EAGLE HARDWARE SECURITIES LITIGATION
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding ("MOU") contains the principal terms of
settlement (the "Settlement") between Eagle Hardware & Garden, Inc. (the
"Company"), David Heerensperger, ET UX, Richard Takata, ET UX, and Myron,
Kirkpatrick, ET UX (the "Individual Defendants") and plaintiffs in the EAGLE
HARDWARE SECURITIES LITIGATION pending in both the state and federal courts,
to wit: MARK OPPENHEIMER. ET AL. V. EAGLE HARDWARE & GARDEN, INC., ET AL.,
King County Superior Court Case NO. 93-2-29908-7, and IN RE EAGLE HARDWARE
SECURITIES LITIGATION, United States District Court, Western District of
Washington Case No. C92-1882C.
1. A settlement of all claims, including all appeals in connection
therewith, in both the state and federal courts, has been reached in the
amount of $1.5 million. On or before June 19, 1995, the Company will deposit
the sum of $1.5 million in an escrow account at Pacific First National Bank.
The essential terms of the escrow will be that, together with any interest,
shall be returned to the Company in the event the settlement is not approved
by both the King County Superior Court and the United States District Court
for the Western District of Washington at Seattle; in the event the
settlement is approved and judgments and orders of dismissal with prejudice
are entered in both cases, the funds will be distributed as directed by the
King County Superior Court. In addition, defendants agree to pay as incurred
reasonable costs of notice to the Class and administration of claims up to
but not in excess of $50,000.
2. The notice and claim form shall have a clause releasing defendants
from any and all claims that were or could have been asserted, whether known or
unknown, against defendants and each of them. In order to participate in the
settlement fund each Class Member will be required to submit an executed Proof
of Claim and Release. Only
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Class Members with recognized losses in excess of $5 shall participate in the
settlement fund. The Honorable Sharon Armstrong, Superior Court Judge for King
County, shall resolve all disputes relative to any notice, claim form, order,
settlement agreement, or the term and provisions of any other document, pleading
or paper required to consummate the settlement. All terms not resolved on or
before June 19, 1995, shall be presented to Judge Armstrong for resolution in
accordance with such schedule as the Court may establish.
3. Upon execution of this MOU, the parties will issue a joint press
release, Exhibit A attached hereto and incorporated herein, relating to the
settlement of this case. All parties are free to comment regarding the case
and the settlement. However, if plaintiffs believe that a published
statement of fact, by a defendant is materially false, plaintiffs may apply
to Judge Armstrong or, in her absence, Judge John Coughenour, for an order
exempting from the protective order one or more specified documents obtained
in discovery from defendants. The court may exempt the specified documents
if it finds that the published statement was materially misleading, and the
document or documents sought to be exempted contradicts the challenged
statement. This provision will be of no furth force or effect after the
protective order has concluded in accordance with its terms.
4. The settlement is contingent upon preliminary and final approval by
both the King County Superior Court and the United States District Court for
the Western District of Washington. The parties agree that they will
promptly seek provisional or preliminary approval by both Courts of this
settlement. The application for preliminary approval of this settlement and
of plaintiffs' petition for attorneys' fees and expenses shall be made before
notice of settlement is distributed to class members. Should either court
fail to provisionally or finally approve the settlement, then this agreement
shall be of no further force or effect and the $1.5 million, plus any
interest, shall be promptly returned
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by the escrow agent to defendants. Promptly upon execution of this MOU,
defendants will advise the Ninth Circuit Court of Appeals and the Washington
Court of Appeals of the pendency of the settlement. Upon final approval of
the settlement by both trial courts, defendants will dismiss all pending
appeals.
5. All opt-outs will be given an opportunity to submit claims, and such
claims shall be processed notwithstanding the claimants' prior opt-out.
6. Except as provided in paragraphs 1 and 4 above relating to return of
funds in escrow, defendants shall have no recapture rights in the settlement
fund.
7. This memorandum may be executed in separate counterparts.
AGREED TO ON THIS 23RD DAY OF MAY, 1995.
ATTORNEYS FOR THE CLASS ATTORNEYS FOR DEFENDANTS
/s/Steve W. Berman /s/Barnes H. Ellis
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Steve W. Berman Barnes H. Ellis
Carl H. Hagens Lois 0. Rosenbaum
HAGENS & BERMAN STOEL RIVES BOLEY JONES & GREY
DATED: illegible DATED: May 24, 1995
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EXHIBIT A
PRESS RELEASE
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Eagle Hardware & Garden Inc. has reached agreement with the plaintiffs'
attorneys in pending shareholder litigation to settle all claims for $1.5
million dollars, plus up to $50,000 of costs of settlement administration.
The agreement is subject to approval by Judge Sharon Armstrong of the King
County Superior Court and Judge John C. Coughenour of the United States
District for the Western District of Washington as well as notice to the
Class and a hearing on final approval. Eagle's Chairman of the Board and
Chief Executive Officer David Heerensperger stated: "This litigation has been
hard fought in two courts for over two years. We believe it to be in the
best interests of our shareholders to agree to this settlement which will be
funded entirely by insurance and will avoid Eagle incurring any further
expense or diversion of management time. We stand by our position that Eagle
and its management acted properly at all times."
Steve Berman and Carl Hagens, lead attorneys for the plaintiffs stated:
"This was a complicated, costly and difficult litigation. We are pleased to
have achieved a fair settlement for the Class."