Nicor Inc.
Form 10-Q
Exhibit 10.1
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
- -------------------------------------------------
RICK SINGER, on behalf of himself and all others )
similarly situated, )
)
Plaintiff, )
v. ) No. 02 C 5168
)
NICOR INC., et al., )
)
Defendants. )
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STIPULATION OF SETTLEMENT
OF SECURITIES CLASS ACTION
--------------------------
This stipulation and agreement of settlement dated as of April 23, 2004
(the "Stipulation") is submitted pursuant to Rule 23 of the Federal Rules of
Civil Procedure. Subject to the approval of the Court, this Stipulation is
entered into between (i) Lead Plaintiff Local 804 I.B.T. and Local 447 I.A.M. -
UPS Retirement Trust ("Teamsters" or "Lead Plaintiff") and additional named
plaintiff Detectives Endowment Association Annuity Fund ("DEA Fund" or
"Additional Named Plaintiff"), individually and on behalf of all other members
of the Class (as defined herein); (ii) defendants Nicor Inc. ("Nicor"), Thomas
L. Fisher ("Fisher"), Kathleen L. Halloran ("Halloran"), George M. Behrens
("Behrens") and Philip S. Cali ("Cali") (collectively, the "Nicor Defendants");
and (iii) Arthur Andersen LLP ("Andersen") (the Nicor Defendants and Andersen
are referred to collectively herein as the "Defendants"), by and through their
respective counsel. This Stipulation is entered into by the Settling Parties to
fully and finally compromise, resolve, discharge and settle the Released Claims,
as defined herein, subject to the terms and conditions set forth below.
WHEREAS, on July 22, 2002 and thereafter, the following actions were filed
in the United States District Court for the Northern District of Illinois (the
"Court") by and on behalf of
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purchasers of Nicor common stock, alleging violations of the federal securities
laws by certain of the Nicor Defendants:
Singer v. Nicor Inc., et al., No. 02 C 5168
Kaltman v. Nicor Inc., et al., No. 02 C 5239
Pilgreen v. Fisher, et al., No. 02 C 5319
Hunt v. Nicor Inc., et al., No. 02 C 6037
Kotowich v. Nicor Inc., et al., No. 02 C 6757
Rodgers v. Nicor Inc., et al., No. 02 C 6761
Johnson v. Nicor Inc, et al., No. 02 C 5558
WHEREAS, on or about March 12, 2003, the Court consolidated all of the
foregoing actions into a single action (the "Action") under Case No. 02 C 5168
for all purposes;
WHEREAS, pursuant to Section 21D(a)(3)(A)(i) of the Securities Exchange
Act of 1934 (the "Exchange Act"), on July 22, 2002, plaintiff Rick Singer
published notice of the pendency of this class action in a national
business-oriented wire service, advising members of the purported class of their
right to move the Court to serve as lead plaintiff or plaintiffs no later than
60 days from the date of publication of the first notice published in this
matter; and
WHEREAS, by Order of October 29, 2002, the Court appointed the Teamsters
as Lead Plaintiff and approved the Lead Plaintiff's selection of Schoengold &
Sporn, P.C. as Lead Counsel and the law firm of Miller Faucher & Cafferty LLP as
Liaison Counsel; and
WHEREAS, on or about February 14, 2003, an Amended Class Action Complaint
was filed by Lead Plaintiff and the Additional Named Plaintiff on behalf of a
class consisting of all purchasers of Nicor common stock in the period from
November 24, 1999 to July 19, 2002 and naming the Nicor Defendants and Andersen
as defendants in this action; and
WHEREAS, on or about March 31, 2003 the Nicor Defendants filed a motion
to dismiss
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the amended Complaint; and
WHEREAS, on or about April 23, 2003, the Court granted Lead Plaintiff's
cross-motion for limited particularized discovery and for a partial lifting of
the discovery stay, directing production of voluminous documents in the
following categories: (1) documents already produced by Nicor to the Illinois
Commerce Commission, Citizens Utility Board, Illinois Attorney General, the Cook
County State's Attorney's Office, and the Securities and Exchange Commission
since June 15, 2002 relating to the allegations contained in the whistleblower
memorandum referred to in Nicor's July 15, 2002 press release; (2) documents
already produced to any of these agencies relating to the investigation of the
whistleblower memorandum by Sidley Austin Brown & Wood in preparation of the
report by Scott Lassar filed with the SEC on October 31, 2002; and (3) documents
already produced to any of these agencies relating to alleged accounting
irregularities at Nicor Energy first disclosed by Nicor in a July 18, 2002 press
release; and
WHEREAS, on or about May 19, 2003 Andersen filed a motion to dismiss the
Amended Complaint; and
WHEREAS, on or about May 28, 2003, this action was reassigned to United
States District Judge Charles R. Norgle from United States District Judge George
W. Lindberg; and
WHEREAS, on or about February 12, 2004, the Court, by two separate orders,
denied the motion to dismiss of the Nicor Defendants and the motion to dismiss
of Andersen; and
WHEREAS, Lead Counsel have extensively litigated this Action and conducted
vigorous and lengthy arms'- length negotiations with counsel for the Defendants,
having done the following:
(a) fully researched and reviewed the facts and law prior to
commencement of this action;
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(b) conducted in-depth discovery, including extensive document
review;
(c) engaged and conferred extensively with an accounting expert;
(d) engaged and conferred extensively with a damages expert
regarding the impact of company-specific events in the context
of energy and gas markets;
(e) engaged and conferred with an expert on gas and energy matters;
and
(f) engaged in vigorous and extended arms'-length negotiations with
the Defendants with the aim of disposition of this action; and
have concluded, based on that investigation and those negotiations, that the
terms and conditions of this Stipulation are fair, reasonable and adequate to
Plaintiffs and the Class, and in their best interests;
WHEREAS, Lead Plaintiff's decision to enter into this Stipulation is based
on its participation in the various phases of the litigation, review of its
counsels' investigation of the facts and circumstances underlying Lead
Plaintiff's claims, the record developed herein by virtue of the above, and its
counsel's assessment of the strengths and weaknesses of those claims reviewed,
discussed and concurred in; and
WHEREAS, at all times, the Nicor Defendants have denied and continue to
deny that they have committed any wrongful act or violation of law or duty of
any nature, but have decided to enter into this Stipulation solely for the
purpose of avoiding prolonged and expensive litigation and the drain on Nicor's
resources and employees' time and energy that such litigation would entail, and
to finally put to rest any and all claims that were or could have been asserted
in the Action, or arising out of the matters set forth in the pleadings,
without in any way acknowledging any fault or liability; and
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WHEREAS, at all times, Andersen has denied and continues to deny that it
has committed any wrongful act or violation of law or duty of any nature, but
has decided to enter into this Stipulation solely for the purpose of avoiding
prolonged and expensive litigation and the drain on Andersen's resources and
employees' time and energy that such litigation would entail, and to finally put
to rest any and all claims that were or could have been asserted in the Action,
or arising out of the matters set forth in the pleadings, without in any way
acknowledging any fault or liability; and
WHEREAS, the Settling Parties (as defined herein) have resolved their
differences and wish to settle and compromise the within Action;
NOW THEREFORE, IT IS HEREBY STIPULATED AND AGREED, by and among Plaintiffs
and the Defendants, by their duly authorized counsel, that, subject to the
approval of the Court, the Action shall be settled, compromised and dismissed
with prejudice as to the Defendants, and the Released Claims shall be finally
and fully compromised, settled and dismissed as to the Released Parties, upon
and subject to the following terms and conditions (the "Settlement"):
DEFINITIONS
1. As used in this Stipulation, in addition to the terms herein
above defined, the following terms shall have the following meanings:
a. "Authorized Claimant" means a member of the Class whose Proof of
Claim has been allowed as provided in Par. 21 hereof.
b. "Claimant" means any member of the Class who files a Proof of
Claim in such manner as the Court shall prescribe.
c. "Claims Administrator" means The Garden City Group, Inc., 105
Maxess Road, Melville, New York 11747.
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d. "Class" means the class to be certified by the Court in this
Action for settlement purposes only, which includes all Persons
who purchased common stock of Nicor during the Class Period
who do not submit a timely request for exclusion from the Class
in accordance with Par. 44 hereof. Also excluded from the Class
are the Defendants, members of the Individual Defendants'
immediate families, any entity in which any Defendant has a
controlling interest or is a parent or subsidiary controlled by
Nicor or Andersen, and the officers, directors, affiliates,
legal representatives, heirs, predecessors, successors and
assigns of any of the Defendants.
e. "Class Period" means the period from November 24, 1999 to
July 19, 2002.
f. "Nicor Defendants" means defendants Nicor, Fisher, Halloran,
Behrens and Cali.
g. "Defendants" means, collectively, the Nicor Defendants and
Andersen.
h. "Representative Plaintiff" means the Teamsters.
i. "Effective Date" means the first business day after the
Court's judgment approving this Stipulation becomes Final
pursuant to Par. 29 hereof.
j. "Hearing Order" means the Order of Preliminary Approval of
Settlement and Directing Notice of Settlement and Administration
substantially in the form attached hereto as Exhibit A.
k. "Settlement Amount" means $39,000,000.
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l. "Settlement Fund" means $39,000,000, plus interest which has
been earned or accrued thereon in accordance with the provisions
of this Stipulation.
m. "Net Settlement Fund" means the "Settlement Fund" less (i) any
award of attorneys' fees and expenses to counsel for the
plaintiffs and (ii) reasonable and necessary costs to provide
notice to the class and to administer the Settlement Fund.
n. "Nominees" means brokerage firms, banks and other institutions
which held Nicor common stock purchased during the Class Period
for the benefit of beneficial owners.
o. "Notice" means the Notice of Pendency of Class Action, Proposed
Settlement and Settlement Hearing, substantially in the form of
Exhibit A-1, hereto.
p. "Notice Account" means an account established by Lead
Plaintiff's Counsel, in his capacity as Settlement Escrow
Agent, at the JPMorganChase Bank ("Chase Bank"), 214 Broadway,
New York, New York 10038, Account No. 441613190065, to be used,
pursuant to Par. 12 hereof, to pay for the reasonable costs
incurred to provide notice to the Class.
q. "Parties" or "Settling Parties" means the Lead Plaintiff and the
Additional Named Plaintiff, on behalf of themselves and all
other members of the Class, and the Defendants.
r. "Lead Plaintiff's Counsel" refers to the law firm of Schoengold
& Sporn, P.C., 19 Fulton Street, Suite 406, New York, New York
10038.
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s. "Liaison Counsel" refers to the law firm of Miller Faucher &
Cafferty LLP, 30 North La Salle Street, Suite 3200, Chicago,
Illinois 60602.
t. "Released Claims" means any and all claims, causes of action,
rights, actions, suits, obligations, debts, demands, judgments,
agreements, promises, liabilities, damages, losses,
controversies, costs, expenses or attorneys' fees, of every
nature and description whatsoever that have been or could have
been asserted in the Action and whether direct or indirect, now
known or unknown, suspected or unsuspected, accrued or
unaccrued, in law or in equity, whether having arisen or yet to
arise, including without limitation, any claims of violations
of federal or state securities laws and any federal or state
claims of fraud, intentional misrepresentation, negligent
misrepresentation, negligence, gross negligence, breach of duty
of care and/or breach of duty of loyalty, breach of fiduciary
duty, or violations of any state or federal statutes, rules or
regulations that have been or could have been alleged or
asserted now or in the future by the Representative Plaintiff
or any Class member against the Defendants or any of the
Released Parties in this Action or in any other court action or
before any administrative body, tribunal, arbitration panel, or
other adjudicatory body, arising out of, relating to, or in
connection with (i) a Class Member's ownership, purchase(s) or
sale(s) of Nicor securities during the Class Period, (ii) the
facts, transactions, events, occurrences, acts, disclosures,
statements, omissions, or failures to act that were alleged or
could have been alleged in the Action, or (iii) any disclosures
or oral or
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written representations or alleged omissions that were issued,
made or operative during the Class Period.
u. "Released Parties" means:(a) Nicor and all of Nicor's past,
present and future parent companies, subsidiaries, divisions,
related or affiliated entities, joint ventures, predecessors
and successors, and their past, present and future directors,
officers (including but not limited to Fisher, Halloran, Behrens
and Cali), partners, principals, employees, shareholders,
agents, advisors, attorneys, and insurers, including but not
limited to, insurers, co-insurers, and reinsurers, and their
respective heirs, executors, administrators, personal or legal
representatives, successors, transferees and assigns, spouses,
or any members of their immediate families, and any and all
persons natural or corporate in privity with them or acting in
concert with any of them or acting on behalf of or at the
direction of any of them; and
(b) (i) Arthur Andersen LLP, AWSC
Societe Cooperative, en liquidation, Accenture LLP (formerly
known as Andersen Consulting LLP), and Accenture Partners, SC
(formerly known as Andersen Consulting Partners, SC); (ii) the
respective past and present subsidiaries, parents, successors
and predecessors, member firms, affiliates, related entities
and divisions of (i); (iii) all present and former shareholders,
members, partners, principals, managing or other agents,
management personnel, advisors, officers, directors,
administrators, attorneys, consultants, accountants,
representatives, servants and employees of (i) and (ii); (iv)
all heirs, spouses, estates, executors,
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administrators, successors and assigns of (iii); and
(v) insurers and reinsurers of (i), (ii) and (iii) in their
capacities as insurers or reinsurers of (i), (ii) and (iii)
with respect to claims relating to this Action.
v. "Settlement Escrow Account" means the escrow account established
by the Settlement Escrow Agents at the Chase Bank, 214 Broadway,
New York, New York 10038, Account No. 441613191965.
w. "Joint Settlement Escrow Agents" means Lead Plaintiff's Counsel
(Schoengold & Sporn, P.C.) and counsel for the Nicor
Defendants (Mayer, Brown, Rowe & Maw LLP), who shall serve as
joint escrow agents for the Settlement Escrow Account, in
accordance with the Escrow Agreement executed on April 15, 2004,
which is incorporated herein by reference, until the Effective
Date of the Settlement. After the Effective Date, counsel for
the Nicor Defendants shall immediately resign as Joint
Settlement Escrow Agents and Schoengold & Sporn P.C. shall
serve as sole Settlement Escrow Agent.
x. "Settlement Hearing" means the hearing to be held by the Court
on a date to be set by it at the United States Courthouse,
Everett McKinley Dirksen Building, 219 South Dearborn Street,
Chicago, Illinois 60604, to consider final approval of the
Settlement pursuant to Rule 23 of the Federal Rules of Civil
Procedure as fair, reasonable and adequate, to approve the
proposed plan of allocation, and to award Lead Plaintiff's
Counsel's fees and reimbursement of costs and expenses.
y. "Stipulation" means this Stipulation of Settlement and the
exhibits attached hereto and incorporated herein by reference.
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THE SETTLEMENT
2. The obligations incurred pursuant to this Stipulation shall be in
full and final disposition and settlement of all claims, actions, suits, causes
of action, and liabilities relating to any of the facts, transactions, events,
occurrences, acts or omissions which have been asserted or could have been
asserted by the Class or any of its members against the Released Parties in the
Action.
3. Valuable consideration for the settlement of this Action has been,
or will be, paid as follows in consideration of and contingent upon the
dismissal of the Action against the Defendants by entry of the final judgment
of dismissal described in Par. 16 hereof, with prejudice and without costs to
any Party (except as otherwise provided herein):
a. the Nicor Defendants have paid the sum of $38,400,000 into the
Settlement Escrow Account to be invested in accordance with
Par. 10-11 hereof and have paid an additional $100,000 to the
Notice Account, which shall be used in accordance with Par. 12
hereof;
b. On or before April 26, 2004, Andersen shall pay or cause to be
paid (by federal wire) the sum of $500,000 into the Settlement
Escrow Account;
c. The settlements with the Nicor Defendants and Andersen are
separate and independent; neither is contingent on final Court
approval of the other.
4. If, for any reason, this Settlement does not become Final (as defined
in Par. 29 hereof) or is terminated pursuant to the provisions of this
Stipulation, the Settlement Fund and accrued interest earned thereon, plus any
amounts remaining in the Notice Account, shall be returned to the persons or
parties contributing such funds proportional to their respective contributions.
Neither the Representative Plaintiff nor Lead Plaintiff's Counsel shall have
any responsibility or obligation to reimburse the Nicor Defendants for any
funds used or committed
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for the reasonable costs incurred in connection with providing notice to the
Class and/or administration of the Settlement Fund.
5. The funds held in the Settlement Escrow Account and the Notice
Account shall be held in custodia legis of the Court, and shall remain subject
to the jurisdiction of the Court until such time as such funds shall be
distributed pursuant to the Stipulation and/or further order(s) of the Court or
returned to the Nicor Defendants and Andersen as provided herein.
6. The Settlement Escrow Agent(s) and/or any other person necessary to
effectuate this paragraph agree to treat the Settlement Fund as being at all
times one or more "qualified settlement funds" within the meaning of Treas. Reg.
Sec. 1.468B-1 and Lead Plaintiff's Counsel as the "administrator" of the
Settlement Fund within the meaning of Treas. Reg. Sec. 1.468B-2(k)(3). In
addition, Lead Plaintiff's Counsel and, as required, the Defendants contributing
any settlement consideration, shall jointly and timely make such elections as
necessary or advisable to carry out the provisions of this paragraph, including
the "relation-back" election (as defined in Treas. Reg. Sec. 1.468B-1(j)(2))
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 Lead Plaintiff's Counsel, to timely and properly
prepare, and deliver the necessary documentation for signature by all necessary
parties, and thereunder to cause the appropriate filing to occur.
7. Lead Plaintiff's Counsel, in their capacity as Settlement Escrow
Agent, 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. Sec. 1.468B-2(k)). Such
returns (as well as the election described in Par. 6 hereof) shall be
consistent with this paragraph and in all events shall reflect that all taxes
(including any estimated taxes,
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interest or penalties) on the income earned by the Settlement Fund shall be
paid out of the Settlement Fund as provided in Par. 10 hereof.
8. All (i) taxes (including any estimated taxes, 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 (ii) expenses and costs incurred in
connection with the operation and implementation of this paragraph (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 paragraph) ("Tax Expenses"), shall be paid out of the
Settlement Fund; in no event shall the Defendants have any liability or
responsibility for the Taxes or the Tax Expenses. Further, Taxes and the 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 Escrow Agent(s) out
of the Settlement Fund without prior order from the Court and the Settlement
Escrow Agent shall be obligated to withhold from distribution to Class members
any funds necessary to pay such amounts (as well as any amounts that may be
required to be withheld under Treas. Reg. Section 1.468B-2(l)(2)). The Parties
hereto agree to cooperate with the Settlement Escrow Agent(s), each other, and
their tax attorneys and accountants to the extent reasonably necessary to carry
out the provisions of this paragraph.
9. For the purpose of Par. 6-8 hereof, references to the Settlement
Fund shall include the Settlement Fund and the Net Settlement Fund, whether
deposited in the Notice Account or the Settlement Escrow Account, and shall
also include any earnings thereon.
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10. Before the Effective Date of the Settlement, the Joint Settlement
Escrow Agents shall cause the sum deposited in the Settlement Escrow Account to
be invested in instruments backed by the full faith and credit of the United
States government, a mutual fund invested solely in such instruments, or
certificates of deposit issued by Chase Bank so long as those investments have
a maturity of 30 days or less, and shall collect and reinvest all interest
accrued thereon. Any funds held in escrow in an amount of $100,000 or less may
be held in an interest-bearing bank account insured by the FDIC. Lead
Plaintiff's Counsel, in their capacity as Settlement Escrow Agent, will
undertake to maintain records of all such investments and all transactions in
the Settlement Escrow Account, which shall be made available at reasonable
times for inspection by any of the undersigned counsel, their duly appointed
agents or any member of the Class. Prior to the Effective Date, no payments
shall be made out of the Settlement Escrow Account unless such payments are
specifically authorized in writing by both of the Joint Escrow Agents pursuant
to the provisions of the Escrow Agrement.
11. After the Effective Date, counsel for the Nicor Defendants shall
immediately resign as Escrow Agents and Lead Plaintiff's Counsel shall serve as
sole Settlement Escrow Agent. After the Effective Date, the Settlement Escrow
Agent shall cause the sums deposited in the Settlement Escrow Account to be
invested in instruments backed by the full faith and credit of the United States
government, a mutual fund invested solely in such instruments or certificates of
deposit issued by Chase Bank of any duration or type and the Settlement Escrow
Agent shall collect and reinvest all interest accrued thereon. Any funds held in
escrow in an amount of $100,000 or less may be held in an interest-bearing bank
account insured by the FDIC.
12. Lead Plaintiff's Counsel, in their capacity as Settlement Escrow
Agent, without further approval from the Nicor Defendants, may pay out of the
Notice Account the reasonable costs and expenses associated with identifying
members of the Class and providing notice to the
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Class, including printing and mailing costs, reimbursement of Nominees' actual
expenses incurred in connection with notice, the actual costs of publication of
the Summary Notice, and the administrative expenses incurred and fees charged
by the Claims Administrator in connection with providing notice and processing
the submitted claims. Lead Plaintiff's Counsel shall provide the Nicor
Defendants with appropriate documentation of all disbursements from the Notice
Account.
13. Any additional costs of providing notice, as well as any other
reasonable expenses incurred in connection with carrying out the terms and
conditions of this Stipulation or arising from the administration, management
or distribution of the Settlement Escrow Account or the Settlement Fund shall
be paid out of the Settlement Escrow Account in accordance with Par. 10 hereof.
14. The Net Settlement Fund shall be administered by Lead Plaintiff's
Counsel and the Claims Administrator, acting as Lead Plaintiff's Counsel's
agent, subject to the Court's direction and supervision, and shall be paid to
Authorized Claimants, as set forth herein, on or after the Effective Date of the
Settlement pursuant to the provisions of this Stipulation. Except as provided in
Par. 10 hereof, the Defendants shall have no responsibility for the
administration of the Settlement and under no circumstances shall have any
liability to the Class in connection with such administration.
SUBMISSION OF SETTLEMENT TO COURT FOR REVIEW
15. As soon as practicable after this Stipulation has been executed, but
in no event later than April 28, 2004, the Parties shall jointly apply to the
Court for entry of an Order (the "Hearing Order") substantially in the form
attached hereto as Exhibit A:
a. Preliminarily approving the Settlement and provisionally
certifying the Class solely for settlement purposes;
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b. Directing that a Settlement Hearing be held to determine
whether the Settlement should be approved as fair, reasonable,
adequate and in the best interests of the Class and whether a
Final Judgment Order and Judgment, substantially in the form
attached hereto as Exhibit B, should be entered dismissing the
Action with prejudice as against the Defendants; to determine
whether the plan of allocation described in the Notice is fair
and reasonable and should be approved; to rule upon an
application by Lead Plaintiff's Counsel for an award of
attorneys' fees and reimbursement of costs and expenses; and to
pass on such other matters as the Court may deem appropriate;
c. Providing that notice of the Settlement Hearing be given, in
the name of the Clerk of the Court, to all Class members,
as follows:
i. Lead Plaintiff's Counsel shall cause to be mailed to all
Class members, by first class mail, to their last known
addresses as appearing on the records maintained by
Nicor's transfer agent or as supplied by Nominees, a copy
of the Notice of Pendency of Class Action, Proposed
Settlement and Settlement Hearing, substantially in the
form attached hereto as Exhibit A-1, and the Proof of
Claim and Release, substantially in the form attached
hereto as Exhibit A-2;
ii. Lead Plaintiff's Counsel also shall cause the Summary
Notice to be published, substantially in the form annexed
hereto as Exhibit A-3, once in the national edition of
Investor's Business Daily, within
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five (5) days of mailing the Notice and at least thirty
(30) days prior to the Settlement Hearing;
d. Determining that the Notice as prescribed by paragraph (c)
above constitutes 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;
e. Prescribing a period of time that Class members may serve
written requests for exclusion from the Class, which shall, in
no event, be less than 14 days before the Settlement Hearing;
f. Prescribing a period of time during which Class members may
serve written objections to the Settlement or request for
counsel fees, which shall, in no event, be less than 14 days
before the Settlement Hearing;
g. Prescribing a period of time during which Class members must
file Proof of Claim and Release forms in order to participate in
the Net Settlement Fund;
h. Preliminarily barring and enjoining the institution and
prosecution, by Class members who have not properly excluded
themselves from the Class, of any claims against the Defendants
that were or could have been asserted in the Action; and
i. Providing that all funds held in the Settlement Escrow Account
and the Notice Account shall be held in custodia legis of the
Court, and shall remain subject to the jurisdiction of the
Court until such time as such
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funds shall be distributed pursuant to the Stipulation and/or
further order(s) of the Court or returned to the Defendants as
provided herein.
16. At or prior to the Settlement Hearing, the Parties shall jointly
submit to the Court a proposed Final Order and Judgment,
substantially in the form attached hereto as Exhibit B:
a. Certifying the Class for settlement purposes and finding that
the Representative Plaintiff adequately represents the Class and
that the Class has been given the best notice practicable of the
Hearing on the fairness of the Settlement;
b. Finally approving the Settlement, as provided herein, pursuant
to Rule 23 of the Federal Rules of Civil Procedure, as fair,
reasonable, adequate and proper and in the best interests of the
Class, and directing consummation of the Settlement in
accordance with the terms of this Stipulation;
c. Directing that the Action be dismissed against the Defendants
with prejudice and on the merits, without costs (except as
otherwise provided herein);
d. Permanently barring and enjoining the Representative Plaintiff
and the Class from instituting or prosecuting any claims against
the Defendants and any other Released Parties that were asserted
or could have been asserted in the Action;
e. Reserving jurisdiction, without affecting the finality of the
judgment with respect to the foregoing matters, over all matters
relating to the administration and consummation of the
Settlement provided for herein;
f. Entering a bar order as provided in Par. 41-43 hereof; and
g. Containing such other and further provisions consistent with
the terms of the Settlement as the Court may deem appropriate.
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ADMINISTRATION AND CALCULATION OF CLAIMS
17. Lead Plaintiff's Counsel shall be responsible for supervising the
administration of the Settlement and disbursement of the Settlement Fund by the
Claims Administrator.
18. The Defendants shall have no responsibility for, interest in, or
liability whatsoever with respect to, the investment or distribution of the
Settlement Fund, the Net Settlement Fund, the determination, administration,
calculation or payment of claims, the payment or withholding of taxes, or any
losses incurred in connection therewith.
19. The Net Settlement Fund shall be distributed in accordance with the
Plan of Allocation. The Plan of Allocation provides that the Net Settlement
Fund shall be distributed to members of the Class who submit timely valid
Proofs of Claim ("Authorized Claimants"). Payments to Authorized Claimants shall
be their pro rata share of the Net Settlement Fund based upon each Authorized
Claimant's Recognized Loss as follows:
a. The payment to be received by each Authorized Claimant from
the Net Settlement Fund shall be calculated by multiplying the
total Net Settlement Fund by a fraction, the numerator of which
is the claimant's Recognized Loss and the denominator of which
is the sum of the Recognized Loss of all Authorized
Claimants;
b. An Authorized Claimant's "Recognized Loss" shall be determined
as follows:
1. claimants who purchased Nicor common stock from
November 24, 1999 to July 18, 2002, inclusive, and
held that common stock through October 16, 2002
(i.e., the end of the 90 days following the
disclosures of July 19, 2002), shall have a
recognized loss of 100% of the difference
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between the price paid (not including brokerage fees
and commissions) and $27.31 per share (i.e., the mean
trading price during the 90 days following the
disclosures of July 19, 2002);
2. claimants who purchased Nicor common stock from
November 24, 1999 to July 18, 2002, inclusive, and
sold that common stock between July 19, 2002 and
October 16, 2002, inclusive, shall have a recognized
loss of the lesser of:
(a) the difference between the price paid (not
including brokerage fees and commissions) and
the price received; OR
(b) the difference between the price paid (not
including brokerage fees and commissions) and the
mean closing price from the date of disclosure
(i.e., July 19, 2002) through the date of the
sale;
3. claimants who purchased Nicor common stock from
November 24, 1999 to July 12, 2002, inclusive, and
sold that common stock between July 15, 2002 and
July 18, 2002, inclusive, shall have a recognized
loss of the lesser of:
(a) the difference between the price paid (not
including brokerage fees and commissions) and
the price received; OR
20
(b) $1.00 per share.
c. Claimants who held Nicor common stock prior to the commencement
of the Class Period and sold or held that common stock during
the Class Period are entitled to no recovery with respect to
that common stock;
d. Claimants who purchased Nicor common stock during the Class
Period but suffered no loss are entitled to no recovery with
respect to that common stock;
e. In performing the above calculations, the trade date rather than
the settlement date will be used to determine dates of purchases
and sales;
f. In the case of a Claimant who made multiple purchases and
multiple sales of Nicor common stock during the Class Period,
these transactions will be treated as if the first shares
purchased or otherwise acquired during the Class Period were
the first shares sold during the Class Period. Profits on any
such transactions during the Class Period will be netted
against losses on such transactions to determine the Recognized
Loss for the Claimant.
20. No Authorized Claimant shall have any claim against Lead
Plaintiff's Counsel or the Claims Administrator, or any other agent designated
by Lead Plaintiff's Counsel based on the distribution made substantially in
accordance with the Stipulation and the Settlement contained herein, the Plan
of Allocation, and further orders of the Court. Lead Plaintiff's Counsel shall
have the right, but not the obligation, to waive what they deem to be formal or
technical defects in any Proofs of Claim filed in the interest of achieving
substantial justice.
21. For purposes of determining whether a Class member is an
Authorized Claimant:
a. Each Class member shall be required to submit a Proof of Claim
with such supporting documentation as is specified therein; and
21
b. All Proofs of Claim must be submitted to the Claims
Administrator by the date specified in the Proof of Claim
unless such period is extended by agreement of Lead Plaintiff's
Counsel. A Proof of Claim shall be deemed to have been
submitted when posted, if received in a post-marked envelope,
first class postage prepaid, addressed in accordance with the
instructions in the Proof of Claim. In all other cases, the
Proof of Claim shall be deemed to have been submitted when
actually received by the Claims Administrator.
22. Each Proof of Claim shall be submitted to and reviewed by the
Claims Administrator under the supervision of Lead Plaintiff's Counsel, who
shall, in accordance with this Stipulation and the Notice Order, determine the
extent, if any, to which each Claim shall be allowed, subject to review by the
Court.
23. The Claims Administrator shall notify Claimants whose claims are
rejected and shall allow a reasonable time for curable deficiencies to be
remedied. The Claims Administrator shall notify all Claimants whose Proofs of
Claim have been rejected finally, in whole or in part, setting forth the
reasons therefor.
24. As soon as practical after the deadline for filing Proofs of Claims
has passed and after all disputes regarding rejection of Proofs of Claim have
been ruled upon by the Claims Administrator, and after the Effective Date of
the Settlement has occurred, Lead Plaintiff's Counsel shall prepare and submit
to the Court a proposed order of distribution.
25. The Net Settlement Fund shall be distributed to Authorized Claimants
by the Claims Administrator only after the Effective Date and after: (i) all
Claims have been processed, and all Claimants whose Claims have been rejected or
disallowed, in whole or in part, have been notified and provided the opportunity
to be heard concerning such rejection or disallowance; (ii)
22
all objections with respect to all rejected or disallowed claims have been
resolved by the Court and all appeals therefore have been resolved or the time
therefor has expired; (iii) all matters with respect to attorneys' fees, costs,
and disbursements have been resolved by the Court, all appeals therefrom have
been resolved or the time to appeal has expired without any appeal having been
filed; and (iv) all costs of administration have been paid.
26. The Claims Administrator shall be required to permit counsel for any
Party to inspect, at reasonable times, all Proofs of Claim received and all
records pertaining to calculation of the amount of Recognized Losses.
27. Each Claimant shall be deemed to have submitted to the jurisdiction
of the Court with respect to the Claimant's claim.
28. Payment in the manner outlined above shall be deemed conclusive as
to the claims of all Class Members. Unless the Court orders otherwise, Class
Members who do not submit timely and valid Proofs of Claims or whose Proofs of
Claims are not approved, shall be barred from participating in distributions
from the Settlement Fund. Unless they have been properly excluded from the
Class, Class Members shall be bound by all terms of this Stipulation, including
the terms of the Release contained herein and the Judgment, regardless of
whether or not they are entitled to participate in distributions from the
Settlement Fund.
FINALITY OF SETTLEMENT
29. The Settlement shall become "Final" upon entry by the Court of a
Final Order and Judgment substantially in the form annexed hereto as Exhibit B,
and the expiration of the time from which to appeal from said Final Order and
Judgment of Dismissal (which shall be deemed to be 30 days from the date of its
entry unless the date to take an appeal shall have been extended by court order
or otherwise) without any review or appeal having been taken, or if such review
or appeal is taken, after such appeal shall have been withdrawn or finally
determined by the highest
23
court before which review is sought, but only in the event that any period of
the time in which to seek any further appellate review or appeal has expired,
and all such further proceedings shall have been resolved in such manner as to
permit the consummation of settlement provided for by this Stipulation in
accordance with all of its terms and provisions and all conditions precedent
described herein have been satisfied. An appeal only with respect to the award
of attorneys' fees and expenses shall not affect the finality of the Final
Order and Judgment of Dismissal.
30. No distributions shall be made from the Settlement Fund prior to the
Effective Date, except that any award of attorneys' fees and expenses to Lead
Plaintiff's Counsel made by the Court following that hearing may be paid to Lead
Plaintiff's Counsel immediately, subject to Lead Plaintiff's Counsel's joint and
several obligation to make appropriate refunds or repayments to the Settlement
Fund, if and when, as a result of any appeal and/or further proceedings on
remand, or successful collateral attack, the fee or cost award is reduced or
reversed. If any objector files an objection or appears at the Settlement
Hearing, then Lead Plaintiff's Counsel shall secure their repayment obligation
with a letter of credit issued by a bank located in Illinois, in a form
acceptable to the Defendants.
31. In the event that the Court does not enter Judgment in substantially
the form attached hereto as Ex. B, or if the Court enters the Judgment and
appellate review is sought and on such review, the entry of Judgment is vacated,
modified or reversed, then this Stipulation shall be cancelled and terminated,
unless all parties who are adversely affected thereby, in their sole discretion
within fifteen (15) business days of the date of such ruling, provide written
notice to all other parties of their intent to proceed with the settlement under
the terms of the Judgment as it may be modified by the Court. No party shall
have any obligation whatsoever to proceed under any terms other than those
provided for and agreed to herein. An appellate order denying
24
approval of the award of attorneys' fees and expenses shall not give plaintiffs
or the Defendants the right to withdraw from this Stipulation.
32. If, for any reason, the Settlement does not become Final or is
terminated pursuant to the provisions of this Stipulation, then the Parties
shall revert to their respective positions immediately prior to the execution
of the Stipulation.
33. If the Settlement is terminated, this Stipulation shall have no
further force and effect except for Par. 4 and 47-49 hereof. All negotiations,
proceedings and statements made in connection herewith shall be without
prejudice to any person or party hereto, shall not be deemed or construed to be
an admission by any Party of any act, matter or proposition, and shall not be
used in any manner or for any purpose in any subsequent proceeding in the Action
or in any other action or proceeding.
APPLICATION FOR ATTORNEYS' FEES AND EXPENSES
34. Lead Plaintiff's Counsel intends to apply to the Court at the
Settlement Hearing for an award of attorneys' fees for legal services rendered
up to an amount of thirty percent (30.00%) of the Settlement Fund plus
reimbursement of their expenses incurred in connection with the Action. Interest
on such award shall accrue from the same date and at the same rate as interest
accrues on the Settlement Fund, unless otherwise provided by the Court.
35. Lead Plaintiff's Counsel may pay other plaintiffs' counsel such
attorneys' fees and reimbursement of expenses, which, in their sole discretion,
are just and proper in accordance with their contribution toward the resolution
of this action.
36. The Defendants agree to take no position with respect to the
application of Lead Plaintiff's Counsel for fees and expenses. Such fees and
expenses will be payable to Lead Plaintiff's Counsel exclusively from the
Settlement Fund, and the Defendants shall not be liable for or obligated to pay
any fees, expenses, costs or disbursements to, or incur any expense on
25
behalf of, any person, either directly or indirectly in connection with the
Action, this Stipulation or the proposed Settlement, other than the payment
of the Settlement Amount and the costs incurred to provide the Claims
Administrator with a list of Class members from its transfer records.
RELEASES
37. Upon the Effective Date of the Settlement, each of the
Representative Plaintiff and Class members and each of the Released Parties
shall be deemed to have and by operation of the Judgment shall have, fully,
finally, and forever released, relinquished, and discharged all Released Claims
against the Released Parties or any of them, as well as any claims against the
Released Parties arising out of, relating to, or in connection with the defense,
settlement or resolution of the Action or the Released Claims whether or not
such Representative Plaintiff or Class member executes and delivers the Proof
of Claim and Release.
38. In connection with this Release, Lead Plaintiff acknowledges that it
is aware that it or other Class members may hereafter discover claims presently
unknown or unsuspected, or facts in addition to or different than those they
now know or believe to be true with respect to the matters released herein, or
with respect to their purchase or sale or other disposition of Nicor securities,
for acts, facts, circumstances or transactions occurring or arising during the
Class Period (collectively, "Unknown Claims"). Nevertheless, it is the
intention of Lead Plaintiff, on behalf of the Class, in executing this Release
fully, finally and forever to settle and release all such Unknown Claims. Lead
Plaintiff hereby agrees and acknowledges that the provisions of this Release
constitute an essential term of the Settlement Agreement.
39. Lead Plaintiff expressly understands that principles of law such as
Section 1542 of the Civil Code of the State of California provide that a general
release does not extend to claims which a creditor does not know or suspect to
exist in his favor at the time of executing the release
26
which, if known by him, would have materially affected his settlement with the
defendant(s). To the extent that, notwithstanding the choice of law provisions
in this Stipulation, California or other law may be applicable, Lead Plaintiff
and the Class Members hereby agree that the provisions of Section 1542 and all
similar federal or state laws, rights, rules, or legal principles of any other
jurisdiction which may be applicable herein, are hereby knowingly and
voluntarily waived and relinquished by Lead Plaintiffs on behalf of itself and
the Class, who acknowledges that this waiver is an essential term of the
Release in this Action.
40. The Proof of Claim and Release to be executed by the Class members
shall release all Released Claims against the Released Parties and shall be
substantially in the form contained in Exhibit A-2 hereto.
BAR ORDER
41. The Judgment to be entered by the Court upon final approval of the
Settlement shall contain a provision permanently barring (i) any and all claims
against the Released Parties for contribution or indemnity based upon, relating
to, or arising out of the Released Claims, the Action, or any settlement of this
Action and (ii) any other claims, regardless of the legal theory on which such
claim may be based, whether tort or contract or state or federal law, seeking to
recover from the Released Parties any amounts paid to defend, settle, or to
satisfy a judgment with respect to any claims that were made or could have been
made against anyone who is named or could have been named as a defendant in the
Action (the "Barred Claims").
42. Andersen and the Nicor Defendants hereby mutually release any Barred
Claims and any other claims arising from or relating to the subject matter of
this Action that either Party could have asserted against the other or against
any Released Party.
43. Notwithstanding anything to the contrary contained herein, the
undersigned, for themselves and any other persons claiming by, through, or on
behalf of them, acknowledge and
27
agree that (i) in no event shall the Administrator of Andersen, any member of
the Administrative Board of Andersen (or any officer, director, members or
shareholder of any Administrative Board), any present or former directors,
officers, managers, partners, participating principals, national directors or
similar persons of Andersen or any of their respective agents or
representatives (collectively, the "Andersen Covered Persons") have any personal
liability with respect to Andersen's obligations arising out of or relating to
this Stipulation; and (ii) no Andersen Covered Person shall be obligated to
make, and no Andersen Covered Person in fact will make, any capital contribution
or other payment of any kind to Andersen in order for Andersen to satisfy its
obligations arising out of or relating to this Stipulation.
RIGHT TO TERMINATE STIPULATION
44. Any member of the Class who chooses not to be a Class member and not
to be bound by this Stipulation must serve and file a written request for
exclusion in accordance with the procedures established by the Court pursuant
to the terms of this Stipulation. Any member of the Class who files a timely
notice of exclusion shall have no rights with respect to this Settlement.
45. The Claims Administrator shall prepare and send to Lead Plaintiff's
Counsel and counsel for the Defendants a written report identifying to the
extent practicable (a) the Class members who validly elect to exclude themselves
from the Class within the deadline specified by the Court in the Notice Order,
(b) the number of Nicor common shares purchased by or on behalf of each such
Class member during the Class Period, (c) the number of such common shares sold,
if any, by each such Class member, and (d) the date(s) and price(s) of such
share purchases and sales (the "Exclusion Notice"). The Exclusion Notice shall
be prepared as of the deadline set by the Court for the receipt of exclusion
requests by the Claims Administrator (the "Exclusion
28
Deadline"), and shall be given by the Claims Administrator to Lead Plaintiff's
Counsel and counsel for the Defendants no later than five (5) days following
the Exclusion Deadline.
46. The Defendants may unilaterally withdraw from and terminate this
Stipulation, in their sole discretion, if persons or entities who elect to
exclude themselves from the Class own, in the aggregate, 5% or more of the total
number of shares of Nicor stock that the Parties have estimated were purchased
and held during the Class Period. In the event of a termination by the
Defendants pursuant to this paragraph, this Stipulation shall become null and
void and of no further force and effect and the provisions of Par. 33 shall
apply. If the Defendants elect to terminate this Settlement pursuant to this
paragraph, they must give written notice of that election to Lead Plaintiff's
Counsel on or before seven calendar days prior to the Settlement Fairness
Hearing.
STIPULATION IS NOT AN ADMISSION
47. Neither this Stipulation nor any of its terms or provisions, nor any
act performed or document executed pursuant to or in furtherance of the
Stipulation or the Settlement is or may be deemed to be or may be used as an
admission or evidence of the validity of any Released Claim or of any liability,
wrongdoing or fault whatsoever of the Defendants with respect to any of the
Released Claims or be deemed evidence of any violation of any statute or law.
Any such violations, liability, fault, or wrongdoing have been and are herein
again denied by the Defendants.
48. Neither this Stipulation nor any of its terms or provisions, nor any
act performed or document executed pursuant to or in furtherance of the
Stipulation or the Settlement is or may be deemed to be or may be used as a
concession or admission by plaintiffs or any Class member that their claims
lack merit or that the defenses asserted by the Defendants have merit.
29
49. Neither this Stipulation nor any of its terms or provisions, nor
any act performed or document executed pursuant to or in furtherance of the
Stipulation shall be offered or received in evidence in any civil, criminal or
administrative action, arbitration or other proceeding other than such
proceedings as may be necessary to consummate or enforce the Stipulation and the
settlement embodied therein or in accordance with Par. 50 hereof.
50. The Defendants may file the stipulation and/or the Judgment in any
action that may be brought against any of them in order to support a defense or
counterclaim based on principles of res judicata, collateral estoppel, release,
good faith settlement, judgment bar or reduction or any other theory of claim
preclusion or issue preclusion or similar defense or counterclaim. This
Stipulation may be pleaded as a full and complete defense to any action, suit or
other proceeding which may be instituted, prosecuted or attempted for, upon or
in respect of any of the claims released hereby. The parties to this Stipulation
agree that any such proceeding would cause irreparable injury to the party
against whom it is brought and that any court with competent, personal and
subject matter jurisdiction may enter an injunction restraining prosecution
thereof.
MISCELLANEOUS PROVISIONS
51. Subject to the approval of the Court, the Parties may agree to
reasonable extensions of time to carry out any of the provisions of this
Stipulation.
52. Words used herein, regardless of the gender or number specifically
used, shall be deemed to include the other gender and any other number singular
or plural, as the context may require.
53. This Stipulation shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, successors, and assigns and any
corporation, partnership or other entity into or with which any party hereto may
merge, consolidate, or reorganize.
30
54. This Stipulation may be executed in one or more counterparts, all of
which shall be considered duplicate originals.
55. This Stipulation, including all of the exhibits appended hereto,
constitute the entire agreement of the Parties with respect to the subject
matter hereof and may not be modified or amended except in a writing signed by
all parties hereto.
56. The waiver by one Party of any breach of this Stipulation by any
other Party shall not be deemed a waiver of any prior or subsequent breach of
this Stipulation.
57. Any inconsistency between this Stipulation and the exhibits
attached hereto shall be resolved in favor of the Stipulation.
58. The Stipulation shall be considered to have been negotiated,
executed and delivered, and to be wholly performed, in the State of Illinois,
and the rights and obligations of the Parties to the Stipulation shall be
construed and enforced in accordance with, and governed by the internal,
substantive laws of the State of Illinois without giving effect to that state's
choice of law principles.
59. To the extent permitted by law, all agreements made and protective
orders entered during the course of the Litigation relating to the
confidentiality of information shall continue in full force and effect and
shall survive this Stipulation.
60. This Stipulation shall not be construed more strictly against one
party than another merely by virtue of the fact that it, or any part of it, may
have been prepared by counsel for one of the parties, it being recognized that
it is the result of arm's-length negotiations between the parties and all
parties have contributed substantially and materially to the preparation of
this Stipulation.
31
61. By execution of this Stipulation, the Defendants do not intend to
release any claim against any insurer for any cost or expense hereunder,
including but not limited to attorneys' fees and expenses.
62. The Parties hereto and their respective counsel of record agree that
they will use their best efforts to obtain all necessary approvals of the Court
required by this Stipulation.
63. Each counsel executing this Stipulation and any of the exhibits
hereto, or any related settlement documents, warrants and represents that such
counsel has full authority to sign this Stipulation on behalf of his or her
client(s).
64. Notices required by this Stipulation shall be submitted by facsimile
and overnight delivery to:
Samuel P. Sporn OR
Joel P. Laitman
SCHOENGOLD & SPORN, P.C.
19 Fulton Street, Suite 406
New York, New York 10038
Lead Plaintiff's Counsel
Hugh R. McCombs OR
Michele Odorizzi
MAYER, BROWN, ROWE & MAW LLP
190 South LaSalle Street
Chicago, IL 60603-3441
Attorneys for the Nicor Defendants
Scott C. Solberg
EIMER STAHL KLEVORN & SOLBERG LLP
224 South Michigan Avenue, Suite 1100
Chicago, Illinois 60604
Attorneys for Arthur Andersen LLP
65. All Parties to this Stipulation shall be subject to the jurisdiction
of the Court for all purposes related to this Action and this Stipulation.
32
IN WITNESS WHEREOF, this Stipulation has been executed by the undersigned
as of the date set forth below.
Dated: April 23, 2004
SCHOENGOLD & SPORN, P.C.
By: /s/ SAMUEL P. SPORN
---------------------------------
Samuel P. Sporn
Joel P. Laitman
Jay P. Saltzman
19 Fulton Street, Suite 406
New York, New York 10038
(212) 964-0046
Lead Plaintiff's Counsel
MAYER, BROWN, ROWE & MAW LLP
By: /s/ MICHELE ODORIZZI
---------------------------------
Hugh R. McCombs
Michele Odorizzi
190 South LaSalle Street
Chicago, IL 60603-3441
(312) 782-0600
Attorneys for Defendants Nicor Inc.,
Thomas L. Fisher, Kathleen L. Halloran,
George M. Behrens and Philip S. Cali
EIMER STAHL KLEVORN & SOLBERG LLP
By: /s/ SCOTT C. SOLBERG
---------------------------------
Scott C. Solberg
224 South Michigan Avenue, Suite 1100
Chicago, Illinois 60604
(312) 660-7600
Attorneys for Defendant Arthur Andersen LLP
33
EXHIBIT A
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
- ---------------------------------------------------
RICK SINGER, on behalf of himself and all others )
similarly situated )
)
Plaintiff, )
v. ) No. 02 C 5168
)
NICOR INC., et al., )
)
Defendants. )
- ---------------------------------------------------)
[PROPOSED] ORDER OF PRELIMINARY APPROVAL OF
SETTLEMENT AND DIRECTING NOTICE OF
SETTLEMENT AND ADMINISTRATION
-----------------------------
WHEREAS, a Stipulation of Settlement dated April 23, 2004 (the
"Stipulation") has been executed settling all claims alleged herein against
defendants Nicor Inc. ("Nicor"), Thomas L. Fisher, Kathleen L. Halloran,
George M. Behrens and Philip S. Cali (the "Nicor Defendants") and Arthur
Andersen LLP (the Nicor Defendants and Andersen are referred to herein
collectively as the "Defendants"),
NOW, upon review and consideration of the Stipulation and the exhibits
annexed thereto, and the application of all parties to the Stipulation, it
appearing that a hearing on the proposed settlement described in the Stipulation
is necessary pursuant to Rule 23 of the Federal Rules of Civil Procedure;
IT IS HEREBY ORDERED that:
1. The terms of the Stipulation and the settlement provided for therein
are preliminarily approved, subject to the Settlement Hearing described below.
All capitalized terms used herein shall have the same meaning as set forth in
the Stipulation and/or further order(s) of the Court.
2. All funds held in the Settlement Escrow Account and the Notice Account
shall be held in custodia legis of the Court, and shall remain subject to the
jurisdiction of the Court until such time as such funds are distributed pursuant
to the Stipulation and/or further order(s) of the Court or are returned to the
Defendants.
3. Pursuant to Rule 23 of the Federal Rules of Civil Procedure and for
the purposes of this Settlement only, this Court hereby conditionally certifies
this action as a class action on behalf of all persons and entities who
purchased or otherwise acquired Nicor common stock during the Class Period.
Excluded from the class are the Defendants, members of the families of any of
the individual defendants, any entity in which any defendant has a controlling
interest or is a parent or subsidiary of or is controlled by the Company, and
the officers, directors, partners, affiliates, legal representatives, heirs,
predecessors, successors and assigns of any of the defendants. Also excluded
from the Class are any persons who submitted valid and timely requests for
exclusion from the Class, as provided for below.
4. As soon as practicable after the entry of this Order but no later than
10 days from the date of entry hereof, Lead Plaintiff's Counsel shall cause
copies of the Notice of Proposed Settlement and Settlement Hearing
(the "Notice") to be provided to all class members identified from the
transfer records of Nicor and/or from other sources, as follows:
a. by mailing a copy of the Notice, substantially in the form
attached hereto as Exhibit A-1, and the Proof of Claim and Release ( the "Proof
of Claim" ), substantially in the form attached hereto as Exhibit A-2, to the
last known addresses of each such Class member by first class mail postage
prepaid; and
b. by publication of the Summary Notice, substantially in the form
attached hereto
2
as Exhibit A-3, once in the national edition of Investor's Business Daily,
within five (5) days of mailing said Notices of Pendency and at least
thirty (30) days prior to the Settlement Hearing.
5. As set forth in the Notice, all Nominees who held Nicor common stock
of record for Class members are directed either (a) to supply the Claims
Administrator with a list of the names and addresses of such beneficial holders,
or (b) to forward the Notice and Proof of Claim to the beneficial owners of that
stock and to submit a statement that they have done so to the Claims
Administrator at a post office box to be designated by Lead Plaintiff's Counsel
as provided in paragraph 8 below, which statement shall contain a list of the
names and addresses of such beneficial holders. Additional copies of the Notice
and Proof of Claim for transmittal to beneficial owners shall be made available
upon written request to the Claims Administrator at a post office box address
to be designated as provided in paragraph 7 below, that they have done so, which
statement shall contain a list of the names and addresses of such beneficial
holders. Such nominees may seek reimbursement from the Claims Administrator of
their reasonable expenses in complying with this Order upon submission of the
requisite supporting documentation to the Claims Administrator.
6. The Court approves, as to form and content, the Notice, the Proof of
Claim and the Summary Notice, attached hereto as Exhibits A-1, A-2 and A-3,
respectively, and finds that the manner of providing notice set forth in
paragraphs 4 and 5 above is the best notice practicable under the circumstances,
and constitutes due and sufficient notice of this Order and the Settlement
Hearing 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 and the requirements of due process. Prior to
the Settlement Hearing, Lead Plaintiff's Counsel or his agent or other designee
shall serve and file a sworn statement evidencing compliance with the provisions
of paragraph 3 of
3
this Order concerning the mailing of the Notice and the Proof of Claim, and
concerning the publication of the Summary Notice.
7. Plaintiffs have designated The Garden City Group, Inc., 105 Maxess
Road, Melville, New York 11747 as the Claims Administrator, who shall be
responsible for providing notice in accordance with this Order . The Claims
Administrator shall lease and maintain post office boxes of adequate size for
the return of Proofs of Claim. All notices to the Class shall designate the
applicable post office box as the return address for the Proof of Claim..
8. In order to be an Authorized Claimant entitled to participate in the
Net Settlement Fund, a Class member shall take the following actions and be
subject to the following conditions:
a. A properly executed and verified Proof of Claim must be filed with
the Claims Administrator no later than ________, 2004, at the post office box
indicated in the Notice. Each Proof of Claim shall be deemed to have been
submitted when posted, if a postmark is indicated on the envelope and it is
mailed first-class postage prepaid and addressed in accordance with the class
postage prepaid and addressed in accordance with the instructions thereon. In
all other cases, the Proof of Claim shall be deemed to have been submitted when
actually received by the Claims Administrator.
b. The Proof of Claim filed by each Class member must satisfy the
following conditions: (i) the Proof of Claim must be properly filled out, signed
and filed in a timely manner in accordance with the provisions of the preceding
subparagraph; (ii) the Proof of Claim must be accompanied by adequate supporting
documentation for the securities transactions reported therein, in the form of
broker confirmation slips, broker account statements, a notarized statement from
the broker containing the transactional information found in a broker
confirmation slip or other evidence
4
satisfactory in form to the Claims Administrator; (iii) if the person executing
the Proof of Claim is acting in a representative capacity, proof of his current
authority to act on behalf of the claimant must be furnished with the Proof of
Claim; and (iv) the Proof of Claim must be complete and contain no material
deletions or modifications of any of the printed matter contained therein.
c. As part of the Claimant's Proof of Claim, each Class member shall
submit to the jurisdiction of the Court with respect to the claim submitted, and
shall (subject to effectuation of the Settlement) release all claims as provided
in the Stipulation.
9. A hearing (the "Settlement Hearing") shall be held at _____ __.m.
on _______, 2004 in Courtroom No. ______, United States Courthouse, Everett
McKinley Dirksen Building, 219 South Dearborn Street, Chicago, Illinois 60604
before the Honorable Charles R. Norgle, United States District Judge for the
Northern District of Illinois, to consider the fairness, reasonableness and
adequacy of the proposed Settlement and whether the claims in the Action against
the Defendants should be dismissed, whether the proposed plan of allocation
should be approved, whether Lead Plaintiff's Counsel's request for attorneys'
fees and reimbursement of expenses should be approved, and other related
matters.
10. Any member of the Class who wishes to be excluded from the Class must
do so by expressly stating, in writing, a request to be excluded from the Class,
and must send such request in an envelope postmarked no later than ______, 2004,
and addressed as follows:
Samuel P. Sporn, Esq.
Joel P. Laitman, Esq.
Schoengold & Sporn, P.C.
19 Fulton Street
New York, New York 10038
(212) 964-0046
5
Requests for exclusion must include: (a) the name of the Class member; (b) the
number of Nicor common shares owned by that Class member; (c) the dates and
amounts of purchase of said shares; and (d) the dates and amounts of any sales
of Nicor common shares. Members of the Class who have not requested exclusion in
the time and manner set forth herein shall be bound by all orders and judgments
entered in the Action, whether favorable or unfavorable to the Class.
11. Any Class member who has not validly requested exclusion from the
Class may appear at the Settlement Hearing in person or by counsel, if an
appearance is filed and served as hereinafter provided, and be heard to the
extent allowed by the Court in support of, or in opposition to, the fairness,
reasonableness and adequacy of the proposed Settlement, the proposed plan of
allocation, and/or the requested 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 the
requested award of attorneys' fees and reimbursement of expenses. No papers or
briefs submitted by any person shall be accepted or considered by the Court
unless, on or before _________________, 2004, 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 files with the Court, either in person or by mail, upon Samuel P.
Sporn, Esq., Joel P. Laitman, Esq., Schoengold & Sporn, P.C., 19 Fulton Street,
New York, New York 10038, Lead Plaintiff's Lead; Michele Odorizzi, Esq., Mayer,
Brown, Rowe & Maw LLP, 190 South LaSalle Street, Chicago, IL 60603-3441,
attorneys for defendants Nicor Inc., Thomas L. Fisher, Kathleen L. Halloran,
George M. Behrens and Philip S. Cali; and Scott C. Solberg, Esq., Eimer Stahl
Klevorn & Solberg LLP, 224
6
South Michigan Avenue, Suite 1100, Chicago, Illinois 60604, attorneys for
defendant Arthur Andersen LLP
12. Briefs in support of the Settlement shall be submitted to the Court
within 7 days of the Settlement Hearing.
13. The Court expressly reserves the right to adjourn the Settlement
Hearing from time to time without further notice, other than that which may be
posted at the Court.
14. 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.
15. The Settlement may be terminated as provided in the Stipulation, and,
if the Settlement is so terminated, 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.
16. Pending final determination whether the Settlement shall be approved,
plaintiffs and all members of the Class are preliminarily barred and enjoined
from commencing , instituting or prosecuting any action or other adversary
proceeding in any court of law or equity, arbitration tribunal or administrative
forum, directly, representatively or derivatively, asserting against any of
7
the Released Parties or any of the Released Claims.
17. Members of the Class may enter an appearance in the Action through
counsel of their own choice, at their own expense. If they do not enter an
appearance, they will be represented by Lead Plaintiff's Counsel.
Dated:____________________, 2004
________________________________________
Hon. Charles R. Norgle
United States District Judge
8
EXHIBIT A-1
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
- -------------------------------------------------
RICK SINGER, on behalf of himself and all others )
similarly situated )
)
Plaintiff, )
v. ) No. 02 C 5168
)
NICOR INC., ET AL., ) Judge Charles R. Norgle
)
Defendants. )
- -------------------------------------------------)
PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR
RIGHTS WILL BE AFFECTED BY PROCEEDINGS IN THIS LITIGATION.
PLEASE MAKE NOTE THAT, IF YOU ARE A CLASS MEMBER, YOU MAY BE
ENTITLED TO SHARE IN THE PROCEEDS OF THE SETTLEMENT DESCRIBED IN
THIS NOTICE. TO CLAIM YOUR SHARE OF THIS FUND, YOU MUST SUBMIT A
VALID PROOF OF CLAIM ON OR BEFORE _______ __, 2004.
-------------------------------------------------------------------
NOTICE OF PROPOSED
SETTLEMENT AND HEARING THEREON,
AND RIGHT TO SHARE IN SETTLEMENT
PROCEEDS OF $39,000,000
-------------------------------------------------------------------
TO: ALL PERSONS AND ENTITIES ("CLASS MEMBERS" OR "CLASS") WHO
PURCHASED COMMON STOCK OF NICOR INC. DURING THE PERIOD FROM
NOVEMBER 24, 1999 TO JULY 19, 2002 (THE "CLASS PERIOD")
The purpose of this Notice is to inform you of the proposed Settlement
of the above-captioned class action litigation (the "Action") in
connection with claims against Nicor Inc. ("Nicor"), Thomas L. Fisher
("Fisher"), Kathleen L. Halloran ("Halloran"), George M. Behrens
("Behrens") and Philip S. Cali ("Cali") (collectively, the "Nicor
Defendants") and Arthur Andersen LLP ("Andersen") (the Nicor Defendants
and Andersen are referred to collectively herein as the "Defendants"),
and the hearing to be held by the United States District Court for the
Northern District of Illinois (the "Court") to consider the fairness,
reasonableness and adequacy of the proposed Settlement of $39,0000,000
in cash. The proposed Settlement, the terms of which are summarized in
this Notice, is embodied in a Stipulation of Settlement of Securities
Class Action dated April 23, 2004 (the "Stipulation") which has been
filed with the Court. A hearing (the "Final Approval Hearing") to
consider whether the Court should approve the proposed Settlement of
$39,000,000 and the proposed plan of allocation as fair, reasonable and
adequate and whether it should award Plaintiff's Counsel attorneys' fees
and expenses will be held by the Court in Courtroom ___ of the United
States District Court for the Northern District of Illinois,
Everett McKinley Dirksen Building, 219 South Dearborn Street, Chicago,
Illinois 60604 on ________ __, 2004, at ____ __.m.
I. SUMMARY OF THE PROPOSED SETTLEMENT
A. STATEMENT OF PLAINTIFF RECOVERY
1
Pursuant to the Settlement described herein, a Settlement Fund has been
established consisting of $39,000,000 cash. Plaintiff's Lead Counsel estimate
an average recovery, before the award of attorneys' fees and reimbursement of
expenses, of approximately $1.76 per damaged share of Nicor stock purchased
during the Class Period. Depending on the number of valid and timely proofs of
claim filed by members of the Class, and whether Class members sold their Nicor
shares during the Class Period or held them until after the end of the Class
Period, an individual Class member may receive more or less than this average
amount.
Under the relevant securities laws, a claimant's recoverable damages are
limited to the losses attributable to the alleged fraud. Losses which resulted
from factors other than the alleged fraud are not compensable from the
Settlement Fund. For purposes of the Settlement herein, a Class member's
distribution from the Net Settlement Fund will be governed by the proposed plan
of allocation described below in Section VII, or such other plan of allocation
as may be approved by the Court.
B. STATEMENT OF POTENTIAL OUTCOME OF CASE
The parties disagree on both liability and damages and do not agree on
the average amount of damages per share that would be recoverable if plaintiffs
were to have prevailed on each claim alleged. Plaintiffs allege that the
Defendants are liable for materially false and misleading statements during the
Class Period and for violations of Generally Accepted Accounting Principles.
The Defendants deny that they are liable to the plaintiffs or the Class and
deny that plaintiffs have suffered any legally compensable damages.
C. STATEMENT OF ATTORNEYS' FEES AND COSTS SOUGHT
Lead Plaintiff's Counsel intends to apply to the Court for an award of
attorneys' fees believed to be fair, reasonable, and adequate as payment for
their substantial time and efforts expended in the prosecution of this action
undertaken on a purely contingent basis, in an amount not to exceed thirty
percent (30.00%) of the Settlement Fund, or approximately $11,700,000.00, as
well as reimbursement for its actual expenses incurred or paid in the
prosecution of this litigation in an amount not to exceed $_________.
D. IDENTIFICATION OF LAWYERS REPRESENTATIVES
Any questions regarding the Settlement should be directed
to the following Lead Plaintiff's Counsel:
SCHOENGOLD & SPORN, P.C.
Samuel P. Sporn, Esq.
Joel P. Laitman, Esq.
Christopher Lometti, Esq.
Jay P. Saltzman, Esq.
19 Fulton Street
New York, NY 10038
2
(212) 964-0046
Lead Counsel for the Class
E. REASONS FOR SETTLEMENT
Counsel for plaintiffs engaged in extensive investigation before the
commencement of this Action; examined hundreds of thousands of pages of
documents, including documents produced under Court order, engaged experts with
direct experience in accounting and the oil, gas and energy fields and engaged
in numerous meetings with damages experts; conducted reviews of the Company's
financial filings and their press releases and news articles during the Class
Period; appeared before the Court on a number of occasions for hearings; and
successfully briefed Defendants' motions to dismiss. Plaintiffs have further
deposed employees of and experts retained by Nicor on the claims and defenses in
this action. Lead Plaintiff's Counsel believe that, based on the record herein
and their assessment of the strengths and weaknesses of the Action, the proposed
Settlement, with its substantial benefits, at this point in time represents an
excellent result for members of the Class. The parties have agreed to the
proposed Settlement, subject to the approval of the Court, after intensive and
protracted arm's length negotiations. Lead Plaintiff believes that it is fair,
reasonable, and adequate to the members of the Class considering, among other
things, the substantial benefits produced by the Settlement to members of the
Class, the strengths and weaknesses of Plaintiffs' claims against the Defendants
and the uncertainty inherent in this complex litigation, including a long
drawn-out appeals process.
II. DESCRIPTION OF THE SETTLEMENT
A. STATEMENT OF PLAINTIFF RECOVERY
The Settlement Fund consists of $39,000,000.00 cash, plus interest earned
on that amount from April 23, 2004. The Settlement Fund (net of any amounts paid
out pursuant to the terms of the Settlement and orders of the Court), together
with interest earned, will be held for the benefit of the Class to be
distributed as set out in Section VII below.
Plaintiffs estimate that there were approximately 22.1 million Nicor
common shares purchased during the Class Period which were damaged as a result
of the alleged wrongdoing described below. Lead Plaintiff's damages expert
estimates that, as of April 15, 2004, the average recovery under the Settlement
will be approximately $1.76 per share out of a reasonably provable estimated
recovery amount of $4.81 per share or a total of $39,000,000 -- a recovery of
approximately 35.34% of the reasonable provable damages -- before the deduction
of notice and administration fees
3
and attorneys' fees and expenses, as approved by the Court. The actual recovery
obtained by any member of the Class will vary from the average recovery per
share depending upon numerous factors, including (i) the actual amount paid and
the amount received on the purchase and/or sale of the Nicor shares; (ii) the
actual number and amount of claims submitted by members of the Class; and
(iii) the timing of the Class member's transactions in Nicor common stock during
the Class Period. As stated, the portion of the Settlement Fund available for
distribution to the Class members may be reduced for payment of various costs
and expenses, including attorneys' fees and expenses and administrative costs
associated with the prosecution of the Action.
The Settlement will become effective, assuming approval by the Court,
upon the judgment to be entered by the Court becoming final, that is, no longer
subject to review either by the expiration of the time for the filing of any
motions or appeals therefrom with no motion or appeal having been taken, or, if
any motions or appeals are taken, by the determination of the motion or appeal
by the highest court to which such motion or appeal may be taken in such manner
as to permit the consummation of the Settlement in accordance with the
Stipulation.
This Notice is not intended to be a complete description of the
Stipulation. The Stipulation contains the full and complete terms of the
Settlement, and is available as set forth in Section XI below.
B. STATEMENT OF POTENTIAL OUTCOME OF THE CASE
The financial expert retained by Plaintiff's Lead Counsel and the
financial expert retained by the Defendants disagree as to the appropriate
methodology for calculating, and the amount of, the damages that would be
recoverable by each member of the Class were Plaintiffs to prevail on all of
their claims against the Defendants. The Defendants denied and continue to deny
that the Complaints in the Action state viable claims and believe that
Plaintiffs would not recover on their claims. Thus, the potential outcome of
the case would vary depending on whether or not Plaintiffs would prevail on
their claims or on a portion of their claims and how the Court and jury would
fix damages. The potential outcome is impossible to predict because of these
factors.
C. STATEMENT OF ATTORNEYS' FEES AND COSTS SOUGHT
At the hearing described below, Lead Plaintiff's Counsel will make an
application for an award by the Court of attorneys' fees in an amount not to
exceed thirty percent (30.00%) of the Settlement Fund, or approximately
$11,700,000.00 (or approximately $0.51 per share) (calculated as of
April 15, 2004), as well as reimbursement of costs expenses in an amount not
to exceed $______ (excluding costs of notice to members of the Class and
administration of the Settlement Fund). All such amounts as awarded by the Court
shall be paid solely out of the Settlement Fund.
Counsel for plaintiffs engaged in extensive investigation before the
commencement of this Action; examined
4
hundreds of thousands of pages of documents, including documents produced by
the Nicor Defendants pursuant to Court order pertaining to (1) documents already
produced by Nicor to the Illinois Commerce Commission, Citizens Utility Board,
Illinois Attorney General, the Cook County State's Attorney's Office, and the
Securities and Exchange Commission relating to the allegations contained in the
whistleblower memorandum referred to in Nicor's July 15, 2002 press release;
(2) documents already produced to any of these agencies relating to the
investigation of the whistleblower memorandum by Sidley Austin Brown & Wood in
preparation of the report by Scott Lassar filed with the SEC on
October 31, 2002; and (3) documents already produced to any of these agencies
relating to alleged accounting irregularities at Nicor Energy first disclosed
by Nicor in a July 18, 2002 press release. Additionally, Lead Plaintiff's
Counsel has engaged accounting experts and experts with direct experience in
the oil, gas and energy fields; conducted meetings with damages experts;
reviewed the Company's financial filings and their press releases and news
articles during the Class Period; had numerous appearances before the Court and
conducted depositions of employees and experts retained by Nicor.
The nature of the allegations themselves involved extremely complex
accounting principles for the energy industry and internal controls at Nicor
during the Class Period. These issues required a detailed examination of Nicor's
accounting documents and its auditor's workpapers. Lead Plaintiff's Counsel
conducted this litigation on a purely contingent basis and without receiving any
compensation for their services. Lead Plaintiff's Counsel has expended thousands
of hours of time and effort. Moreover, they advanced their own funds on behalf
of the Class to pay the necessary litigation expenses. They have done so on the
understanding that, if they were successful in obtaining a recovery, they would
apply to the Court for legal fees and reimbursement of their expenses.
The fees sought by Plaintiffs' Counsel are believed to be fair and
reasonable and are customary in actions brought on a contingency fee basis. The
expense reimbursement sought by Lead Plaintiff's Counsel consists of expenses
actually paid or incurred in the prosecution of the Action to date, and are
likewise believed to be fair and reasonable.
D. IDENTIFICATION OF LAWYERS REPRESENTATIVES
Any questions regarding the Settlement should be directed to the
following Plaintiffs' Counsel:
SCHOENGOLD & SPORN, P.C.
Samuel P. Sporn, Esq.
Joel P. Laitman, Esq.
Christopher Lometti, Esq.
Jay P. Saltzman, Esq.
19 Fulton Street
5
New York, NY 10038
(212) 964-0046
Lead Counsel for the Class
E. REASONS FOR SETTLEMENT
Lead Plaintiff's Counsel have engaged in extensive and intensive
investigation and litigation in the pursuit of this Action. Lead Plaintiff's
Counsel has also engaged in extensive arm's length negotiations with counsel for
the Defendants with respect to the Settlement of the Action. These settlement
discussions were intensive and protracted. In addition to disputing any
liability, the Defendants' counsel raised issues regarding damages and
causation. Against this background, Lead Plaintiff's Counsel believe that the
Settlement that has been negotiated (which provides $39,000,000 in cash) is an
excellent result and provides certainty of recovery to the members of the Class
without the delay inherent in litigating the claims. As set forth above, Lead
Plaintiff's Counsel have made a thorough study of the legal principles
applicable to the Class claims, have carefully reviewed the facts and
circumstances underlying the allegations made in the Action and have conducted
intensive and extensive discovery on the merits of this Action.
Proving the allegations asserted by Plaintiffs also would pose certain
significant difficulties. Part of the action and a substantial portion of the
alleged damages arise from alleged accounting irregularities at a Nicor joint
venture, Nicor Energy L.L.C. ("Nicor Energy"). Nicor Energy operated
independently from Nicor, with separate management, operations and officers.
Establishing the liability of Nicor for Nicor Energy's fraudulent accounting
practices poses a significant legal hurdle, the success of which is in no way
assured.
Further, the allegations in the Action center around extremely complex
accounting principles for the energy industry and Nicor's internal controls
during the Class Period. These principles and their application by Nicor have
required the detailed explanation and assistance of experts in accounting and
energy fields. The complexity of the technical issues would likely entail a
"battle of the experts" and require an extended trial that would consume a great
amount of time. The outcome of a trial cannot be predicted.
Lead Plaintiff's Counsel also have evaluated the expense and length of
time necessary to try the Action, taking into account the uncertainties of
predicting the outcome of such complex litigation, including the possibility
that the Court might summarily dismiss the Action, the uncertain outcome on the
merits, and the possibility of lengthy and costly appeals, including a possible
appeal on the merits of the Defendants' Motions for Summary Judgment, if they
were to be granted. On the basis of their appraisal of all of these factors,
Lead Plaintiff's Counsel have concluded that further proceedings would be
protracted, complex and expensive, and that the outcome is uncertain. Based upon
consideration
6
of all these factors, and balancing them against the certain, substantial and
immediate benefits that will be received as a result of the Settlement, Lead
Plaintiff's Counsel has concluded that it is fair, reasonable, adequate and in
the best interests of the Class to settle all of the Class claims against the
Defendants on the terms and conditions set forth hereinafter.
Defendants continue to deny any fault, wrongdoing, or liability as a
result of the claims made in the Action. The Stipulation expressly provides that
the Settlement shall in no event be construed as or deemed to be evidence of any
admission or concession on the part of the Defendants, or any of them; of any
fault, wrongdoing, or liability whatsoever, or that any of the allegations of
the Action are true. Defendants entered into the Stipulation in order to avoid
the cost, distraction and drain on their resources of burdensome, protracted and
uncertain litigation, and to finally put to rest any and all claims that were or
could have been asserted in the Action, or arising out of the matters set forth
in the pleadings, without in any way acknowledging any fault or liability. The
parties intend this Settlement to be a final and complete resolution of all
disputes between them with respect to the subject matter of the Action, and
acknowledge and agree that it represents a compromise of disputed claims.
Accordingly, Class Plaintiff and the Defendants agree that the terms of the
Settlement reflect a good faith settlement of the claims against the Defendants,
and that the Settlement was reached voluntarily after consultation with
experienced legal counsel.
III. DESCRIPTION OF THE LITIGATION
A. HISTORY OF THE LITIGATION
Nicor is a regulated natural gas distribution utility that serves two
million customers in a service territory that encompasses most of the northern
third of Illinois, excluding the city of Chicago. Nicor also owns several other
energy-related ventures, including a 50% interest in Nicor Energy, LLP, a retail
energy marketing joint venture with Dynegy, Inc.. This action arises from
alleged injury to purchasers of Nicor common stock from the issuance by Nicor of
allegedly fraudulently inflated financial statements from November 24, 1999 to
July 19, 2002.
On or about July 22, 2002, a securities class action (the "Action") was
filed in the United States District Court for the Northern District of Illinois
under the caption above on behalf of purchasers of Nicor common stock, alleging
violations of the federal securities laws by Nicor and certain of its directors
and officers.
On or about July 22, 2002, plaintiff Rick Singer published notice of the
pendency of this class action in a national business-oriented wire service,
advising members of the purported class of their right to move the Court to
serve as lead plaintiff or plaintiffs no later than 60 days from the date of
publication of the first notice published in this matter.
On or about October 29, 2002, United States District Judge George W.
Lindberg appointed Local 804 I.B.T.
7
and Local 447 I.A.M. - UPS Retirement Trust (the "Teamsters") as Lead Plaintiff
and approved the Lead Plaintiff's selection of Schoengold & Sporn, P.C. as Lead
Counsel and the law firm of Miller Faucher & Cafferty LLP as Liaison Counsel.
On or about February 14, 2003, an Amended Class Action Complaint was
filed by Lead Plaintiff and the Additional Named Plaintiff Detectives Endowment
Association Annuity Fund naming Nicor, Fisher, Halloran, George M. Behrens, Cali
and Andersen, as defendants in this action.
On or about April 23, 2003, United States District Judge George W.
Lindberg granted Lead Plaintiff's cross-motion for limited particularized
discovery and for a partial lifting of the discovery stay, directing production
of voluminous documents pertaining to (1) documents already produced by Nicor to
the Illinois Commerce Commission, Citizens Utility Board, Illinois Attorney
General, the Cook County State's Attorney's Office, and the Securities and
Exchange Commission relating to the allegations contained in the whistleblower
memorandum referred to in Nicor's July 15, 2002 press release; (2) documents
already produced to any of these agencies relating to the investigation of the
whistleblower memorandum by Sidley Austin Brown & Wood in preparation of the
report by Scott Lassar filed with the SEC on October 31, 2002; and (3) documents
already produced to any of these agencies relating to alleged accounting
irregularities at Nicor Energy first disclosed by Nicor in a July 18, 2002 press
release.
On or about May 19, 2003 Andersen filed a motion to dismiss the Amended
Complaint.
On or about May 28, 2003, this Action was reassigned to
United States District Judge Charles R. Norgle from United States
District Judge George W. Lindberg.
On or about February 12, 2004, United States District Judge Charles R.
Norgle, by two separate orders, and after full briefing of all the defendants
motion to dismiss, denied their separate motions to dismiss.
B. THE DEFENDANTS' DENIAL OF ALL ALLEGATIONS
The Defendants have denied that the Complaint in the Action states viable
claims and do not acknowledge any fault, wrongdoing or liability.
THE COURT, EITHER BY AUTHORIZING THE SENDING OF THIS NOTICE OR OTHERWISE,
HAS NOT EXPRESSED ANY OPINION AS TO THE MERITS OF ANY OF PLAINTIFFS' CLAIMS OR
ALLEGATIONS, NOR AS TO ANY OF THE DEFENDANTS' DENIALS OR DEFENSES. THIS NOTICE
SHALL NOT BE CONSTRUED AS EXPRESSING ANY SUCH OPINION, BUT IS PROVIDED ONLY SO
THAT YOU MAY DECIDE WHAT STEPS, IF ANY, TO TAKE IN RELATION TO THE PROPOSED
SETTLEMENT.
IV. CLASS ACTION DETERMINATION
8
In connection with issuing preliminary approval of the settlement,
the Court has preliminarily certified the Class alleged in the Complaint
for settlement purposes only.
V. YOUR RIGHT TO BE EXCLUDED FROM THE CLASS
If you purchased Nicor common stock during the Class Period as
described above, and are not a defendant herein, or other excluded person, you
are a member of the Class. If you do not wish to remain in the Class, you must
provide written notice of your desire to exclude yourself to:
Nicor Inc. Securities Litigation
c/o Schoengold & Sporn, P.C.
19 Fulton Street
New York, NY 10038
Your request for exclusion must clearly indicate that you request to be
excluded from the Class and must state: the name and address of the person
seeking exclusion; the number of Nicor shares, if any, held as of the close of
business on November 23, 1999, and for all purchases and sales of Nicor common
stock during the applicable Class Period: (a) the number of Nicor shares
bought; (b) the number of Nicor shares sold during the Class Period or
thereafter; (c) during the Class Period, the total dollar value paid or
received for such purchase or sale; (d) the date of such purchase or sale; and
(c) the name(s) in which such shares were registered when purchased and sold.
The request for exclusion will not be effective unless all of the above
information is provided and unless the request for exclusion is sent via United
States mail and postmarked no later than __________, 2004.
If you validly request exclusion, you will not be entitled to share in
the benefits of any court approved Settlement or be bound by any judgment. Any
Class member who does not request exclusion may, if he or she desires, enter an
appearance through his or her counsel by sending such entry of appearance to the
above address.
All members of the Class who do not request to be excluded is eligible to
participate in the benefits of the proposed Settlement in accordance with the
plan of allocation approved by the Court and will be bound by the proposed
Settlement. Moreover, all members of the Class who do not request to be
excluded, upon the Effective Date, shall be deemed to have, and by operation of
the Judgment shall have, waived any and all provisions, rights, and benefits any
and all claims, causes of action, rights, actions, suits, obligations, debts,
demands, judgments, agreements, promises, liabilities, controversies, costs,
expenses and attorneys' fees that have been or could have been asserted and
whether now known or unknown, suspected or unsuspected, including without
limitation, any claims of violations of federal or state securities laws and any
federal or state claims of fraud, intentional misrepresentation, negligent
misrepresentation negligence, gross negligence, breach of duty of care and/or
breach of duty of loyalty, breach
9
of fiduciary duty, or violations of any state or federal statutes, rules or
regulations against the Defendants or any of the Released Parties based upon,
arising from, or in any way related to the Action and the facts, transactions,
events, occurrences, acts or omissions which were or could have been alleged in
the Action or Settlement thereof. The Representative Plaintiffs and the Class
expressly waive all protection under California Civil Code Section 1542
(General release; extent) or any similar provision of the statutory or
nonstatutory law of any other jurisdiction. If you wish to remain a member of
the Class, you need do nothing and your rights will be represented by the
following Counsel for Plaintiffs:
SCHOENGOLD & SPORN, P.C.
Samuel P. Sporn, Esq.
Joel P. Laitman, Esq.
Christopher Lometti, Esq.
Jay P. Saltzman, Esq.
19 Fulton Street
New York, NY 10038
Lead Counsel for the Class
In order to share in the benefits of the proposed Settlement, you must file a
Proof of Claim and Release form as described below.
VI. EFFECT OF APPROVAL OF THE PROPOSED SETTLEMENT
AND RELEASE
If the Court approves the proposed Settlement, judgment will be entered:
(a) approving the Settlement as fair, reasonable, adequate, meeting the
requirements of due process, and in the best interests of the Class; determining
the reasonable amount of attorneys' fees and reimbursement of costs and
disbursements to be awarded to Lead Plaintiff's Counsel, and retaining
jurisdiction for the purposes of effectuating the terms and provisions of the
Settlement;
(b) dismissing with prejudice, and releasing and discharging, any and all
claims, debts, demands, actions, causes of actions, specialties, covenants,
contracts, variances, damages, executions, rights, suits, sums, accounts,
reckonings, presentments, extents and any other liabilities whatsoever, both at
law and in equity, known or unknown, accrued or unaccrued, liquidated or
contingent, matured or unmatured, of or by the Plaintiff Class, or any member or
representative of the Plaintiff Class, whether class, derivative or individual
in nature, that were asserted, could have been asserted, could in the future be
asserted, or are related to claims that were, could have been, or could in the
future be asserted, in the Action or in any other action or proceeding or
otherwise by the Plaintiff Class, or by any member or representative of the
Plaintiff Class, whether class, derivative or individual in nature (including,
without limitation any
10
claims for alleged violations of federal or state statutory or common law, or
any other law, and for damages, interest, attorneys' fees, expert or consulting
fees, and any other costs, expense or liability whatsoever) arising from or
relating to (i) the purchase, sale, distribution or other transfer, of Nicor
common stock during the Class Period; or (ii) the facts, transactions, events,
occurrences, disclosures, statements, acts or omissions or failures to act by
Nicor or any other Defendant, which were, could have been, or could in the
future be asserted in the Action or in any other action or proceeding or
otherwise.
VII. YOUR SHARE OF THE SETTLEMENT FUND
If the proposed Settlement becomes effective, Class members will be
entitled to share in the distribution of the proceeds of the Settlement Fund
allocated to Plaintiffs and the Class, after payment of attorneys' fees,
expenses, and expenses of the settlement administration, to the extent allowed
by the Court.
Payments and distributions from the Settlement Fund on claims submitted
by Class members shall be made in accordance with a plan of allocation (the
"Plan of Allocation") approved by the Court.
The Settlement Fund, net of the costs of notice and administration of the
Settlement, attorneys' fees and costs as may be awarded by the Court (the "Net
Settlement Fund"), shall be distributed in accordance with the following
procedures and criteria:
a) "Eligible Securities" shall be Nicor common shares purchased or
otherwise acquired during the period from November 24, 1999 to July 19, 2002
(the "Class Period");
b) Subject to paragraphs (c) and (d) below, the recognized per share loss
for each Nicor common share purchased or otherwise acquired during the Class
Period shall be determined as follows:
1. claimants who purchased Nicor common stock from November 24, 1999
to July 18, 2002, inclusive, and held that common stock through and
including October 16, 2002 (i.e., the end of the 90 days following
the disclosures of July 19, 2002), shall have a recognized loss of
100% of the difference between the price paid (not including
brokerage fees and commissions) and $27.31 per share (i.e., the
mean trading price during the 90 days following the disclosures of
July 19, 2002);
2. claimants who purchased Nicor common stock from November 24, 1999
to July 18, 2002, inclusive, and sold that common stock between
July 19, 2002 and October 16, 2002, inclusive, shall have a
recognized loss of the lesser of:
(a) the difference between the price paid (not including brokerage
fees and commissions) and
11
the price received; OR
(b) the difference between the price paid (not including brokerage
fees and commissions) and the mean closing price from the date
of disclosure (i.e., July 19, 2002) through the date of the
sale;
3. claimants who purchased Nicor common stock between November 24,
1999 to July 12, 2002, inclusive, and sold that common stock
between July 15, 2002 and July 18, 2002, inclusive, shall have a
recognized loss of the lesser of:
(a) the difference between the price paid (not including
brokerage fees and commissions) and the price received; OR
(b) $1.00 per share.
4. claimants who held Nicor common stock prior to the commencement of
the Class Period and sold or held that common stock during the Class Period are
entitled to no recovery with respect to that common stock;
5. Claimants who purchased Nicor common stock during the Class Period
but suffered no loss are entitled to no recovery with respect to that common
stock;
c) In processing Claims, the first-in, first-out basis (FIFO) will be
applied to both purchases and sales. Each Claim must show the number of Nicor
common shares held as of the close of business on November 23, 1999 and the
prices paid therefor, and all purchases and sales of Eligible Securities made
until October 16, 2002, inclusive, and the prices paid therefor. The sales of
Eligible Securities will be matched in chronological order first against the
shares so held as of the close of business on November 23, 1999 and then against
the earliest in time purchases of Eligible Securities during the applicable
Class Period. Resulting match-ups which show a gain will be netted against
losses on such transactions to determine the Recognized Loss for the Claimant.
d) In the event that the Net Settlement Fund is more or less than the
aggregate of all Claimants' Eligible Amount, each Claimant will receive a
proportionate share of the Net Settlement Fund based upon the ratio of that
Claimant's Eligible Amount to the aggregate of all Claimants' Eligible Amounts.
e) The determinations of the Claims Administrator shall be subject to
review and approval by the Court, as part of the Court's review and approval of
a proposed Order of Distribution. Neither the Defendants nor their counsel shall
have any responsibility or liability with respect to the administration of
Claims by the Claims Administrator, including determinations as to the Claims of
Class members, nor shall they have any right to challenge any Claims.
If you acquired any Nicor common shares during the Class Period by gift,
inheritance, or operation of law, you
12
are to report this transaction as if you acquired the stock at the same time
and at the same cost as the person who purchased the shares.
This Plan of Allocation, and any modification thereof, shall be subject
to the approval of the Court as fair, reasonable and adequate to the members of
the Plaintiff Class only upon notice and opportunity to be heard by all parties.
The Defendants take no position with respect to the Plan of Allocation and shall
have no responsibility for its provisions or terms. The Plan of Allocation may
be altered or amended by order of the Court only for good cause shown.
Following the calculation of each Claimant's recognized loss Lead
Plaintiff's Counsel expect to recommend to the Court that all available cash
comprising the Settlement Fund shall be allocated so that each Claimant will
receive a proportionate share of the Settlement Fund based upon the ratio of
that Claimant's recognized loss to the aggregate of all Claimants' recognized
losses. Claimants filing claims resulting in a proportionate share of the
Settlement Fund less than $10 in cash shall not be paid but shall otherwise be
bound by the Judgment.
In order to make a claim to share in the proceeds of the proposed
Settlement described above, you must fill out and submit the enclosed Proof of
Claim and Release in the attached form, postmarked no later than ___________,
2004. Each Class member, by filing a Claim, shall submit to the jurisdiction of
the Court for purposes of this action.
ANY CLASS MEMBER WHO FAILS TO SUBMIT A VALID AND TIMELY PROOF OF CLAIM
AND RELEASE FORM WILL BE FOREVER BARRED FROM SHARING IN THE DISTRIBUTION
PROCEEDS OF THE SETTLEMENT, BUT WILL NONETHELESS BE BOUND BY THE JUDGMENT.
In the event that an appeal is taken or a motion is filed as to the
Court's approval of the proposed Settlement, no distribution will be made until
such time as any and all motions and appeals are finally resolved in such manner
as to permit consummation of the Settlement in accordance with the Stipulation.
VIII. TERMINATION OF PROPOSED SETTLEMENT
If there is no final Court approval of the proposed Settlement in this
case, or if the Defendants withdraw from the Settlement in accordance with the
Stipulation, or if the Settlement is not consummated for any other reason, the
Stipulation will become null and void, and the parties will resume their former
positions in this Action.
IX. THE SETTLEMENT HEARING
IF YOU DO NOT WISH TO OBJECT TO THE PROPOSED SETTLEMENT, PLAN OF ALLOCATION OR
REQUEST FOR ATTORNEYS' FEES AND EXPENSES YOU NEED NOT APPEAR AT THE HEARING.
Pursuant to an Order of this Court, dated ____________, 2004, the Final
Approval and Settlement Fairness
13
Hearing (the "Final Approval Hearing") with respect to the Settlement will be
held in Courtroom ___ of the United States Courthouse, United States District
Court for the Northern District of Illinois, Everett McKinley Dirksen Building,
219 South Dearborn Street, Chicago, Illinois 60604 at __:00 __.m.
on ___________, 2004 to determine whether the proposed Settlement is fair,
reasonable, adequate, meets the requirements of due process, and is in the best
interests of the Class, and should be approved by the Court. At this hearing
the Court will also pass on Plaintiffs' Counsel's application for attorneys'
fees and reimbursement of costs and disbursements and Plaintiffs' proposed
Plan of Allocation.
Any member of the Class who has not requested exclusion as described
above may appear at the Final Approval Hearing in person, or through duly
authorized counsel of his or her choice, and show cause, if any, why the
proposed Settlement, the proposed Plan of Allocation, and the application for
attorneys' fees and reimbursement of costs and disbursements should not be
approved. Any such objection must be supported by the following documents: a
written objection and any supporting memoranda or other papers and information
(including documentary proof of membership in the Class), and a written
statement signed by the objector and setting forth (a) the name, address, and
telephone number of the objector; (b) the number and price of Nicor common
shares purchased by the objector during the applicable Class Period, and the
date of each such transaction with proof thereof, (c) the number and price of
Nicor common shares sold during the applicable Class Period or thereafter, and
the date of each such transaction with proof thereof, and (d) the reason the
person is objecting. The failure to file in a timely manner may bar the objector
from being heard, absent relief from the Court. No such objection will be heard
and no papers or briefs will be considered unless those objections or papers
have been filed with the Clerk of the United States District Court for the
Northern District of Illinois, no later than __________, 2004, showing due proof
of service, by hand or by first class mail, postage prepaid, on the following
persons:
Samuel P. Sporn, Esq.
Joel P. Laitman, Esq.
Jay P. Saltzman, Esq.
SCHOENGOLD & SPORN, P.C.
19 Fulton Street
New York, NY 10038
Lead Counsel for the Class
Bradley J. Andreozzi
Michele Odorizzi
Mayer, Brown, Rowe & Maw LLP
190 South LaSalle Street
Chicago, IL 60603-3441
14
Attorneys for Defendants Nicor Inc.,
Thomas L. Fisher, Kathleen L. Halloran,
George M. Behrens and Philip S. Cali
Scott C. Solberg
EIMER STAHL KLEVORN & SOLBERG LLP
224 South Michigan Avenue
Suite 1100
Chicago, Illinois 60604
Attorneys for Defendant Arthur Andersen LLP
You may file an objection without having to appear at the Settlement
Hearing. Members of the Class who approve of the proposed Settlement do not need
to appear at the Settlement Hearing to indicate their approval, although they
must file a Proof of Claim to participate in the Settlement.
ANY CLASS MEMBER WHO DOES NOT OBJECT IN THE MANNER DESCRIBED HEREIN WILL BE
DEEMED TO HAVE WAIVED ANY OBJECTION, AND SHALL BE FOREVER FORECLOSED FROM MAKING
ANY OBJECTION TO THE PROPOSED SETTLEMENT.
X. SPECIAL NOTICE TO BROKERS, BANKS AND OTHER NOMINEES
If you, as nominee, purchased Nicor common stock during the Class Period
on behalf of any beneficial owner, you have been directed by Order of the Court
dated ____________, 2004 immediately to contact the CLAIMS ADMINISTRATOR, NICOR
INC. SECURITIES LITIGATION, c/o THE GARDEN CITY GROUP, P.O. Box 9000 #6221,
Merrick, New York 11566-9000, Telephone: (866) 808-3585, and either (a) within
fourteen (14) days after receipt from the Claims Administrator of copies of the
Notice and Proof of Claim and Release, mail such copies to the beneficial owners
of the securities, providing written confirmation, in Affidavit form, to the
Claims Administrator and Plaintiff's Lead Counsel of such mailing, or (b)
provide the Claims Administrator with the names and addresses of such beneficial
owners, in which case the Claims Administrator will then send copies of the
Notice and Proof of Claim and Release to each such person. The Claims
Administrator will provide nominees with additional copies of the Notice and
Proof of Claim and Release upon the request of such nominees. The Claims
Administrator will also offer reimbursement to nominees for the reasonable
administrative costs of searching their records to find the names and addresses
of the beneficial owners and for mailing the Notices.
XI. FURTHER INFORMATION
For a more detailed statement of the matters involved in this litigation,
you are referred to the papers on file in this action, including the
Stipulation, which may be inspected during regular business hours at the Office
of the Clerk of the United States District Court for the Northern District of
Illinois, Everett McKinley Dirksen Building, 219 South Dearborn Street, Chicago,
Illinois 60604.
PLEASE DO NOT CALL OR WRITE THE COURT DIRECTLY. IF YOU HAVE ANY QUESTIONS,
PLEASE WRITE TO THE FOLLOWING COUNSEL REPRESENTING PLAINTIFFS AND THE CLASS:
Schoengold & Sporn, P.C.
19 Fulton Street
New York, NY 10038
Dated: ____________, 2004
BY ORDER OF THE UNITED STATES
DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS
15
THE HONORABLE CHARLES R.NORGLE
______________________________
16
EXHIBIT A-2
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
- ---------------------------------------------------
RICK SINGER, on behalf of himself and all others )
similarly situated )
)
Plaintiff, )
v. ) No. 02 C 5168
)
NICOR INC., et al., )
)
Defendants. )
- ---------------------------------------------------)
PROOF OF CLAIM AND RELEASE
--------------------------
DEADLINE FOR SUBMISSION: __________, 2004.
IF YOU PURCHASED OR OTHERWISE ACQUIRED NICOR INC. ("NICOR") COMMON STOCK
DURING THE PERIOD FROM NOVEMBER 24, 1999 TO JULY 19, 2002, YOU ARE A
"CLASS MEMBER" AND YOU MAY BE ENTITLED TO SHARE IN THE SETTLEMENT
PROCEEDS. (EXCLUDED FROM THE CLASS ARE THE NICOR DEFENDANTS AND ARTHUR
ANDERSEN, LLP ("ANDERSEN"), THE OFFICERS AND DIRECTORS OF NICOR AND
ANDERSEN AT ALL RELEVANT TIMES, MEMBERS OF THE INDIVIDUAL DEFENDANTS'
IMMEDIATE FAMILIES AND THEIR LEGAL REPRESENTATIVES, HEIRS, SUCCESSORS OR
ASSIGNS AND ANY ENTITY IN WHICH THE NICOR DEFENDANTS AND/OR ANDERSEN HAVE
OR HAD A CONTROLLING INTEREST).
IF YOU ARE A CLASS MEMBER, YOU MUST COMPLETE AND SUBMIT THIS FORM IN
ORDER TO BE ELIGIBLE FOR ANY SETTLEMENT BENEFITS.
YOU MUST COMPLETE AND SIGN THIS PROOF OF CLAIM AND MAIL IT BY FIRST CLASS
MAIL, POSTMARKED NO LATER THAN _________ __, 2004 TO THE FOLLOWING
ADDRESS:
NICOR SECURITIES LITIGATION
P.O. Box 9000 #6221
Merrick, New York 11566-9000
YOUR FAILURE TO SUBMIT YOUR CLAIM BY ________ __, 2004 WILL SUBJECT
YOUR CLAIM TO REJECTION AND PRECLUDE YOUR RECEIVING ANY MONEY IN
CONNECTION WITH THE SETTLEMENT OF THIS LITIGATION. DO NOT MAIL OR
DELIVER YOUR CLAIM TO THE COURT OR TO ANY OF THE PARTIES OR THEIR
COUNSEL AS ANY SUCH CLAIM WILL BE DEEMED NOT TO HAVE BEEN SUBMITTED.
SUBMIT YOUR CLAIM ONLY TO THE CLAIMS ADMINISTRATOR.
1. I purchased or otherwise acquired Nicor common stock during the
period from November 24, 1999 to July 19, 2002 (the "Class Period"). Do not
submit this Proof of Claim if you did not purchase or otherwise acquire Nicor
common stock during this period.
2. By submitting this Proof of Claim, I state that I believe in good
faith that I am a Class Member as defined above and in the Notice of Pendency of
Class Action, Proposed Settlement and Attorneys' Fees Petition and Hearing (the
"Notice"), or am acting for such person; that I am not a defendant in the Action
or anyone excluded from the Class; that I have read and understand the Notice;
that I believe that I am entitled to receive a share of the Net Settlement Fund;
that I elect to participate in the proposed Settlement described in the Notice;
and that I have not submitted a request for exclusion. (If you are acting in a
representative capacity on behalf of a Class Member (e.g., as an executor,
administrator, trustee, or other representative), you must submit evidence of
your current authority to act on behalf of that Class Member. Such evidence
would include, for example, letters testamentary, letters of administration, or
a copy of the trust documents.)
3. I have set forth where requested below all relevant information
with respect to each purchase or acquisition of Nicor common stock during the
Class Period, and each sale or retention, if any, of such securities.
2
4. I have enclosed photocopies of the stockbroker's confirmation
slips, stockbroker's statements, relevant portions of my tax returns or other
documents evidencing each purchase, acquisition, sale or retention of Nicor
common stock listed below in support of my claim. IF ANY SUCH DOCUMENTS ARE NOT
IN YOUR POSSESSION, PLEASE OBTAIN A COPY OR EQUIVALENT DOCUMENTS FROM YOUR
BROKER OR TAX ADVISOR BECAUSE THESE DOCUMENTS ARE NECESSARY TO PROVE AND PROCESS
YOUR CLAIM.
5. I understand that the information contained in this Proof of
Claim is subject to such verification as the Court may direct, and I agree to
cooperate in any such verification.
6. I hereby acknowledge that upon the occurrence of the Effective
Date (as defined in the Notice), my signature hereto will constitute a full,
final, and complete release, remise and discharge by me or, if I am submitting
this Proof of Claim on behalf of a corporation, a partnership, estate or one or
more other persons, by it, him, her or them, and by my, its, his, her or their
heirs, executors, administrators, successors, and assigns and any person(s)
they represent, in any and every capacity whatsoever, for good and sufficient
consideration, the receipt of which is hereby acknowledged, of any and all
Released Claims against any and all Released Parties, as those terms are defined
in the Stipulation of Settlement, including without limitation, any and all
claims, however denominated, whether known or unknown, suspected or unsuspected,
including without limitation those based in statute, contract, tort or any body
of law, which arise out of or in any way relate to: the claims against the
Defendants set forth in the Action or the subject matter of the claims against
the Defendants set forth in the Action; the offer, purchase, sale, transfer or
retention of any Nicor securities during the Class Period; disclosures or oral
or written representations or alleged
3
omissions that were issued, made or operative during the Class Period; and/or
any claims which have been or could have been asserted in the Action or any
other proceeding against any of the Released Parties, including, but not
limited to, Defendants, Defendants' past, present and future parent companies,
subsidiaries, divisions, related or affiliated entities, joint ventures,
predecessors and successors, and their past, present and future directors,
officers, partners, principals, employees, shareholders, agents, advisors,
attorneys, and insurers, including but not limited to, insurers, co-insurers,
and reinsurers, and their respective heirs, executors, administrators, personal
or legal representatives, successors, transferees and assigns, spouses, or any
members of their immediate families, and any and all persons natural or
corporate in privity with them or acting in concert with any of them or acting
on behalf of or at the direction of any of them.
7. Statement of Claim
Name(s) of Beneficial Owner(s):
___________________________Name
_____________________________Name
_____________________________Street No.
____________ ___________Zip Code
___________City
State
( ) _______________________ ( ) ________________________
Telephone No. (Day) Telephone No. (Night)
____________________________________Taxpayer I.D. No. or Social Security No.
Check one:___ Individual ___ Corporation ___ Trust___ Estate___ IRA_________
Other _________________ (specify)____________________________Joint Owner's Name
(if any)
8. At the close of business on November 23, 1999,
I owned __________ shares of Nicor common stock.
4
9.I made the following purchases of Nicor common stock on the open
market, or otherwise acquired Nicor common stock, during the period from
November 24, 1999 through July 18, 2002, inclusive:
Date(s) of Purchase Number of Shares of Purchase Price Aggregate Cost
(List Chronologically) Common Stock Common Share of Common (including,
(Month/Day/Year) Purchased/Acquired Stock commissions, taxes,
and fees)
____/____/______ __________________ $______________ $______________
____/____/______ __________________ $______________ $______________
____/____/______ __________________ $______________ $______________
____/____/______ __________________ $______________ $______________
10. I made the following sales of Nicor common stock during the
period from November 24, 1999 through October 16, 2002, inclusive:
Date(s) of Sale Number of Shares of Sale Price Per Amount Received
List Chronologically) Common Stock Sold Share of Common (net of
(Month/Day/Year) Stock commissions,
taxes, and fees)
____/____/______ __________________ $______________ $______________
____/____/______ __________________ $______________ $______________
____/____/______ __________________ $______________ $______________
____/____/______ __________________ $______________ $______________
5
11. I made the following purchases of Nicor common stock on the
open market, or otherwise acquired Nicor common stock, during the period from
July 20, 2002 through October 16, 2002, inclusive:
Date(s) of Purchase Number of Shares of Purchase Price Aggregate Cost
(List Chronologically) Common Stock Common Share of Common (including,
(Month/Day/Year) Purchased/Acquired Stock commissions, taxes,
and fees)
____/____/______ __________________ $______________ $______________
____/____/______ __________________ $______________ $______________
____/____/______ __________________ $______________ $______________
____/____/______ __________________ $______________ $______________
12. At the close of business on October 16, 2002, I still
owned __________ shares of Nicor common stock.
13. Substitute Form W-9
Request for Taxpayer Identification Number:
Enter taxpayer identification number below for the Beneficial
Owner(s). For most individuals, this is your Social Security Number. The
Internal Revenue Service ("I.R.S.") requires such taxpayer identification
number. If you fail to provide this information, your claim may be rejected.
________________________________________Social Security Number (for
individuals) or________________________________________Taxpayer Identification
Number(for estates, trusts, corporations, etc.)
14. Certification
UNDER THE PENALTIES OF PERJURY, I (WE) CERTIFY THAT ALL OF THE
INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE.
6
I (We) certify that I am (we are) NOT subject to backup withholding
under the provisions of Section 3406 (a)(1)(c) of the Internal Revenue Code
because: (a) I am (We are) exempt from backup withholding, or (b) I (We) have
not been notified by the I.R.S. that I am (we are) subject to backup withholding
as a result of a failure to report all interest or dividends, or (c) the I.R.S.
has notified me (us) that I am (we are) no longer subject to backup withholding.
NOTE: If you have been notified by the I.R.S. that you are subject to backup
withholding, please strike out the language that you are not subject to backup
withholding in the certification above.
Signature of Claimant (If this claim is
being made on behalf of Joint Claimants,
then each must
sign)
________________________(Signature)
________________________(Signature)
Date: ________________
THIS PROOF OF CLAIM MUST BE SUBMITTED NO LATER THAN _______ __, 2004,
AND MUST BE MAILED TO:
Nicor Inc. Securities Litigation, P.O. Box 9000 #6221, Merrick,
New York 11566-9000.
A Proof of Claim received by the Claims Administrator shall be deemed
to have been submitted when posted, if mailed by ______________, 2004 and if a
postmark is indicated on the envelope and it is mailed first class, and
addressed in accordance with the above instructions. In all other cases, a Proof
of Claim shall be deemed to have been submitted when actually received by the
Claims Administrator.
7
If you wish to be assured that your Proof of Claim is actually
received by the Claims Administrator then you should send it by Certified Mail,
Return Receipt Requested. No acknowledgment will be made as to the receipt of
claim forms. You should be aware that it will take a significant amount of time
to process fully all of the Proofs of Claim and to administer the Settlement.
This work will be completed as promptly as time permits, given the need to
investigate and tabulate each Proof of Claim. Please notify the Claims
Administrator of any change of address.
8
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
- ---------------------------------------------------
RICK SINGER, on behalf of himself and all others )
similarly situated )
)
Plaintiff, )
v. ) No. 02 C 5168
)
NICOR INC., et al., )
)
Defendants. )
- ---------------------------------------------------)
SUMMARY NOTICE OF HEARING ON PROPOSED
SETTLEMENT OF $39,000,000
TO: ALL PERSONS AND ENTITIES ("CLASS MEMBERS" OR "CLASS") WHO
PURCHASED COMMON STOCK OF NICOR INC. DURING THE PERIOD FROM
NOVEMBER 24, 1999 TO JULY 19, 2002 (THE "CLASS PERIOD")
YOU ARE HEREBY NOTIFIED that a hearing will be held before the Honorable
Charles R. Norgle, on ___________, 2004 at 10:00 a.m. in Courtroom __ of the
United States District Court for the Northern District of Illinois, Everett
McKinley Dirksen Building, 219 South Dearborn Street, Chicago, Illinois 60604,
to determine whether orders should be entered (a) finally approving the proposed
Settlement of $39,000,000 in cash; (b) dismissing with prejudice the litigation
as against the Defendants; (c) approving the Plan of Allocation of the Net
Settlement Fund; and (d) awarding counsel fees and reimbursement of expenses to
counsel for plaintiffs.
This notice is only a summary. If you have not yet received a "Notice of
Proposed Settlement And Hearing Thereon And Right to Share in Settlement
Proceeds" which describes in detail the terms of the proposed Settlement and
your rights thereunder, you may obtain a copy of said Notice by contacting:
CLAIMS ADMINISTRATOR
NICOR INC. SECURITIES LITIGATION
P.O. Box 9000 #6221
Merrick, New York 11566-9000
Telephone: (866) 808-3585
If you have any questions regarding the litigation or require information
in addition to the Notice or Proof of Claim, you may contact Plaintiff's Lead
Counsel: SCHOENGOLD & SPORN, P.C., Samuel P. Sporn, Esq., Joel P.
Laitman, Esq., Jay P. Saltzman, Esq., 19 Fulton Street, Suite 406,
New York, NY 10038, (212) 964-0046.
1
PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE FOR
INFORMATION.
Dated:________________, 2004
BY ORDER OF THE COURT
2
EXHIBIT B
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
- ---------------------------------------------------
RICK SINGER, on behalf of himself and all others )
similarly situated )
)
Plaintiff, )
v. ) No. 02 C 5168
)
NICOR INC., et al., )
)
Defendants. )
- ---------------------------------------------------)
[PROPOSED] FINAL ORDER AND JUDGMENT
This matter having come before the Court for approval of a settlement of
the above-captioned consolidated class action, pursuant to the Order of this
Court dated ___________, 2004 (the "Hearing Order"), to consider and determine
the matters set forth in said Hearing Order; and due and adequate notice (the
"Notice") having been published and transmitted by first-class mail, postage
prepaid, to those persons or entities who could reasonably be identified as
having purchased or acquired Nicor Inc. ("Nicor") common stock during the period
from November 24, 1999 to July 19, 2002 (the "Class Period"), except those
persons or entities excluded from the definition of the Class, and all such
persons having any objection to the proposed Settlement or the attorneys' fee
and expense request of Plaintiff's Lead Counsel described in the Notice or the
plan of allocation described in the Notice having been given an opportunity to
present such objections to the Court; and the Court having heard all parties
and having considered all papers filed in connection therewith, and good cause
appearing therefor,
1
IT IS HEREBY ORDERED, ADJUDGED, and DECREED THAT:
1. Unless otherwise defined herein, all terms that are capitalized herein
shall have the meanings ascribed to those terms in the Stipulation of Settlement
of Securities Class Action dated April 23, 2004 (the "Stipulation").
2. This Court has jurisdiction over the subject matter of this Action (and
all actions and proceedings consolidated in the Action) and over all parties to
the Action, including Lead Plaintiff, the Additional Named Plaintiff, all
members of the Class, and Defendants.
3. The Court finds that the prerequisites for a class action under Fed. R.
Civ. P. 23(a) and (b)(3) have been satisfied. Specifically, the Court finds that
Lead Plaintiff has and will adequately represent the interests of the Class and
appoints Lead Plaintiff as class representative.
4. Pursuant to Rule 23 of the Federal Rules of Civil Procedure and for
the purposes of this Settlement only, this Court hereby finally certifies this
action as a class action on behalf of all persons and entities who purchased or
otherwise acquired Nicor common stock during the Class Period. Excluded from the
class are the Defendants, members of the families of any of the individual
defendants, any entity in which any defendant has a controlling interest or is a
parent or subsidiary of or is controlled by the Company, and the officers,
directors, affiliates, legal representatives, heirs, predecessors, successors
and assigns of any of the defendants. Also excluded from the Class are any
persons who submitted valid and timely requests for exclusion from the Class, as
identified in Exhibit 1 hereto.
5. Based upon the evidence submitted by Lead Plaintiff's Counsel, this
Court finds that
2
the dissemination of the Notice of Pendency of Class Action, Proposed
Settlement and Attorneys' Fee Petition and Hearing Thereon (the "Notice") as
previously authorized by the Court, constituted the best notice practicable,
and was due and sufficient notice to those entitled to such notice pursuant to
Rule 23 of the Federal Rules of Civil Procedure and principles of due process.
6. This Court hereby approves the Settlement and finds that the Settlement
is, in all respects fair, reasonable, adequate, meets the requirements of due
process, and is in the best interest of the Class, especially in light of the
complexity, expense and probable duration of further litigation, the discovery
conducted to date, the risks of establishing liability and damages, the
intensive arm's length negotiation of experienced counsel, and the
reasonableness of the recovery herein considering the range of possible recovery
and the attendant risks of litigation, and the Court further directs the parties
thereto to consummate the terms and provisions of the Settlement.
7. This Court hereby dismisses the Action, as well as all claims of any
kind that were made, could have been made, or could in the future be made, in
the Action, or in any other action or proceeding, including the Released Claims,
and the claims described in Paragraph 9 herein, on the merits, with prejudice,
and in full and final discharge of any and all such claims, by any person not
seeking exclusion against the Defendants and the Released Parties, and without
costs (except as provided in the Stipulation) to be binding on the Lead
Plaintiff and all Class Members. This Court specifically finds that all Class
Members are bound by the Settlement and this Order.
8. Upon the Effective Date, each and every Class Member who has not timely
and validly requested exclusion, whether or not such Class Member has filed a
Proof of Claim, are and
3
will be deemed to have conclusively released the Released Claims as against the
Released Parties. The Lead Plaintiff, the Additional Named Plaintiff, and all
other Class Members who have not properly excluded themselves from the Class,
shall further, as of the Effective Date, conclusively be deemed to have waived
the rights afforded by California Civil Code Section 1542 and any similar
statute or law, or principle of common law, of California or any other
jurisdiction.
9. Upon the Effective Date, as defined in the Stipulation, all claims
against the Defendants and the Released Parties, however denominated, including
but not limited to claims for contribution, indemnification or reimbursement,
arising under federal or state law, including without limitation those based in
statute, contract, tort or any body of law, which arise out of or in any way
relate to the Action or the Released Claims, and which have been asserted or
could have been asserted against the Defendants in the Action or any other
proceeding by any Class member who has not timely and validly requested
exclusion, or, to the extent legally permissible, any other person or entity,
are hereby extinguished, discharged, satisfied and barred, and the future
filing, institution, reinstitution and/or prosecution of such claims is hereby
enjoined.
10. Those persons, if any, identified in Exhibit 1 hereto shall be
excluded from the Class and from any benefits under the Settlement and (a) said
persons may not pursue any claims or remedies on behalf of those who are bound
by the Judgment against the Defendants or the other Released Parties, or in
connection with or relating in any way to the Released Claims compromised in the
Settlement and (b) they shall not commence, maintain, or participate in any
class, derivative or representative action relating in any way to the Released
Claims compromised in the Settlement.
4
11. Neither the Settlement, this Judgment, any of their terms and
provisions, nor the fact of settlement, nor any of the proceedings or
negotiations connected with it, nor any of the documents or statements referred
to therein shall be: (a) construed as a concession or admission by the
Defendants or the Released Parties with respect to any of the Released Claims or
be deemed evidence of any violation of any statute or law or of any liability,
fault or wrongdoing with respect to the Released Claims; (b) offered or received
against the Defendants as an admission or concession that recovery could be had
in any amount should the Action not be settled; (c) construed as a concession or
admission by Plaintiffs or any Class Member that their claims lack merit or that
the defenses asserted by the Defendants have merit; (d) offered or received in
evidence in any civil, criminal or administrative action, arbitration or other
proceeding other than such proceedings as may be necessary to consummate or
enforce the Settlement; provided, however, that the Defendants may file the
Stipulation, the Judgment and/or any releases executed in connection therewith,
in any action that may be brought against any of them in order to support a
defense or counterclaim based on principles of res judicata, collateral
estoppel, release, good faith settlement, judgment bar or reduction or any other
theory of claim preclusion or issue preclusion or similar defense or
counterclaim.
12. The Court hereby approves the Plan of Allocation as fair, reasonable
and equitable and Lead Plaintiff's Counsel and the Claims Administrator are
directed to administer the Stipulation in accordance with its terms and
provisions.
13. The Court finds that all parties and their counsel have complied with
each
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requirement of Rule 11 of the Federal Rules of Civil Procedure as to all
proceedings herein.
14. This Court hereby awards attorneys' fees in the amount of ______% of
the Settlement Fund, including interest at the same rate as earned by the
Settlement Fund, to Lead Plaintiff's Counsel. The Court further awards expenses
(including experts' fees and expenses) in the amount of $_______________ to
Lead Plaintiff's Counsel. Lead Plaintiff's Counsel, in their sole discretion,
may make payment to other Plaintiffs' counsel who have contributed to the
successful prosecution of this Action. Lead Plaintiff's Counsel's judgment in
this matter shall be deemed conclusive. In accordance with the terms and
conditions set forth in the Stipulation, payment of fees and expenses may be
made immediately upon the final order and approval of the Settlement, and shall
be paid out of, and shall not be in addition to, the Settlement Fund.
15. Without affecting the finality of this Judgment, the Court hereby
reserves and retains continuing jurisdiction over this Action and the parties to
the Stipulation and the Class Members for all matters related to this Action,
including, but not limited to, the administration, interpretation, effectuation
or enforcement of the Stipulation and the Judgment, and any application for fees
and expenses incurred in connection with administering and distributing the
Settlement proceeds to the members of the Class.
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16. The provisions of this Judgment constitute a full and complete
adjudication of the matters considered and adjudged herein, and the Court
determines that there is no just reason for delay and directs, pursuant to Fed.
R. Civ. P. 54(b), this Judgment to be entered as a final judgment with respect
to all matters ordered, judged and decreed.
Dated ______________, 2004
_____________________________
The Hon. Charles R. Norgle
United States District Judge
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