Union's Counsel are executing a "Supplemental Agreement"
setting forth certain conditions under which this Stipulation may be withdrawn
or terminated by Defendants and/or National Union if potential Class Members who
purchased in excess of a certain number of shares of FirstPlus stock traded
during the Class Period exclude themselves from the Class. The Claims
Administrator shall promptly deliver by facsimile to Plaintiffs' Co-Lead
Counsel, Defendants' Counsel and National Union's Counsel copies of all requests
for exclusion received, together with all written revocations of requests for
exclusion, within three (3) business days of receipt but in no event later than
ten (10) business days before the Settlement Fairness Hearing. The Supplemental
Agreement shall be held as confidential and will not be filed with the Court
prior to the Settlement Fairness Hearing unless a dispute among the parties
concerning its application arises or unless the Court requests it be submitted
and, in that event, the parties shall request that the Supplemental Agreement be
submitted to the Court in camera. In the event of a withdrawal from this
Stipulation pursuant to the Supplemental Agreement, this Stipulation shall
become null and void and of no further force and effect, except that the
provisions of paragraphs 27 and 28 shall apply.
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 30
EFFECTIVE DATE OF SETTLEMENT, WAIVER OR TERMINATION
25. The Effective Date of Settlement shall be the date when all the
following shall have occurred:
(a) entry of the Preliminary Approval Order in all material
respects in the form annexed hereto as Exhibit A;
(b) National Union has made the cash contribution to the
Settlement Fund as required by paragraph 5(a) and National Union has paid
Outstanding and Future Defense Costs as required by paragraph 6;
(c) FirstPlus has delivered and transferred the Certificate to
the Escrow Agent(s) as required by paragraph 5(b);
(d) 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
(e) entry by the Court of an Order and Final Judgment, in all
material respects in the form set forth in Exhibit B annexed hereto, and the
expiration of any time for appeal or review of such Order and Final Judgment,
or, if any appeal is filed and not dismissed, after such Order and Final
Judgment is upheld on appeal in all material respects and is no longer subject
to review upon appeal or review by writ of certiorari, or, in the event that the
Court enters an order and final judgment in a form other than that provided
above ("Alternative Judgment") and none of the Parties hereto elect to terminate
this Settlement, the date that such Alternative Judgment becomes final and no
longer subject to appeal or review.
26. In addition to Defendants' right to terminate this Stipulation
pursuant to the Supplemental Agreement referenced in paragraph 24 herein,
Defendants' Counsel or Plaintiffs' Co-Lead Counsel shall have the right to
terminate the Settlement and this Stipulation by
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 31
providing written notice of their election to do so ("Termination Notice") to
all other Parties hereto within thirty (30) days of: (a) the Court's declining
to enter the Preliminary Approval Order in any material respect; (b) the Court's
refusal to approve this Stipulation or any material part of it; (c) the Court's
declining to enter the Order and Final Judgment in any material respect; (d) the
date upon which the Order and Final Judgment is modified or reversed in any
material respect by the Court of Appeals or the Supreme Court; or (e) the date
upon which an Alternative Judgment is modified or reversed in any material
respect by the Court of Appeals or the Supreme Court. This Settlement is not
conditioned upon the Court's approval of the proposed Plan of Allocation as to
the cash portion of the Settlement nor on the Court's approval of Plaintiffs'
Co-Lead Counsel's application for attorneys' fees and expenses to be paid from
the Settlement Fund, and any change in the Order and Final Judgment relating to
these items shall not be considered to be a material change. The Effective Date
shall not be delayed or affected in any way if the Settlement is approved but
the Plan of Allocation and/or the application for Plaintiffs' Co-Lead Counsel's
fees and expenses to be paid from the Settlement Fund are also not approved.
27. Except as otherwise provided herein, in the event the
Settlement is terminated, cancelled or withdrawn, or fails to become effective
for any reason, then: (a) the Parties to this Stipulation shall be deemed to
have reverted to their respective status in the Action as of the date of
execution of this Stipulation; (b) except as otherwise expressly provided, the
Parties shall proceed in all respects as if this Stipulation and any related
orders had not been entered; (c) to the extent any attorney's fees or expenses
have been paid to Plaintiffs' Counsel from the Settlement Fund, Plaintiffs'
Counsel shall within five (5) business days of such termination and/or written
notice from Defendants' Counsel or National Union to Plaintiffs' Co-Lead Counsel
of such termination, cause a refund to be made directly to National Union in the
amount paid to them,
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 32
plus interest at the same rate that would have accrued on such amounts had they
remained in the Settlement Fund; (d) any portion of the cash settlement amount
referenced in paragraph 5(a) previously paid by or on behalf of Defendants,
together with any interest earned thereon, less any Taxes due with respect to
such income, and less costs of administration and notice actually incurred and
paid or payable from the Settlement Fund, shall be returned directly to National
Union; and (e) the Escrow Agent(s) shall deliver to FirstPlus the Certificate
endorsed in blank or accompanied by duly executed assignment documents, and all
right, title and interest in the Certificate, the Assigned Distributions (as
defined in the Assignment Agreement) and Common Units represented thereby shall
immediately revert back to, and vest in, FirstPlus.
NO ADMISSION OF WRONGDOING
28. This Stipulation, the exhibits hereto and the Supplemental
Agreement, and their terms and provisions and the negotiations or proceedings
connected with them, and the documents or statements referred to therein,
whether or not consummated, and any proceedings taken pursuant to them:
(a) shall not be offered or received against any Released Party
as evidence of or construed as or deemed to be evidence of any presumption,
concession, or admission by any of the Released Parties with respect to the
truth of any fact alleged by the Class Representative and/or any Class Member or
the validity of any claim that had been or could have been asserted in the
Action or in any litigation, 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 Released Parties for the
Settled Claims;
(b) shall not be offered or received against any of the
Released Parties as evidence of a presumption, concession or admission of any
fault, misrepresentation or omission
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 33
with respect to any statement or written document approved or made by any
Released Party, or against the Class Representative and/or any Class Member as
evidence of any infirmity in the claim of the Class Representative and/or any
Class Member;
(c) shall not be offered or received against any Released Party
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, Capital Lending and any Released Party may refer to it to effectuate the
liability protection granted them hereunder;
(d) shall not be construed against any Released Party, the
Class Representative, the Lead Plaintiffs and/or any Class Member 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;
(e) shall not be construed as or received in evidence as an
admission, concession or presumption against the Class Representative, the Lead
Plaintiffs, the Class Members or any of them that any of their claims are
without merit or that damages recoverable under the Complaint would not have
exceeded the Settlement Fund; and
(f) shall not be construed or taken as an admission of coverage
or lack of coverage under the D&O Policy for this Action.
MISCELLANEOUS PROVISIONS
29. All of the exhibits attached hereto are material and integral
parts hereof and are hereby incorporated by reference as though fully set forth
herein.
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 34
30. The Parties to this Stipulation intend the Settlement to be a
full, final and complete resolution of all disputes asserted or which could be
asserted by the Class Representative and/or the Class Members against the
Released Parties with respect to the Settled Claims. Accordingly, the Class
Representative and Defendants agree not to assert in any forum that the
litigation was brought by plaintiffs or defended by 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 Order and Final Judgment
will contain a statement that during the course of the Action, the parties and
their respective counsel at all times complied with the requirements of Federal
Rule of Civil Procedure 11. The Parties agree that the amount paid and the other
terms of the Settlement were negotiated at arm's length in good faith by the
Parties, and reflect a Settlement that was reached voluntarily after
consultation with experienced legal counsel.
31. This Stipulation may not be modified or amended, nor may any of
its provisions be waived except by a writing signed by or on behalf of all
Parties hereto or their successor-in-interest.
32. The headings herein are used for the purpose of convenience
only and are not meant to have legal effect.
33. 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
consummating and enforcing the terms of this Stipulation. The Court in the
Action shall have continuing jurisdiction over Capital Lending solely for
purposes of, construing and enforcing the Registration Rights Agreement;
however, the Parties hereby acknowledge that Capital Lending is not a party to
the Action or the
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 35
Stipulation and agree and acknowledge that the Regulations (and, with respect to
Capital Lending, the Assigned Distributions) are not part of or otherwise
incorporated into the Action, the Stipulation or the Registration Rights
Agreement and shall not constitute a document "delivered pursuant hereto" under
Section 5(b) of the Registration Rights Agreement.
34. The waiver by one Party of any breach of this Stipulation by
any other Party shall not be deemed a waiver of any other prior or subsequent
breach of this Stipulation.
35. This Stipulation and its exhibits 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 and its exhibits
and the Supplemental Agreement other than those contained and memorialized in
such documents.
36. This Stipulation may be executed in one or more counterparts.
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 prior to the Settlement
Fairness Hearing.
37. Subject to the limitations with respect to Capital Lending set
forth in paragraph 33 above, this Stipulation shall be binding upon, and inure
to the benefit of, the successors and assigns of the Parties hereto, including
any and all Released Parties and any corporation, partnership, or other entity
into which or with which any Party hereto may merge, consolidate or reorganize.
38. Subject to the limitations with respect to Capital Lending set
forth in paragraph 33 above, 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 State of Texas
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 36
without regard to conflicts of laws, except to the extent that federal law
requires that federal law governs.
39. 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 have contributed substantially and materially to the preparation of this
Stipulation.
40. 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.
41. Plaintiffs' Co-Lead Counsel and Defendants' Counsel agree to
cooperate fully with one another in seeking Court approval of the Preliminary
Approval Order, the Stipulation and the Settlement, and to exercise their best
efforts to execute all such other documentation as may be reasonably required to
obtain final approval by the Court of the Settlement and as necessary for the
Settlement.
42. The Parties hereto and their respective counsel agree that the
Stipulation and Order Governing Confidential Information entered in this Action
shall survive this Stipulation.
43. The Parties hereto and their respective counsel agree that any
changes to this Stipulation and/or the exhibits annexed hereto that impact the
consideration to be paid by or on behalf of Defendants, the scope of releases,
and/or dismissal of claims are material for purposes of this Settlement.
Provided, however, that nothing herein shall be deemed to exclude any other
provision of this Stipulation and/or exhibits annexed hereto from being
considered material.
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 37
DATED: as of July 30, 2003
/s/ Xxxxxx X. Xxxxxxx, III
----------------------------------------
CLASS REPRESENTATIVE XXXXXX
X. XXXXXXX, III
/s/ Xxx Xxx Xxxx
----------------------------------------
Xxxxxxx X. Xxxxxx
Xxx Xxx Xxxx
G. Xxxx Xxxxx
Tor Xxxxxxxx
XXXXXXX XXXXX XXXXXXX XXXXX
& LERACH LLP
000 X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Telephone: 000.000.0000
Telecopier: 619.231.7423
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 38
/s/ Xxxxxxx Xxxxxx
----------------------------------------
Xxxxxx X. Xxxxxx
Xxxxxxx Xxxxxx
Xxxx Xxxxx
XXXXXX & SIROTA LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000.000.0000
Telecopier: 212.425.9093
PLAINTIFFS' CO-LEAD COUNSEL
DEFENDANT FIRSTPLUS FINANCIAL
GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
-----------------------------------
Title: CEO
----------------------------------
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
DEFENDANT XXXXXX X. XXXXXXXX
/s/ Xxxx X. Xxxxx
----------------------------------------
DEFENDANT XXXX X. XXXXX
/s/ Xxxxxx X. Xxxx
----------------------------------------
Xxxxxx X. Xxxxxxxxx, Xx.
State Bar No. 02867000
Xxxx X. X. Xxxxxxx
State Bar No. 09491400
Xxxxxx X. Xxxx
State Bar No. 10180610
XXXXXX AND XXXXX, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
DEFENDANTS' COUNSEL
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 39
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA
By: /s/ Xxxxxxxx Xxxx
-------------------------------------
Name: Xxxxxxxx Xxxx
-----------------------------------
Title: Vice President
----------------------------------
STIPULATION AND AGREEMENT OF SETTLEMENT - Page 40
