Appendix — International Precious Metals Corp. v. Waters
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91
9915 6 0 MAR 2 > 2000
No. 99-
IN THE ,
Supreme Court of the Anited States
INTERNATIONAL PRECIOUS METALS CORPORATION,
MULTIVEST, INC., JAMES GROSFELD, INDIVIDUALLY AND AS
TRUSTEE OF THE JASON GROSFELD TRUST, MULTIVEST REAL ESTATE,
INC., S.S. MELBOURNE, INC., AND THE CYPRESS GROUP, INC.,
Petitioners,
Vv.
WILLIAM WATERS AND LINDA BARTHOLOMEW,
INDIVIDUALLY AND ON BEHALF OF ALL THOSE SIMILARLY SITUATED,
Respondents.
ON PETITION FOR WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
APPENDIX TO PETITION FOR WRIT OF CERTIORARI
PAUL M. DODYK
Counsel of Record
CRAVATH, SWAINE & MOORE
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Telephone: (212) 474-1000
Facsimile: (212) 474-3700
R. Lawrence Bonner Martin I. Kaminsky
HOMER, BONNER & DELGADO, P.A. POLLACK & KAMINSKY
100 S.E. Second Street 114 West 47th Street
Miami, FL 33131 New York, NY 10036
Telephone: (305) 350-5100 Telephone: (212) 575-4700
Facsimile: (305) 379-0918 Facsimile: (212) 575-6560
Attorneys for Petitioners
March 22, 2000
TABLE OF CONTENTS
Opinions & Orders
Appendix A
Appendix B
Appendix C
Appendix D
Appendix E
Opinion of the United States Court of
Appeals for the Eleventh Circuit, filed
September 30, 1999 ............... A-1
Order with respect to Notice, Settlement
Hearing and Administration of Class
Action Settlement, signed by Judge
Ungaro-Benages on January 31, 1997
(United States District Court for the
Southern District of Florida) ........ B-1
Final Order and Judgment Approving
Settlement, filed April 2, 1997 (United
States District Court for the Southern
District of Florida) ................ C-1
Amendment to Final Order and
Judgment Approving Settlement, filed
May 8, 1997 (United States District
Court for the Southern District of
ON hk vhs bbb cb daeenaas D-1
Order Granting in part Motion of
Plaintiffs’ Class Counsel to Alter or
Amend Judgment with respect to Cost
Award, signed May 8, 1997 (United
States District Court for the Southern
District of Florida) ................ E-1
Order on Rehearing
Appendix F
Order denying Petition for Panel
Rehearing and Petition for Rehearing en
banc, filed December 23, 1999 ...... F-]
il
Other Material filed before the United States
District Court for the Southern District of Florida
Appendix G
Appendix H
Appendix J
Appendix J
Appendix K
Appendix L
Appendix M
Appendix N
Stipulation of Settlement, dated January
17, 066F scsecaeneee ee G-1
Exhibit A-1 to Stipulation of
Settlement, dated January 17, 1997:
[Draft] Notice of Proposed Settlement
of Class Action, Settlement Hearing,
and Right to Appear ............... H-1
Exhibit A-2 to Stipulation of
Settlement, dated January 17, 1997:
[Draft] Summary Notice ........... I-]
Excerpts from Denise N. Martin et al.,
National Economic Research
Associates, Recent Trends IV: What
Explains Filings & Settlements in
Shareholder Class Actions?, (1996)... J-1
Table 12b from Denise N. Martin et al.,
National Economic Research
Associates, Recent Trends IV: What
Explains Fili & Set] na
Shareholder Class Actions?, (1996)... K-1
Defendants’ Motion Pursuant to Fed. R.
Civ. P. 52(b) and 59(e), dated April 21,
hg Te te Pee L-1l
Affidavit of Michael R. Siebecker,
executed April 21, 1997 ............ M-1
Declaration of Martin Kaminsky,
executed April 24, 1997 ............ N-1
Appendix O
Appendix P
Appendix Q
Appendix R
Appendix S
ili
Page
Declaration of Paul M. Dodyk, executed
Se ra re O-1
Declaration of Martin I. Kaminsky,
(undated, but executed on or about May
I ne a 6 ce bck ose 6 P-]
Declaration of Paul M. Dodyk, dated
Sidra wn Ph ka bao ee kao Q-1
Declaration of Matthew S. Schweber,
oo a | i es R-1
Order Denying Defendant’s Motion
Pursuant to Fed. R. Civ. P. 52(b) and
59(e), filed May 8, 1997............ S-1
Other Material filed before the United States Court
of Appeals for the Eleventh Circuit
Appendix T
Appendix U
Motion of Defendants-Appellants
Pursuant to Federal Rule of Appellate
Procedure 10(e) to Supplement the
Record on Appeal with Affidavit of
Paul M. Dodyk in Support Thereof,
dated September 9, 1998 ........... T-1
Appellants’ Reply to Appellees’
Opposition to Appellants’ Motion
Pursuant to Federal Rule of Appellate
Procedure 10(e) to Supplement the
Record on Appeal, dated
september 23, 1996 ...........05.. U-1
Appendix V
Appendix W
Appendix X
iv
Order Granting in part and Denying in
Part Appellants’ Motion to Supplement
the Record on Appeal, and Granting
Appellees’ Motions to Strike Portions
of Appellants’ Brief and for Extension
of Time, filed October 6, 1998 ....... V-1
Brief for Defendants-Appellants, dated
October 16, 1998 (filed in the United
States Court of Appeals for the Eleventh
RM ci cca uree esac abana eae ake W-1
Reply Brief for Defendants-Appellants,
dated November 6, 1998 (filed in the
United States Court of Appeals for the
OWEN CHIONEE) .. cece cciveses X-]
APPENDIX A
Opinion of the United States Court of Appeals for
the Eleventh Circuit, filed September 30, 1999
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A-1
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
No. 97-5074
D.C. Docket No. 90-6863-CV-UUB
WILLIAM WATERS, LINDA BARTHOLOMEW,
individually, and on behalf of all those similarly situated,
Plaintiffs-Appellees,
versus
INTERNATIONAL PRECIOUS METALS
CORPORATION, MULTIVEST, INCORPORATED, et. al.,
Defendants-Appellants.
Appeal from the United States District Court
for the Southern District of Florida
(September 30, 1999)
Before TJOFLAT and BIRCH, Circuit Judges, and BRIGHT,
Senior Circuit Judge.
* Honorable Myron H. Bright, Senior U.S. Circuit Judge for the
Eighth Circuit, sitting by designation.
BIRCH, Circuit Judge:
In this class action, customers of the commodity futures
brokerage firm, MultiVest Options, Inc. (“MOI”), brought suit
against the firm and its brokers and alleged that the defendants
engaged in a scheme to defraud customers by soliciting and
stimulating excessive trading in commodities options. James
Grosfeld, as owner of MOI’s parent company, MultiVest, Inc.,
is the primary defendant in the case, as MultiVest, Inc. is
substantially insolvent.
After seven years of extremely contentious litigation and
five months of trial, the parties agreed to a settlement prior to
the scheduled date of closing arguments to the jury.! The
settlement created a $40 million fund to pay claims of class
members and the fees and expenses of the plaintiffs’ attorneys.
The fund was “reversionary,” meaning that any unclaimed
amounts would revert to defendant Grosfeld, the sole source of
funding for the settlement. Defendants now argue that (1) the
district court’s award of $13.3 million in fees to the plaintiffs’
attorneys was an abuse of discretion, (2) they are not prohibited
from challenging the fee award even though the settlement
agreement contained a “clear sailing” provision whereby
defendants agreed not to challenge the fee award application,
(3) the district court’s order finding that plaintiffs’ counsel’s
fee award is assignable is reversible error, and (4) the district
court’s approval of plaintiffs’ attorneys’ expense request was
an abuse of discretion. We address each of these issues in turn.
I. FEE AWARD
On the eve of closing arguments, the parties reached a
settlement stipulation and presented the agreement to the
district court. In pertinent part, the settlement provided that
defendant Grosfeld would provide the money to fund a
settlement of $40 million with which to satisfy the claims of the
! The merits of the underlying class action, notwithstanding the energy
devoted to those topics by counsel, are not at issue in this appeal.
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plaintiff class. The fund would consist in part of cash payments
and in part promissory notes. In addition, the stipulation
provided that any money not claimed by the plaintiff class or
used to pay out fees and expenses would revert to defendant
Grosfeld. See R31-1371, § 6.2(e), at 43.
The stipulation also provided that plaintiffs’ class counsel
would apply for attorneys’ fees “in an amount not to exceed
33-1/3% of the Settlement Fund plus their costs and expenses.”
Id., § 7.1, at 54-55.* Finally, the stipulation included a
“clear-sailing” agreement which provided that “Defendants will
not directly or indirectly oppose Plaintiff's Class Counsel of
Record’s application for fees and expenses or compensation of
the Representative Plaintiffs.” Jd. at 55.> The district court
conducted numerous hearings and conferences among the
parties on the provisions of the settlement agreement. On
January 31, 1997, the district court held a hearing in open court
on the pending motion for preliminary approval of the
stipulation of settlement. The court gave preliminary approval
and dismissed the jury. The final fairness hearing was held on
March 31, 1997. The district court approved the settlement and
awarded plaintiffs’ class counsel $13.3 million in attorneys’
fees. See R132-1518-94. The court postponed consideration of
2 Under the agreement, “settlement fund” is defined as “the sum of the
cash and aggregate initial principal amount of the Master Promissory Note
to be delivered to the Settlement Administrator pursuant to § 2.2 of this
Stipulation.” R31-1371, § 1.36, at 15. Section 2.2 provides: “Defendants
shall cause James Grosfeld to deposit the Settlement Fund in the amount of
$40,000,000 by delivery actually made to the Settlement Administrator,
contemporaneously with the entry of an order by the United States District
Court for the Southern District of Florida preliminarily approving this
Stipulation.” Jd., § 2.2, at 17.
3 Such agreements are sometimes included in class action settlements
so that defendants have a more definite idea of their total exposure. See
Weinberger v. Great N. Nekoosa Corp., 925 F.2d 518, 520 n. 1 (lst
Cir.1991) (“In general, a clear sailing agreement is one where the party
paying the fee agrees not to contest the amount to be awarded by the
fee-settling court so long as the award falls beneath a negotiated ceiling.”).
A-4
expenses and asked the plaintiffs’ counsel to provide additional
documentation. After two additional conferences on April 25
and April 28, 1997, the district court awarded plaintiffs’ class
counsel $2,400,204 in expenses. See R35-1543-2.
We review a district court’s award of attorneys’ fees for
abuse of discretion. Camden 1 Condominium Assoc., Inc. v.
Dunkle, 946 F.2d 768, 770 (11th Cir.1991). The district court
“has great latitude in formulating attorney’s fees awards subject
only to the necessity of explaining its reasoning so that we can
undertake our review.” McKenzie v. Cooper, Levins & Pastko,
Inc., 990 F.2d 1183, 1184 (11th Cir. 1993) (internal quotation
omitted).
By definition . . . under the abuse of discretion
standard of review there will be occasions in which
we affirm the district court even though we would
have gone the other way had it been our call. That is
how an abuse of discretion standard differs from a de
novo standard of review. As we have stated
previously, the abuse of discretion standard allows a
range of choice for the district court, so long as that
choice does not constitute a clear error of judgment.
Purcell v. BankAtlantic Fin. Corp., 85 F.3d 1508, 1513
(11th Cir. 1996) (citation omitted).
In considering a fee award in the class action context, the
district court has a significant supervisory role. Federal Rule of
Civil Procedure 23(e) mandates that a “class action shall not be
dismissed or compromised without the approval of the court.”
See also Evans v. Jeff D., 475 U.S. 717, 726, 106 S.Ct. 1531,
1537, 89 L.Ed.2d 747 (1986) (“Rule 23(e) wisely requires court
approval of the terms of any settlement of a class action.”).
Upon reviewing the voluminous record in this case, we find no
A-5
abuse of discretion by the district court and affirm the award of
attorneys’ fees.*
On March 31, 1997, the district court presided over a
fairness hearing concerning the proposed Settlement
Agreement. At that hearing, after noting the objections raised
by the defendants, the district court proceeded to discuss the
attorneys’ fee award with reference to Boeing Co. v. Van
4 Because we find no abuse of discretion by the district court in its
award of fees and expenses, we need not address the ramifications of the
“clear sailing” agreement on the defendants’ ability to challenge the fee
award in this case. We note that clear sailing agreements have been the
_ subject of some controversy in the class action arena. In Malchman vy. Davis,
761 F.2d 893 (2d Cir.1985), abrogated on other grounds, Amchem Prods.,
Inc. v. Windsor, 521 U.S. 591, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997), the
court upheld an attorneys’ fee award from a settlement agreement that
contained a clear sailing clause. The writing judge noted that while the
district court judge should always be the ultimate determiner of the fee
award, “where . . . the amount of the fees is important to the party paying
them, as well as to the attorney recipient, it seems . . . that an agreement ‘not
to oppose’ an application for fees up to a point is essential to the completion
of the settlement, because the defendants want to know their total maximum
exposure and the plaintiffs do not want to be sandbagged.” /d. at 905 n. 5.
In contrast, a concurring panel member noted that clear sailing agreements
had “adverse effects” in that they take away the advantages of the
adversarial process and create the likelihood that plaintiff counsel will
negotiate away something of value to the class in order to procure the
defendant’s agreement not to challenge the fee award. /d. at 907-08
(Newman, J., concurring). Significantly, the district court here made a
factual finding that there had not been any collusion among the parties. See
R132-1518-64 (“it should be noted that the settlement plainly is not
collusive in any respect”).
Other courts have not been as suspicious of clear sailing agreements
reached after arms-length negotiations. See Skelton v. General Motors
Corp., 860 F.2d 250, 259-60 (7th Cir.1988) (noting that a settlement
agreement is a contract and when a party “accepted the benefits of the
contract . . . [hJe cannot obtain the quid of the settlement agreement and
avoid the quo of foregoing his right to appeal.”). We are satisfied that the
district court here fulfilled its Rule 23 supervisory function and decline to
address the clear sailing agreement.
A-6
Gemert, 444 U.S. 472, 100 S.Ct. 748, 62 L.Ed.2d 676 (1980)
and Camden I. See R132-1518-84-85. In Boeing, the Supreme
Court rejected petitioner’s argument that the attorneys’ fee
award could be based only on the portion of the common fund
actually claimed by class members and not from the unclaimed
portion of the fund. See Boeing, 444 U.S. at 477, 100 S.Ct. at
749. The Court found that “to claim their logically
ascertainable shares of the judgment fund, absentee class
members need prove only their membership in the injured
class. Their right to share the harvest of the lawsuit upon proof
of their identity, whether or not they exercise it, is a benefit in
the fund created by the efforts of the class representatives and
their counsel.” Jd. at 480, 100 S.Ct. at 750 (emphas\» added).
Boeing, as in the case at bar, involved the defendant’s potential
claim on undispersed portions of the fund, causing the Court to
note that Boeing’s “latent claim against unclaimed money in
the judgment fund may not defeat each class member’s
equitable obligation to share the expenses of litigation.” Jd. at
482, 100 S.Ct. at 751.
In Camden I, we held that “attorney’s fees awarded from
a common fund shall be based upon a reasonable percentage of
the fund established for the benefit of the class.” 946 F.2d at
774. We further noted that the “majority of common fund fee
awards fall between 20% to 30% of the fund.” Jd. Finally, we
directed district courts to view this range as a “benchmark”
which “may be adjusted in accordance with the individual
circumstances of each case,” using the factors set forth in
Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (Sth
Cir.1974), abrogated on other grounds, Blanchard v. Bergeron,
489 U.S. 87, 109 S.Ct. 939, 103 L.Ed.2d 67 (1989). Jd. at 775.°
> Johnson instructs that district court should consider twelve factors
in determining attorneys’ fee awards: (1) time and labor, (2) novelty and
difficulty of the questions, (3) requisite skill, (4) preclusion of other
employment, (5) customary fee, (6) fixed or contingent fee, (7) time
limitations, (8) amount involved and results obtained, (9) experience,
reputation and ability of attorneys, (10) “undesirability” of the case,
A-7
After determining that the benchmark in this case should
be 30%, see R132- 1518-87, the district court proceeded to
consider whether the benchmark should be adjusted up or down
based on the circumstances of the case as analyzed under the
twelve factors outlined in Johnson. Jd. at 86-93. The district
court concluded that all factors were either neutral or required
an upward adjustment in the benchmark percentage. /d.
Following the directives of Camden I, the district court factored
an additional upward adjustment for the time taken to reach
settlement through seven years of litigation and five months of
trial. The district court further found that the case served an
unusual public policy by highlighting the potential for “boiler
room” tactics in the commodities industry. Jd. at 94. The
district court then concluded that “class counsel is entitled to a
small upward adjustment in the benchmark of 30%, and that the
appropriate adjustment is to the percentage of the fund
requested by class counsel as its fee, that is, 33 1/3%, or
$13,333,333.” Id.
The defendants’ primary argument seems to be that the
attorneys’ fee award was based on a percentage of the total
fund rather than the actual payments made to class members.°
The district court, however, considered the possibility that the
actual payout would be less than the total fund generated for the
settlement and noted that
after seven years the number of class members
actually asserting claims will be significantly lower
than the class membership. I can also anticipate that
the number of class members who end up having
approved claims, who will actually demand payment
on their notes after five years similarly will decrease,
(11) nature and length of professional relationship with client, and
(12) award in similar cases. 488 F.2d at 717-19.
© The estimated actual payment to class members is $6,485,362.15.
See R35-1563-13.
A-8
so that the actual dollars paid out will be substantially
less than $40 million.
R132-1518-91-92.7
” Defendants’ assertion to the contrary notwithstanding, the district
court reiterated, in its denial of defendants’ motion to amend the final order
and judgment approving the settlement, that the “Court is, and was at the
time the Final Judgment was entered, well aware that there is a distinction
between the ratio of attorneys’ fee to the value of the class members’
recovery in a common fund settlement in circumstances where the entire
fund is distributed to class members asserting claims on a pro rata basis as
opposed to circumstances where, as here, the defendants were able to
successfully negotiate for a reversion of any unclaimed portion of the fund.”
R35-1544-2.
The district court also rejected defendants’ suggestions that it was
“misled” by the National Economic Research Associates (NERA) study on
class actions offered by both parties in support of the settlement agreement,
and that the NERA Study presented attorneys’ fees as a percentage of the
actual payout rather than of the total fund. The district court responded that:
[Defense counsel's argument] (1) conflicts with the position he
took earlier in the case when he was seeking the Court’s
preliminary approval of the Stipulation of Settlement that the fee
application specifically contemplated by the Stipulation of
Settlement, i.e. $13,333,333 representing 33 and one-third
percent of the $40 million Settlement Fund, was reasonable and
that its reasonableness was supported by his experience in other
class actions and consistent with the conclusions contained in the
NERA Study; (2) conflicts with the Defendants’ express
undertaking that they would not oppose Plaintiffs’ fee application
so long as it did not exceed 33 and one-third percent of the $40
million Settlement Fund; and (3) conflicts with the term
“settlement value” as used in the NERA Study, the plain meaning
of which is the gross amount of the settlement pursuant to the
Final Judgment as stated in the Final Settlement Notice to class
members. In fact, the Court's understanding of NERA’s usage of
the term “settlement value” has been confirmed to the
undersigned by Todd S. Foster, a representative of NERA who
was one of the authors of the NERA Study.
R35-1544-4.
A-9
Contrary to defendants’ assertion, no case has held that a
district court must consider only the actual payout in
determining attorneys’ fees.2 Strong v. BellSouth
Telecommunications, Inc., 137 F.3d 844 (Sth Cir.1998), does
not mandate that a district court must consider only the actual
award made to the class. Rather, Strong held that it was not an
abuse of discretion for a district court judge to consider the
actual award paid out to the class in determining whether a fee
application was reasonable. Jd. at 852-53. The Fifth Circuit, in
fact, noted that while the district court’s request for information
concerning the actual claims was “not the usual” course of
action, it was not an abuse of discretion under the
circumstances presented to the district court. Jd. at 853.
Additionally, unlike the case at bar, Strong never established a
“common fund” from which money would be drawn. See
Strong, 137 F.3d at 852 (“[NJo fund was established at all in
this case.”). In contrast, the parties here established that $40
million was the fund upon which the amount of the individual
claimants’ awards would be based. The district court here never
made a determination that this amount was illusory. Cf. id.
(finding that common fund figure was “phantom”).
8 In Goodrich v. E.F. Hutton Group, Inc., No. 8279 (Del. Ch. Feb. 2,
1996), aff'd, 681 A.2d 1039 (Del.1996), the judge, in his discretion, chose
to base the percentage of the attorney fee award on the actual payment to
claimants. Unlike the case at bar, Goodrich did not involve a situation where
each claimant had an “undisputed and mathematically ascertainable claim”
to part of the judgment. /d. at 1048. Furthermore, Goodrich emphasized that
the “award of attorneys’ fee in a common fund case is committed to the
sound discretion of the trial court.” /d. at 1050 n. 12. The court further
declined to adopt a mandatory methodology for determining attorneys’ fees.
Id. at 1050. The fact that the cases cited by the defendants emphasize that
attorneys’ fee awards are in the discretion of the district court and decline
to adopt a strict method of calculation, illustrate that whether a district court
judge considers the total fund or the actual payment will vary according to
the circumstances of each case. Here, where the district court considered
both the total fund and the possibility that the actual payment would be
substantially lower, there is no abuse of discretion.
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Moreover, in Williams v. MGM-Pathe Communications
Co., 129 F.3d 1026 (9th Cir.1997) (per curiam), a class action
reversionary fund case, the Ninth Circuit held that the “district
court abused its discretion by basing the fee on the class
members’ claims against the fund rather than on a percentage
of the entire fund or on the lodestar.” Jd. at 1027 (footnote
omitted). The court found that the attorneys’ fee award should
have been based on a percentage of the total recovery fund,
$4.5 million, even though the actual payout only totaled
approximately $10,000. Interestingly, in addressing arguments
similar to those presented by the defendants here, the court
stated that “Defendants here knew, because it was in the
settlement agreement, that the class attorneys would seek to
recover fees based on the entire $4.5 million fund. The
Defendants had some responsibility to negotiate at the outset
for a smaller settlement fund if they wished to limit the fees.”
Id? We also note, as the district court recognized, that a
9 While we fully agree that the district court has an independent
supervisory duty to assess the appropriateness of the fee award apart from
any agreement reached by plaintiff and defense counsel, see Piambino v.
Bailey, 610 F.2d 1306, 1328 (Sth Cir.1980) (“A district court is not bound
by the agreement of the parties as to the amount of attorneys’ fees.”), we
note that defense counsel’s arguments about the “exorbitant and
unprecedented fee Award,” Brief for Defendants-Appellants, at 4, are in
conflict with their earlier assertions to the district court. As the district court
noted, at the time that the settlement agreement was presented to the court,
the defense counsel fully supported, as “well within the range of
reasonable”, R132-1518-42, an award of 33 1/3% of the total settlement
fund. The district court further noted that both parties supported “a fee
award of one-third of the $40 million settlement fund, which everyone at the
time clearly understood to be approximately $13 million,” id. at 34, and
emphasized “that in these discussions both sides went to some lengths to
convince me that a settlement fund consisting of $40 million, albeit
comprised of $10 million in cash and the balance in notes, less a fee award
of one-third of the gross amount of the settlement fund and reimbursement
of counsel’s expenses, would produce an exceptional benefit to the class
members.” /d. at 35. Additionally, no class members opposed the amount of
the attorneys’ fee award. See id. at 63 (only class member to oppose portion
of settlement stipulation at fairness hearing “was just angry at the
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leading commentator on class actions has agreed that fee
awards may be based on the total available fund:
When a lump sum has been recovered for a class, that
sum represents the common fund benchmark on
which a reasonable fee will be based. When, however,
the defendant reserves the right to recapture any
unclaimed portion of the common fund after class
members have had an opportunity to make their
claims against the fund, . . . the question arises
concerning whether the benchmark common fund
amount for fee award purposes comprises only the
amount claimed by class members or that amount
potentially available to be claimed. In Boeing Co. v.
Van Gemert, the Supreme Court settled this question
by ruling that class counsel are entitled to a reasonable
fee based on the funds potentially available to be
claimed, regardless of the amount actually claimed.
Herbert B. Newberg and Alba Conte, Newberg on
Class Actions § 14.03, at 14-14 (3d ed.1992).!°
In addition to the district court’s careful consideration of
the Johnson factors and awareness that the actual claims made
reversionary clause.”).
10 See also In re Copley Pharmaceutical, Inc., | F.Supp.2d 1407
(D.Wyo.1998), where the district court approved, under Boeing, the
payment of attorneys’ fees from the gross settlement fund. “The first step in
a percentage of the fund analysis is a determination of the value of the fund.
While disputed by the parties in this case, the matter is settled by the explicit
terms of the Agreement.” /d. at 1412. The court further found that “this case
involves a settlement negotiated at arms length, rather than a judgment.
Under the terms of that settlement and its remittitur provisions, Defendant
not only knew that class counsel would seek to recover fees based on the
gross amount of the fund recovered (regardless of whether some part of that
fund was not claimed), but also agreed to a mechanism and formula by
which class counsel could do so. Thus Defendant cannot complain now that
class counsel seek to do what the settlement agreement explicitly
contemplates.” /d. at 1416.
EL
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could be less than the gross settlement fund, our conclusion that
the award is not an abuse of discretion is supported by the
following observations. Unlike many other class actions, the
total fund amount of $40 million was not illusory or
meaningless. Each class claimant benefitted from having the
total amount of the fund set at $40 million because the
individual payment was based upon a percentage of the total
fund. The amount of the total fund determined the amount of
each class member’s claim, regardless of the actual number of
claims filed. In other words, as the district court explained:
In relationship to the plan of allocation, the stipulation
of settlement provides that each class member will
recover from the net settlement fund in the same
proportion that his or her losses bore to total customer
losses. Therefore, the claim of any class member will
not reduce or increase the recovery of any other class
member except to the extent that the Court orders that
bonuses be paid to the class representatives.
R132-1518-64. Defendants’ counsel also noted that “each
claimant’s distribution does not depend on how many claims
are submitted in this case.” Jd. at 145. The total fund awarded
in the settlement, therefore, substantially and directly affected
the amount that each claimant would eventually be awarded.
The fact that there were a reduced number of claimants had no
effect at all on the amount each class member received. That
amount, rather, was determined by the total fund accrued.
Negotiating a $40 million gross settlement fund, therefore,
created a benefit on behalf of the entire class.!!
!! Defendants argue that the court should consider the policy behind
the recently-enacted Private Securities Litigation Reform Act, (“PSLRA”),
Pub.L. No. 106-67, 109 Stat. 737, 758, § 108, which specifies that
attorneys’ fee requests must be considered in light of the total benefit to
plaintiffs. We decline to apply the policy of the PSLRA because it does not
apply to actions commenced before and pending upon its effective date,
December 22, 1995. Furthermore, it is likely that the PSLRA does not apply
to commodities actions.
ee ee er ee eee
A-13
Moreover, even if we were to accept defendants’ argument
about the amount on which attorneys’ fees should be based, the
reversionary nature of the settlement necessarily would mean
that 90% of the reduction in attorneys’ fees would accrue to the
benefit of the defendant, in contrast to the mere 10% which
would accrue to the class’ interest.!2 Defense counsel’s claimed
interest in protecting the class thus, seen in this light, strains
credulity. Furthermore, while we have decided in this circuit
that a lodestar calculation is not proper in common fund cases,
we may refer to that figure for comparison. The plaintiffs’
counsel’s lodestar calculation would bring a fee of
$12,663,897. See R32-1480, at 99. The $13.3 million awarded
by the district court then would have only a modest lodestar
multiplier of 1.05%.
Finally, the abuse of discretion standard has particular
meaning in lawsuits that are as lengthy and contentious as the
case at bar. This litigation has generated 134 volumes of record.
Forty-eight witnesses testified at the trial alone. The district
court is in the unique position to evaluate the labors of both
parties in this litigation. Nothing in this opinion precludes a
district court judge in a different case from basing the
attorneys’ fee award on the actual class recovery, or on the
gross settlement figure. The factors the district court considers
will vary according to the circumstances presented in each case.
When we can discern no clear error of judgment by the court,
however, there is no abuse of discretion.
Il. EXPENSE AWARD
The defendants also challenge the district court’s award of
$2,400,204 in expenses to the plaintiffs’ class counsel.
12 Defendants calculate that the attorneys’ fees should be $3,627 ,526,
as opposed to the $13.3 million awarded by the district court. Brief of
Defendants-Appellants, at 47 & n. 17. Of the additional $9.7 million that
would accrue to the settlement fund from this calculated reduction in
attorneys’ fees, only $1,000,000 would be redistributed to the 20,000
potential claimants, while $8.7 million would revert to the defendants. /d.
A-14
R35-1543-2. Plaintiffs’ lead counsel originally requested an
expense award of $2,586,61 1.60, and co- counsel, $77,482.97,
totaling $2,664,094.57. See R132-1518-94. While observing
that Camden I did not provide guidance for determination of
expenses, the district court recognized that “there is a
requirement . . . on the part of class counsel to establish that the
costs are reasonable and necessary . . . to the prosecution of the
case.” R132-1518-96. See also In re “Agent Orange” Prod.
Liab. Litig., 611 F.Supp. 1296, 1314 (E.D.N.Y.1985), modified
on other grounds, 818 F.2d 226 (2d Cir.1987) (“Upon
submission of adequate documentation, plaintiffs’ attorneys are
entitled to reimbursement of those reasonable and necessary
out-of-pocket expenses incurred in the course of activities that
benefitted the class.”). The district court further recognized a
“responsibility to scrutinize the costs for which reimbursement
is requested in order to ensure that class counsel is not
obtaining a secret or unintended profit.” R132-1518-97.
After a March 31, 1997, hearing, the district court
determined that lead counsel for the plaintiff class had failed to
substantiate its cost application to the extent necessary for the
court to make a determination as to whether the expenses were
reasonable. From the co-counsel’s costs, the district court
disallowed “legal services” and “postal costs” and cut
reproduction costs from 25 cents to 10 cents per page. See
R132-1518-95.
At an April 25, 1997, status conference, the district court
made final expense determinations in light of plaintiffs’
counsel’s supplements to the expense request, such as
“additional computer print-outs, invoices and other documents,
as well as affidavits explaining the law firm’s billing
procedures for out-of- pocket costs, and affidavits addressing
the reasonableness of certain categories of expenses.”
R35-1542-2-3. The record reveals that the district court
eal lle! Bly RS V5. Ee
A-15
conducted an exhaustive and detailed examination of each of
plaintiff's counsel’s claimed expenses. See R133-1 535-4-16.!
We are convinced that the district court did not “rubber
stamp” the submissions of the plaintiffs’ class counsel for
expenses, but rather required more specific documentation for
costs, considered each type of expense separately, and
eventually disallowed over $200,000 of the request. Rarely do
class action litigations proceed to trial. The expense request in
this case reflects seven years of litigation and a five-month trial.
We see no abuse of discretion in the district court’s expense
award.
Ill. ASSIGNABILITY OF FEE AWARD
Under the original stipulation of settlement, plaintiffs’
class counsel was to receive the entire sum of attorneys’ fees
and expenses in cash. The district court questioned this
arrangement because the plaintiff class members were to
receive only 25% of their claim in cash and the remaining 75%
in the form of promissory notes. Responding to the district
court’s concem, plaintiffs’ class counsel agreed to accept 25%
cash and 75% in deferred obligation for their fee award. The
terms of the deferred obligation are the source of the present
controversy.
Defendants challenge the district court’s determination that
the promissory notes given to plaintiffs’ class counsel are
assignable. The stipulation of settlement provides that the
portion of attorneys’ fees “not paid in cash out of the cash
portion of the Settlement Fund will be paid by the Settlement
Administrator if, as and when the Settlement Administrator
receives payments with respect to the Master Promissory Note,
and the deferred portion of these fees and expenses will earn
13, Among many other considerations, the district court eliminated
costs for local meals, cabs, airline ticket upgrades, and other miscellaneous
travel charges, id. at 6; approved telephone charges, id. at 4; and disallowed
lobbyist fees and charges for a jury selection psychiatrist, id. at 9.
_———E
A-16
interest at the same rate and be paid at the same time as interest
is earned and paid on the Master Promissory Note.” R31-1371-
55-56. Exhibit A to the stipulation agreement, a proposed order
with respect to the class action settlement, signed by counsel
for both parties, provides that “Counsel will request that the
payment of fees and expenses out of the Settlement Fund be
made in cash to the extent available. Any fee awarded which is
not paid in cash shall be paid in the form of an obligation
having the same terms and bearing the same interest rate as the
Promissory Notes, as defined in the Stipulation.” R31-1371,
Exh. A, at 11. The stipulation provided that promissory notes
given to class claimants were freely assignable. R31-1371-20.
Under the terms of the proposed order, the deferred attorney’s
fees would be on equal terms with the class claimants’
promissory notes and, therefore, assignable. Defendants argue
that the language in the proposed order is a material alteration
of the language in the stipulation of settlement. The proposed
order, however, was attached to the stipulation agreement as an
exhibit. Under the terms of the stipulation agreement, “[a]ll of
‘ the Exhibits to the Stipulation . . . are fully incorporated herein
by this reference.” Jd. at 66, s 10.5.
Furthermore, as the district court noted, “[nJowhere in the
January 31, 1997 Order or the Stipulation of Settlement is it
specifically provided that the deferred obligation to class
counsel shall not be assignable or transferable.” R33-1515-2-3.
As a result, the more detailed language of the proposed order
does not materially alter the silence of the stipulation of
settlement. Moreover, under Florida law, in accordance with
which the settlement agreement is to be governed, “[g]enerally,
all contractual rights are assignable unless the contract prohibits
assignment, the contract involves obligations of a personal
nature, or public policy dictates against assignment.” L. V.
McClendon Kennels, Inc. v. Investment Corp., 490 So.2d 1374,
1375 (Fla. Dist. Ct. App. 1986). Since there is no language in
the stipulation of settlement or proposed order prohibiting
‘eitheaie)
sii ee RAE ROA REPRO LEC Ae Ns ae ete EE
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Pi GI AINA AE GE
A-17
assignment, we find that the district court properly determined
the notes are assignable.
IV. CONCLUSION
We find that the district court did not abuse its discretion
in awarding attorneys’ fees and expenses to plaintiffs’ class
counsel. We also affirm the district court’s order that the
portion of attorneys’ fee to be paid in promissory notes is
assignable. Nothing in this opinion should be interpreted to
minimize the importance of the active supervisory role of the
district court when reviewing class action settlements,
particularly those involving the so-called “clear sailing”
agreements. The district court here, however, did not abuse its
discretion in making an attorneys’ fee award. The court
considered, and applied, all the relevant Eleventh Circuit
precedent. Defense counsel, having reaped the benefits of their
bargain in settling the class action suit, cannot expect the court
to renegotiate on their behalf the terms of an agreement
concluded after arms-length negotiations.
AFFIRMED.
Le
APPENDIX B
Order with respect to Notice, Settlement Hearing and
Administration of Class Action Settlement, signed by
Judge Ungaro-Benages on January 31, 1997
(United States District Court for the
Southern District of Florida)
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
WILLIAM WATERS and LINDA
BARTHOLOMEW, individually
and on behalf of all those similarly
situated,
Plaintiff, | Case No. 90-6863
Civ-UNGARO-
— BENAGES
INTERNATIONAL PRECIOUS
METALS CORPORATION,
MULTIVEST, INC., et al.,
Defendants.
ORDER WITH RESPECT TO NOTICE,
SETTLEMENT HEARING AND ADMINISTRATION
OF CLASS ACTION SETTLEMENT
Upon review and consideration of the Stipulation of
Settlement dated January 17, 1997 and the exhibits annexed
thereto or incorporated therein (the “Stipulation”’), executed on
behalf of the Representative Plaintiffs, William Waters and
Linda Batholomew, (on behalf of themselves and each of the
Settlement Class Members), and Defendants International
Precious Metals Corporation, MustiVest, Inc., Multi Vest Real
Estate, Inc., S.S. Melbourne Inc., the Cypress Group, Inc., and
a certain Individual Defendant described in the Stipulation.
NOW, upon the application of Plaintiffs and the
Defendants, it is hereby ORDERED as follows:
B-2
1. The terms of the Stipulation and the Settlement and
releases provided for therein, are preliminarily approved as fair,
reasonable and adequate.
2. The definitions set forth in the Stipulation are hereby
incorporated into this Order.
3. The following class was certified, pursuant to Rule 23
of the Federal Rules of Civil Procedure on June 22, 1993. The
class represented by Plaintiffs Waters and Bartholomew (“the
Settlement Class”) consists of all persons who opened customer
accounts at MultiVest Options, Inc. (hereinafter including its
predecessor, IPMC Options, Ltd.) and traded exchange traded
options at any time during the period from June 1, 1985
through October 31, 1989, in conformity with the Court’s
Order of June 22, 1993 defining the class in this litigation and
as more particularly identified in Plaintiffs’ Updates to
Defendants’ Submissions A&B to the court’s Order of August
12, 1996. Excluded from the Settlement Class are Defendants,
members of the immediate family of any individual Defendant,
any entity in which any Defendant has or had a controlling
interest, current and former directors, officers and employees
of any of the Defendants, and the legal representatives, heirs,
successors or assigns of any such excluded person or entity;
those Persons who timely and validly requested exclusion from
the plaintiffs’ class pursuant to the “Notice of Pendency and
Settlement of Class Action” previously sent to the plaintiff
class; persons whose accounts at MultiVest options, Inc. had a
net profit; and persons who have executed valid releases of
MultiVest Options, Inc. and affiliated entities. The Settlement
Class includes the claims asserted by persons who are
otherwise Settlement Class Members who _.cd claims in the
Commodities Futures Trading Commission Receivership for
MultiVest Options, Inc.
4. The Defendants shall, at their expense, furnish to the
Settlement Administrator the names and addresses of all readily
identifiable Settlement Class Members as of the date of this
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B-3
order. The Settlement Administrator or his duly designated
representative shall cause notice of the Stipulation and the
Settlement Hearing to be given to Settlement Class Members
as follows:
(a) Acopy of the Notice of Proposed Settlement of Class
Action, Settlement Hearing, and Right to Appear (the
“Notice”), substantially in the form attached to the
Stipulation as Exhibit A-1, which shall incluee a
description of the general terms of the Settlement;:and
the Proof of Claim and Release, substantially inthe
form annexed hereto as Exhibit A-3, shall be mailed
by first-class mail to all Settlement Class Members
appearing on the records provided by Defendants to
the Settlement Administrator or his designee.
(b) At approximately the same time as the initial mailing
of the Notice, a copy of the Summary Notice
substantially in the form annexed to the Stipulation as
Exhibit A-2 shall be published once in the national
editions of the New York Times, The Wall Street
Journal and USA Today.
5. The Settlement Administrator shall pay the costs and
expenses reasonably incurred in connection with providing
notice to the Settlement Class, soliciting the filing of Proof of
Claim and Release forms, locating members of the Settlement
Class including forwarding addresses to the extent reasonably
obtainable, administering and distributing the Settlement Fund
to Authorized Claimants, processing Proof of Claim and
Release forms and paying escrow fees and costs if any out of
the Settlement Fund. The Settlement Administrator may
contract with an outside service provider to obtain these
Services.
6. The Settlement Administrator shall be permitted to
withdraw funds from the Settlement Fund to pay any costs
described above in paragraph 5 without prior approval of the
Court or any of the other signatories to the Stipulation.
B-4
7. At or prior to the hearing described in paragraph 14,
the Settlement Administrator shall cause to be filed with the
Clerk of the Court proof of mailing and publication of the
Notice and Summary Notice, respectively, in conformity with
this Order.
8. The Court approves the form of Notice, Proof of
Claim and Release and Summary Notice and finds that the
Notice is in compliance with provisions set forth paragraph 4
above, is hereby found to be the best notice practicable under
the circumstances, and constitutes due and sufficient notice of
the Settlement Hearing and proposed Settlement to all persons
affected by and/or entitled to participate in the Settlement, in
full compliance with the notice requirements of Rule 23 of the
Federal Rules of Civil Procedure.
9. The Settlement Administrator shall lease and maintain
a post office box of adequate size for the return of Proofs of
Claim and Release. All Notices to the Classes shall designate
said post office box as the return address for Proofs of Claim
and Release. The Settlement Administrator shall be
responsible for the receipt of all responses from the Settlement
Class Members and shall preserve all entries of appearance,
Proofs of Claim and Release, and any and all other written
communications from the Settlement Class Members, or any
other person in response to said notice for one year after the
distribution to Settlement Class Members. All written
communications received from the Settlement Class Members
and all written responses to inquires by the Settlement Class
members relating to this Stipulation and Settlement shall be
available at all reasonable times for inspection and copying by
Plaintiffs’ Settlement Counsel and counsel for the Defendants,
subject to further order of the Court if issues of privilege or
confidentiality arise.
10. (a) The Defendants and the Settlement Administrator
agree to treat the Settlement Fund so being at all times a
“qualified settlement fund” within the meaning of Treas. Reg.
B-5
Section 1.468B-1. In addition, the Settlement Administrator
and, as required, the defendants shall jointly and timely make
such elections as necessary or advisable to carry out the
provisions of this § 11, including the “relation-back election”
(as defined in Treas. Reg. Section 1.468B-1) back to the
earliest permitted date. Such elections shall be made in
compliance with the procedure and requirements contained in
such regulations. It shall be the responsibility of the Settlement
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.
(b) For the purpose of Section 468B of the Internal
Revenue Code of 1986, as amended, and the regulations
promulgated thereunder, the “administrator” shall be the
Settlement Administrator. The Settlement Administrator shall
timely and properly file all informational and other tax returns
necessary or advisable with respect to the Settlement Fund
(including without limitation the returns described in Treas.
Reg. Section 1.468B-2(K). Such returns (as well as the
election described in §10(a) shall be consistent with this §10
and in all events shall reflect that all taxes (including any
interest or penalties) on the income earned by the Settlement
Fund shall be paid out of the Settlement Fund as provided in
§10(c) hereof.
(c) All (a) taxes (including any 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
the Defendants 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
(b) expenses and costs incurred in connection with the
operation and implementation of this § 10 (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 § 10) (“Tax
B-6
Expenses”), shall be paid out of the Settlement Fund. The
Settlement Administrator shall indemnify and hold Defendants
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 Settlement
Administrator out of the Settlement Fund without prior order
from the Court and the Settlement 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 Treas.
Reg. Section 1.468B-2(1)(2)). The parties hereto agree to
cooperate with the Settlement Administrator, each other, and
their tax attorneys and accountants to the extent reasonably
necessary to carry out all of the foregoing provisions.
11. In order to be deemed an Authorized Claimant entitled
to participate in the Net Settlement Funds, in the event the
Settlement is effected in accordance with all of the terms and
conditions thereof, Settlement Class Members shall take the
following actions and be subject to the following conditions:
(a) A properly executed and verified Proof of Claim
and Release must be submitted at the post office box
indicated in the Notice and in the manner described in the
Notice on or before April 16, 1997, together with all of the
Settlement Class Member’s Monthly Statements from
MultiVest Options Inc. (hereinafter including its
predecessor, IPMC Options, Ltd.) Upon demand by a
Claimant, the Settlement Administrator shall provide
copies of the Claimant’s Monthly Statements from
MultiVest Options Inc. The provisions of such
information shall not relieve Claimants of their obligation
to submit a properly completed Proof of Claim and
Release together with their Monthly Statements. Class
iD ites tia rt eas ee
B-7
Members may request copies of their Monthly Statements
from the Settlement Administrator and shall be subject to
a total charge of $50 for the Settlement Administrator
providing such statements which charge shall be deducted
from any distribution. Proofs of Claim and Release sent
by mail shall be deemed submitted when postmarked if
mailed by first class, registered or certified mail, postage
prepaid, addressed in accordance with the instructions in
the Proof of Claim and Release form. All other Proofs of
Claim and Release shall be deemed submitted at the time
of actual receipt. Every Settlement Class Member who
files a Proof of Claim and Release shall thereby submit
himself or herself or itself to the jurisdiction of the Court.
The Settlement Administrator shall review all timely
submitted Proofs of Claim and Release and Monthly
Statements and make such corrections to the Proofs of
Claim and Releases as may be required to ensure they
accurately reflect the information contained in such
Claimant’s Monthly Statements.
(b) As part of each Claimant’s Proof of Claim and
Release, each Claimant shall (subject to effectuation of the
Settlement) release all claims as provided in the
Stipulation. however, failure to file this Release shall not
affect the validity of the Release set forth in the
Stipulation, or that will be incorporated into the Court’s
Final Order and Judgment, which shall bind all Settlement
Class Members except those who have heretofore been
excluded by timely filing a Request for Exclusion.
(c) Any Settlement Class Member who does not
timely file a Proof of Claim and Release, unless otherwise
ordered by the Court, shall not be entitled to any share in
the Settlement Fund, but shall nonetheless be bound by the
Court’s judgment in this matter and enjoined from
asserting any of the claims asserted in, or that could have
been asserted in, the Litigation unless they have heretofore
properly excluded themselves from the plaintiff class.
B-8
12. Plaintiffs’ Settlement Counsel and Plaintiffs’ Class
Counsel of Record will apply for an award of fees and expenses
(“Fee and Expense Award”) to be considered by the Court at
the Settlement Hearing. Counsel’s fee application will not
exceed 3314% of the Settlement Fund plus expenses. Counsel
will request that the payment of fees and expenses out of the
Settlement Fund be made in cash to the extent available. Any
fee awarded which is not paid in cash shall be paid in the form
of an obligation having the same terms and bearing the same
interest rate as the Promissory Notes as defined in the
Stipulation. Defendants will not oppose plaintiffs’ counsel’s
application for a Fee and Expense Award.
13. Plaintiffs’ Settlement Counsel shall allocate the
attorneys’ fees among counsel for Representative Plaintiffs
within their discretion, in a manner which they in good faith
believe reflects the contributions of such counsel to the
prosecution and settlement of the Litigation.
14. A hearing (the “Settlement Hearing”) shall be held
before the Hon. Ursual Ungar-Benages at 9:30 a.m. on
March 31, 1997 in the United State District Court for the
Southern District of Florida, to determine whether the proposed
Settlement of the Litigation on the terms and conditions
provided for in the Stipulation are fair, reasonable and
adequate, whether the Settlement should be approved by the
Court, whether to approve counsel’s application for the Fee and
Expense Award described in paragraph 12 and whether the
Final Order and Judgment of dismissal of Litigation in the form
of Exhibit B to the Stipulation should be entered. This hearing
may be postponed, adjourned or continued by Order of the
Court without further notice to Plaintiffs and the Classes.
15. Any Settlement Class Member may appear at the
Settlement Hearing in person or by counsel, if an appearance is
filed and served as hereinafter provided, and may be heard to
the extent allowed by the Court in support of, or in opposition
to, the fairness, reasonableness and adequacy of the proposed
B-9
Settlement and, any award of attorneys’ fees and
reimbursement of expenses; provided, however, that no person
shall be heard in opposition to the proposed Settlement and, if
approved, the judgment entered thereon, or to the award of
attorneys’ fees and reimbursement of expenses, and no papers
or briefs submitted by any person shall be accepted or
considered by the Court unless, on or before March 17, 1997,
such person: (a) has filed with the Clerk of the Court a notice
of such person’s intention to appear together with a statement
that indicates the basis for such opposition along with any
supporting documentation, and (b) has served copies of such
notice, statement, and documentation together with copies of
any other papers or briefs which such person seeks to file with
the Court, either in person or by mail, upon Plaintiffs’
Settlement Counsel, John L. Cooper; Farella Braun & Martel;
235 Montgomery Street, San Francisco, CA 94104, and upon
Defendants’ Counsel, Martin I. Kaminsky, Pollack &
Kaminsky; 114 W. 47th Street, New York, NY 10036.
16. Upon consummation and approval of the Settlement
provided for in the Stipulation, the Stipulation, and each and
every term and provision thereof, shall be deemed incorporated
herein as if explicitly set forth and shall have the full force and
effect of an Order of this Court.
17. If the Settlement is terminated for any reason
whatsoever all funds in the Settlement Fund, less amounts
necessary to pay costs appropriately incurred but not yet paid,
shall be returned to Defendants within five (5) business days of
such termination as determined by the Court and, the
Settlement and all proceedings had in connection therewith
shall be without prejudice to the status quo ante rights of the
parties to the action, and all Orders issued pursuant to the
Settlement shall be vacated. In such an event, the Settlement
and all negotiations concerning it, shall not be used or referred
B-10
to for any purpose whatsoever and the litigation shall be set for
retrial before this Court as soon as practicable.
Dated: [Jan.31], 1997
APPENDIX C
Final Order and Judgment Approving Settlement,
filed April 2, 1997
(United States District Court for the
Southern District of Florida)
—_eere ere
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
WILLIAM WATERS and LINDA
BARTHOLOMEW, individually and
on behalf of all those similarly
situated,
Plaintiffs,
og CASE NO.
INTERNATIONAL PRECIOUS 90-6863
METALS CORPORATION, CIV-UNGARO-
MULTIVEST, INC., JAMES BENAGES
GROSFELD, Individually and as
Trustee of the Jason Grosfeld Trust,
MULTIVEST REAL ESTATE, INC..,
S.S. MELBOURNE, INC., and THE
CYPRESS GROUP, INC.,
Defendants.
FINAL ORDER AND JUDGMENT
APPROVING SETTLEMENT
The parties to this Litigation, having executed and filed the
Stipulation of Settlement dated as of January 17, 1997 and later
amended through January 31, 1997 (the “Stipulation”), the
definitions of which the Court incorporates by reference herein:
the Court having entered its Order thereof dated January 31,
1997, directing the notice of the proposed Settlement of the
Litigation be mailed to all members of the Settlement Class and
scheduling a hearing to determine whether the proposed
settlement including the award of attorneys’ fees, expenses and
costs should be approved as fair, reasonable and adequate; said
C-2
notice having been given, a hearing having been held on March
31, 1997, at which all interested persons were given an
opportunity to be heard; and the Court having read and
considered all submissions in connection with the proposed
settlement, and having reviewed and considered the files and
records herein, the Court finds and concludes that:
Stipulations of dismissalls with prejudice will be entered
into by all parties to this case and will be filed in the United
States District Court, Southern District of Florida in accordance
with the Stipulation.
On January 31, 1997, an Order with respect to Notice, the
Settlement Hearing and the Administration of the Class Action
was entered by this Court directing that Notice be given to the
Settlement Class of the proposed Settlement, of a hearing to
determine whether the propose:d Settlement should be approved
as fair, adequate, and reasonable, to award fees and expense
reimbursements to Plaintiffs’ Settlement Counsel and Counsel
for the representative Plaintiffs, as well as to consider any
objections thereto. Such a hearing was held, as noticed, on
March 31, 1997. Prior to the Settlement Hearing, proof of
Notice, as directed in said Order, was presented and filed.
Members of the Settlement Class were notified of their right to
appear at the hearing in support of or in opposition to the
proposed Settlement, award of fees, and reimbursement of
expenses.
The Court having heard plaintiffs’ Settlement Counsel and
counsel for the Defendants aind having reviewed all of the
submissions presented with resjpect to the proposed Settlement,
including such objections as have been asserted by members of
the Settlement Class, and the C’ourt having determined that the
Settlement is fair, adequate,, and reasonable, and having
considered the Petition of Plaiintiffs’ Settlement Counsel and
Plaintiffs’ Class Counsel of RRecord for awards of fees and
expense reimbursements, and |having reviewed the affidavits,
C-3
schedules, and exhibits submitted in support thereof and
determining that there is no just reason for delay, it is hereby
ORDERED, ADJUDGED, AND DECREED THAT:
1. The Court has subject matter jurisdiction over this
action.
2. Notice to the Settlement Class required by Rules 23(c)
and (e) of the Federal Rules of Civil Procedure has been given
in an adequate and sufficient manner, constituting the best
notice practicable, complying in all respects with such rules and
due process, including, but not limited to, the forms of notice
and the methods of identifying and giving notice to the
Settlement Class Members.
3. The Members of the Settlement Class are as described
in the Stipulation.
4. The proposed Stipulation is in all respects fair,
adequate, reasonable, and proper, and in the best interests of the
Settlement Class Members and is approved as modified by this
Order.
5. The Plan of Allocation of the Net Settlement Amount
as set forth in the Notice and Stipulation is hereby approved as
modified by this Order.
6. Plaintiffs, Settlement Class Members through
Plaintiffs’ Settkement Counsel, and Defendants shall
consummate the Settlement according to the terms of the
Stipulation as modified by this order.
7. All Settlement Class Members are permanently barred
and enjoined, absolutely and forever, from suing upon or
asserting any of the Released Claims against any of the
Defendants, either directly, individually, or in a representative
or derivative capacity, or against any of the other Related
Persons as defined in the Stipulation.
C-4
8. This Litigation is dismissed with prejudice and on the
merits as to the Defendants and without award of court costs.
Judgment dismissing the claims against the defendants shall be
entered and all Released Claims as defined in the Stipulation,
as hereby extinguished.
9. Each of the Released Persons, as defined in the
Stipulation, are discharged, dismissed, and released from and
with respect to all released Claims including Unknown Claims
as defined in the Stipulation, whether class or individual,
whether in law or equity, whether based on federal or state law,
whether based on events or actions occurring prior to or on the
Eifective Date, which representative Plaintiffs, or any members
of the Settlement Class ever had, now have, or may
hereafter have against any of the Defendants or Released
Persons.
10. Each and every Defendant is deemed to have released
and discharged each and every other Defendant of any claim by
Settlement Class Members of any claim asserted in this
Litigation, of any Defendant’s potential liability to the
Settlement Class Members, or of any claim for indemnification
or contribution or any other such claim arising out of the
aforesaid claims and each and every Defendant is hereby barred
and enjoined from suing upon or otherwise asserting any such
claim against any other Defendant.
11. Jurisdiction is hereby retained as to all matters related
to administration and consummation of the Settlement hereby
approved, the processing and allowance of claims against-
the-Settlement Fund, the distribution thereof to Settlement
Class Members and the continuing administration thereof until
the various obligations comprising the Settlement Fund are
paid in full.
12. Neither this final order and Judgment nor the
Stipulation is an admission or concession by any Defendants of
any actual or potential fault, omission, liability, or wrongdoing.
This Final Order and Judgement is not a finding of the validity
C-5
or invalidity of any claims in the Litigation or of any
wrongdoing by any of the parties. Neither this Final Order and
Judgment nor the Stipulation or the fact of Settlement, nor the
Settlement negotiations, nor any related document shall be used
as an admission of any actual or potential fault or omission by
any person or be offered or received in evidence as an
admission, concession, presumption, or inference against any
party in any proceeding or an accurate measure of damages,
other than such proceedings as may be necessary to
consummate or enforce the Stipulation except that Defendants
may file the stipulation and this Final Order and Judgement in
any action brought against them in order to support their
defense therein including, without limitation any defense or
counterclaim based on principles of res judicata, collateral
estoppel, release, good faith settlement, judgment bar or
reduction on any other theory of claim preclusion or issue
preclusion or similar defenses or counterclaims.
13. With respect to the allocation of cash and Promissory
Notes to be paid to Authorized Claimants, the Authorized
Claimants shall be paid in cash from the Net Settlement Fund
to the extent of cash from the cash portion of the Settlement
Fund remaining after the payment of expenses of the
Administrator of the Settlement Fund as described in §6.2 of
the Stipulation, including the portion of the Fee and Expense
Award which is by this order ordered to be paid in cash, with
the remaining amounts owed to each Authorized Claimant to
be paid in the form of the individual Promissory Notes
contemplated by the Stipulation.
14. Plaintiffs’ Class Counsel is hereby awarded
$13,333,333 in fees (one-third of the $40 million Settlement
Fund) and the Court further awards the law firm of Raring &
Lipoff costs in the amount of $74,404. The Court also
currently awards the law firm of Farella Braun & Martel LLP
(“FBM”) costs in the amount of $141,519. The total of this
current Fee and Expense Award (“The Fee and Expense
Award”) is therefor $13,534,256. The Fee and Expenses
C-6
Award is an obligation of the Settlement Class Members (and
not of Defendants) and is payable by the Settlement
Administrator on behalf of the Settlement Class Members out
of the Settlkement Fund. The Fee and Expense Award is
payable as follows and otherwise in accordance with the terms
of the Stipulation:
(a) The Fee and Expense Award shall be paid $5,000,000,
in cash in accordance with Section 7.2 of the Stipulation, and
the balance, as a deferred obligation of the Settlement Class
Members in accordance with Section 7.1 and the other
provisions of the Stipulation. (The deferred obligation together
with the interest thereon is referred to as the “Deferred
Amount”).
(b) The interest of any of Plaintiffs’ Settlement Counsel
and Plaintiffs’ Class Counsel in the Fee and Expense Award
and/or Deferred Amount may be pledged, hypothecated or
otherwise transferred in whole or in part, including to any one
or more heirs, successors, assigns, financial institutions or other
persons.
(c) The Settlement Administrator will pay the Deferred
Amount to the two law firms comprising Plaintiff's Class
Counsel in the ratio directed in writing by the Plaintiff's Class
Counsel or to such law firms’ respective successors and
assigns. The Settlement Administrator will directly pay each
firm’s share of the Deferred Amount by wire transfer to the
bank account or accounts designated by that recipient on the
day on which note Proceeds have been received by the
Settlement Administrator, if Note Proceeds are received by it
by 11:00 a.m. (New York City time) on a business day,
otherwise on the immediately following business day.
(d) To the extent, that the cash portion of the Settlement
Fund is not actually paid to Authorized Claimants or used to
pay expenses of the administration of the Settlement Fund as
described in §6.2 of the Stipulation, this cash portion of the
Settlement Fund and interest earned thereon will be used to
C-7
promptly pay down the Deferred Amount owed to the
Plaintiffs’ Class Counsel.
15. The amount of the Irrevocable Letter of Credit
securing the Promissory Notes and the Master Promissory Note
will not be reduced below the amount provided in the
Stipulation. The Settlement Administrator will at the times at
which the Irrevocable Letter of Credit is renewed or extended
verify that, if the issuing or renewed bank is not NBD Bank, the
bank has a long-term unsecured credit rating equal to or higher
than the credit rating of Aa3 from Moody’s Investor Services,
AA- from Standard & Poor’s Ratings Group.
16. The class representatives William Waters and Linda
Bartholomew shall each receive a bonus of $10,000 in addition
to amounts otherwise recoverable under the Stipulation. This
bonus will be payable as $2,500 in cash and $7,500 in
additional individual Promissory Notes for each of them.
17. The Settlement Administrator is ordered to promptly
mail written notice to each Settlement Class Member whose
initially mailed notice was returned undelivered to the
Settlement Administrator to the extent that new addresses are
found for those Settlement Class Members as a result of the
new addresses obtained by the Settlement Administrator from
the efforts of Credit Bureau Information Services, Inc. and
Class Action Locator Services of San Rafael, California,
advising that each such Settlement Class Member shall have
sixty (60) days from the mailing of this notice within which to
submit their Proof of Claim and Release Form to the Settlement
Administrator, notwithstanding anything to the contrary in any
prior published notice or the Proof of Claim and Release Form
or otherwise. The final date for these Settlement Class
Members to submit their proof of Claim and Release Forms is
hereby ordered extended to a date which is sixty (60) days from
the date of mailing of this notice, notwithstanding any prior
order of this Court.
C-8
Notwithstanding anything in the Stipulation. The
Settlement Administrator shall periodically submit its
reasonable fees and expenses to the Court for approval prior to
payment from the Settlement Fund.
(a) The Defendants and the Settlement Administrator
agree to treat the Settlement Fund as being at all times a
“qualified settlement fund” within the meaning of Treas. Reg.
Section 1.468B-1. In addition, the Settkement Administrator
and, as required, the Defendants shall jointly and timely make
such elections as necessary or advisable to carry out the
provisions of this section, including the “relation-back
election” (as defined in Treas. Reg. Section 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 Settlement
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.
(b) For the purpose of Section 468B of the Internal
Revenue Code of 1986, as amended, and the regulations
promulgated thereunder, the “administrator” shall be the
Settlement Administrator. The Settlement Administrator shall
timely and properly file all informational and other tax returns
necessary or advisable with respect to the Settlement Fund
(including without limitation the returns described in Treas.
Reg. Section 1.468B-2(K)). Such returns (as well as the
election described in 418(a)) shall be consistent with this
section and in all events shall reflect that all taxes (including
any interest or penalties) on the income earned by the
Settlement Fund shall be paid out of the Settlement Fund as
provided in §18(c) hereof.
(c) All (1) taxes (including any 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 the Defendants with respect to any income
C-9
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
(2) expenses and costs incurred in connection with the
operation and implementation of this §18 (including, without
limitation, expenses of tax attorneys and/or accountants and
mailing and distribution costs and expenses relating to filing (or
failing to file) and returns described in this §18) (“Tax
Expenses”), shall be paid out of the Settlement Fund. The
Settlement Administrator shall indemnify and hold Defendants
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 Settlement
Administrator out of the Settlement Fund without prior order
from the Court and the Settlement 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 Treas.
Reg. Section 1.468B-2(1)(2). The parties hereto agree to
cooperate with the Settlement Administrator, each other, and
their tax attorneys and accountants to the extent reasonably
necessary to carry out the provisions of this section.
19. In the event that the conditions to the Settlement set
forth in the Stipulation are not satisfied and this Settlement is
terminated pursuant to the terms of the Stipulation for any
reason, then this Final Order and Judgment shall, upon further
order of the Court, be rendered null and void and be vacated,
and the Stipulation of Settlement and all orders entered in
connection therewith shall be rendered null and void.
C-10
DONE and ORDERED in Chambers, at Miami, Florida
this [2] day of April, 1997.
APPENDIX D
Amendment to Final Order and Judgment
Approving Settlement, filed May 8, 1997
(United States District Court for the
Southern District of Florida)
D-1
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
WILLIAM WATERS AND LINDA
BARTHOLOMEW, individually and
on behalf of all those similarly
Situated,
Plaintiffs,
ae ; CASE NO.
INTERNATIONAL PRECIOUS 90-6863-
METALS CORPORATION, CIV-UNGARO-
MULTIVEST, INC., JAMES BENAGES
GROSFELD, individually and as :
Trustee of the Jason Grosfeld Trust,
MULTIVEST REAL ESTATE, INC..,
S.S. MELBOURNE, INC., and THE
CYPRESS GROUP, INC.,
Defendants.
AMENDMENT TO
FINAL ORDER AND JUDGMENT
APPROVING SETTLEMENT
Plaintiffs’ counsel having filed a motion to alter or amend
this Court’s “Final Order and Judgment Approving
Settlement,” dated April 2, 1997 (hereinafter “April 2, 1997
Order’’); and the Court having considered the matter and having
found good cause therefor, IT IS HEREBY ORDERED that
plaintiffs’ counsel’s motion IS GRANTED IN PART.
The Court HEREBY AMENDS the April 2, 1997 Order as
follows:
D-2
The Court hereby STRIKES from page 5 of the April 2,
1997 Order that portion of paragraph 14 that previously read as
follows:
14. Plaintiffs’ Class Counsel is hereby awarded
$13,333,333 in fees (one-third of the $40 million
Settlement Fund) and the Court further awards the law
firm of Raring & Lipoff costs in the amount of $74,404.
The Court also currently awards the law firm of Farella
Braun & Martel LLP (“FBM”) costs in the amount of
$141,519. The total of this current Fee and Expense Award
(“The Fee and Expense Award”) is therefor $13,534,256.
The Fee and Expenses Award is an obligation of the
Settlement Class Members (and not of Defendants) and is
payable by the Settlement Administrator on behalf of the
Settlement Class Members out of the Settlement Fund. The
Fee and Expense Award is payable as follows and
otherwise in accordance with the terms of the Stipulation.
In place of that one paragraph which is now stricken, the Court
SUBSTITUTES the following:
14. Plaintiffs’ Class Counsel is hereby awarded
$13,333,333 in fees (one-third of the $40 million
Settlement Fund) and the Court further awards the law
firm of Raring & Lipoff costs in the amount of $74,404.
The Court also awards the law firm of Farella Braun &
Martel LLP (“FBM”) costs in the amount of
$2,325,800.77. The total of this Fee and Expense Award
(“The Fee and Expense Award”) is_ therefor
$15,733,537.77. The Fee and Expense Award is an
obligation of the Settlement Class Members (and not of
Defendants) and is payable by the Settlement
Administrator on behalf of the Settlement Class Members
out of the Settlement Fund. The Fee and Expense Award
is payable as follows and otherwise in accordance with the
terms of the Stipulation. Other than the substitution of the
ON On ee ek pe eg er en ee eres, Ee ek ap ee ee Cee G ie eee Lee eee eee eee Te a eae
D-3
one paragraph set forth above, the Court’s April 2, 1997
Order remains unchanged and in full force and effect.
DONE and ORDERED in Chambers, at Miami, Florida,
this [8] day of May, 1997.
APPENDIX E
Order Granting in part Motion of Plaintiffs’
Class Counsel to Alter or Amend Judgment
with respect to Cost Award, signed May 8, 1997
(United States District Court for the
Southern District of Florida)
E-1]
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
WILLIAM WATERS,
LINDA BARTHOLOMEW, et al.,
Plaintiffs, CASE No.
- 90-6863-CIV-
; UNGARO-
INTERNATIONAL PRECIOUS BENAGES
METALS CORP., INC., et al.,
Defendants.
ORDER GRANTING IN PART MOTION OF
PLAINTIFFS’ CLASS COUNSEL TO ALTER
OR AMEND JUDGMENT WITH RESPECT
TO COST AWARD
THIS CAUSE is before the Court upon the Motion of
Plaintiffs’ Class Counsel to alter or Amend the Final Judgment
entered by this Court on April 2, 1997, filed April 4, 1997
(D.E. 1517) with Memorandum in Support filed April 21,
1997. The Motion requests that the Court amend the Final
Judgment to include all of the costs incurred by Plaintiffs’ class
counsel in this action which should be reimbursed to Plaintiffs’
class counsel from the Settlement Fund.
By way of background, the pending motion was
necessitated by the Court’s ruling at the Fairness Hearing on
March 31, 1997 that Farella, Braun and Martel, lead counsel for
the plaintiff class, had failed to substantiate its cost application
to an extent that the undersigned was unable to make an
informed judgment respecting whether most of the amounts
claimed were reasonable and appropriately reimbursable from
the Settlement Fund. Thus, of the $2,571,611 requested by the
E-2
—_—
Farella, Braun & Martel at the Fairness Hearing, the Court
directed that the Final Judgment only award the following
costs:
Witness Fees: $ 3,020.13
Service of Process: 1,383.26
Special Master Fees: 86,503.88
Rental & Storage Costs: 15,611.80
Court Reporter Costs: 20,000.00
Total: $126,519.07
The Court also stated at the Fairness Hearing that it was
awarding an additional $15,000 to class counsel against costs
incurred since entry of the order giving preliminary approval to
the settlement. However, due to a typographical error in the
Final Judgment, which was entered on April 2, 1997, the
$15,000 awarded for future expenses was omitted. The
undersigned also notes that at the Fairness Hearing she awarded
$74,404.00 for costs incurred by the law firm of Raring &
Lipoff, co-counsel for the plaintiff class.
At the Fairness Hearing, the undersigned also invited
Farella, Braun and Martel to file a timely motion to amend the
Final Judgment to seek reimbursement of the balance of the
costs with adequate supporting documentation. Accordingly, on
April 21, 1997 Farella, Braun and Martel filed the pending
motion to amend and supplemented the back-up for its original
costs application with additional computer print-outs, invoices
and other documents, as well as affidavits explaining the law
firm’s billing procedures for out-of-pocket costs, and affidavits
addressing the reasonableness of certain categories of
expenses. 4 In addition, Farella, Braun and Martel requested,
14 Plaintiffs’ counsel also pointed out the typographical error in the
Final Judgment Order with respect to the amount of costs awarded to the
Farella, Braun and Martel firm.
E-3
as part of the motion to amend, that the Court award additional
costs which the firm had incurred since the Fairness Hearing.
These additional costs were supported by the affidavit of Judy
Craig and further back-up documentation.
The Court held a hearing on Plaintiffs’ motion to amend on
April 25, 1997. For the reasons stated on the record at the
April 25, 1997 hearing on the motion to amend, the
undersigned was satisfied that the cost application, as amended,
had been substantiated to the degree necessary to allow the
Court to assess the reasonableness of the amounts requested,
with respect to all categories of costs other than the fees and
costs of Zuckerman Spaeder, Plaintiffs’ local counsel. Further,
as explained at the hearing, the undersigned, after reviewing the
request for additional costs, was also able to determine the
extent to which the additional costs should be reimbursed,
subject to certain adjustments which the Court ordered class
counsel to make. Therefore, of the total costs of $2,816,636
then requested by the Farella, Braun & Martel over and above
the $126,519 previously awarded to the firm in the Final
Judgment, the undersigned ruled that the reasonable,
reimbursable costs consisted of the following:
Telephone: $33,392.69
Duplicating: ; 304,342.08
Microfilm: - 47,784.09
Facsimile: 39,724.11
Court Reporter!>: 180,434.21
Computerized Research: 307,209.97
Postage/Delivery Charges: 90,294.61
15 The Court notes that this amount is over and above the $20,000
previously awarded for expenses related to Court Reporter services in the
April 2 Order. The Court also notes that class counsel has pointed out an
error in the transcript of the April 25, 1997 hearing which states that the
Court was awarding a total of $204,434.21 in expenses related to court
Reporter services. The correct amount should have been $200,434.21.
E-4
Travel: 274,820.56
Secretarial Word Processing: 148,613.21
Supplies: 39,561.29
iscel ; 7,473.29
Document Imaging'®: 6,410.85
Expert Witness & Consultant
Fees: 385,262.32
Fees to Local Counsel: 23,427.02
Other Attorneys: 19,606.01
Mediator: 8,695.43
Other Consultants and
Investigators: 160,510.43
Miscellaneous Charges: 411.30
osts Inc ized since
2/21/97!7: 63,633.82
Total: 2,141,607.29
'6 The Court notes that at the April 25 Hearing on the Motion to
Amend, the Court inadvertently failed to mention the amount of the
document imaging costs, although the Court informed the parties that the
total amount requested for such costs was reasonable.
17 This amount includes those costs detailed in the Affidavit of Judy
Craig submitted as part of the April 21 Memorandum in Support of the
Motion to Amend. Although class counsel initially requested $72,018.49,
class counsel subsequently backed out that the portion related to these types
of costs previously disallowed by the Court. The Court points out that class
counsel has also requested an additional $11,721.67 incurred or realized
subsequent to the filing of Ms. Craig’s Affidavit and detailed in the
declaration of Paul B. Duncan accompanying Plaintiffs’ May 1, 1997 Notice
of Filing Proposed Orders. The Court declines to award these costs, and the
Court will not entertain further applications for future costs. This litigation
must eventually come to an end.
E-5
As to the fees and costs of Zuckerman Spaeder, the
undersigned allowed Farella, Braun and Martel to submit
additional supporting documentation by the close of the hearing
on the motion to amend. Thereafter, Farella, Braun and Martel
timely submitted copies of the invoices which it had received
from Zuckerman Spaeder and paid during the pendency of the
litigation. Then, on April 28, 1997, after considering the
invoices, the undersigned held a telephone conference with
counsel for the parties and explained that she was satisfied that
the costs incurred at Zuckerman Spaeder were adequately
supported and reasonable, but that she would not reimburse the
Zuckerman Spaeder fees as an item of out-of-pocket costs. As
found by the Court, the reasonable reimbursable costs incurred
at the Zuckerman Spaeder firm were $57,674.41.!8
Therefore, based on the foregoing and for the reasons
stated on the record at the March 31, 1997 Fairness Hearing,
the April 25, 1997 hearing on the motion to amend, and the
April 28, 1997 telephone conference, and being otherwise fully
advised in the premises, the undersigned finds that the Motion
To Alter Or Amend Final Judgment With Respect To Cost
Award should be granted in part and denied in part,!? and that
it should be amended to reflect that the total reasonable,
reimbursable costs incurred by the Farella, Braun & Martel law
firm as class counsel are $2,325,800.77.7°
Accordingly, it is hereby
18 The Court disallowed further amounts requested for the use of
Zuckerman Spaeder’s office space.
19 The motion is denied in part because the Court has disallowed
reimbursement of costs claimed by Farella, Braun and Martel in the amount
of $480,835.23 for the reasons stated on the record during the hearings
referred to in this Order.
20 The total consists of $126,519.07 awarded in the April 2, 1997
Final Judgment Order, $2,141,607.29 awarded at the April 21, 1997 hearing
on the motion to amend, and $57,674.41 awarded during the April 28, 1997
telephone conference.
E-6
ORDERED AND ADJUDGED that the Motion of
Plaintiffs’ Class counsel to Alter or Amend the Final Judgment
entered by this Court on April 2, 1997 is GRANTED IN PART
as set forth above. It is further
ORDERED AND ADJUDGED that the total reasonable,
reimbursable costs incurred by Farella, Braun & Martel, as lead
class counsel, is $2,325,800.77. It is further
ORDERED AND ADJUDGED that the Final Judgment
entered by this Court on April 2, 1997 shall be amended
consistent with the Court’s findings herein by separate Order
issued concurrently herewith.
DONE AND ORDERED in Chambers at Miami, Florida,
this [8] day of May, 1997.
Order denying Petition for Panel Rehearing
and Petition for Rehearing en banc,
filed December 23, 1999
F-]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
No. 97-5074
WILLIAM WATERS,
LINDA BARTHOLOMEW,
individually, and on behalf of
all those similarly situated,
Plaintiffs-Appellees,
versus
INTERNATIONAL PRECIOUS METALS
CORPORATION, MULTIVEST, INCORPORATED, et al.
Defendants-Appellants.
>
On Appeal from the United States District Court for the
Southern District of Florida
TION
PETI AN
(Opinion ,1lthCir.,19_,
F.2d _).
Before: TJOFLAT and BIRCH, Circuit Judges, and BRIGHT™*,
Senior Circuit Judge.
PER CURIAM:
The Petition(s) for Rehearing are DENIED and no member of
this panel nor other Judge in regular active service on the Court
having requested that the Court be polled on rehearing en banc
F-2
(Rule 35, Federal Rules of Appellate Procedure; Eleventh
Circuit Rule 35-5), the Petition(s) for Rehearing En Banc are
DENIED.
ENTERED FOR THE COURT:
UNITED STATES CIRCUIT JUDGE
*Honorable Myron H. Bright, Senior U.S. Circuit Judge for the
Eighth Circuit, sitting by designation. '
APPENDIX G
Stipulation of Settlement,
dated January 17, 1997
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
WILLIAM WATERS AND LINDA
BARTHOLOMEW, individually and
on behalf of all those similarly
situated,
Plaintiffs, | Case No. 90-6863-
-against- CIV-UNGARO-
INTERNATIONAL PRECIOUS BENAGES
METALS CORPORATION,
MULTIVEST, INC., JAMES
GROSFELD, Individually and as STIPULATION
Trustee of the Jason Grosfeld Trust, OF
MULTIVEST REAL ESTATE, INC., SETTLEMENT
S. S. MELBOURNE, INC., and THE
CYPRESS GROUP, INC.,
Defendant.
STIPULATION OF SETTLEMENT
PREAMBLE
This Stipulation of Settlement (the “Stipulation”), dated as
of January 17, 1997, and as amended and restated pursuant to
the amendment to the Stipulation of Settlement pursuant to
§ 10.6 of this Stipulation (attached as Exhibit C), and the
Second Amendment of Stipulation of Settlement (attached
hereto as Exhibit D), is made and entered into by and among
the following parties to the above-entitled Litigation: (i) The
Representative Plaintiffs (on behalf of themselves and each of
the Settlement Class Members), by and through their counsel
of record in the Litigation; and (ii) Defendants International
Precious Metals Corporation, MultiVest, Inc., and James
G-2
Grosfeld, Individually (the “Individual Defendant”) and as
Trustee of the Jason Grosfeld Trust, MultiVest Real Estate,
Inc., S. S. Melbourne, Inc. and The Cypress Group, Inc. The
Stipulation is intended by the Settling Parties to fully, finally
and forever resolve, discharge and settle the Released Claims
(as defined herein), and to dismiss with prejudice and without
costs this Litigation and the Conveyance Litigation, upon and
subject to the terms and conditions hereof.
THE LITIGATION
1. The action of William Waters and Linda
Bartholomew vy. International Precious Metals Corp., et al.,
No. 90-6863 is currently in trial in the United States District
Court of the Southern District of Florida before The Honorable
Ursula Ungaro-Benages (the “Court”). In April 1990, Plaintiffs
filed a complaint in the United States District Court for the
Northern District of California. On October 17, 1990, this case
was transferred to the Southern District of Florida.
2. Plaintiffs allege that Defendants violated Section 4c(b)
and 22 of the Commodity Exchange Act (“CEA”), as amended,
7 U.S.C. §§ 6c(b) and 25, and rules and regulations
promulgated thereunder, the Racketeer Influenced and Corrupt
Organizations Act (“RICO”), 18 U.S.C §§ 1961 et. seq., and
provisions of the Florida Securities and Investor Protection Act,
Fla. Stat. §§ 517.211, 517.301 and 517.312. Plaintiffs further
allege common law claims for fraud, aiding and abetting breach
of fiduciary duty, inducing breach of contract, negligent
misrepresentation, and constructive fraud. One count of the
complaint alleges violations of the Uniform Fraudulent
Transfer Act, Fla. Stat. §§ 726.101, et. seq.
3. James Grosfeld is sued individually and as trustee of
the Jason Grosfeld Trust, a trust set up for the benefit of
Grosfeld’s minor son and of which Grosfeld serves as trustee.
MultiVest, Inc. was, at all relevant times, owned 100% by
Grosfeld and his son’s trust. MultiVest Options, Inc. was a
wholly owned subsidiary of MultiVest, Inc. Also named as
G-3
Defendants are MultiVest Real Estate, Inc., S.S. Melbourne,
Inc., and the Cypress Group, Inc., who are named solely with
respect to certain claims alleging fraudulent transfers.
4. The plaintiff class was certified by order of the Court
pursuant to Rule 23 of the Federal Rules of Civil Procedure on
June 22, 1993.
5. The Defendants have denied and continue to deny
each of the claims and contentions alleged by the
Representative Plaintiffs in the Litigation. The Defendants
have denied and continue to deny all charges of wrongdoing or
liability against them arising out of any of the conduct,
statements, acts or omissions alleged, or that could have been
alleged, in the Litigation. The Defendants also have denied and
continue to deny, inter alia, the allegations that the
Representative Plaintiffs or the Settlement Class Members have
suffered damage, or that the Representative Plaintiffs or the
_ Settlement Class Members were harmed by the
misrepresentations, omissions and other wrongful conduct
alleged in the Complaint. Defendants believe that the evidence
introduced to date at the trial does not support Plaintiffs’
claims. Defendants also believe that they have other defenses
sufficient to defeat plaintiffs’ claims and that the District Court
has entered erroneous rulings which render any verdict
reversible on appeal.
6. Nonetheless, the Defendants have concluded that the
further conduct of the Litigation and current trial would be
protracted and expensive, and that it is desirable that the
Litigation be fully and finally settled in the manner and upon
the terms and conditions set forth in this Stipulation in order to
limit further expense, inconvenience and distraction, and to
dispose of burdensome and protracted litigation.
7. Plaintiffs’ Class Counsel of Record believe that the
claims asserted in the Litigation have merit and that the
evidence developed and presented in trial to date supports the
claims asserted. However, Plaintiffs’ Class Counsel of Record
G-4
recognize the expense and length of continued proceedings
necessary to prosecute the Litigation against the Defendants
through trial and potential appeals. Plaintiffs’ Class Counsel of
Record also have taken into account the uncertainty regarding
the eventual outcome and the risk of any litigation, especially
in complex actions such as this Litigation, as well as the
difficulties and delays inherent in such litigation. Plaintiffs’
Class Counsel of Record also are mindful of the inherent
problems of proof under and possible defenses to the federal
commodities law violations and other claims asserted in the
Complaint. Plaintiffs, Class Counsel of Record believe that the
settlement set forth in the Stipulation confers substantial
benefits upon the Settlement Class and each of the Settlement
Class Members. Based on their evaluation, Plaintiffs’ Class
Counsel of Record have determined that the Settlement
Agreement set forth in the Stipulation is in the best interests of
the Representative Plaintiffs and the Settlement Class and each
of the Settlement Class Members.
TERMS OF STIPULATION AND AGREEMENT
OF SETTLEMENT
NOW, THEREFORE, IT IS HEREBY STIPULATED
AND AGREED by and among the Representative Plaintiffs
(for themselves and the Settlement Class Members) and
Defendants (as defined in § 1.5) by and through their respective
counsel or attorneys of record that, subject to the approval of
the Court, this Litigation and the Released Claims and the
Conveyance Litigation, and all claims which were or could
have been seen asserted therein shall be finally and fully
compromised, settled and released, and this Litigation and the
Conveyance Litigation, shall be dismissed with prejudice, as to
all Settling Parties, upon and subject to the terms and
conditions of the Stipulation, as follows:
1. Definitions
As used in the Stipulation the following terms have the
means specified below:
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1.1 “Authorized Claimant” means any Settlement Class
Member whose claim for recovery has been allowed pursuant
to the terms of the Stipulation.
1.2 “Authorized Claim” means the claim of an Authorized
Claimant which has been allowed pursuant to the terms of the
Stipulation.
1.3 “Claimant” means any Settlement Class Member who
files a Proof of Claim and Release.
1.4 “Conveyance Litigation” means all actions, claims and
proceedings which were asserted in, could have been asserted
in or relate to William Waters v. James & Nancy Grosfeld, Case
No. 95-73108 filed in the United States District Court for the
Eastern District of Michigan.
1.5 “Defendants” means James Grosfeld, individually and
as Trustee of the Jason Grosfeld Trust; International Precious
Metals Corp., MultiVest, Inc., MultiVest Real Estate Inc., S.S.
Melbourne Inc. and The Cypress Group Inc.
1.6 “Distribution Date” means the tenth business day
following the date on which the Court enters its order
approving or modifying the Settlement Administrator’s Initial
Distribution Report as provided in Section 6.3(b).
1.7 “Document Letter” means that certain letter of
understanding executed by Plaintiffs’ Settlement Counsel and
counsel for Defendants dated January [17], 1997 which
describes in its text and exhibits the terms of certain documents
related to this Stipulation, including the Master Promissory
Note, the Promissory Notes, the Note Administration and
Pledge Agreement and the Representations and Warranties.
1.8 “Effective Date” means the first date by which all of
the events and conditions specified in § 8.2 of the Stipulation
have been met and have occurred.
1.9 “Execution Date” means the date on which the last of
the signatures required to form the agreement embodied in this
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Stipulation are affixed as provided in § 10.10 of this
Stipulation.
1.10 “Exhibits” means the exhibits to this Stipulation
which are incorporated by reference; namely, “Exhibit A: Order
with Respect to Notice, Settlement Hearing and Administration
of Class Action Settlement” (the “Hearing Order”); Exhibit A-
1: Notice of Proposed Settlement of Class Action, Settlement
Hearing and Right to Appear; Exhibit A-2: Summary Notice;
Exhibit A-3: Proof of Claim and Release; and Exhibit B: Final
Order and Judgment approving Settlement (“Final Order”);
Exhibit C: Settlement Class listed on Plaintiffs’ Update of
Defendants’ Submission “A” incompliance with the Court’s
August 12, 1996 Order; Exhibit D: Settlement Class Roster as
Plaintiffs’ Update of Defendants’ Submission B in Compliance
with the Court’s August 12, 1996 Order.
1.11 “Final” means: (i) the date of final affirmance on
an appeal of the Judgment, the expiration of the time for a
petition for a writ of certiorari to review the Judgment and, if
certiorari be granted, the date of final affirmance of the
Judgment following review pursuant to that grant; or (11) the
date of final dismissal of any appeal from the Judgment or the
final dismissal of any proceeding on certiorari to review the
Judgment; or (111) if no appeal is filed, the expiration date of the
time for the filing or noticing of any appeal from the Court’s
Final Order and Judgment approving the Stipulation
substantially in the form of Exhibit “B” hereto, all as
determined under the Federal Rules of Civil Procedure. Any
proceeding, order, appeal or petition for a writ of certiorari
pertaining solely to an application for attorneys’ fees, costs or
expenses, shall not in any way delay or preclude the Judgment
from becoming final.
1.12 “Hearing Notice” means the Notice to be mailed
to Settlement Class Members as provided in § 4.1(b),
substantially in the form appended hereto as Exhibit A-1.
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1.13 “Final Order and Judgment” means the judgment
to be rendered by the Court, substantially in the form attached
hereto as Exhibit B.
1.14 “Irrevocable Letter of Credit” means a letter of
credit as described in § 2.3(a) hereof.
1.15 “Litigation” means all actions, claims and
proceedings which were asserted in, could have been asserted
in or relate to Waters and Bartholomew v. Int’ Precious Metals
Corp., et al., Case No. 90-6863 which is in trial in the United
States District Court for the Southern District of Florida before
The Hon. Ursula Ungaro-Benages as of the date of this
Stipulation.
1.16 “Marketable Securities” means any readily
tradable United States Government Securities with a maturity
of less than one year, and any readily tradable commercial
paper having maturities of less than one year issued by a
corporation formed under the laws of any of the states of the
United States rated P-1 or A-1 or better or any readily tradable
common stock of Pulte Corporation or Centex Corporation.
1.17. “Monthly Statements” means the account
statements which were generated each month by MultiVest
Options, Inc. or IPMC Options, Ltd. and mailed to their
customers.
1.18 “Net Settlement Fund” means the remainder of
the Settlement Fund after deduction of all fees, costs, expenses,
taxes and other charges in accordance with this Stipulation.
1.19 “Person” means an individual, corporation,
partnership, limited partnership, association, joint stock
company, estate, legal representative, trust, unincorporated
association, government or any political subdivision or agency
thereof, and any business or legal entity and their spouses,
heirs, predecessors, successors, representatives, or assigns.
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1.20 “Plaintiffs’ Settlement Counsel” means Farella
Braun & Martel LLP, Neil A. Goteiner, Gary S. Anderson,
C. Brandon Wisoff, Karen P. Kimmey, and/or John L. Cooper,
235 Montgomery Street, 30th Floor, San Francisco, CA 95104
and/or Eric G. Lipoff, and/or Raring & Lipoff, 3070 Bristol,
Suite 680, Costa Mesa, CA 92626.
1.21 “Plaintiffs’ Class Counsel of Record” means all
counsel representing the Representative Plaintiffs or Settlement
Class Members who are signatory to this Stipulation.
1.22 “Plan of Allocation” means a plan of allocation of
the Settlement Fund whereby the Settlement Fund shall be
distributed to Authorized Claimants after payment of all fees,
costs and expenses, including, without limitation, expenses of
notice and administration of the Settlement and such attorneys’
fees, costs, expenses and interest as may be awarded by the
Court, as described in § 6.3.
1.23 “Promissory Notes” shall mean the promissory
notes described in § 2.2 which are to be issued to Authorized
Claimants.
1.24 “Proof of Claim and Release” means the proof of
claims and release which Settlement Class Members are
required to complete pursuant to this Stipulation substantially
in the form annexed hereto as Exhibit A-3.
1.25 “Receiver” means James McTivia as Receiver of
MultiVest Options, Inc. in the Receivership Litigation and his
predecessors and successors and any other person serving as
Receiver of MultiVest Options, Inc.
1.26 “Related Parties” means each of a Person’s past
or present directors, officers, employees, partners, principals,
agents, insurers, co-insurers, reinsurers, controlling
shareholders, attorneys, accountants, personal or legal
representatives, predecessors, successors, parents, subsidiaries,
divisions, joint ventures, assigns, spouses, heirs, related or
affiliated entities, any entity in which any Defendant has a
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direct or indirect controlling interest, any members of their
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 his family.
1.27 “Released Claims” means any and all claims or
causes of action, including “Unknown Claims” as defined in
§ 1.38 hereof, demands, rights, liabilities and causes of action
of every nature and description whatsoever, known or
unknown, asserted or that might 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 or federal
statutes, rules or regulations by the Representative Plaintiffs,
the Settlement Class Members, or any of them, in the Litigation
or the Conveyance Litigation based upon or related to any
transaction with MultiVest Options, Inc. by any Settlement
Class Member during the Settlement Class Period, any
conveyance of property by Defendant James Grosfeld, or the
facts, transactions, events, occurrences, acts, disclosures,
statements, omissions or failures to act which were or could
have been alleged in the Litigation or the Conveyance
Litigation.
1.28 “Released Persons” means each and all of the
Defendants and their Related Parties, including, without
limitation, MultiVest Options, Inc. (as used herein “MultiVest
Options, Inc.” shall include IPMC Options, Ltd.).
1.29 “Representative Plaintiff(s)’ means William
Waters and/or Linda Bartholomew acting on behalf of
themselves or on behalf of the Settlement Class and/or the
Settlement Class Members.
1.30 “Settlement” means the settlement embodied in
this Stipulation of Settlement.
1.31 “Settlement Administrator” means the Garden
City Group or any other replacement Person selected by
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agreement of Plaintiffs’ Settlement Counsel and Defendant’s
counsel to administer the Settlement Fund and process
Claimants’ Proofs of Claim and Release, or in the event they
fail to agree within ten (10) business days following any notice
of the then Settlement Administrator of its intention to resign
or any vacancy in this position, then as appointed by the Court
upon motion by Plaintiffs or Defendants or any of them.
1.32 “Settlement Agreement” means the agreement
embodied in this Stipulation of Settlement.
1.33 “Settlement Class” means all those persons listed
on Plaintiffs’ Update of Defendants’ Submission “A” in
compliance with the Court’s August 12, 1996 Order and
Plaintiffs’ Update of Defendants’ Submissions “B” in
compliance with the Court’s August 12, 1996 Order (hereafter
“Submissions A and B”) attached hereto as Exhibits C and D.
1.34 “Settlement Class Member” or “Member of the
Settlement Class” means any Person who falls within the
definition of the Settlement Class as set forth in § 1.33 of the
Stipulation, including the Representative Plaintiffs.
1.35 “Settlement Class Period” means the period from
June 1, 1985, through and including October 31, 1989.
1.36 “Settlement Fund” means the sum of the cash and
the aggregate initial principal amount of the Master Promissory
Note to be delivered to the Settlement Administrator pursuant
to § 2.2 of this Stipulation.
1.37 “Settlement Hearing” means the hearing held by
the Court to consider final approval of the Stipulation pursuant
to Fed. R. Civ. P. Rule 23.
1.38 “Settling Party(ies)” means, individually or
collectively, each or all of the Defendants and the Settlement
Class Members.
1.39 “Stipulation” means this Stipulation of Settlement
and all Exhibits attached hereto (which are incorporated by
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reference) and the Document Letter executed by Plaintiffs
Settlement Counsel and counsel for Defendants, and all
Exhibits thereto.
1.40 “Summary Notice” means the printed summary of
the Hearing Notice to be published substantially in the form of
Exhibit A-2.
1.41 “Unknown Claims” means any Released Claims
which any Settlement Class Member does not know or suspect
to exist in his, her or its favor at the time of the release of the
Released Persons which, if known by him, her or it, might have
affected his, her or its settlement with and release of the
Released Persons, or might have affected his, her or its decision
not to object to this settlement.
1.42 “United States Government Securities” means any
instrument backed by the full faith and credit of the United
States Government or fully insured by the United States
Government or an agency thereof.
2. The Settlement
2.1 The Settling Parties are executing this Stipulation to
settle, compromise and release all claims which have been
asserted or could have been asserted in the Litigation or the
Conveyance Litigation and to provide for the dismissal with
prejudice and without costs of each of these Litigations. To
that end, each of these litigations shall be dismissed with
prejudice and without costs and all claims which were or could
have been asserted in those litigations shall be released as
herein provided. Subjcct to the provisions of Section 2.5,
Plaintiffs’ Class Counsel of Record shall dismiss the
Conveyance Litigation without prejudice and without costs not
later than two (2) business days after the Final Order and
Judgment in this Litigation becomes Final as defined in §1.11.
2.2 Defendants shall cause James Grosfeld to deposit the
Settlement Fund in the amount of $40,000,000 by delivery
actually made to the Settlement Administrator, |
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contemporaneously with the entry of an order by the United
States District Court for the Southern District of Florida
preliminarily approving this Stipulation (the “Preliminary
Approval Order”), 25% of which ($10,000,000) shall be in
immediately available funds transferred by Federal Reserve
Bank wire transfer to a bank account specified by the
Settlement Administrator and the balance of which (75%) shall
be represented by a Master Promissory Note described below
in this section, delivered to the Settlement Administrator. If the
Settlement Fund is not delivered simultaneously with the entry
of the Preliminary Approval Order, at the election of Plaintiffs’,
Settlement Counsel, this failure of delivery will be treated in
the same manner as the Court’s failure to enter is order
preliminarily approving this Stipulation as provided in § 8.3 or
as in §8.4.
The Master Promissory Note will be substantially in the
form attached to the Document Letter, or as otherwise approved
by Plaintiffs’ Settlement Counsel and Defendants’ counsel and
otherwise on the following terms (which in the event of any
conflict shall be as provided in the instrument attached to the
Document Letter):
Until paid in full, the Master Promissory Note will bear
interest per annum at a rate equal to the rate of interest payable
per annum (including calculations of compounding and
generally referred to as the yield) on $100,000 denomination
FDIC insured certificates of deposit having a maturity of five
years offered by NBD Bank on the date the Stipulation is
executed, or the first business day preceding that date if that
date is not a business day. Interest will be payable annually on
December 15, commencing December 15, 1997, and on the
maturity of the note. Interest will commence to accrue on the
Distribution Date defined in § 6.3(b).
The Master Promissory Note will mature on the tenth
anniversary of the Distribution Date, and earlier on events of
default. However, this note or any portion thereof shall be
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payable upon demand on the first business day after the fifth
anniversary of the Distribution Date (the “Five Year Maturity
Date”), provided that notice of intention to demand payment at
the Five Year Maturity Date must be given not more than one
year, nor later than fifteen days, prior to the Five Year Maturity
Date, in which event the Maturity Date with respect to the sums
demanded will become the Five Year Maturity Date; or if no
such notice is given, then on the Maturity Date. Notice of this
right to demand early payment shall be enclosed -with the
interest payment made on the December 15 preceding the Five
Year Maturity Date and otherwise as reasonably determined by
the Settlement Administrator.
The obligations under the Master Promissory Note shall be
secured by the pledge of Marketable Securities (as provided in
§ 2.3(b)), and within one hundred twenty (120) days after the
presentation of this Stipulation to the Court for preliminary
approval shall be secured by the Irrevocable Letter of Credit
described in this section and § 2.3. The Irrevocable Letter of
Credit shall also secure the obligations under the Promissory
Notes described below, if and when they are issued. The only
risk on the Master Promissory Note and the Promissory Notes
to which the note holders shall be exposed is the failure of
NBD or any other bank issuing the Letter of Credit.
The individual Promissory Notes shall not be restricted to
prevent them from being sold or discounted to other persons or
financial institutions and shall be transferable to the heirs and
assigns of Authorized Claimants.
The Promissory Notes shall be issued by a Bankruptcy
Remote Corporation and secured by the Irrevocable Letter of
Credit.
The Master Promissory Note, the Promissory Notes, the
Note Administration and Pledge Agreement, Bankruptcy
Remote Corporation (Defined) and the Irrevocable Letter of
Credit shall be substantially in the form attached to the
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Document Letter or otherwise as approved in writing by
Plaintiffs’ Settlement Counsel and counsel for Defendants.
Pursuant to the Plan of Allocation described in § 6.3, each
Authorized Claimant is to be distributed one or more
Promissory Notes representing each Class Member’s
Settlement Amount. The Promissory Notes shall be on the
same economic terms as the Master Promissory Note.
The Master Promissory Note shall be reduced as provided
in § 6.2(e) and by the amounts represented by the substituted
individual and separate Promissory Notes issued by a
Bankruptcy Remote Corporation in the appropriate amounts
payable to each Authorized Claimant and otherwise on the
terms provided in this Stipulation. The maker of the Master
Promissory Note shall be obligated to cause the Bankruptcy
Remote Corporation to execute and deliver the Promissory
Notes to the Settlement Administrator within ten (10) days after
requested in writing by the Settlement Administrator, and any
failure to do so will constitute an event of default with respect
to the Master Promissory Note which will immediately
accelerate the maturity of the obligations under the Master
Promissory Note and require the liquidation of the collateral for
the Master Promissory Note including any Marketable
Securities or draw on the Irrevocable Letter of Credit.
Prior to the time of distribution to the Authorized
Claimants of the Promissory Notes, the Settlement
Administrator shall appoint a Paying Agent who shall be The
First National Bank of Chicago or some other Person who is
approved in writing by Plaintiffs’ Settlement Counsel and
counsel for Defendants, or if they cannot agree then as
approved by the Court, who is willing to serve as the Paying
Agent pursuant to the Note Administration and Pledge
Agreement. The Note Administration and Pledge Agreement
shall be effective between the parties to this Stipulation without
the need for the approved Paying Agent consenting to serve
under the agreement, but the Promissory Notes will not be
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distributed until the approved Paying Agent has agreed to serve
under the terms of the Note Administration and Pledge
Agreement.
2.3(a) Defendants shall cause James Grosfeld to provide
not later than one hundred twenty (120) days after the
presentation of this Stipulation to the Court for preliminary
approval and shall thereafter maintain in effect the Irrevocable
Letter of Credit. All sums due with respect to the Master
Promissory Note and the Promissory Notes will be secured by
the Irrevocable Letter of Credit. The Irrevocable Letter of
Credit will be subject to approval in writing as to amount, form,
substance and issuer by the Settlement Administrator and
Plaintiffs’ Settlement Counsel, who shall not unreasonably
withhold their approval. The Irrevocable Letter of Credit will
be an irrevocable letter of credit not expiring before one year
from the date of its original issuance and will be fully drawable
if not renewed at least sixty (60) days before its expiration, and
will continue in full force and effect until all sums secured
thereby have been paid in full. The Irrevocable Letter of Credit
will be issued by NBD Bank, Detroit, Michigan, or a United
States national bank of comparable creditworthiness
(determined as of the date of execution of the Stipulation), in
an amount not less than the sum of (i) the original principal
amount of the Master Promissory Note, plus (ii) an amount
equal to the interest that would accrue on the Master
Promissory Note and Promissory Notes from the Distribution
Date through December 15, 1998, but in no event less than one
year’s interest at the interest Rate (provided that after
December 15, 1998, the amount with respect to interest shall be
reduced to one year’s interest on these notes). The Irrevocable
Letter of Credit will be drawable up to the amount of all
outstanding obligations under the Master Promissory Note and
the Promissory Notes (but without duplication), including
unpaid principal, interest accrued through and including the
date of payment and the other sums due with respect to these
notes, upon demand by the Settlement Administrator and/or the
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Paying Agent notwithstanding any action by the payor, or any
guarantor, endorser or other party contesting the rights of the
Paying Agent to draw upon the Irrevocable Letter of Credit.
2.3(b) Concurrently with delivery of the Settlement Fund
pursuant to § 2.2, Defendants shall deliver to the Settlement
Administrator Marketable Securities securing the performance
of the Defendants’ obligations hereunder and under the Master
Promissory Note, together with the Note Administration and
Pledge Agreement in the form attached to the Document Letter
or as otherwise approved in writing by Plaintiffs’ Settlement
Counsel and counsel for Defendants. The Note Administration
and Pledge Agreement will be effective at the time of the
delivery of the Marketable Securities even if no approved
Paying Agent has then agreed to serve under the agreement. In
connection with and concurrently with the delivery of the
Marketable Securities, Defendants shall deliver evidence that
such actions have been taken and such documents executed,
delivered or filed as is necessary or reasonably required in the
opinion of Plaintiffs’ Settlement Counsel to create, perfect and
maintain a first priority perfected security interest in the
Marketable Securities in favor of the Settlement Administrator
for the benefit of the holders of the Master Promissory Note
and Promissory Notes. The Note Administration and Pledge
Agreement shall provide that the Marketable Securities shall be
held by the Settlement Administrator as security for the
obligations of the Defendants, including James Grosfeld, until
the Irrevocable Letter of Credit is timely provided, in which
event the pledge of the Marketable Securities will terminate
and the Marketable Securities will be returned to the
Defendants.
The Marketable Securities shall, at all times, have a fair
market value equal to at least one hundred and five (105%)
percent of the sum of the face amount of the Master Promissory
Note plus one year’s interest on these notes (the “Required
Amount’). Any Marketable Security in the form of cash shall
be deemed to have a fair market value equal to the amount of
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the cash. Any Marketable Securities in the form of United
States Government Securities or commercial paper will be
deemed to have a fair market value equal to the then current
price at which the Government Security or commercial paper
is trading in the public markets. Any Marketable Security in
the form of readily tradable common stock of Pulte Corporation
or Centex Corporation shall be deemed to have a fair market
value at which that common stock is then trading in the public
markets, but each $142.86 of this fair market value shall be
counted as $100 for the purpose of determining the Required
Amount, provided that if the Marketable Securities consist
exclusively of the Pulte Corporation stock, the fair market
value of this stock shall not be less than $47,700,000. If at any
time the fair market value, as determined above, of the
Marketable Securities becomes less than the Required Amount,
Defendants shall promptly and in all events within five (5)
business days, deposit sufficient additional Marketable
Securities with the Settlement Administrator pursuant to the
Note Administration and Pledge Agreement such that the
aggregate value of all Marketable Securities deposited with the
Settlement Administrator is not less than the Required Amount.
In the event the irrevocable Letter of Credit is not in place
30 days after the entry of the Preliminary Approval Order, or in
the event of Defendants’ failure to maintain the value of the
Marketable Securities which is not cured within the time
periods herein provided, the Master Promissory Note shall
become immediately due and payable and the Settlement
Administrator or other collateral agent under the Note
Administration and Pledge Agreenrent shall forthwith sell the
Marketable Securities and apply the proceeds to the payment of
the Master Promissory Note and institute any proceedings
necessary to collect full payment of the Master Promissory
Note.
2.4 Defendant James Grosfeld warrants that at the time of
the payment described in § 2.2, he was not insolvent nor did the
payment required to be made by or on behalf of him render
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such Defendant insolvent, nor did the pendency of this lawsuit
render him insolvent within the meaning of and/or for the |
purposes of applicable bankruptcy laws and agrees to make and |
deliver the Representations and Warranties in the forth attached ;
to the Document Letter to Plaintiffs’ Settlement Counsel at the ,
same time the Settlement Fund is delivered pursuant to this |
Stipulation. |
2.5 Ifacase is commenced in respect of Defendant James
Grosfeld or the corporation issuing the Promissory Notes,
under applicable bankruptcy laws, 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 transfer of the Settlement Fund, or any portion
thereof, by or on behalf of such Defendant to be a preference,
voidable transfer, fraudulent transfer or similar transaction, full
payment of the Letter of Credit shall be made to the Settlement
Administrator on or before the Distribution Date or to the
Settlement Administrator and the holders of the Promissory
Notes if Promissory Notes are outstanding. If any event of
bankruptcy results in a deficiency in the Settlement Fund such
that any Promissory Notes or fee, cost or expense of Settlement
cannot be paid, all Releases of the Conveyance Litigation shall
be recinded to the extent necessary to remedy any such
deficiency. The Conveyance Litigation shall be dismissed
without prejudice until one hundred (100) days after the posting
of the Irrevocable Letter of Credit as provided herein, and at
that time the dismissal shall be with prejudice; provided that all
statutes of limitation, claims of laches and similar time bars
will be tolled during this period between the dismissal without
prejudice and the dismissal with prejudice.
2.6 The Settlement Administrator shall invest all cash
which it holds to the extent not reasonably required for
immediate distribution, including the cash portion of the
Settlement Fund deposited pursuant to § 2.2 above in United
States Government Securities and shall reinvest the proceeds of
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these instruments as they mature in similar instruments at their
then current market rates.
2.7 The Settlement Administrator shall not disburse the
Settlement Fund except as provided in this Stipulation, or with
the written agreement of counsel for Defendants and Plaintiffs’
Settlement Counsel.
2.8 The Settlement Administrator is authorized to execute
such transactions on behalf of the Settlement Class Members
as are consistent with the terms of the Stipulation.
2.9 All funds held by the Settlement Administrator shall
be deemed and considered to be in custodia legis of the Court,
and shall remain subject to the jurisdiction of the Court, until
such funds shall be distributed pursuant to the Stipulation;
provided, however, if this Stipulation and Settlement
Agreement are terminated as provided herein, all such funds,
less amounts retained for the payment of appropriate expenses
incurred but not paid, shall be returned within five (5) business
days of any such termination.
2.10(a) This Section relates to the taxation of income
earned on the Settlement Fund. The Defendants and the
Settlement Administrator agree to treat the Settlement Fund as
being at all times a “qualified settlement fund” within the
meaning of Treas. Reg. Section 1.468B-1. In addition, the
Settlement Administrator and, as required, the Defendants shall
jointly and timely make such elections as necessary or
advisable to carry out the provisions of this § 2.10, including
the “relation-back election” (as defined in Treas. Reg.
Section 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 Settlement 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 purpose of Section 468B of the Internal
Revenue Code of 1986, as amended, and the regulations
promulgated thereunder, the “administrator” shall be the
Settlement Administrator. The Settlement Administrator shall
timely and properly file all informational and other tax returns
necessary or advisable with respect to the Settlement Fund
(including without limitation the returns described in Treas.
Reg. Section 1.466B-2(K). Such returns (as well as the
election described in § 2.10(a) shall be consistent with this
§ 2.10 and in all events shall reflect that all taxes (including any
interest or penalties) on the income earned by the Settlement
Fund shall be paid out of the Settlement Fund as provided in
§ 2.10(c) hereof.
(c) All (a) taxes (including any 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 the Defendants 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
(b) expenses and costs incurred in connection with the
operation and implementation of this § 2.10 (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 § 2.10) (“Tax
Expenses”), shall be paid out of the Settlement Fund. The
Settlement Administrator out of the Settlement Fund shall
indemnify and hold Defendants 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
Settlement Administrator out of the Settlement Fund without
prior order from the Court and the Settlement Administrator
shall be obligated (notwithstanding anything herein to the
contrary) to withhold from distribution to Settlement Class
| a Sea nner em
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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 Treas. Reg. Section 1.468B-2(1)(2)). The
parties hereto agree to cooperate with the Settlement
Administrator, each other, and their tax attorneys and
accountants to the extent reasonably necessary to carry out the
provisions of this § 2.10.
2.11 The Plaintiffs’ Settlement Counsel and
Defendants shall use their best efforts and good faith to secure
approval of the Settlement Agreement set forth in this
Stipulation and shall not attack this Stipulation in the
settlement approval process.
3. Class Notice and Administration Expenses
3.1 The Settlement Administrator shall pay from the
Settlement Fund the costs and expenses reasonably incurred in
connection with providing notice to the Settlement Class,
attempting to locate Settlement Class Members, soliciting the
filing of Proof of Claim and Release forms, assisting with the
filing of claims, administering and distributing the Settlement
Fund to Authorized Claimants, processing Proofs of Claim and
Release forms and paying escrow fees and costs, if any, out of
the Settlement Fund. The Settlement Administrator is
authorized to and shall use reasonable due diligence, utilizing
Customary procedures to identify, locate and obtain mailing
addresses for the Settlement Class Members as defined in § 1.34
and provide them with notice of the settlement and claim
procedures. The Settlement Administrator may contract with
outside service providers to obtain these services.
3.2 Ifthe Settlement is terminated pursuant to the terms of
this Stipulation or is not approved as F inal, any unused portion
of the Settlement Fund, reduced by any reserve necessary for
expenses incurred but not paid, shall be returned to Defendants
within five business days of such termination. Except as
provided in this Section and Section 3.3, in the event the
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Settlement is terminated, no party to this Stipulation shall be
responsible for any expenses previously incurred as described
herein, including expenses incurred in connection with the
notification of and the costs of settlement administration; nor
shall any party be obligated to reimburse any person
contributing funds for such expenses.
3.3 The Settlement Administrator shall be permitted to
withdraw funds from the Settlement Fund to pay any necessary
costs described above without prior approval of the Court or
any of the other signatories to this Stipulation.
4. Hearing Order and Settlement Hearing
4.1 Subject to the provisions of § 8.1, the Settling Parties
shall submit this Stipulation as soon as possible after the
execution, together with its Exhibits, to the Court and shall
jointly apply for entry of the Hearing Order, substantially in the
form of Exhibit “A” hereto:
(a) Directing that a Settlement Hearing be held, as soon
as practicable, to determine whether the Stipulation should be
approved as fair, reasonable and adequate under Rule 23 and
whether judgment should be entered dismissing the Complaint
against the Defendants on the merits and with prejudice and
without costs; and in the event that the Court approves this
Stipulation, to pass upon the application of Plaintiffs’
Settlement Counsel and Plaintiffs Class Counsel of Record for
allowance of fees and expenses, and to pass on such other
matters as the Court may deem appropriate;
(b) Providing that notice of this Stipulation and of the
Settlement Hearing be given in the name of the Clerk of the
Court by or at the direction of the Court to all persons who are
Members of the Settlement Class by ordering:
(i) That notice to Settlement Class Members shall be
given by the Settlement Administrator by mailing a copy
of the Hearing Notice, substantially in the form annexed
hereto as Exhibit A-1, which shall include a description of
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the general terms of the Stipulation, the proposed Plan of
Allocation and Plaintiffs’ Settlement Counsel’s application
for a Fee and Expense Award, and the Proof of Claim and
Release, substantially in the form annexed hereto as
Exhibit A-3, to all Settlement Class Members.
(ii) That the Settlement Administrator shall publish a
Summary Notice substantially in the form annexed hereto
as Exhibit A-2 once in the national editions of The New
York Times, The Wall Street Journal and USA Today at
approximately the same time as the initial mailing of the
Notice.
(c) Requiring the filing by the Settlement Administrator
or its designee, prior to or at the Settlement Hearing, of proof
of mailing of the Hearing Notice and proof of publication of the
Summary Notice;
(d) Determining that the notices described above
constitute the best notice practicable under the circumstances
and constitute due and sufficient notice of the Settlement
Hearing and Settlement Agreement to all persons affected by
and/or entitled to participate in the Settlement and is in full
compliance with the notice requirements of Rule 23 of the
Federal Rules of Civil Procedure;
(e) Designating the Settlement Administrator as the tax
administrator of the Settlement and authorizing the Settlement
Administrator to act on behalf of the Settlement Fund in filing
any tax returns deemed appropriate; allowing the Settlement
Administrator to pay from the Settlement Fund, without further
order of the Court, any taxes, interests, or penalties it deems
due or owing to federal, state, or municipal tax authorities; and
allowing the Settlement Administrator to sue such authorities
for refunds or take any other actions against such authorities to
settle the tax issues of the Settlement Fund, without further
order of the Court; and
(f) Providing for other matters set forth in Exhibit A.
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4.2 The trial of this matter which is being currently
conducted before The Hon. Ursula Ungaro-Benages of the
United States District Court for the Southern District of Florida
shall be suspended pending the Court’s consideration of this
Stipulation as provided in § 10.2 of this Stipulation and until
the Court enters its order granting or denying preliminary
approval of this Stipulation, the Settlement Agreement and
related procedures and deposit of the Settlement Fund. Except
as provided in § 10.2, the Settling Parties shall make no
arguments or disclosures regarding this Stipulation or the
related negotiations which will or are designed to delay or alter
in any way that trial. Upon preliminary approval of this
Stipulation and deposit of the Settlement Fund and compliance
with the security provisions set forth in § 2.3(b), trial of this
Litigation shall be terminated and the jury discharged. The
Litigation may thereafter be set for retrial in the event the
Settlement is not consummated pursuant to such orders as the
Court may enter.
5. Releases
5.1 Upon the Effective Date, as defined in § 1.8, each of
the Settlement Class Members shall be deemed to have, and by
operation of the Final Order and Judgment shall have, fully,
finally, and forever released, relinquished and discharged all
Released Claims against the Released Persons, whether or not
such Settlement Class Member executes and delivers the Proof
of Claim and Release.
5.2 The Proof of Claim and Release to be executed by the
Settlement Class Members shall release all Released Claims
against the Released Persons and shall be substantially in the
form contained in Exhibit A-3 hereto.
5.3 This Stipulation and the consideration therefor are
offered and given in return for and are contingent upon the
release described herein and Defendants receiving full and final
dismissals (under Fed. R. Civ. P. 54(b), or otherwise), of this
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Litigation and the Conveyance Litigation with prejudice and
without costs.
5.4 Upon the Effective Date, as defined in § 1.8, each of
the Released Persons shall be deemed to have, and by operation
of the Final Order and Judgment shall have, fully, finally, and
forever released, relinquished and discharged each and all of
the Settlement Class Members and Plaintiffs’ Class Counsel of
Record from all claims (including “Unknown Claims”), arising
out of, relating to, or in connection with the institution,
prosecution, assertion, settlement or resolution of the Litigation
or the Released Claims.
5.5 With respect to any and all Released Claims, including
Unknown Claims, upon the Effective Date, each of the
Settlement Class Members shall be deemed to have, and by
operation of the Final Order and Judgment shall have, expressly
waived and relinquished, to the fullest extent permitted by law,
the provisions, rights, and benefits of § 1542 of the California
Civil Code (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.”) or any similar statute or law.
5.6 The Settlement Ciass 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 Released Claims, but the Settlement Class
Members, upon the Effective Date, shall be deemed to have,
and by operation of the Final Order and Judgment shall have,
fully, finally, and forever settled and released any and all
Released Claims, including Unknown Claims, known or
unknown, suspected or unsuspected, contingent or non-
contingent, whether or not concealed or hidden, which now
exist, or heretofore have existed upon any theory of law or
equity now existing or coming into existence in the future,
including, but not limited to, conduct which is negligent,
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intentional, with or without malice, or a breach of any duty, law
or rule, without regard to the subsequent discovery or existence
of such different or additional facts.
5.7 Following receipt of preliminary approval by the
Court and pending final determination of whether the
Stipulation should be approved, no one of the Representative
Plaintiffs, Settlement Class Members, or Plaintiffs’ Class
Counsel for Record, either directly, representatively, or in any
other capacity, shall commence or prosecute against any of the
Released Persons, any action or proceeding in any Court or
tribunal asserting any of the Released Claims.
5.8 In the event that any Settlement Class Member shall
thereafter bring any action involving any Released Claim
against any party in violation of this Stipulation, such Class
Member shall indemnify any Released Person who may be
made a defendant in any such litigation against any liability or
expense arising from any such litigation, whether by reason of
contribution, indemnity, attorneys’ fees, defense costs or any
other liability, cost, fee or expense.
6. Administration and Calculation of Claims, and
Supervision and Distribution of Settlement Fund
6.1 The Settlement Administrator shall administer, verify,
calculate and authorize the claims submitted by Settlement
Class Members and shall oversee distribution of the Net
Settlement Fund pursuant to the Plan of Allocation (defined in
§ 6.3 below) to Authorized Claimants. The Settlement
Administrator shal] assume exclusive responsibility for all
communications with the Settlement Class Members upon
preliminary approval of the Settlement by the Court. From that
date forward, none of Plaintiffs’ Settlement Counsel, Plaintiffs’
Class Counsel of Record or counsel for Defendants shall
engage in any further communication with the Settlement
Class, or Settlement Class Members directly or indirectly, or
otherwise initiate any communications with any newspaper or
information media relating to this litigation, except that such
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counsel may communicate with an individual Settlement Class
Member who initiates communication with such counsel, may
respond to any objection to the Stipulation by communication
with the objecting party, may communicate with the Settlement
Class for the purpose of supporting the Stipulation and may
engage in any communication required by the Court.
6.2 Until the Effective Date, the Settlement F und shall be
used only to pay those costs provided for in Section 3 (Class
Notice and Administration Expenses). On and after the
Effective Date the Settlement Fund shall be applied as follows:
(a) To pay fees, expenses and costs for Plaintiffs’
Settlement Counsel and Plaintiffs’ Class Counsel of
Record (the “Fee and Expense Award”), in accordance
with the orders of the Court;
(b) To pay all the costs and expenses reasonably and
actually incurred in connection with the claims process
including providing notice to the Class, processing Proofs
of Claim and Release forms, and calculating,
administering and distributing payments from the
_ Settlement Fund to the Settlement Class;
(c) To pay the Taxes and Tax Expenses;
(d) To distribute the Settlement Fund after deduction
of all fees, costs and expenses to Authorized Claimants in
accordance with the Plan of Allocation; and (e) All
of the cash portion of the Settlement Fund originally
deposited by Defendants will be used to pay the foregoing
expenses and/or to make cash distributions to Authorized
Claimants. The claims administration and note
distribution process shall be completed when the
Settlement Administrator has submitted its “Final Claims
Determination Report” to the Court on the administration
process and final orders have been entered by the Court
determining the Net Settlement Amount and the Class
Member’s Settlement Amount (defined in § 6.3(b)) for
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each Authorized_Claimant. Upon completion of this
process, the Settlement Administrator shall, subject to
Court approval, notify the Payor under the Master
Promissory Note of the amount of the reduction, if any, in
the then outstanding Principal Sum of this note (and the
maximum drawable amount under the Irrevocable Letter
of Credit), with this reduction to be the amount by which
the Net Settlement Fund exceeds the sum of (i) the original
principal amount of all of the Promissory Notes, including
any supplementary Promissory Notes, distributed to
Authorized Claimants, plus (ii) the amounts, if any, as to
which the Settlement Administrator has elected pursuant
to § 6.3(b) to make supplemental direct cash payments to
Authorized Claimants. The Settlement Administrator shall
from time to time in its reasonable judgment, subject to
Court approval at the request of either Defendants’
Settlement Counsel or Plaintiffs’ Settlement Counsel,
make interim determinations of the amount of this
reduction as Promissory Notes are distributed and the
amount of the Net Settlement Fund becomes closer to the
final amount of the Net Settlement Fund. If the Settlement
Administrator determines that he no longer requires any
amount of the cash or the Master Promissory Note to
complete the payment of fees, expenses and distributions
contemplated by this Stipulation as a result of the final
claim determination or any interim determination, he shall
so advise the Payor of the Master Promissory Note and
return any excess cash not less than 10 and not more than
15 days after such determination unless otherwise ordered
by the Court.
6.3(a) Pursuant to the Plan of Allocation, the Settlement
Administrator shall determine the Net Settlement Fund by
subtracting from the Settlement Fund, the Fee and Expense
Award, Taxes, Tax Expenses and the expenses for notice and
administration as provided in § 6.2 above and any other
expenses. The Settlement Administrator shall determine each
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Settlement Class Member’s Recognized Loss. Recognized
Loss is the sum of all payments made by a Settlement Class
Member to MultiVest Options, Inc. reduced by all payments
received from MultiVest Options, inc. and the amount of cash
and value of unexpired options in that Class Member’s account
as of October i1, 1989, or the last month in which a Class
Member had an account at MultiVest Options, Inc., if earlier
than October 31, 1989, all as shown on the Class Member’s
Monthly Statements. The Settlement Administrator shall
divide the Net Settlement Fund by $119,931,383.40 to
determine the Distribution Ratio for all Settlement Class
Members. The Settlement Administrator shall determine the
distribution to be made to each Settlement Class Member (the
“Class Member’s Settlement Amount”) by multiplying that
Settlement Class Member’s Recognized Loss by the
Distribution Ratio. No adjustment shall be made to the Class
Members’ Settlement Amounts by reason of the failure of other
Settlement Class Members to comply with the procedures set
forth herein.
6.3(b) Upon receipt and review of all Proofs of Claim
and Release, the Settlement Administrator shall file an initial
report (the “Initial Distribution Report”) setting forth for each
undisputed Authorized Claim (i) the approved amount of each
such Authorized Claimant’s Recognized Loss, (ii) the
percentage of the Net Settlement Fund to which each such
Authorized Claimant is entitled (i.e., the Recognized Loss of
the Authorized Claim divided by $119,931,383.40, hereinafter
the “Class Member’s Settlement Percentage”), and (iii) if it can
be determined at the time of filing the report, each such
Authorized Claimant’s Class Member’s Settlement Amount, or
(iv) if it cannot be determined precisely, the Settlement
Administrator’s reasonable estimate of the Net Settlement Fund
after making allowances for such reserves as the Settlement
Administrator determines to be prudent for all sums to be
deducted from the Settlement Fund in determining the Net
Settlement Fund, and based on this estimate the estimated Class
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Member’s Settlement Amount for each such Authorized
Claimant (the “Class Member’s Estimated Settlement
Amount’).
The identity of each Authorized Claimant, the Authorized
Claimant’s Recognized Loss, the Class Member’s Settlement
Percentage, the Class Member’s Estimated Settlement Amount
and/or the Class Member’s Settlement Amount will be as
reported by the Settlement Administrator subject only to such
modifications as the Court may order in approving the report of
the Settlement Administrator.
As used in this Stipulation, “Distribution Date” means the
day which is ten business days after the Court enters its order
approving or modifying that portion of the Initial Distribution
Report which provides for each such undisputed claim the
information described above in this § 6.2(b) (the “Initial Report
Approval Order”).
On or as soon as reasonably practicable after the
Distribution Date, the Settlement Administrator shall distribute
Promissory Notes (as described in § 2.2 and 2.3) to each
Authorized Claimant whose claim was approved in the Initial
Report Approval Order, in an original principal amount which
is either the Authorized Claimant’s Class Member’s Settlement
Amount or the Class Member’s Estimated Settlement Amount.
In the event these Promissory Notes are distributed with
Original principal amounts based on the Class Member’s
Estimated Settlement Amount, when the Class Member’s
Settlement Amount is determined to be final, the Settlement
Administrator shall either issue supplemental Promissory Notes
to each Authorized Claimant for the difference between the
Class Member’s Settlement Amount and the Class Member’s
Estimated Settlement Amount or if the Settlement
Administrator holds sufficient cash and reasonably determines
it to be more efficient or practical to simply pay by check to
each Authorized Claimant, an amount equal to the principal
and interest the Authorized Claimant would have received if a
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supplemental Promissory Note had been issued to the
Authorized Claimant, and in so doing the Settlement
Administrator may rely on the register of registered owners
maintained by the Paying Agent with respect to the Promissory
Notes and may if it so chooses elect to distribute these
supplemental Promissory Notes or make these supplemental
payments through the Paying Agent. Such distributions shall
not be delayed pending the resolution of any disputed
Claimants’ claims or the resolution of any appeal relating to
Plaintiffs’ counsel’s Fee and Expense Award.
If an appeal has been taken from the Fee and Expense
Award, in determining the Class Member’s Estimated
Settlement Amount, the Settlement Administrator shall
estimate the Net Settlement Fund as if the appeal resulted in
whatever result would yield the lowest Net Settlement F und,
taking into account the results of the appeal and whatever
amounts may be required to fund the payment of fees and
expenses of Plaintiffs’ Class Counsel of Record as a result of
the pending appeal, together with any consequent expenses.
Following the issuance by the Court of the Initial Report
Approval order, the Settlement Administrator shall from time
to time as appropriate file supplemental and additional reports
providing comparable information to that in the Initial
Distribution Report with respect to any disputed claims which
later are determined to be Authorized Claims. As soon as
reasonably practicable after the entry of an order of the Court
approving any such formerly disputed claims, the Settlement
Administrator shall distribute to each such Authorized
Claimant a Promissory Note in the appropriate original
principal amount on the same terms and with the same interest
commencement and maturity dates as the other Promissory
Notes previously distributed, and otherwise in accordance with
the same procedures as the first group of Promissory Notes
were distributed and/or supplemented by subsequent payments
or Promissory Notes.
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6.4 Upon the Effective Date and thereafter, and in
accordance with the terms of the Stipulation and the Plan of
Allocation, the Net Settlement Fund shall be distributed to
Authorized Claimants, subject to and in accordance with the
following:
(a) Within sixty (60) days after the mailing of the
Notice each Person claiming to be an Authorized Claimant |
shall be required to submit to the Settlement Administrator
a completed Proof of Claim and Release and all of his or
her Monthly Statements from Multivest Options, Inc.
substantially in the form annexed hereto as Exhibit A-3.
(b) All Proofs of Claim and Release, together with all
of the Settlement Class Members’ Monthly Statements,
must be submitted to the Settlement Administrator by the
date specified in the Proof of Claim and Release. Any
Settlement Class Member who fails to file a Proof of
Claim and Release and Monthly Statements by such date
shall be forever barred from receiving any payment
pursuant to this Stipulation but shall in all other respects
be bound by the terms of this Stipulation and by the
releases contained herein and the final judgment entered in
_ the Litigation. A Proof of Claim and Release shall be
deemed to have been submitted when posted if a postmark
is indicated on the envelope and if it is mailed first-class
postage prepaid-and addressed in accordance with the
instructions therein. In all other cases, a Proof of Claim
and Release shall be deemed to have been submitted when
actually received by the Settlement Administrator;
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(c) Each Proof of Claim and Release shall be
submitted to and reviewed by the Settlement
Administrator, who shall determine in accordance with this
Stipulation the extent, if any, to which each claim shall be
allowed. Each Proof of Claim and Release shall be
approved by the Settlement Administrator for the full
amount of the Class Member’s Settlement Amount as
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defined in § 6.3(a), unless the Settlement Administrator
shall have reason to believe that the Claimant is not
entitled to distributions as an Authorized Claimant or that
the Monthly Statements submitted are not complete and
authentic, in which case the claims shall be treated as a
disputed claim as provided in § 6.4(e). The Settlement
Administrator shall review all Proofs of Claim and
Releases and Monthly Statements submitted and make
such corrections to the Proof of Claim and Release as may
be required to ensure that they accurately reflect the
information contained in that Settlement Class Member’s
Monthly Statements. Proof of Claim and Release forms
and Monthly Statements which are timely submitted by
Claimants and are capable of correction and completion by
the Settlement Administrator to accurately reflect the
information on such Claimants’ Monthly Statements shall
be so corrected and completed and not rejected. Copies of
submitted Proofs of Claim and Release shall be made
available for examination by Plaintiffs’ Settlement
Counsel and Defendants’ counsel. Following the
Distribution Date, the Settlement Administrator shall
retain all Proofs of Claim and Release and other related
documents until all Promissory Notes have been paid, at
which time all Proofs of Claim and Release and other
related documents shall be destroyed.
(d) The Settlement Administrator shall reject Proofs
of Claim and Release that do not meet the requirements set
forth in the Proof of Claim and Release and which are not
capable of correction by the Settlement Administrator as
provided in § 6.4(c). The Settlement Administrator shall
notify all Claimants whose Proofs of Claim and Release
have been rejected in whole or in part, setting forth the
reasons therefor, and shall provide Claimants with a
reasonable time to cure any defect in his/her Proof of
Claim and Release. Upon demand by a Claimant, the
Settlement Administrator shall provide any MultiVest
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G-34
Options, Inc. Monthly Statements requested. The
provision of such information shall not relieve the
Claimants of their obligations to submit a Proof of Claim
and Release together with the related documents required
by the Proof of Claim and Release which documentation
shall be satisfied by the Monthly Statements received from
the Settlement Administrator if appropriate.
Notwithstanding any other provision of this Stipulation, if
neither the Claimant nor MultiVest Options, Inc. is able to
provide copies of Claimant’s Monthly Statements, the
Settlement Administrator may consider other
documentation provided by MultiVest Options, "ic. or
Plaintiffs’ Settlement Counsel to ascertain whether the
information required to establish any Claimant’s claim is
otherwise available. Class members who request and
obtain Monthly Statements from the Settlement
Administrator shall have a total charge of fifty dollars
($50) for the provision of such Statements deducted from.
the amount of their claim to compensate for this service.
If any Claimant whose claim has been rejected and has
been given an opportunity to cure his/her defect fails to do
so within the time provided, the Claims Administrator will
send such Claimant a final notice of rejection.
(e) If any Claimant whose claim has been finally
rejected in whole or in part, desires to contest such final
rejection, the Claimant must, within twenty (20) days after
the date of mailing of the notice of final rejection of the
Proof of Claim and Release, serve upon the Settlement
Administrator a notice and statement of reasons indicating
the Claimant’s grounds for contesting the final rejection
along with any supporting documentation, and requesting
a review thereof by the Court. Any such notice and
statement shall be deemed served when actually received
by the Settlement Administrator. The Settlement
Administrator shali thereafter present such unresolved
requests, if any, for review to the Court. The procedures
—<—-- we ETE,
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for contesting rejected claims Shall be provided in
Exhibit A-1, The Hearing Notice.
6.5 None of Representative Plaintiffs, Settlement Class
Members or Defendants or counsel for any party shall have any
liability with respect to the investment, distribution, allocation
or payment of the Settlement F und, the Plan of Allocation, the
determination, administration, calculation, review, approval or
payment of the Settlement Class Members’ claims, the payment
of fees, costs and expenses, the payment or withholding of
taxes, or any losses incurred in connection therewith.
6.6 Payment shall be deemed conclusive as to all
Settlement Class Members. Al] Settlement Class Members
who do not timely submit Proofs of Claim and Release 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 any judgment entered in the Litigation.
6.7 Each Claimant shall be deemed to have submitted to
the jurisdiction of the Court with respect to his, her or its claim.
6.8 All proceedings with respect to the Settlement
Agreement described by this Stipulation and the determination
of all controversies relating thereto, including disputed
questions of law and fact with respect to the validity of claims,
shall be subject to the jurisdiction of the Court.
6.9 The Settlement Administrator shal] provide Plaintiffs’
Settlement Counsel and Defendants’ counsel with copies of all
reports on claims.
7. Plaintiffs’ Class Counsel of Record Attorneys’ Fees
and Reimbursement of Expenses
7.1 Plaintiffs’ Class Counsel of Record shall submit an
application (the “Fee and Expense Application”) for
distribution to them from the Settlement Fund as an obligation
of the Settlement Class Members of attorneys’ fees and
expenses, including reimbursement of Court costs and other
G-36
expenses, and the fees and expenses of any experts retained by
them. Plaintiffs’ Class Counsel of Record shall apply for fees
in an amount not to exceed 33-1/3% of the Settlement Fund
plus their costs and expenses. Plaintiffs’ Class Counsel of
Record will apply for payment of their fees and expenses in
cash to the extent available, but in no event will any Promissory
Notes be issued directly to them. Defendants will not directly
or indirectly oppose Plaintiffs’ Class Counsel of Record’s
application for fees and expenses or compensation of the
Representative Plaintiffs. Any award of attorneys’ fees, costs
and expenses shall be paid out of the Settlement Fund and
Defendants shall have no separate liability for the payment of
any attorneys’ fees, costs and expenses. Any portion of
Plaintiffs’ Class Counsel of Record fees and expenses awarded
by the Court which is not paid in cash out of the cash portion
of the Settlement Fund or interest earned thereon, will be paid
by the Settlement Administrator out of the balance of the
Settlement Fund as the fees and expenses of the Settlement
Class Members and not as an obligation of the Defendants.
The portion of these fees and expenses not paid in cash out of
the cash portion of the Settlement Fund will be paid by the
Settlement Administrator if, as and when the Settlement
Administrator receives payments with respect to the Master
Promissory Note, and the deferred portion of these fees and
expenses will earn interest at the same rate and be paid at the
same time as interest is earned and paid on the Master
Promissory Note. In addition, the Settlement Administrator
will demand payment at the earliest possible date, and not later
than the Five Year Maturity Date referred to in the Master
Promissory Note, of sufficiemt principal on the Master
Promissory Note to pay the balance in full of these deferred
fees and expenses.
7.2 The attorneys’ fees, expenses and costs, including the
fees of experts and consultants, ais awarded by the Court, shall
be paid by the Settlement Administrator to Plaintiffs’ Class
Counsel of Record from the Settlement Fund, as ordered,
ae BE Co
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