UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
In re CMS ENERGY ERISA LITIGATION This Document Relates To: ALL ACTIONS | ) ) ) ) ) ) ) | Master File No. 02-72834 Honorable George Caram Steeh Class Action | ||
CLASS ACTIONSETTLEMENT AGREEMENT
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This CLASS ACTIONSETTLEMENT AGREEMENT(“Settlement Agreement”) is entered into by and betweenNamed Plaintiffsin the above-captionedActionfor themselves and on behalf of theSettlement Class, on the one hand, and theDefendants, on the other.
RECITALS
WHEREAS,Named Plaintiffscommenced the above-captionedActionasserting various claims for relief under the Employee Retirement Income Security Act of 1974, as amended, against theDefendants, all of which claims are disputed byDefendants; and
WHEREAS, thePartiesdesire to promptly and fully resolve and settle with finality theAction;
NOW, THEREFORE, theParties, in consideration of the promises, covenants and agreements herein described, and for other good and valuable consideration, acknowledged by each of them to be satisfactory and adequate, and intending to be legally bound, do hereby mutually agree as follows:
1. | DEFINITIONS |
As used in thisSettlement Agreement, italicized and capitalized terms and phrases not otherwise defined have the meanings provided below:
1.1. “Action” shall mean:In re CMS Energy ERISA Litigation, Master File No. 02-72834, United States District Court, Eastern District of Michigan, (Hon. George Caram Steeh), and any and all cases now or hereafter consolidated therewith. The “Action” specifically excludes the “Securities Actions.”
1.2. “Affiliate” shall mean: any entity which owns or controls, is owned or controlled by, or is under common ownership or control with, aPerson. For purposes of this definition, “control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of suchPerson, whether through the ownership of voting securities or otherwise.
1.3. “Agreement Execution Date” shall mean: the date on which thisSettlement Agreementis fully executed, as provided in Section 11.14 below.
1.4. “Carrier” shall mean: Associated Electric & Gas Insurance Services Limited, and its General Managing Agent, AEGIS Insurance Services, Inc. (collectively, “AEGIS”).
1.5. “Class Counsel” shall mean: Keller Rohrback L.L.P.; Malakoff, Doyle and Finberg, P.C.; McTigue Law Firm; and Campbell, Harrison and Dagley, L.L.P.
1.6. “Claims” shall have the meaning set forth in Section 3.2.
1.7. “Class Notice” shall mean: the form of notice which shall be attached as an exhibit to the form ofPreliminary Approval Order, the terms of which shall be agreed upon by theParties.
1.8. “Class Period” shall mean: the period from August 3, 2000 through December 27, 2004.
1.9. “Class Settlement Amount” shall have the meaning set forth in Section 7.2.
1.10. “Company” shall mean: CMS Energy Corporation, a Michigan corporation, and each of itsAffiliates, and includes any and all predecessors orSuccessors-In-Interest, local, regional, national, and/or executive offices, divisions, or affiliates (foreign and domestic), segments, or divisions thereof, any of its subsidiaries, divisions or affiliates, including, but not limited to Consumers Energy Company and CMS Energy Resource Management Company, formerly known as CMS Marketing, Services and Trading Company, and all of their present and former officers, directors, employees, agents, directors, attorneys, accountants, advisors, and all other persons acting or purporting to act on their behalf.
1.11. “Complaint” shall mean: the Second Amended Consolidated Complaint filed on August 24, 2005.
1.12. “Court” shall mean: the United States District Court for the Eastern District of Michigan.
1.13. “Defendants” shall mean: theCompanyand the followingPersons named as defendants in theComplaint: Kathleen R. Flaherty; Victor J. Fryling; Earl D. Holton; William U. Parfet; Kenneth L. Way; Kenneth Whipple; John B. Yasinsky; John M. Deutch; James J. Duderstadt; Preston D. Hopper; David W. Joos; William T. McCormick, Jr.; Tamela W. Pallas; Percy A. Pierre; Alan M. Wright; Legal Representative of the Estate of Thomas McNish; and Laura L. Mountcastle.
1.14. “Effective Date” shall mean: the date on which theFinal OrderbecomesFinalin accordance with Section 1.17.
1.15. “ERISA” shall mean: the Employee Retirement Income Security Act of 1974, as amended, including all regulations promulgated and case law there under.
1.16. “Fairness Hearing” shall have the meaning set forth in Section 2.1.4.
1.17. “Final” shall mean: with respect to any judicial ruling or order, that the thirty (30) day period for any appeal has expired without the initiation of an appeal, or, if an appeal has been timely initiated, that there has occurred a full and final disposition of any such appeal without a reversal or modification, including the exhaustion of proceedings in any remand and/or subsequent appeal after remand.Notwithstanding any other provision hereof, theFinal Ordershall be deemedFinalwithout regard to whether (i) theCourthas entered an order regarding thePlan of Allocationor the award of legal fees and expenses; (ii) any order referred to in (i) above, if entered, has becomeFinal; or (iii) any order referred to in (i) above is reversed or modified on appeal.
1.18. “Final Order” shall have the meaning set forth in Section 2.1.4.
1.19. “Financial Institution” shall have the meaning set forth in Section 7.1.1.
1.20. “Mediators” shall mean Judge Nicholas H. Politan and Eric D. Green.
1.21. “Named Plaintiffs” shall mean: Roger D. Schilling, Karen Potter, and Danny Jordan.
1.22. “Net Proceeds” shall have the meaning set forth in Section 8.2.4.
1.23. “Parties” shall meanNamed Plaintiffsand theDefendants.
1.24. “Person” shall mean: an individual, partnership, corporation, governmental entity or any other form of entity or organization.
1.25. “Plaintiff Releasees” shall have the meaning set forth in Section 3.3.
1.26. “Plaintiffs” shall mean:Named Plaintiffsand each member of theSettlement Class.
1.27. The “Plan” shall mean: the Employees’ Savings Plan of Consumers Energy Company, as has been or may later be amended, individually and collectively, and any trust created under suchPlan.
1.28. “Plan of Allocation” shall mean: thePlan of Allocationapproved by theCourtas contemplated by Section 2.1.4 and described in Section 8.2.4.
1.29. “Preliminary Approval Order” refers to the Order to be issued as set forth in Section 2.1.1.
1.30. “Preliminary Motion” refers to the motion to be filed as set forth in Section 2.1.1.
1.31. “Released Claims” shall have the meaning set forth in Section 3.2.
1.32. “Releasees” shall mean: theDefendants, the present and formerRepresentativesof each of them, as well as the applicable fiduciary liability Insurance Policy, AEGIS Policy No. F0136A1A01.
1.33. “Releases” shall mean the releases set forth in Sections 3.1 and 3.3.
1.34. “Representatives” shall mean: attorneys, agents, directors, officers, or employees.
1.35. “Securities Actions” shall mean:In Re CMS Energy Securities Litigation, Master File No. 02-CV-72004-DT, United States District Court, Eastern District of Michigan (Hon. George Caram Steeh); and any and all cases now or hereafter consolidated therewith. “Securities Actions” specifically excludes theAction.
1.36. “Settlement” shall mean: the settlement to be consummated under thisSettlement Agreementpursuant to theFinal Order.
1.37. “Settlement Agreement” means this Class Action Settlement Agreement.
1.38. “Settlement Class” shall mean: the class certified by theCourtin theAction, by Order filed December 27, 2004, consisting of: allPersonswho were participants in or beneficiaries of thePlanat any time from August 3, 2000 through December 27, 2004.
1.39. “Settlement Fund” shall have the meaning set forth in Section 7.1.
1.40. “Successor-In-Interest” shall mean: aPerson’s estate, legal representatives, heirs, successors or assigns, including successors or assigns that result from corporate mergers or other structural changes.
2. | CONDITIONS TO THE EFFECTIVENESS OF THESETTLEMENT |
TheSettlementis contingent on the following conditions in Sections 2.1 through 2.5:
2.1.Condition #1: Court Approval. TheSettlementmust be approved by theCourtin accordance with the following steps.
2.1.1.Motion for Preliminary Approval of Settlement and of Notices.Class Counsel will file a motion (“Preliminary Motion”) with theCourtfor an order, the terms of which shall be agreed upon by the Parties, including the exhibits thereto (the “Preliminary Approval Order”), and in good faith shall take reasonable steps to (i) secure expeditiousCourtentry of thePreliminary Approval Order; and (ii) seek a setting for theFairness Hearing, described in Section 2.1.4, forty-five (45) days from the mailing of theClass Noticein accordance with Section 2.1.2.
2.1.2.Issuance ofClass Notice. As ordered by theCourtin itsPreliminary Approval Order,Named Plaintiffsand/orClass Counselshall cause theClass Noticeto be disseminated to thePlaintiffs.
2.1.3.Request byCourtorNamed Plaintiffsfor Information: If theCourtdeems it necessary for theDefendantsto supply information in their possession as part of theCourt’s review of theSettlement Agreement, theDefendantsagree to reasonably expedite provision of such information as directed by theCourt. IfNamed Plaintiffsdeem it necessary for theDefendantsto supply accessible information in their possession in order to respond to any timely filed objection, theDefendantsagree to reasonably expedite provision of such information, which shall be treated as Highly Confidential under the stipulated Protective Order entered by theCourtin thisAction. Any disputes regarding requests for information byNamed Plaintiffsshall be decided by the Court.
2.1.4.The Fairness Hearing. TheCourtwill conduct a hearing at which it will consider whether theSettlementis fair, reasonable, and adequate (“Fairness Hearing”). At or after theFairness HearingtheCourtwill determine: (i) whether to enter judgment finally approving theSettlementand dismissing theAction(which judgment is referred to herein as the “Final Order”); (ii) whether the distribution of theClass Settlement Amountas provided in thePlan of Allocationshould be approved or modified; and (iii) what legal fees, compensation and expenses should be awarded toClass Counseland toNamed Plaintiffsas contemplated by Section 10 of thisSettlement Agreement. ThePartiesagree to support entry of theFinal Orderas contemplated by clause (i) of this Section 2.1.4; however, theDefendantsagree not to take any position, and are not required to take any position, with respect to the matters described in clauses (ii) or (iii) of this Section 2.1.4. ThePartiescovenant and agree that they will reasonably cooperate with one another in obtaining theFinal Orderas contemplated hereby at theFairness Hearingand will not do anything inconsistent with obtaining theFinal Order.
2.2.Condition #2: Funding ofClass Settlement Amount. TheCarriermust cause to be deposited the funds as specified in 7.2 of thisSettlement Agreementinto theSettlement Fundin accordance therewith.
2.3.Condition #3: Finality ofFinal Order. TheFinal Ordermust beFinalin accordance with Section 1.17 above.
2.4.Condition #4: Independent Fiduciary. TheSettlementwill be contingent upon U.S. Trust Company N.A., acting as independent fiduciary, (i) approving theSettlementand giving a release in its capacity as a fiduciary of thePlanand for and on behalf of thePlanwhich is coextensive with the release from the class members, (ii) authorizing theSettlementin accordance with Prohibited Transaction Class Exemption 2003-39, and (iii) finding that theSettlement Agreementdoes not constitute a prohibited transaction under ERISA § 406 (a). CMS shall move promptly to seek to obtain this authorization and finding. TheCarriershall pay all fees and expenses of the independent fiduciary. All parties shall cooperate in providing information to the independent fiduciary as requested.
2.5.Condition #5: Dismissal of Claims. TheActionand allClaimsasserted therein must be dismissed with prejudice.
3. | RELEASES |
3.1.Releasesof theReleasees. Effective upon theEffective Date,Named Plaintiffs on behalf of themselves, on behalf of theSettlement Class, and on behalf of thePlan, absolutely and unconditionally release and forever discharge theReleaseesfromReleased ClaimsthatNamed Plaintiffs, theSettlement Classor thePlandirectly, indirectly, derivatively, or in any other capacity ever had, now have or hereafter may have.
3.2.Released Claims. Subject to Section 3.6 below,Plaintiffs(on behalf of each member of theSettlement Class) and thePlanshall release any and all claims of any nature whatsoever (including claims for any and all losses, damages, unjust enrichment, attorneys’ fees, disgorgement of fees, litigation costs, injunction, declaration, contribution, indemnification or any other type or nature of legal or equitable relief), against any of theDefendants, their current or former subsidiaries and affiliates, and the current or former officers, directors, employees, insurers, plan fiduciaries or agents of anyDefendant, whether accrued or not, whether already acquired or acquired in the future, whether known, unknown, suspected or unsuspected, in law or equity, as well as any claim or right obtained by assignment, brought by way of demand, complaint, cross-claim, counterclaim, third party claim or otherwise (collectively, “Claims”), arising out of or in any way related to, directly or indirectly, any or all of the acts, omissions, facts, matters, transactions or occurrences during the Class Period: (i) that are, were or could have been alleged, asserted, or set forth in theComplaint, including but not limited to claims that: (a)Defendantsbreached ERISA fiduciary duties toPlaintiffsin connection with the acquisition and holding ofCompanystock by thePlanor thePlaintiffs, (b) the Director Defendants failed to appoint and/or adequately monitorPlanfiduciaries with respect toCompanystock, (c) theDefendantsfailed to provide complete and accurate information to plan fiduciaries or participants and beneficiaries of thePlanregarding theCompanyorCompanystock, (d)Defendantseach or any one of them caused thePlanto pay more than adequate consideration forCompanystock for thePlan, (e) theDefendantsviolated any ERISA duties related to the acquisition, disposition, or retention ofCompanystock by the Plan; (ii) against the applicable fiduciary liability Insurance Policy, AEGIS Policy No. F0136A1A01; (iii) that would be barred by principles ofres judicatahad the claims asserted in theComplaintbeen fully litigated and resulted in a final judgment or order; (iv) that pertain to any decision made by any of the Parties to enter into or approval this Settlement Agreement; or (v) that pertain to any conduct related to the direction to calculate, the calculation of, and/or the allocation of theClass Settlement Amountto thePlanor any participant or beneficiary of thePlanpursuant to thePlan of Allocation. Except for the obligations arising under theSettlement Agreement,Plaintiffshereby expressly and completely waive and release any and all rights or benefits which they have or may have under Section 1542 of the California Civil Code, and any similar provision in any other jurisdiction, pertaining to the matters set forth in theAction. Section 1542 provides as follows:
A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.
In connection with such waiver and relinquishment,Plaintiffsacknowledge that they are aware that they have or may hereafter discover claims presently unknown or unsuspected, or facts in addition to or different from those which now are known or believed to be true, with respect to the matters set forth in theAction. Nevertheless, it is the intention ofPlaintiffs, through theSettlement Agreement, and with the advice of counsel, to fully, finally and forever to settle and release all such matters. In furtherance of such intention, the releases herein given byPlaintiffsshall be and remain in effect as full and complete releases of the matters set forth in the Action, notwithstanding the discovery or existence of any such additional or different claims or facts relative hereto.
3.3.ReleasesofNamed Plaintiffs, theSettlement ClassandClass Counsel. Effective upon theEffective Date, theDefendantsabsolutely and unconditionally release and forever discharge theNamed Plaintiffs, theSettlement Class, andClass Counseland theirRepresentatives (collectively, the “Plaintiff Releasees”), from any and allClaimsrelating to the institution or prosecution of theActionor the settlement of anyReleased Claim.
3.4.ReciprocalReleasesamong theDefendants. Effective upon theEffective Date, eachDefendantabsolutely and unconditionally releases and forever discharges each and every otherDefendantfrom any and allClaimsin this litigation relating to theReleased Claims, including any and allClaimsfor contribution or indemnification for suchClaims. Notwithstanding the foregoing, nothing in this Section 3.4 is intended to affect the respective rights of theCompanyand otherDefendantsrelative to one another under theCompany’scurrent corporate authority and relevant provisions of the Michigan Business Corporation Act with respect to reimbursement and advancement of an individualDefendant’slegal fees and expenses by theCompany.
3.5.Scope ofReleases. The releases set forth in 3.1, 3.3, and 3.4 (the “Releases”) are not intended to include the release of any rights or duties arising out of thisSettlement Agreement, including the express warranties and covenants in thisSettlement Agreement.
3.6.PersonsandClaimsNot Released. Nothing in thisSettlement Agreementshall release, bar, waive, or otherwise affect anyClaimthat has been asserted in theSecurities Actions or any defense thereto, andDefendants, the PlanandNamed Plaintiffsreserve all rights with respect to positions they may take on that question in that action.
4. | COVENANTS |
ThePartiescovenant and agree as follows:
4.1.Covenants Not to Sue.
4.1.1.Named Plaintiffsand theSettlement Classcovenant and agree: (i) not to file against anyReleaseeor thePlanany additionalClaimbased on or arising from anyReleased Claim, or re-file theClaimbrought in thisAction; and (ii) that the foregoing covenants and agreements shall be a complete defense to any suchClaimsagainst any of the respectiveReleasees.
4.1.2.Defendantscovenant and agree (i) not to file against anyPlaintiff Releaseeor thePlanor any otherDefendantany claim released under Section 3.3 or Section 3.4; and (ii) that the foregoing covenants and agreements shall be a complete defense to any such claims against any of the respectivePlaintiff Releasees.
4.2.Taxation ofClass Settlement Amount.Named Plaintiffsacknowledge on their own behalf, and on behalf of theSettlement Class, that theReleaseeshave no responsibility for any taxes due on funds once deposited in theSettlement Fundor that theNamed PlaintiffsorClass Counselreceive from theClass Settlement Amount,should any be awarded pursuant to Article 10 hereof. Nothing herein shall constitute an admission or representation that any taxes will or will not be due on theClass Settlement Amount. TheCompanywill direct thePlanadministrator and trustee to treat the amounts allocated pursuant to thePlan of Allocationas restorative payments consistent with Revenue Ruling 2002-45, 2002-2 C.B. 116, 2002 WL 137852.
4.3.Cooperation. TheCompanyshall use its best efforts to promptly provideClass Counsel, as available,in electronic database format the names and last known addresses of members of theSettlement Classand timely respond to reasonable written requests for accessible data in theCompany’scustody or control necessary to implement, enforce or determine the administrability of a proposedPlan of Allocation. This information shall be treated as Highly Confidential under the stipulated Protective Order entered by theCourtin thisAction; provided that theParties expressly acknowledge that the information may be used to deliver theClass Noticeand/or implement theSettlement, including thePlan of Allocation.
4.4.CompanyCovenant Not To Restrict Sale of Its Stock. TheCompanycovenants and agrees that it will not take any action to restrictPlanparticipants’ ability to sell CMS stock that is in or may be added to the Plan for a period of 4 years except in instances required to comply with applicable law or internal compliance procedures.
4.5.CompanyCovenant to Provide Information toPlanFiduciaries. TheCompany covenants and agrees that it will take steps to see that individuals identified as fiduciaries to thePlanare provided with knowledge of their ERISA imposed duties and obligations. TheCompany will take steps to provide suchPlanfiduciaries with regularly updated materials regardingPlan management and administration that sets forth their duties and responsibilities under ERISA.
4.6.CompanyCovenant to Provide Information toPlanParticipants and Beneficiaries.The Plan Document and Summary Plan Description will identify the fiduciary structure of thePlansuch that it is clear who exercises fiduciary responsibility for thePlanandPlanassets. In addition, to the extent not already in place, the Plan Document and Summary Plan Description shall provide contact information for participants or beneficiaries with questions regarding thePlanandPlanassets. To the extent not already accomplished by materials prepared by the current Plan record keeper and trustee, Fidelity,Planmaterials shall clearly state the importance of diversification, and shall encourage participants to regularly evaluate whether their retirement plan assets are sufficiently diversified to protect against large losses.
4.7.Stay of Discovery in theAction. ThePartiescovenant and agree to a stay of discovery in theAction, effective for the period of time from December 19, 2005 until two weeks after any of the following events: (i) the parties fail to execute aSettlement Agreement consistent with the terms of the Settlement Terms Sheet; (ii) theSettlementis not preliminarily approved by the Court; or (iii)Finalapproval by theCourtis not granted. ShouldFinalapproval of this settlement not occur for any reason, thePartieswill be given the opportunity to proceed with depositions notwithstanding that some of the deponents will have been deposed once already in theSecurities Actionsduring such discovery stay, and in all other respects the parties will be restored to the position they were in immediately prior to the settlement being reached. In the event discovery recommences, thePartiesshall jointly stipulate for an extension of the discovery period for a length of time that is not less than the duration of the settlement stay, such that the parties are provided with a reasonable opportunity to complete discovery in this action.
5. | REPRESENTATIONS AND WARRANTIES |
5.1.Named Plaintiffs’ Representations and Warranties.
5.1.1.Named Plaintiffsrepresent and warrant that they have not assigned or otherwise transferred any interest in anyReleased Claimsagainst anyReleasee, and further covenant that they will not assign or otherwise transfer any interest in anyReleased Claims; and
5.1.2. Pursuant to Articles 3 and 4,Named Plaintiffsrepresent and warrant that they shall have no surviving claim or cause of action against any of theReleaseesor thePlanwith respect to theReleased Claimsagainst them.
5.2.Parties’ Representations and Warranties. TheParties, and each of them, represent and warrant:
5.2.1. That they have conducted voluminous discovery; that they are voluntarily entering into thisSettlement Agreementas a result of arm’s length negotiations among their counsel, with the assistance of theMediators; that in executing thisSettlement Agreementthey are relying solely upon their own judgment, belief and knowledge, and the advice and recommendations of their own independently selected counsel, concerning the nature, extent and duration of their rights and claims hereunder and regarding all matters which relate in any way to the subject matter hereof; and that, except as provided herein, they have not been influenced to any extent whatsoever in executing thisSettlement Agreementby any representations, statements or omissions pertaining to any of the foregoing matters by any party or by anyPersonrepresenting any party to thisSettlement Agreement, other than those expressly set forth in theSettlement Agreement. Each of thePartiesassumes the risk of mistake as to facts or law; and
5.2.2. That they have carefully read the contents of thisSettlement Agreement, and thisSettlement Agreementis signed freely by eachPersonexecuting thisSettlement Agreementon behalf of each of theParties.TheParties, and each of them, further represent and warrant to each other that he, she, or it has made such investigation of the facts pertaining to theSettlement, thisSettlement Agreementand all of the matters pertaining thereto, as he, she, or it deems necessary.
5.3.Signatories’ Representations and Warranties. Each individual executing thisSettlement Agreementon behalf of any otherPersondoes hereby personally represent and warrant to the otherPartiesthat he or she has the authority to execute thisSettlement Agreementon behalf of, and fully bind, each principal whom such individual represents or purports to represent.
6. NO ADMISSION OF LIABILITY
ThePartiesunderstand and agree that thisSettlement Agreementembodies a compromise settlement of disputed claims, and that nothing in thisSettlement Agreement, including the furnishing of consideration for thisSettlement Agreement, shall be deemed to constitute any finding of fiduciary status underERISAor wrongdoing by any of theDefendants, or give rise to any inference of fiduciary status underERISAor wrongdoing or admission of wrongdoing or liability in this or any other proceeding. ThisSettlement Agreementand the payments made hereunder are made in compromise of disputed claims and are not admissions of any factual assertions in this Action or of any liability of any kind, whether legal or factual. Moreover, theDefendantsspecifically deny any such liability or wrongdoing Neither the fact nor the terms of thisSettlement Agreementshall be offered or received in evidence in any action or proceeding for any purpose, except (i) in an action or proceeding arising under thisSettlement Agreementor arising out of or relating to thePreliminary Approval Orderor theFinal Order, or (ii) in an action or proceeding where theReleasesprovided pursuant to thisSettlement Agreementmay serve as a bar to recovery, or (iii) for purposes of determining a remedy in theSecurities Actions.
7. | THESETTLEMENT FUNDAND DELIVERIES INTO THESETTLEMENT FUND |
7.1.TheSettlement Fund.
7.1.1. No later than five (5) business days after the Settlement Terms Sheet is executed by all parties,Class Counselshall (i) establish at a federally-insured financial institution (the “Financial Institution”); and (ii) provide to theDefendantsand theirCarrierany information needed to fund theSettlement Fund.The monies in theSettlement Fund, together with the value of theCompany’scovenants in Sections 4.4 through 4.6, shall be considered a common fund created as a result of theAction.TheFinancial Institutionshall agree in writing to hold theSettlement Fund and make distributions therefrom strictly in accordance with the terms and conditions of thisSettlement Agreement.
7.1.2. TheSettlement Fundshall include interest earned thereon, for the benefit ofNamed Plaintiffs, theSettlement Class,andClass Counsel,and shall be invested only in United States Treasury securities and/or securities of United States agencies backed by the full faith and credit of the United States Treasury, repurchase agreements collateralized by such securities, and mutual funds or money market accounts, provided that such funds or accounts invest exclusively in the foregoing securities.Class Counselshall structure and manage theSettlement Fundto qualify as a qualified settlement fund under Section 468B of the Internal Revenue Code and Treasury regulations promulgated there under. It is intended that theSettlement Fundbe structured and administered to preserve, to the maximum degree possible, the tax benefits associated withERISA-qualified plans. ThePartiesshall not take a position in any filing or before any tax authority inconsistent with such treatment. All taxes on the income of theSettlement Fundand tax-related expenses incurred in connection with the taxation of theSettlement Fundshall be paid out of theSettlement Fund. All fees and/or expenses of thePlantrustee for allocation pursuant to thePlan of Allocationwill be paid from theSettlement Fund.Class Counselshall have signature authority over theSettlement Fund,and shall direct theFinancial Institutionto pay from theSettlement Fundthe reasonable cost of administering theSettlement Fundwithout further order of theCourt,which expenses shall include (i) expenses associated with the preparation and filing of all tax reports and tax returns required to be filed by theSettlement Fund; (ii) payment of any taxes owed by theSettlement Fund; (iii) expenses associated with the preparation and issuance of any required Forms 1099 associated with payments from theSettlement Fund; and (iv) fees charged and expenses incurred by theFinancial Institutionassociated with administration of theSettlement Fund.Class Counselmay instruct theFinancial Institutionto reserve any portion of theSettlement Fundfor the purpose of satisfying future or contingent expenses or obligations, including expenses ofSettlement Fund administration or any disbursement provided in Article 8 of thisSettlement Agreement. TheDefendantswill take no position, directly or indirectly, with respect to such matters.
7.1.3. ThePartiesacknowledge and agree that theDefendantsshall have no authority, control, or liability in connection with the design, management, administration, investment, maintenance, or control of theSettlement Fund, or for any expenses theSettlement Fundmay incur or for any taxes that may be payable by theSettlement Fundor any distributee there from.
7.2.TheClass Settlement Amount. In consideration of, and expressly in exchange for, all of the promises and agreements set forth in thisSettlement Agreement, theCarrierwill, within ten business days after execution of the Settlement Terms Sheet by all parties (by February 27, 2006), cause to be deposited the sum of $28,000,000 plus interest since December 28, 2005 (with a deduction of $11 for the wire transfer fee) into theSettlement Fund. At least five business days prior to such funding deadline,Class Counselshall provide to theDefendantsand theCarrierany information needed to fund theSettlement Fund. TheCarrierwill provideClass Counselall information and materials necessary to calculate any taxes and expenses due on theClass Settlement Amountfrom December 28, 2005 through the date suchClass Settlement Amountis deposited into theSettlement FundandClass Counselagree to cause the taxes to be paid from theSettlement Fund, including taxes due on the interest earned from December 28, 2005, in a timely manner. In the event that the Court does not grant preliminary approval of theSettlement Agreementor if theSettlement Agreementdoes not become effective for any reason,Class Counselwill return the money held in escrow, together with the interest thereon, to theCarrier. In the event final approval is not granted by the Court, the only deductions from thisSettlement Fundbefore the amount is returned to theCarrierwill be the expenses associated with class notice and any costs incurred to date byClass Counselin connection with the implementation of theSettlement Agreement, including expenses necessary to calculate and allocate theClass Settlement Amountand any related taxes or fees associated with establishment and maintenance of theSettlement Fund.
7.3.Sole Monetary Contribution. TheClass Settlement Amountshall be the full and sole monetary contribution made by or on behalf of theDefendantsin connection with theSettlement effected betweenNamed Plaintiffsand theDefendantsunder thisSettlement Agreement.TheClass Settlement Amountspecifically covers any claims for costs and attorneys’ fees byNamed Plaintiffs, on their behalf or on behalf of theSettlement Class,as well as any costs or expenses of theClass Notice. Except as otherwise specified in thisSettlement Agreement, thePartiesshall bear their own costs and expenses (including attorneys’ fees) in connection with effectuating theSettlement and securing all necessary court orders and approvals with respect to the same.
8. | PAYMENTS FROM THESETTLEMENT FUND |
8.1.Expenses ofClass Notice.Class Counselshall direct theFinancial Institution in writing to disburse from theSettlement Fundan amount approved by theCourtfor the payment of costs of theClass Notice. If theSettlement Agreementis terminated for any reason or if any condition stated in Article 2 above is not satisfied or waived, noPersonshall have an obligation to reimburse to theSettlement Fundthe costs of theClass Notice, or other costs or expenses of theSettlement Fundcharged to theSettlement Fundunder thisSettlement Agreement.
8.2.Disbursements from theSettlement Fund.Class Counselshall direct theFinancial Institutionto disburse money from theSettlement Fundas follows:
8.2.1.For Attorneys’ Fees and Expenses. As provided in Section 10.2 herein.
8.2.2.ForNamed Plaintiffs’compensation. As provided in Section 10.2 herein.
8.2.3.For taxes and expenses of theSettlement Fund. As provided in Section 7.1.2 herein.
8.2.4.For thePlan of Allocation.Class Counselshall propose to theCourtaPlan of Allocation(“Plan of Allocation”) that shall provide for the allocation of theSettlement Fundnet of the disbursements called for in sections 8.2.1, 8.2.2 and 8.2.3 (“Net Proceeds”). SuchPlan of Allocationwill provide the method by which the specific dollar amount to be allocated by thePlan as to each member of theSettlement Classwill be calculated. On or after theEffective Date,Class Counselshall direct theFinancial Institutionto disburse theNet Proceedsto thePlanfor distribution by thePlan’s trustee in accordance with thePlan of Allocation. TheDefendantswill be excluded from thePlan of Allocation. ThePlan of Allocationis a matter separate and apart from theSettlementbetween theParties, and no decision by theCourtconcerning thePlan of Allocationshall affect the validity of theSettlement Agreementor finality of theSettlementin any manner. Nothing herein shall constitute approval or disapproval of thePlan of Allocationby theReleasees, and theReleaseesshall have no responsibility or liability for thePlan of Allocationand shall take no position for or against thePlan of Allocationbefore theCourt, other than as set forth in the following paragraph.
8.2.5. Defendants shall have no responsibility for structuring the content or fairness of thePlan of Allocationbut will review it for feasibility only before submission to theCourt. Reasonable and necessary costs incurred byClass Counseland any third parties retained in connection with implementation of the Plan of Allocation shall be paid from theSettlement Fund, as approved by theCourt. In the event that it is necessary and appropriate for CMS to retain a third party with respect to implementation or allocation of thePlan of Allocation, CMS shall provide advance notice toClass Counsel, and providedClass Counseldo not object,Class Counselwill pay the reasonable costs of such third party out of theSettlement Fundsubject to the approval of theCourt.Class Counselshall not unreasonably object to the retention of such third-parties and will in good faith consider the matter with the sole purpose of ensuring that settlement funds are not expended unreasonably or unnecessarily. In the event that the parties have any dispute regarding the retention of any third party, they shall petition theCourtfor a prompt resolution.
9. | TERMINATION OF THESETTLEMENT AGREEMENT |
9.1.Termination. Automatic termination of thisSettlement Agreement, thereby making theSettlement Agreementnull and void, will occur under the following circumstances:
9.1.1. If theCourtdeclines to approve theSettlement,then thisSettlement Agreementshall automatically terminate and become null and void.
9.1.2. If any Court issues a final order modifying theSettlement Agreement, and if, within ten (10) days after the date of any such ruling, thePartieshave not agreed in writing to proceed with all or part of theSettlement Agreementas modified by theCourtor theParties,then thisSettlement Agreementshall automatically terminate and become null and void.
9.1.3. If any or all of the conditions of Article 2 of thisSettlement Agreementare not fully satisfied or waived in accordance with their terms and on the timetables set forth in that Article and in Section 7.2, then thisSettlement Agreementshall terminate and become null and void, except as provided in Section 9.2.
9.2.Consequences of Termination of theSettlement Agreement. If theSettlement Agreementis terminated and rendered null and void for any reason specified in Section 9.1, the following shall occur:
9.2.1. Upon written request by counsel forDefendantsor counsel for theCarrier, Class Counselshall within ten (10) days after the date of termination of theSettlement Agreementnotify theFinancial Institutionin writing to return to theCarrierthe amounts contributed to theSettlement Fund, with all net income earned thereon, after deduction of the amount earlier disbursed or owed for theClass Notice, the expenses charged by theFinancial Institution, and any expense of theSettlement Funddisbursed or owed pursuant to Section 7.1.2, directing theFinancial Institutionto effect such return within ten (10) days.
9.2.2. TheActionshall for all purposes with respect to thePartiesrevert to its status as of the day immediately before theAgreement Execution Date,and the parties shall be restored to the position they were prior to theSettlementbeing reached.
9.2.3. All provisions of thisSettlement Agreementshall be null and void except as otherwise provided herein. Neither the fact nor the terms of thisSettlement Agreementshall be offered or received in evidence in any action or proceeding for any purpose, except in an action or proceeding arising under thisSettlement Agreement.
10. | ATTORNEYS’ FEES AND EXPENSES |
10.1.Application for Attorneys’ Fees and Expenses. Pursuant to the common fund doctrine and/or any applicable statutory fee provision,Class Counselmay apply to theCourtfor an award toClass Counselof attorneys’ fees, and for reimbursement of expenses, to be paid from theSettlement Fund.Class Counselmay apply to theCourtfor compensation toNamed Plaintiffs, payable solely from theSettlement Fund, andNamed Plaintiffsshall be entitled to receive such compensation from theSettlement Fundto the extent awarded by theCourt. The Defendants shall take no position onClass Counsel’sapplication for fees, costs, and reimbursement of expenses or on any such applications byNamed Plaintiffs.
10.2.Disbursement of Attorneys’ Fees and Expenses andNamed PlaintiffsCompensation. Upon the later of (i) entry of an order by theCourtawarding payment of attorneys’ fees and expenses from theSettlement Fundand/or payment ofNamed Plaintiffscompensation from theSettlement Fund, and (ii) theEffective Date,Class Counselmay instruct theFinancial Institution in writing to disburse such payments from theSettlement Fund. If at the time of any disbursement from theSettlement Fundpursuant to Article 8 there shall be a pending application for attorneys’ fees or expenses orNamed Plaintiffscompensation, there shall be reserved in theSettlement Fund an amount equal to the amount of the pending application, until such time as theCourtshall rule upon such application.
11. | MISCELLANEOUS PROVISIONS |
11.1.Governing Law. ThisSettlement Agreementshall be governed by the laws of the State of Michigan without giving effect to the conflict of laws or choice of law provisions thereof, except to the extent that the law of the United States governs any matter set forth herein, in which case such federal law shall govern.
11.2.Destruction of Materials. Except for attorney notes, pleadings, transcripts, and other court submissions and exhibits thereto, eachPartythat received material, including confidential material obtained in formal discovery (as defined in the Stipulation and Order Re Confidentiality entered by the Court on November 16, 2005), material obtained in informal discovery (including initial disclosure material provided pursuant to Federal Rule of Civil Procedure 26), information provided for purposes of settlement, and all other confidential material, from an opposingPartyin the course of litigating thisAction, shall, within thirty (30) days after theEffective Date, certify that all such copies of such materials received from any otherParty, in its custody or control, including in the possession of consultants of the opposingParty, have been destroyed.
11.3.Severability. The provisions of thisSettlement Agreementare not severable.
11.4.Amendment. Before entry of theFinal Order, theSettlement Agreementmay be modified or amended only by written agreement signed by or on behalf of allParties.Following entry of theFinal Order, theSettlement Agreementmay be modified or amended only by written agreement signed on behalf of allParties, and approved by theCourt.
11.5.Waiver. The provisions of thisSettlement Agreementmay be waived only by an instrument in writing executed by the waiving party.The waiver by any party of any breach of thisSettlement Agreementshall not be deemed to be or construed as a waiver of any other breach, whether prior, subsequent, or contemporaneous, of thisSettlement Agreement.
11.6.Construction. None of thePartieshereto shall be considered to be the drafter of thisSettlement Agreementor any provision hereof for the purpose of any statute, case law or rule of interpretation or construction that would or might cause any provision to be construed against the drafter hereof.
11.7.Principles of Interpretation. The following principles of interpretation apply to thisSettlement Agreement.
11.7.1.Headings. The headings of thisSettlement Agreementare for reference purposes only and do not affect in any way the meaning or interpretation of thisSettlement Agreement.
11.7.2.Singular and Plural. Definitions apply to the singular and plural forms of each term defined.
11.7.3.Gender. Definitions apply to the masculine, feminine, and neuter genders of each term defined.
11.7.4.References to aPerson. References to aPersonare also to thePerson’s permitted successors and assigns.
11.7.5.Terms of Inclusion. Whenever the words “include,” “includes” or “including” are used in thisSettlement Agreement, they shall not be limiting but rather shall be deemed to be followed by the words “without limitation.”
11.8.Further Assurances. Each of thePartiesagrees, without further consideration and as part of finalizing theSettlementhereunder, that they will in good faith execute and deliver such other documents and take such other actions as may be necessary to consummate and effectuate the subject matter and purpose of thisSettlement Agreement.
11.9.Survival. All representations, warranties and covenants set forth in thisSettlement Agreementshall be deemed continuing and shall survive theEffective Date. The provisions of Section 9 above shall apply in the event of the termination of thisSettlement Agreement.
11.10.Notices. Any notice, demand or other communication under thisSettlement Agreement(other than theClass Notice, or other notices given at the direction of theCourt) shall be in writing and shall be deemed duly given upon receipt if it is addressed to each of the intended recipients as set forth below and personally delivered, sent by registered or certified mail (postage prepaid), sent by confirmed facsimile, or delivered by reputable express overnight courier:
IF TOPLAINTIFFS:
Lynn Lincoln Sarko
Derek W. Loeser
Keller Rohrback L.L.P.
1201 Third Avenue, Suite 3200
Seattle, WA 98101-3052
Fax: (206) 623-3384
Justin Campbell
Robin L. Harrison
Campbell, Harrison & Dagley, LLP
4000 Two Houston Center
909 Fannin Street
Houston, TX 77010
Fax: (713) 752-2330
Ellen M. Doyle
Malakoff Doyle & Finberg, P.C.
437 Grant Street, Suite 200
Pittsburgh, PA 15219
Fax: (412) 281-3262
J. Brian McTigue
Greg Porter
Cornish F. Hitchcock
McTigue Law Firm
5301 Wisconsin Avenue NW, Suite 350
Washington, DC 20015
Fax: (202) 364-9960
IF TODEFENDANTS:
Wilbur H. Boies, P.C.
Nancy G. Ross
Chris C. Scheithauer
McDermott Will & Emery LLP
227 West Monroe Street, Suite 4400
Chicago, IL 60606-5096
Fax: (312) 984-7700
Michael G. Wilson
Consumers Energy Company
One Energy Plaza
212 West Michigan Avenue
Jackson, MI 49201
Fax: (517) 768-3141
James K. Robinson
Cadwalader, Wickersham & Taft LLP
1201 F Street NW, Suite 1100
Washington, DC 20004
Fax: (202) 862-2400
James G. Munisteri
Gardere Wynne Sewell LLP
1000 Louisiana, Suite 3400
Houston, TX 77002-5007
Fax: (713) 276-5555
Neil A. Steiner
Dechert LLP
30 Rockefeller Plaza
New York, NY 10112-2200
Fax: (212) 698-3599
Ryan T. Scarborough
Williams & Connolly LLP
725 Twelfth Street NW
Washington, DC 20005-5901
Fax: (202) 434-5029
Joseph J. Reilly
Sullivan & Cromwell L.L.P.
1701 Pennsylvania Avenue, N.W.
Washington, DC 20006
Fax: (202) 293-6330
Lewis J. Liman
Jeffrey Jordan
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, NY 1006
IF TOCARRIER:
Martin B. Schnabel
AEGIS Insurance Services, Inc.
10 Exchange Place
Jersey City, NJ 07302
Fax: (201) 462-7269
Darius N. Kandawalla
Bailey Cavalieri LLC
10 West Broad Street, Suite 2100
Columbus, OH 43215
Fax: (614) 229-3255
Howard Shapiro
Proskauer Rose LLP
LL&E Tower, Suite 1100
909 Poydras Street
New Orleans, LA 70112-4017
Any Party may change the address at which it is to receive notice by written notice delivered to the otherPartiesin the manner described above.
11.11.Entire Agreement. ThisSettlement Agreementcontains the entire agreement among thePartiesrelating to thisSettlement. It specifically supersedes any settlement terms orSettlement Agreements relating to theDefendantsthat were previously agreed upon orally or in writing by any of theParties.
11.12.Counterparts. ThisSettlement Agreement, and any amendments thereto, and waivers of conditions, may be executed by exchange of faxed executed signature pages, and any signature transmitted by facsimile for the purpose of executing thisSettlement Agreementshall be deemed an original signature for purposes of thisSettlement Agreement.ThisSettlement Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which, taken together, shall constitute one and the same instrument.
11.13.Binding Effect. ThisSettlement Agreementbinds and inures to the benefit of thePartieshereto, their assigns, heirs, administrators, executors and successors.
11.14.Agreement Execution Date. The date on which the final signature is affixed below shall be theAgreement Execution Date.
IN WITNESS WHEREOF, thePartieshave executed thisSettlement Agreementon the dates set forth below.
FORPLAINTIFFS: | ||||
Dated:________________________ | By: ___________________________________ | |||
Lynn Lincoln Sarko | ||||
Derek Loeser | ||||
Gary Gotto | ||||
Amy Hanson | ||||
Keller Rohrback L.L.P. | ||||
1201 Third Avenue, Suite 3200 | ||||
Seattle, WA 98101-3052 | ||||
Class Counsel for Plaintiffs | ||||
Dated: _______________________ _ | By: ___________________________________ | |||
Justin Campbell | ||||
Campbell, Harrison & Dagley, LLP | ||||
4000 Two Houston Center | ||||
909 Fannin Street | ||||
Houston, TX 77010 | ||||
Class Counsel for Plaintiffs | ||||
Dated: _______________________ _ | By: ___________________________________ | |||
Ellen M. Doyle | ||||
Malakoff Doyle & Finberg, P.C. | ||||
437 Grant Street, Suite 200 | ||||
Pittsburgh, PA 15219 | ||||
Class Counsel for Plaintiffs | ||||
Dated: | ||||
________________________ | By: ___________________________________ | |||
J. Brian McTigue | ||||
Gregory Porter | ||||
Cornish F. Hitchcock | ||||
McTigue Law Firm | ||||
5301 Wisconsin Ave NW, Suite 350 | ||||
Washington, D.C. 20015 | ||||
Class Counsel for Plaintiffs | ||||
Dated: _______________________ _ | By: ___________________________________ | |||
Jeffrey T. Meyers (P34348) | ||||
Morgan & Meyers PLC | ||||
3200 Greenfield, Suite 260 | ||||
Dearborn, MI 48120-1802 | ||||
Liaison Counsel for Plaintiffs | ||||
Dated: _______________________ _ | By: ___________________________________ | |||
Barry D. Adler (P30557) | ||||
Adler & Associates | ||||
30300 Northwestern Highway, Suite 304 | ||||
Farmington Hills, MI 48334 | ||||
Liaison Counsel for Plaintiffs | ||||
FORDEFENDANTS: | ||||
Dated: _______________________ _ | By: ___________________________________ | |||
Wilbur H. Boies, P.C. | ||||
Nancy G. Ross | ||||
Chris C. Scheithauer | ||||
McDermott Will & Emery LLP | ||||
227 West Monroe Street, Suite 4400 | ||||
Chicago, IL 60606-5096 | ||||
Counsel for Defendants CMS Energy | ||||
Corp., CMS Marketing Services and | ||||
Trading Company, Laura L. Mountcastle, | ||||
Victor J. Fryling, Estate of Thomas | ||||
McNish, John M. Deutch, James J. | ||||
Duderstadt, Kathleen R. Flaherty, Earl | ||||
D. Holton, Percy A. Pierre, Kenneth L. | ||||
Way, Kenneth Whipple, and John B. | ||||
Yasinsky | ||||
Dated: _______________________ _ | By: ___________________________________ | |||
Todd A. Holleman | ||||
Miller, Canfield, Paddock | ||||
& Stone, P.L.C. | ||||
150 West Jefferson, Suite 2500 | ||||
Detroit, MI 48226-4415 | ||||
Counsel for Defendants CMS Energy | ||||
Corp., CMS Marketing Services and | ||||
Trading Company, Laura L. Mountcastle, | ||||
Victor J. Fryling, Estate of Thomas | ||||
McNish, John M. Deutch, James J. | ||||
Duderstadt, Kathleen R. Flaherty, Earl | ||||
D. Holton, Percy A. Pierre, Kenneth L. | ||||
Way, Kenneth Whipple, and John B. | ||||
Yasinsky | ||||
Dated: _______________________ _ | By: ___________________________________ | |||
Michael G. Wilson | ||||
Consumers Energy Company | ||||
One Energy Plaza | ||||
212 West Michigan Avenue | ||||
Jackson, MI 49201 | ||||
Counsel for Defendant Consumers Energy | ||||
Company | ||||
Dated: _______________________ _ | By: ___________________________________ | |||
James K. Robinson | ||||
Cadwalader, Wickersham & Taft LLP | ||||
1201 F Street NW, Suite 1100 | ||||
Washington, DC 20004 | ||||
Counsel for Defendant Preston D. Hopper | ||||
Dated: _______________________ _ | By: ___________________________________ | |||
William A. Sankbeil | ||||
Kerr Russell & Weber | ||||
Suite 2500, Detroit Center | ||||
500 Woodward Avenue | ||||
Detroit, MI 48226 | ||||
Counsel for Defendant Tamela Pallas | ||||
Dated: _______________________ _ | By: ___________________________________ | |||
James G. Munisteri | ||||
Gardere Wynne Sewell LLP | ||||
1000 Louisiana, Suite 3400 | ||||
Houston, TX 77002-5007 | ||||
Counsel for Defendant Tamela Pallas | ||||
Dated: _______________________ _ | By: ___________________________________ | |||
Samuel C. Damren | ||||
Dykema Gossett, PLLC | ||||
400 Renaissance Center | ||||
Detroit, MI 48243 | ||||
Counsel for Defendant David W.Joos | ||||
Dated: _______________________ _ | By: ___________________________________ | |||
Neil A. Steiner | ||||
Dechert LLP | ||||
30 Rockefeller Plaza | ||||
New York, NY 10112-2200 | ||||
Counsel for Defendant David W. Joos | ||||
Dated: _______________________ _ | By: ___________________________________ | |||
Philip J. Kessler | ||||
Sheldon Klein | ||||
Butzel Long, P.C. | ||||
150 West Jefferson, Suite 900 | ||||
Detroit, MI 48226-4450 | ||||
Counsel for Defendant William T. | ||||
McCormick,Jr. | ||||
Dated: _______________________ _ | By: ___________________________________ | |||
Ryan T. Scarborough | ||||
Williams & Connolly LLP | ||||
725 Twelfth Street NW | ||||
Washington, DC 20005-5901 | ||||
Counsel for Defendant William T. | ||||
McCormick, Jr. | ||||
Dated: _______________________ _ | By: ___________________________________ | |||
Joseph J. Reilly | ||||
Sullivan & Cromwell L.L.P. | ||||
1701 Pennsylvania Avenue, N.W. | ||||
Washington, DC 20006 | ||||
Counsel for William U. Parfet | ||||
Dated: _______________________ _ | By: ___________________________________ | |||
Richard A. Rossman | ||||
James D. VandeWyngearde | ||||
PEPPER HAMILTON LLP | ||||
100 Renaissance Center, 36th Floor | ||||
Detroit, MI 48243-1157 | ||||
Counsel for Defendant Alan Wright | ||||
Dated: _______________________ _ | By: ___________________________________ | |||
Lewis J. Liman | ||||
Jeffrey Jordan | ||||
CLEARY, GOTTLIEB, STEEN | ||||
& HAMILTON LLP | ||||
One Liberty Plaza | ||||
New York, NY 10006 | ||||
Counsel for Defendant Alan Wright |