.
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.
EXHIBIT 10.47
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
SOUTHERN DIVISION
<Table>
IN RE BROADCOM CORP. Case No. SACV 01-275 GLT (MLGx)
SECURITIES LITIGATION
(Consolidated Cases - Class Actions
Only)
CLASS ACTION
STIPULATION OF SETTLEMENT OF CLASS
ACTION
</Table>
STIPULATION OF SETTLEMENT OF CLASS ACTION
TABLE OF EXHIBITS
EXHIBIT(S)
----------
Notice Order................................................................A.
Notice of Settlement......................................................A.1.
Proof of Claim............................................................A.2.
Plan of Allocation........................................................A.3.
Summary Notice of Settlement..............................................A.4.
Final Judgment and Order of Dismissal.......................................B.
Arenson Notice of Rescission of Request for Exclusion from the Class........C.
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STIPULATION OF SETTLEMENT OF CLASS ACTION
TABLE OF CONTENTS
Page
----
I. THE CLASS ACTION.......................................................1
II. PRE-TRIAL PROCEEDINGS, INVESTIGATION, AND DISCOVERY....................2
A. Discovery, Investigation, and Research Conducted by
Lead Plaintiff...................................................2
B. Pre-Trial Proceedings............................................3
C. Settlement Negotiations and Mediation............................5
III. CLAIMS OF LEAD PLAINTIFF AND BENEFITS OF SETTLEMENT....................5
IV. DEFENDANTS' STATEMENT AND DENIALS OF WRONGDOING AND
LIABILITY..............................................................6
V. TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT.......................8
A. Definitions......................................................8
B. Settlement Fund.................................................15
C. Administration of the Settlement Fund...........................16
D. Notice Order, Notice, and Settlement Hearing....................19
E. Releases........................................................21
F. Administration and Calculation of Claims, Final
Awards, and Supervision and Distribution of Settlement
Fund............................................................22
G. Plaintiffs' Counsel's Attorneys' Fees and
Reimbursement of Expenses.......................................25
H. Conditions of Settlement; Effect of Disapproval,
Cancellation, or Termination....................................28
I. Entry of Judgment...............................................31
J. Miscellaneous Provisions........................................31
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STIPULATION OF SETTLEMENT
This Stipulation of Settlement (the "Stipulation"), dated as of June 24,
2005, is made and entered into by and among the following parties (as defined
further in Section V.A herein) to the above-entitled action: (i) Lead Plaintiff
(as defined below), on behalf of itself and each of the Class Members (as
defined below), by and through its counsel of record in the Class Action; and
(ii) the Defendants (as defined below), by and through their counsel of record
in the Class Action (collectively, the "Settling Parties"). The Stipulation is
intended by the Settling Parties to fully, finally, and forever resolve,
discharge, and settle the Released Claims (as defined below), upon and subject
to the terms and conditions hereof.
I. THE CLASS ACTION.
On and after March 5, 2001, 31 putative federal securities class action
complaints, including Minnesota State Board of Investment v. Broadcom
Corporation, et al., Case No. 01-04120 ABC (Mcx), were filed against Broadcom
Corporation ("Broadcom") and certain of its then-officers and/or directors in
the Central District of California. By an order dated May 31, 2001, the
Honorable Gary L. Taylor consolidated these complaints under the caption In re
Broadcom Corporation Securities Litigation, Case No. SA CV 01-275 GLT (MLGx)
(the "Class Action"), appointed the Minnesota State Board of Investment as the
lead plaintiff and class representative (the "Lead Plaintiff"), and appointed
Heins, Mills & Olson PLC as lead Plaintiffs' counsel ("Plaintiffs' Lead
Counsel").
On April 1, 2002, Plaintiffs' Lead Counsel filed a Second Consolidated
Amended Complaint for Violation of Securities Exchange Act of 1934 (the "Amended
Complaint"). The Amended Complaint asserted claims against Broadcom and the
Individual Defendants (as defined below) for alleged violations of Sections
10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder. The Amended Complaint sought recovery on behalf of all
persons or entities who purchased or otherwise acquired publicly traded
securities of
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STIPULATION OF SETTLEMENT OF CLASS ACTION
Broadcom, or bought or sold options on Broadcom stock, between July 31, 2000 and
February 26, 2001, and were damaged thereby (the "Class"). The Class does not
include Defendants; members of the immediate families of the Individual
Defendants; officers and directors of Broadcom; Broadcom's parents,
subsidiaries, or affiliates; or the legal representatives, heirs, successors, or
assigns of such excluded parties. The Amended Complaint alleged that during the
Class Period, Defendants issued false or misleading statements and omitted
certain facts concerning certain of Broadcom's acquisitions, accounting for
certain warrant agreements in connection with those acquisitions, and current or
future financial condition, causing Broadcom's stock price to be artificially
inflated.
II. PRE-TRIAL PROCEEDINGS, INVESTIGATION, AND DISCOVERY.
A. DISCOVERY, INVESTIGATION, AND RESEARCH CONDUCTED BY LEAD PLAINTIFF.
Plaintiffs' Lead Counsel has conducted extensive discovery and
investigation during the prosecution of the Class Action, and has responded to
Defendants' discovery and investigation. This discovery and investigation has
included, among other things, (i) inspection of approximately 300,000 pages of
documents produced by Defendants in response to requests served by Plaintiffs'
Lead Counsel; (ii) inspection of over 50,000 pages of documents produced by
third-parties in response to subpoenas served by Plaintiffs' Lead Counsel; (iii)
approximately 67 days of depositions of current or former Broadcom employees or
third-party witnesses, including one deposition conducted in Israel, two
depositions conducted in the United Kingdom, and numerous depositions conducted
outside the Central District of California; (iv) the propounding of and response
to numerous written discovery requests, including interrogatories and requests
for admissions; (v) numerous discovery motions brought by both parties; (vi)
consultations with testifying experts, and the defense of or examination in
approximately 25 days of expert depositions; (vii) review of Broadcom's public
filings, annual reports, and other public
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STIPULATION OF SETTLEMENT OF CLASS ACTION
statements; and (viii) research of the applicable law with respect to the claims
asserted in the Class Action and the potential defenses thereto.
B. PRE-TRIAL PROCEEDINGS.
Throughout the Class Action, the parties had numerous significant disputes
that they presented to the Court by motions. Those disputes, which involved
substantial legal research and briefing and frequently required substantial
factual research, included the following:
- Defendants' motion to dismiss Plaintiffs' Consolidated Amended
Complaint (granted, with leave to amend, by order dated March 11,
2002);
- Defendants' motion to dismiss Plaintiffs' Second Consolidated
Amended Complaint (denied by order dated July 24, 2002);
- Plaintiffs' motion for class certification (granted by order dated
October 15, 2003);
- Defendants' motion for partial summary judgment concerning
statements about acquisitions and third-quarter results (denied by
order dated November 6, 2003);
- Plaintiffs' motion to approve a form of notice of class action and
plan for dissemination of notice (granted in part and denied in part
by order dated August 31, 2004);
- Defendants' motion for partial summary judgment regarding VisionTech
press releases (granted by order dated November 24, 2004);
- Defendants' motion for partial summary judgment regarding
forward-looking statements (granted by order dated November 24,
2004);
- Defendants' motion for partial summary judgment regarding Silicon
Spice press releases (granted by order dated November 24, 2004);
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STIPULATION OF SETTLEMENT OF CLASS ACTION
- Defendants' motion for partial summary judgment regarding
pre-November 9 statements (granted in part and denied in part by
order dated November 24, 2004);
- Defendant Henry Samueli's motion for summary judgment (denied by
order dated November 24, 2004);
- Plaintiffs' motion to exclude evidence of reliance on counsel or in
the alternative to find a waiver of privilege (motion to exclude
denied and motion to find waiver granted in part by order dated
February 10, 2005);
- Defendants' motion to preclude evidence of individual Defendants'
stock sales (granted by order dated February 10, 2005);
- Parties' cross-motions to define scope of waiver of privilege
(decided by orders dated April 7, 2005 and June 8, 2005);
- Defendants' motion to exclude aggregate damages testimony of
Plaintiffs' damage expert (granted by order dated June 3, 2005);
- Plaintiffs' motion to qualify expert witnesses (resolution postponed
pursuant to Court order);
- Defendants' motion to exclude Plaintiffs' damage expert's testimony
concerning per-share damages (resolution postponed pursuant to Court
order); and
- Defendants' motion for partial summary judgment re Rule 10b-5(a) and
(c) (resolution postponed pursuant to Court order).
In addition, the parties prepared several pre-trial filings, including
memoranda of contentions of fact and law, the Pretrial Conference Order, witness
and exhibit lists, a proposed jury questionnaire, draft jury instructions, and
Plaintiffs' initial Good-Faith Trial Estimate.
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STIPULATION OF SETTLEMENT OF CLASS ACTION
C. SETTLEMENT NEGOTIATIONS AND MEDIATION.
On August 13, 2004, September 23, 2004, January 14, 2005, and June 13,
2005, the parties to the Class Action, through their respective counsel and
representatives, participated in mediation sessions before the Honorable Judge
Edward A. Infante (ret.) in an effort to settle the Class Action. Each side
drafted extensive and detailed confidential mediation statements, which they
submitted to Judge Infante. During the mediation sessions, the parties and Judge
Infante discussed, among other things, the parties' respective claims and
defenses, expert damages analyses, legal analyses, the discovery and motions
completed or expected in the Class Action, the evidence expected to be offered
by the parties at trial, and other important factual and legal issues and
matters relating to the merits of the Class Action. At the conclusion of the
June 13, 2005 mediation session, Judge Infante orally recommended that the
parties accept a settlement discussed and negotiated during the mediation
sessions. The parties subsequently agreed to the settlement embodied herein (the
"Settlement").
III. CLAIMS OF LEAD PLAINTIFF AND BENEFITS OF SETTLEMENT.
Lead Plaintiff believes that the claims asserted in the Class Action
have merit and that the evidence developed to date in the Class Action supports
the claims asserted. Lead Plaintiff asserts, and believes it would present
supporting evidence at trial, that Defendants issued materially false and
misleading statements and omissions of material information concerning Broadcom,
causing the price of Broadcom stock to be artificially inflated during the Class
Period and causing injury to Lead Plaintiff and members of the Class.
Plaintiffs' Lead Counsel recognizes and acknowledges the expense and
length of continued proceedings necessary to prosecute the Class Action through
trial and through appeals. Plaintiffs' Lead Counsel also has taken into account
the uncertain outcome and the risk of any litigation, especially in complex
actions such as the Class Action, as well as the difficulties and delays
inherent in such litigation.
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STIPULATION OF SETTLEMENT OF CLASS ACTION
Plaintiffs' Lead Counsel also is mindful of the inherent problems of proof under
and possible defenses to the violations asserted in the Class Action, including
the defenses asserted by Defendants.
In light of the foregoing, Plaintiffs' Lead Counsel agrees with Lead
Plaintiff and believes that the settlement set forth in this Stipulation confers
substantial benefits upon the Class and its members. Plaintiffs' Lead Counsel,
based on its evaluation, has determined that the settlement set forth in the
Stipulation is fair, adequate and reasonable to and in the best interests of the
Lead Plaintiff and the Class.
Lead Plaintiff enters into this Stipulation based upon, among other
things, the parties' agreement herein that, to the fullest extent permitted by
law, neither this Stipulation nor any of its terms or provisions, nor any of the
negotiations or proceedings connected therewith, shall be offered as evidence in
the Class Action or in any pending or future civil, criminal, or administrative
action or other proceeding to establish any liability or admission by any of
Lead Plaintiff's Released Persons or any other matter adverse to the Lead
Plaintiff's Released Persons, except as expressly set forth herein.
IV. DEFENDANTS' STATEMENT AND DENIALS OF WRONGDOING AND LIABILITY.
The Defendants have denied and continue to deny each and all of the
claims and contentions alleged by Lead Plaintiff on behalf of the Class. The
Defendants also have denied and continue to deny, among other things, the
allegations that the price of Broadcom stock was artificially inflated by
reasons of any alleged "scheme," misrepresentations, omissions, or otherwise, or
that Lead Plaintiff or any member of the Class was harmed by the conduct alleged
in the Class Action. Defendants maintain that throughout the Class Period they
fully and adequately disclosed all material facts required by law to be
disclosed, and that they made no false or misleading statements, and engaged in
no fraudulent scheme. The
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STIPULATION OF SETTLEMENT OF CLASS ACTION
Defendants further maintain that they reasonably relied on their independent
outside accountants with respect to the transactions at issue and that they
complied with the advice received from the accountants. The Defendants also have
denied and continue to deny, among other things, the allegations that the price
of Broadcom stock was artificially inflated by reasons of any alleged "scheme,"
misrepresentations, omissions, or otherwise. The Defendants further maintain
that the claimed misstatements, omissions, and the like were immaterial, and
that neither Lead Plaintiff nor any other member of the Class actually suffered
any loss as a result of the conduct alleged in the Class Action.
Nonetheless, the Defendants have concluded that further conduct of the
Class Action would be protracted and expensive, and that it is desirable that
the Class Action be fully and finally settled in the manner and upon the terms
and conditions set forth in this Stipulation to limit further expense,
inconvenience and distraction; to dispose of the burden of protracted
litigation; and to permit the operation of Broadcom's business without further
distraction and diversion of the Company's executive personnel with respect to
the matters at issue in the Class Action. The Defendants also have taken into
account the uncertainty and risks inherent in any litigation, especially in
complex cases like this Class Action.
The Defendants have, therefore, determined that it is desirable and
beneficial to them that the Class Action be settled in the manner and upon the
terms and conditions set forth in this Stipulation. The Defendants enter into
this Stipulation of Settlement without in any way acknowledging any fault,
liability, or wrongdoing of any kind. There has been no adverse determination by
any court or otherwise against any of the Defendants on the merits of the claims
asserted by the Lead Plaintiff. Neither this Stipulation, nor any of its terms
or provisions, nor any of the negotiations or proceedings connected with it,
shall be construed as an admission or concession by any of the Defendants of the
merit or truth of any of the allegations or wrongdoing of any kind on the part
of any of the Defendants. The Defendants enter
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STIPULATION OF SETTLEMENT OF CLASS ACTION
into this Stipulation of Settlement based upon, among other things, the parties'
agreement herein that, to the fullest extent permitted by law, neither this
Stipulation nor any of its terms or provisions, nor any of the negotiations or
proceedings connected therewith, shall be offered as evidence in the Class
Action or in any pending or future civil, criminal, or administrative action or
other proceeding to establish any liability or admission by any of the
Defendants' Released Persons or any other matter adverse to any of the
Defendants' Released Persons, except as expressly set forth herein.
V. TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT.
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among Lead
Plaintiff (for itself and the Class members), by and through its counsel of
record and the Defendants, by and through their counsel of record, that, subject
to the approval of the Court, the Class Action and the Released Claims shall be
finally and fully compromised, settled and released, and the Class Action shall
be dismissed with prejudice, upon and subject to the terms and conditions of the
Stipulation, as follows:
A. DEFINITIONS.
As used in this Stipulation, the following terms have the meanings
specified below:
1. "Arenson Action" means the matter entitled Arenson, et al. v.
Broadcom, et al., Case No. SACV 02-301 GLT (MLGx), pending in United States
District Court for the Central District of California.
2. "Authorized Claimant" means any Class member whose claim for
recovery is allowed pursuant to the terms of this Stipulation.
3. "Claimant" means any Class member who files a Proof of Claim and
Release within such time as the Court shall prescribe, and in such form and
manner and with such content as set forth in Exhibit 2 to Exhibit A hereto, or
in such form and manner and with such content as the Court shall otherwise
prescribe.
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STIPULATION OF SETTLEMENT OF CLASS ACTION
4. "Claims Administrator" means Gilardi & Co., LLC.
5. "Class" means the class certified by the Court in its Order
Granting Plaintiffs' Motion for Class Certification, dated October 15, 2003. A
"Class Member" is a Person who falls within the definition of the Class and who:
(a) did not validly and timely request exclusion from the Class in accordance
with the terms of the Notice of Class Action provided in 2004; or (b) has timely
served a Notice of Rescission as set forth in Section V.J.20 herein.
6. "Class Period" means the period from July 31, 2000 to February
26, 2001, inclusive.
7. "Company" means defendant Broadcom.
8. "Defendants" means Broadcom, Henry T. Nicholas III, Henry
Samueli, and William Ruehle.
9. "Defendants' Insurers" means Gulf Insurance Company, Twin City
Fire Insurance Company, and Starr Excess Liability Insurance International
Limited.
10. "Effective Date" means the first date by which all of the events
and conditions specified in Section V.H.1 (if not waived by Broadcom) and V.H.2
of this Stipulation have been met and have occurred.
11. "Escrow Agent" means U.S. Bank, N.A., in Minneapolis, Minnesota.
12. "Final" means: (a) the date of final affirmance on an appeal
from the Judgment, the expiration of the time for a petition for a writ of
certiorari to review the Judgment and, if certiorari is granted, the date of
final affirmance of the Judgment following review pursuant to that grant; or (b)
the date of final dismissal of any appeal from the Judgment or the final
dismissal of any proceeding on certiorari to review the Judgment; or (c) if no
appeal is filed, the expiration date of the time for the filing or noticing of
any appeal from the Judgment, i.e., thirty (30) days after entry of the Judgment
(or, if the date for taking an appeal or seeking
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STIPULATION OF SETTLEMENT OF CLASS ACTION
review of the Judgment shall be extended beyond this time by order of the Court,
by operation of law or otherwise, or if such extension is requested, the date of
expiration of any extension if any appeal or review is not sought); or (d) if
the Court enters a judgment in a form other than that set forth in Exhibit B
hereto (an "Alternative Judgment") and none of the Parties elect to terminate
this Settlement, the date that such Alternative Judgment becomes final as
defined in parts (a) to (c) above and no longer subject to appeal or review. Any
proceeding or order, or any appeal or petition for a writ of certiorari
pertaining solely to any Plan of Allocation and/or application for attorneys'
fees, costs, or expenses shall not in any way delay or preclude the Judgment
from becoming final.
13. "Individual Defendants" means Henry T. Nicholas III, Henry
Samueli, and William Ruehle.
14. "Judgment" means the judgment to be rendered by the Court
dismissing the Class Action with prejudice, substantially in the form and with
the content as set forth in the Final Judgment and Order of Dismissal attached
hereto as Exhibit B.
15. "Lead Plaintiff" means the Minnesota State Board of Investment.
16. Parties" means, collectively, each of the Defendants and Lead
Plaintiff on behalf of itself and the members of the Class.
17. "Person" means an individual, corporation (including all
divisions and subsidiaries), partnership, limited partnership, association,
joint stock company, estate, legal representative, trust, unincorporated
association, government or political subdivision or agency, and/or any business
or legal entity, and the spouse, heir, predecessor, successor, representative,
or assign of any such entity.
18. "Plaintiffs" means each of the plaintiffs who filed a complaint
in the Class Action, including, but not limited to, the Lead Plaintiff.
19. "Plaintiffs' Counsel" means each counsel who has appeared as
counsel for any of the Plaintiffs in the Class Action, including, but not
limited to
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STIPULATION OF SETTLEMENT OF CLASS ACTION
Plaintiffs' Lead Counsel. For clarification, the term "Plaintiffs' Counsel" does
not include plaintiffs' attorneys of record in the Arenson Action.
20. "Plaintiffs' Lead Counsel" means Heins Mills & Olson P.L.C.
21. "Plan of Allocation" means a plan or formula of allocation of
the Settlement Fund to be prepared by Plaintiffs' Lead Counsel (which shall be
described in the "Notice of Proposed Settlement of Class Action, Settlement
Hearing, and Right to Share In the Settlement Fund" to be sent to Class Members
in connection with the settlement) whereby the Settlement Fund shall be
distributed to Authorized Claimants after payment of expenses of notice and
administration of the settlement, any taxes, penalties or interest or tax
preparation fees owed by the Settlement Fund, any fees and costs associated with
the escrow account which shall be established for the Settlement Account, and
such attorneys' fees, costs, expenses, and interest as may be awarded by the
Court. Lead Plaintiff's proposed Plan of Allocation is or will be attached as
Exhibit 3 to Exhibit A to this Stipulation. The terms of any Plan of Allocation,
however, are not part of this Stipulation.
22. "Released Claims" shall collectively mean any and all claims,
debts, demands, rights, or causes of action or liabilities (including, but not
limited to, any claims for damages, interest, attorneys' fees, expert or
consulting fees, and any other costs, expenses or liability), whether based on
federal, state, local, statutory or common law or any other law, rule or
regulation (including, but not limited to, claims for violation of the federal
securities laws, negligence, gross negligence, indemnification, breach of duty
of care and/or breach of duty of loyalty, fraud, misrepresentation, breach of
fiduciary duty, negligent misrepresentation, unfair competition, insider
trading, professional negligence, malpractice mismanagement, corporate waste, or
breach of contract), whether fixed or contingent, accrued or unaccrued,
liquidated or not liquidated, at law or in equity, matured or not matured,
Class-wide or individual in nature, including both known claims and Unknown
Claims, (a) that have been asserted in this Class Action by the
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STIPULATION OF SETTLEMENT OF CLASS ACTION
Class Members or any of them against any of the Defendants' Released Persons, or
(ii) that could have been asserted in the Class Action or any other forum by the
Class Members or any of them against any of the Defendants' Released Persons,
that arise out of, are based upon, or relate in any way to the allegations,
transactions, facts, matters or occurrences, representations or omissions
involved, set forth, or referred to in the Class Action and are based upon or
relate in any way to the purchase of Broadcom stock or options to purchase or
sell Broadcom stock during the Class Period. Released Claims do not include
claims to enforce the Settlement.
23. "Released Defendants' Claims" means any and all claims, rights,
or causes of action or liabilities whatsoever, whether based on federal, state,
local, statutory, or common law or any other law, rule, or regulation, including
both known claims and Unknown Claims, that have been or could have been asserted
in the Class Action or any forum by the Defendants or any of them or the
successors and assigns of any of them against any of the Lead Plaintiff's
Released Persons, including, Lead Plaintiff, Class Members, or attorneys for the
Class (excluding, for clarification, plaintiffs' attorneys of record in the
Arenson Action), that arise out of or relate in any way to the institution,
prosecution, or settlement of the Class Action (except for claims to enforce the
Settlement).
24. "Released Persons" means the "Defendants' Released Persons" and
the "Lead Plaintiff's Released Persons."
a. "Defendants' Released Persons" means each and all of the
Defendants and their respective past or present directors, officers, employees,
partners, principals, agents, underwriters, insurers, co-insurers, reinsurers,
controlling shareholders, any entity in which the Defendant and/or any member(s)
of any Defendant's immediate family has or have a controlling interest,
attorneys, accountants, auditors, banks, investment banks or investment bankers,
analysts, advisors, personal or legal representatives, insurers, co-insurers,
reinsurers, predecessors, successors, parents, subsidiaries, divisions, joint
ventures, assigns,
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STIPULATION OF SETTLEMENT OF CLASS ACTION
spouses, heirs, associates, related or affiliated entities, any members of their
immediate families, or any trust of which any Defendants is the trustee or
settler or which is for the benefit of any Defendant and/or member(s) of his
family.
b. "Lead Plaintiff's Released Persons" means the Lead
Plaintiff, and all other Class Members, and any Plaintiffs' counsel (except
counsel for the Plaintiffs in the Arenson Action), and the past, present or
future officers, partners, members, board members, employees and agents of any
of the foregoing and their predecessors, successors and assigns, and the heirs,
administrators, executors and personal representatives of each, their
respective, present and former parents, subsidiaries, divisions and affiliates,
their present and former attorneys, accountants, insurers and agents of each of
them and the predecessors, heirs, successors and assigns of each and any person
or entity in which the Lead Plaintiff, any other Class Member and/or any counsel
for any of the Plaintiffs in the class action has or had a controlling interest.
25. "Settlement Account" means an escrow account at U.S. Bank, N.A.,
in Minneapolis, Minnesota into which the Settlement Fund is to be deposited.
26. "Settlement Fund" means the principal amount of
one-hundred-fifty million dollars ($150,000,000) in cash, to be distributed as
set forth in this Stipulation. The Settlement Fund shall consist of the
"Insurance Funds" and the "Broadcom Funds." "Insurance Funds" means the total
aggregate remaining limits of liability under Broadcom's applicable D&O
insurance policies. "Broadcom Funds" means the sum calculated by subtracting the
Insurance Funds from the Settlement Fund.
27. "Unknown Claims" means any Released Claims that the Lead
Plaintiff or any Class Member does not know or suspect to exist in his, her, or
its favor as of the Effective Date, and any Released Defendants' Claims that any
Defendant does not know or suspect to exist in his or its favor as of the
Effective Date, which, if known by him, her, or it, might have affected his,
her, or its
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STIPULATION OF SETTLEMENT OF CLASS ACTION
decision(s) with respect to this Settlement. With respect to any and all
Released Claims and Released Defendants' Claims, the Parties stipulate and agree
that, upon the Effective Date, the Lead Plaintiff and the Defendants expressly
waive and relinquish, and the Class Members and Defendants shall be deemed to
have, and by operation of the Judgment shall have expressly waived and
relinquished, to the fullest extent permitted by law, the provisions, rights,
and benefits of Section 1542 of the California Civil Code, which provides:
A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor.
The Lead Plaintiff and Defendants expressly waive and the Class Members shall be
deemed to waive, and upon the Effective Date and by operation of the Judgment
shall have waived, any and all provisions, rights, and benefits conferred by any
law of the United States or any state or territory of the United States, or
principle of common law, which is similar, comparable, or equivalent to Section
1542 of the California Civil Code. The Lead Plaintiff and the Class Members may
hereafter discover facts in addition to or different from those which he, she,
or it now knows or believes to be true with respect to the subject matter of the
Released Claims, but each of them hereby stipulates and agrees that the Lead
Plaintiff does settle and release, and each Class Member shall be deemed to
settle and release, and upon the Effective Date and by operation of the Judgment
shall have settled and released, fully, finally, and forever, any and all
Released Claims, known or unknown, suspected or unsuspected, contingent or
non-contingent, whether or not concealed or hidden, which now exist, or which
heretofore have existed upon any theory of law or equity now existing or coming
into existence in the future, including, but not limited to, conduct that is
negligent or intentional and with or without malice, or a breach of any duty,
law, or rule, without regard to the subsequent discovery or existence of such
different or additional facts. Similarly, the Defendants may hereafter discover
facts in addition
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STIPULATION OF SETTLEMENT OF CLASS ACTION
to or different from those which they now know or believe to be true with
respect to the subject matter of the Released Defendants' Claims, but each of
them hereby stipulates and agrees that the Defendants do settle and release, and
each Released Person shall be deemed, upon the Effective Date and by operation
of the Judgment, to have fully, finally, and forever settled and released any
and all Released Defendants' Claims, known or unknown, suspected or unsuspected,
contingent or non-contingent, whether or not concealed or hidden, which now
exist, or heretofore have existed upon any theory of law or equity now existing
or coming into existence in the future, including, but not limited to, conduct
which is negligent, intentional, with or without malice, or a breach of any
duty, law, or rule, without regard to the subsequent discovery or existence of
such different or additional facts. The Parties acknowledge that the foregoing
waiver was bargained for and a key element of the Settlement, of which this
release is a part.
B. SETTLEMENT FUND.
1. Within 15 calendar days after preliminary approval of this
Stipulation as provided in Section V.D below, Broadcom shall transfer
$108,000,000 into the Settlement Account by wire transfer pursuant to
instructions to be supplied by Plaintiffs' Lead Counsel. Upon determination of
the limits of liability remaining under the applicable insurance policies, and
in any event no later than 2 business days prior to the Settlement Hearing, as
defined in Section V.D.1 below, Broadcom shall (unless this Stipulation and
Settlement is terminated in accordance with Section V.H below) transfer the
remainder of the Broadcom Funds, if any, into the Settlement Account by wire
transfer pursuant to instructions to be supplied by Plaintiffs' Lead Counsel.
2. No later than 3 business days prior to the Settlement Hearing,
Defendants' Insurers shall transfer the Insurance Funds into the Settlement
Account, by wire transfer pursuant to instructions to be supplied by Plaintiffs'
Lead Counsel; provided, however, that if Defendants' Insurers, or any of them,
do not timely
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STIPULATION OF SETTLEMENT OF CLASS ACTION
transfer the Insurance Funds into the Settlement Account, then no later than 2
business days prior to the Settlement Hearing, Broadcom, in its sole discretion,
may elect to transfer an amount equal to the resulting shortfall in the
Settlement Fund into the Settlement Account and separately pursue reimbursement
from the Defendants' Insurers.
3. If the aggregate sum transferred into the Settlement Account by
Broadcom and Defendants' Insurers exceeds $150,000,000 disregarding, for
purposes of this paragraph V.B.3, any payments or withdrawals from or interest
earned on the Settlement Sum (an "Overpayment"), then within five (5) business
days after the date on which such an Overpayment has occurred, the Claims
Administrator shall refund to Broadcom the amount by which the aggregate sum
transferred into the Settlement Account exceeds $150,000,000 (computed in the
manner described in this paragraph).
C. ADMINISTRATION OF THE SETTLEMENT FUND.
1. The Escrow Agent.
a. The Escrow Agent shall invest the Settlement Fund in
instruments backed by the full faith and credit of the United States Government
or fully insured by the United States Government or an agency thereof and shall
reinvest the proceeds of these instruments as they mature in similar instruments
at the current market rates.
b. The Escrow Agent shall not disburse the Settlement Fund
except as provided in the Stipulation, or by an order of the Court (consistent
with the terms of the Stipulation), or with the written agreement of counsel for
the Defendants and Plaintiffs' Lead Counsel.
c. Subject to such further order and direction by the Court as
may be necessary, the Escrow Agent is authorized to execute such transactions on
behalf of the Class Members as are consistent with the terms of the Stipulation
and the Escrow Agreement.
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STIPULATION OF SETTLEMENT OF CLASS ACTION
d. All funds held by the Escrow Agent shall be deemed and
considered to be in the custody 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 consistent with
the terms of the Stipulation.
e. The Escrow Agent may pay from the Settlement Fund, in
accordance with the terms of the Escrow Agreement, the costs and expenses
reasonably and actually incurred in connection with providing notice to the
Class, locating Class Members, soliciting Class claims, assisting with the
filing of claims, administering and distributing the Settlement Fund to members
of the Class, and processing Proofs of Claim, including, without limitation, the
actual costs of publication, printing and mailing the Notice, reimbursements to
nominee owners for forwarding notice to their beneficial owners, and the
administrative expenses incurred and fees charged by the Claims Administrator in
connection with providing notice and processing the submitted claims. Prior to
the Effective Date, the Escrow Agent may not pay more than $2,000,000 in the
aggregate for these costs and expenses without further approval from the Parties
or the Court.
2. Taxes.
a. The parties and the Claims Administrator agree to treat the
Settlement Fund as being at all times a "qualified settlement fund" within the
meaning of Treas. Reg. Section 1.468B-1. In addition, Plaintiffs' Lead Counsel
and, as required, the Defendants and the Defendants' Insurers shall jointly and
timely make the "relation-back election" (as defined in Treas. Reg. Section
1.468B-1) back to the earliest permitted date. Such election shall be made in
compliance with the procedures and requirements contained in such regulations.
It shall be the responsibility of the Claims Administrator to timely and
properly prepare and deliver the necessary documentation for signature by all
necessary parties and thereafter to cause the appropriate filing to occur.
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STIPULATION OF SETTLEMENT OF CLASS ACTION
b. For the purposes of Section 468B of the Internal Revenue
Code of 1986, and Treas. Reg. Section 1.468B, the "administrator" shall be the
Claims Administrator. The Claims Administrator shall timely and properly file
all informational and other tax returns necessary or advisable with respect to
the Settlement Fund (including, without limitation, the returns described in
Treas. Reg. Section 1.468B-2(1)). Such returns (as well as the election
described in Section V.C.2.a) shall be consistent with this Section V.C.2 of
this Stipulation and in all events shall reflect that all taxes (including any
estimated taxes, interest, or penalties) on the income earned by the Settlement
Fund shall be paid out of the Settlement Fund as provided in Section V.C.2
herein.
c. All (i) taxes (including any estimated taxes, interest, or
penalties) arising with respect to the income earned by the Settlement Fund
("Taxes"), and (ii) expenses and costs incurred in connection with the operation
and implementation of this Section V.C.2, 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 Section V.C.2 ("Tax Expenses"), shall be paid out of the Settlement Fund;
in all events the Defendants' Released Persons shall not have any responsibility
for, or any liability whatsoever with respect to, the Taxes, the Tax Expenses,
or the filing of any tax returns or other documents with the Internal Revenue
Service or any other state or local taxing authority. The Claims Administrator
shall indemnify and hold the Defendants' Released Persons harmless for Taxes and
Tax Expenses (including, without limitation, Taxes payable by reason of any such
indemnification). Further, Taxes and Tax Expenses shall be treated as, and
considered to be, a cost of administration of the Settlement and shall be timely
paid by the Escrow Agent out of the Settlement Fund without prior order from the
Court, and the Escrow Agent shall be obligated (notwithstanding anything herein
to the contrary) to withhold from distribution to Authorized Claimants any funds
necessary to pay such amounts (as well as any
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STIPULATION OF SETTLEMENT OF CLASS ACTION
amounts that may be required to be withheld under Treas. Reg. Section
1.468B-2(1)(2)); the Defendants' Released Persons are not responsible and shall
have no liability therefor, or for any reporting requirements that may relate
thereto. The Parties hereto agree to cooperate with the Claims Administrator and
Escrow Agent, each other, and their tax attorneys and accountants to the extent
reasonably necessary to carry out the provisions of this Section V.C.2.
3. Termination.
In the event that the Stipulation is not approved, or is terminated, is
cancelled, or fails to become effective for any reason, the Settlement Fund
(including any tax refund owing to the Settlement Fund), less expenses and any
costs which have been incurred for notice and administration of the proposed
Settlement pursuant to Section V.C.1 herein, and less any Taxes or Tax Expenses
paid or incurred pursuant to Section V.C.2 herein, and less any fees or costs
incurred in connection with the establishment and maintenance of the Escrow
Account shall be refunded to Broadcom and the Defendants' Insurers in the
following order: (a) the Broadcom Funds and any further payment by Broadcom into
the Settlement Account pursuant to Section V.B.2 herein shall be refunded to
Broadcom; and (b) thereafter, the Insurance Funds shall be distributed to
Defendants' Insurers in the amounts that they actually contributed to the
Settlement Fund, with preference given to the insurance carrier with the highest
layer of excess insurance contributing to the Settlement Fund that has not yet
received a full refund, until the funds available for refund are exhausted. At
the request of the Defendants, the Claims Administrator or its designee shall
apply for any tax refund owing to the Settlement Fund and the Escrow Agent shall
pay the proceeds of any tax refund, less the costs of obtaining the tax refund,
as set forth in this Section.
D. NOTICE ORDER, NOTICE, AND SETTLEMENT HEARING.
1. The Parties shall present this Stipulation together with its
exhibits to the Hon. Gary L. Taylor and shall jointly apply for entry of an
order (the
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STIPULATION OF SETTLEMENT OF CLASS ACTION
"Notice Order"), substantially in the form and with the content set forth in
Exhibit A hereto, requesting preliminary approval of the Settlement set forth in
this Stipulation, approval for the mailing and publication of a Notice of
Proposed Settlement substantially in the form and with the content set forth in
Exhibits 1 and 4 to Exhibit A hereto, which shall include the general terms of
the settlement set forth in the Stipulation, the proposed Plan of Allocation,
the general terms of the Fee and Expense Application (as defined in Section
V.G), and the date of the Settlement Hearing (as defined in Section V.D.2). The
Parties shall use their best efforts to present such matters to the Court for
hearing on June 27, 2005. In the event that the parties are unable to do so,
then they shall present such matters to the Court promptly after execution of
this Stipulation, but in no event later than ten (10) calendar days after the
Stipulation is signed (unless such time is extended by the written agreement of
Plaintiffs' Lead Counsel and counsel for the Defendants).
2. The Parties shall request that after notice is given the Court
hold a hearing (the "Settlement Hearing") to finally approve this Settlement as
set forth herein. At the Settlement Hearing, Plaintiffs' Lead Counsel also will
request that the Court approve the proposed Plan of Allocation and the Fee and
Expense Application.
3. Subject to the approval of the Court, the schedule for provision
of notice to Class Members and final approval of the Settlement or of the Fee
and Expense Application shall be as follows:
a. Plaintiffs' Lead Counsel or its designated agents shall
cause notice to be provided to the Class, in the manner set forth in the Notice
Order or as otherwise ordered by the Court, as soon as practicable but no later
than July 7, 2005 (10 calendar days after the hearing for preliminary approval
of the Settlement).
b. The deadline for objections to the Settlement, or for
objections or opposition to the Fee and Expense Application or the Plan of
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STIPULATION OF SETTLEMENT OF CLASS ACTION
Allocation, shall be August 22, 2005 (46 calendar days after the last date to
provide notice as set forth above).
c. The Settlement Hearing and hearing on the Fee and Expense
Application and the Plan of Allocation shall be September 12, 2005 (21 calendar
days after the deadline for objections to the Settlement or objections or
opposition to the Fee and Expense Application or the Plan of Allocation), or
such other date as the Court may order.
E. RELEASES.
1. Upon the Effective Date, the Lead Plaintiff shall release,
relinquish, and discharge, and each of the Class Members shall be deemed to
have, and by operation of the Judgment shall have, fully, finally, and forever
released, relinquished, and discharged the Defendants' Released Persons from all
Released Claims (including Unknown Claims as defined herein) and all claims
(including Unknown Claims as defined herein) arising out of, relating to, or in
connection with the defense or resolution of the Class Action or the Released
Claims, whether or not such Class Member executes and delivers a Proof of Claim
and Release.
2. Upon the Effective Date, each of the Defendants shall be deemed
to have, and by operation of the Judgment shall have, fully, finally, and
forever released, relinquished, and discharged the Lead Plaintiff's Released
Persons from all Released Defendants' Claims (including Unknown Claims as
defined herein).
3. Except as otherwise expressly provided in this Stipulation, the
Settling Parties shall each bear their own respective attorneys' fees, expenses,
and costs incurred in connection with the conduct and settlement of the Class
Action, and the preparation, implementation, and performance of the terms of
this Stipulation.
4. Only those Class Members filing valid and timely Proofs of Claim
and Release shall be entitled to participate in the settlement and to receive
any distributions from the Settlement Fund. The Proofs of Claim and Release to
be
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STIPULATION OF SETTLEMENT OF CLASS ACTION
executed by the Class Members shall release all Released Claims against the
Defendants' Released Persons, and shall be substantially in the form and with
the content set forth in Exhibit 2 to Exhibit A hereto. All Class Members shall
be bound by the releases set forth therein whether or not they submit a valid
and timely Proof of Claim and Release.
F. ADMINISTRATION AND CALCULATION OF CLAIMS, FINAL AWARDS, AND
SUPERVISION AND DISTRIBUTION OF SETTLEMENT FUND.
1. Plaintiffs' Lead Counsel, or its authorized agents, acting on
behalf of the Class, shall formulate a Plan of Allocation of the Settlement Fund
to the Class Members, subject to the approval of the Court. The Claims
Administrator, subject to the supervision, direction, and approval of the Court,
shall administer and calculate the claims submitted by Class Members and shall
oversee distribution of that portion of the Settlement Fund that is finally
awarded by the Court to Authorized Claimants.
2. The Settlement Fund shall be applied as follows:
a. To pay all unpaid costs and expenses reasonably and
actually incurred in connection with providing notice to the Class, including
locating members of the Class, soliciting Class claims, assisting with the
filing of claims, administering and distributing the Settlement Fund to the
Class, processing Proofs of Claim and Release and paying escrow or Claims
Administrator fees and costs, if any;
b. To pay Taxes and Tax-related Expenses, if any;
c. To pay Plaintiffs' Counsel's attorneys' fees, expenses, and
costs, with interest thereon (the "Fee and Expense Award"), if and to the extent
allowed by the Court;
d. To pay escrow fees and costs associated with the Escrow
Account that will hold the Settlement Fund until distribution;
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STIPULATION OF SETTLEMENT OF CLASS ACTION
e. To create a reserve fund of $50,000 in the Escrow Account
to be used to adjust for errors in payment, pay possible late claims, meet other
contingencies, and make equitable adjustments regarding claims, with any unused
portion of the reserve fund to be contributed to one or more national public
interest or national charitable organizations approved by the Court; and
f. To distribute the balance of the Settlement Fund (the "Net
Settlement Fund") to Authorized Claimants as allowed by the Stipulation, the
Plan of Allocation, or the Court.
3. After the Effective Date and subject to such further approval and
further order(s) of the Court as may be required, the Net Settlement Fund shall
be distributed to Authorized Claimants, subject to and in accordance with the
following:
a. Within ninety (90) days after the mailing of the Notice or
such other time as may be set by the Court, each Person claiming to be an
Authorized Claimant shall be required to submit to the Claims Administrator a
separate completed Proof of Claim and Release as attached to the Notice and
substantially in the form and with the content set forth in Exhibit 2 to Exhibit
A hereto, signed under penalty of perjury and supported by such documents as
specified in the Proof of Claim and Release and as are reasonably available to
the Authorized Claimant.
b. Except as otherwise ordered by the Court, all Class Members
who fail to timely submit a valid Proof of Claim and Release within such period,
or such other period as may be ordered by the Court, or who have not already
done so, shall be forever barred from receiving any payments of money pursuant
to the Stipulation and the settlement set forth herein, but will in all other
respects be subject to and bound by the provisions of the Stipulation, the
settlement and releases contained herein, and the Judgment.
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STIPULATION OF SETTLEMENT OF CLASS ACTION
c. The Net Settlement Fund shall be distributed to the
Authorized Claimants in accordance with and subject to the Plan of Allocation to
be described in the Notice mailed to Class Members. The proposed Plan of
Allocation shall not be a part of the Stipulation.
4. Defendants' Released Persons and their counsel shall have no
responsibility for, interest in, or liability whatsoever with respect to: (a)
the investment or distribution of the Settlement Fund or the Net Settlement
Fund; (b) the Plan of Allocation; (c) the determination, calculation, payment,
or administration of claims; (d) the determination, withholding, payment, or
administration of taxes (except to the extent they have an obligation relating
to any relation back election); or (e) any losses incurred in connection with
(a), (b), (c), or (d). No Person shall have any claim of any kind against the
Defendants' Released Persons or their counsel with respect to the matters set
forth in this Section F or any of its subsections.
5. No Person shall have any claim against the Plaintiffs or their
counsel (including Plaintiffs' Lead Counsel), or any claims administrator, or
other agent designated by Plaintiffs' Lead Counsel based on the distributions
made substantially in accordance with this Stipulation and the Settlement
contained herein, the Plan of Allocation, or further orders of the Court.
6. Any proposed Plan of Allocation of the Net Settlement Fund,
including, without limitation, any adjustments to an Authorized Claimant's claim
set forth therein, is not a part of the Stipulation and is to be considered by
the Court separately from the Court's consideration of the fairness,
reasonableness, and adequacy of the Settlement set forth in this Stipulation,
and any order or proceedings relating to the Plan of Allocation shall not
operate to terminate or cancel the Stipulation or affect the finality of the
Court's Judgment approving the Stipulation and the Settlement set forth herein,
including, but not limited to, the release,
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STIPULATION OF SETTLEMENT OF CLASS ACTION
discharge, and relinquishment of the Released Claims against the Defendants'
Released Persons, or any other orders entered pursuant to the Stipulation.
7. The Settlement is not a claims-made settlement.
G. PLAINTIFFS' COUNSEL'S ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES.
1. Within 32 calendar days after the mailing of notice as provided
in Section V.D.3.a herein, Plaintiffs' Lead Counsel will submit an application
or applications for an order (the "Fee and Expense Application") for
distributions to them from the Settlement Fund for: (a) an award of attorneys'
fees; (b) reimbursement of all expenses and costs, including the fees of any
experts or consultants, incurred in connection with prosecuting the Class
Action; and (c) interest on such attorneys' fees, costs, and expenses at the
same rate and for the same periods as earned by the Settlement Fund (until
paid), as may be awarded by the Court. The amount of attorneys' fees and costs
to be awarded to Plaintiffs' Counsel shall be determined by the Court.
2. Plaintiffs' Counsel's fees, expenses, and costs, including the
fees of experts and consultants, as awarded by the Court (the "Fee and Expense
Award"), may be transferred to Plaintiffs' Lead Counsel from the Settlement Fund
one day after both of the following conditions are satisfied: (a) the Court
enters the Judgment; and (b) the Court approves a Fee and Expense Award,
notwithstanding the potential for any collateral attack or appeal that could
result in a reversal or modification of the award of fees and/or costs, and
subject to the security described below. Plaintiffs' Lead Counsel shall
thereafter allocate the Fee and Expense Award among Plaintiffs' Counsel in a
manner in which Plaintiffs' Lead Counsel in good faith believes reflects the
contributions of such counsel to the prosecution and settlement of the Class
Action.
3. In the event that the Judgment or the order making the Fee and
Expense Award is reversed or modified on appeal, and in the event that the Fee
and
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STIPULATION OF SETTLEMENT OF CLASS ACTION
Expense Award has been paid to any extent, then Plaintiffs' Counsel shall,
within five (5) business days from any such reversal or modification, refund to
the Settlement Fund the fees, expenses, costs, and interest previously paid to
Plaintiffs' Counsel from the Settlement Fund, including accrued interest on any
such amount at the average rate earned on the Settlement Fund from the time of
withdrawal until the date of refund. If there are objections to or collateral
attacks upon the proposed Judgment or the approval of the Settlement (as
distinguished from objections to the amount of fees or expenses sought by
Plaintiffs' Counsel), then, as a condition of payment of any attorneys' fees or
costs to Plaintiffs' counsel, so long as such objections are appealable or
during the pendency of any such appeals or collateral attacks: (a) Plaintiffs'
Counsel shall provide, upon Broadcom's further written request, reasonable
security acceptable to Broadcom for the repayment of distributions pursuant to a
Fee and Expense Award prior to the resolution and/or exhaustion of all appeals
and/or collateral attacks that may result in a modification or reversal of the
Fee and Expense Award; (b) further, each Plaintiffs' Counsel's law firm, as a
condition of receiving any portion of such fees and expenses, on behalf of
itself and each equity partner and/or shareholder of it agrees: (i) that the law
firm and each of its partners and/or shareholders shall be jointly and severally
liable with each other Plaintiffs' Counsel law firm that received any part of
the Fee and Expense Award and each of such other firms' partners and/or
shareholders for any refund to be made as set forth in this Section V.G.3; and
(ii) that the law firm and each of its partners and/or shareholders are subject
to the jurisdiction of the Court for the purpose of enforcing this Section
V.G.3; and (c) in addition, without limitation, each Plaintiffs' Counsel law
firm receiving fees, expenses, or costs paid from the Settlement Fund and its
partners and/or shareholders agrees that the Court may, upon application of
Defendants or Plaintiffs' Counsel, on notice to counsel for the Plaintiffs,
summarily issue orders, including, but not limited to, judgments and attachment
orders, and may make appropriate findings of or sanctions for contempt,
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STIPULATION OF SETTLEMENT OF CLASS ACTION
against them or any of them should such law firm fail timely to repay fees and
expenses pursuant to this Section V.G.3 of this Stipulation.
4. Defendants' Released Persons shall have no responsibility for,
and no liability whatsoever with respect to, any payment to Plaintiffs' Lead
Counsel or any Plaintiffs' Counsel from the Settlement Fund that may occur at
any time.
5. Defendants' Released Persons shall take no position on the
reasonableness of the attorneys' fees and costs sought by Plaintiffs' Counsel.
6. Defendants' Released Persons shall have no responsibility for,
and no liability whatsoever with respect to, the allocation of any Fee and
Expense Award among Plaintiffs' Counsel, or any other Person who may assert some
claim thereto, or any Fee and Expense Awards that the Court may make in the
Class Action.
7. Defendants' Released Persons shall have no responsibility for,
and no liability whatsoever with respect to, any attorneys' fees, costs, or
expenses incurred by or on behalf of the Class or Class members that are not
paid from the Settlement Fund.
8. The procedure for and the allowance and disallowance by the Court
of the Fee and Expense Application are not part of the Settlement set forth in
this Stipulation, and are to be considered by the Court separately from the
Court's consideration of the fairness, reasonableness, and adequacy of the
Settlement set forth in this Stipulation. Any order or proceedings relating to
the Fee and Expense Application, or any appeal from any order relating thereto,
shall not operate to terminate or cancel the Stipulation or affect the finality
of the Court's Judgment approving the Stipulation and the Settlement set forth
herein, including, but not limited to, the release, discharge, and
relinquishment of the Released Claims against the Defendants' Released Persons,
or any other orders entered pursuant to the Stipulation.
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STIPULATION OF SETTLEMENT OF CLASS ACTION
H. CONDITIONS OF SETTLEMENT; EFFECT OF DISAPPROVAL, CANCELLATION, OR
TERMINATION.
1. This Stipulation and Settlement is conditioned upon Defendants'
Insurers, and each of them, agreeing in writing to pay the Insurance Funds as
set forth in Section V.B.2 above at least 15 business days prior to the
Settlement Hearing; provided, however, that only Broadcom may terminate this
Stipulation and Settlement as set forth in Section V.H.5 herein for failure of
this condition; and provided further that in its sole discretion Broadcom may
waive this condition until up to 5 business days prior to the Settlement
Hearing.
2. The Effective Date of the Stipulation shall be conditioned upon
occurrence of all of the following events:
a. Broadcom shall have timely transferred or caused to be
timely transferred the Broadcom Funds as required in Section V.B.1 above;
b. Defendants' Insurers shall have timely transferred or
caused to be timely transferred the Insurance Funds as required in Section V.B.2
above, or Broadcom shall have timely transferred or caused to be timely
transferred any shortfall in the Insurance Funds pursuant to V.B.2 above;
c. The Court shall have entered the Notice Order as required
by Section V.D above;
d. The Court shall have entered the Judgment, or a judgment
substantially in the form and with the content as set forth in Exhibit B hereto;
e. The Judgment shall have become Final, as defined in Section
V.A.12 above; and
f. Counsel for the Defendants shall not have given notice of
intent to exercise the option to terminate the Stipulation of Settlement for
failure of the condition set forth in Section V.H.1 in accordance with the terms
of Section V.H.5.
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STIPULATION OF SETTLEMENT OF CLASS ACTION
3. Upon satisfaction of the condition set forth in Section V.H.1
above and the occurrence of all of the events referenced in Section V.H.2 above,
any and all remaining interest or right of the Defendants and the Defendants'
Insurers to the Settlement Fund shall be absolutely and forever extinguished,
except as otherwise provided herein.
4. Neither a modification nor a reversal on appeal of any Plan of
Allocation or of any award of attorneys' fees, costs, expenses, and/or interest
awarded by the Court to any Plaintiffs' Counsel shall constitute a condition to
the Effective Date or grounds for cancellation and termination of the
Stipulation.
5. If any of the conditions set forth in Section V.H.2 above are not
met, then Broadcom or Plaintiffs' Lead Counsel shall have the right to terminate
the Settlement and this Stipulation. In addition, if the condition set forth in
Section V.H.1 above is not met, then Broadcom only shall have the right to
terminate the Settlement and this Stipulation. Any Party terminating the
Settlement and this Stipulation pursuant to this Section V.H.5 shall provide
written notice of its election to do so to all other Parties within thirty (30)
calendar days of: (a) the Court's declining to enter the Notice Order in any
material respect; (b) the Court's refusal to approve the stipulation or any
material part of it; (c) the Court's declining to enter the Judgment in any
material respect; (d) the date upon which the Judgment is modified or reversed
in any material respect by the Court of Appeals or the Supreme Court; or (e) the
date upon which an Alternative Judgment is modified or reversed in any material
respect by the Court of Appeals or the Supreme Court; or (f) any other event
giving rise to the right to terminate this Settlement.
6. Unless otherwise ordered by the Court, in the event the
Stipulation terminates, is cancelled, or does not become effective for any
reason, within five (5) business days after the Escrow Agent's receipt of
written notification of such event, the Settlement Fund (including accrued
interest) shall be refunded as set forth in Section V.C.1.b above.
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STIPULATION OF SETTLEMENT OF CLASS ACTION
7. In the event that the Stipulation is not approved by the Court or
the Settlement set forth herein is terminated or fails to become effective in
accordance with its terms, this Stipulation and all negotiations and proceedings
relating hereto shall be without prejudice to any or all settling Parties who
shall be restored to their respective positions in the Class Action as of June
20, 2005. In such event, the terms and provisions of this Stipulation, with the
exception of Sections V.A.1-V.A.27, V.C.1.b, V.C.1.d, V.C.1.e, V.C.2 (including
all subparts), V.C.3, V.F.4-V.F.6, V.G.3, V.G.4, V.G.6-V.G.8, V.H (including all
subparts), V.J.3, V.J.4, V.J.7, V.J.10, V.J.12, V.J.18, V.J.19, and
V.J.21-V.J.23 herein, shall have no further force and effect with respect to the
settling Parties and shall not be used in the Class Action or in any other
proceeding for any purpose and any Judgment or order entered by the Court in
accordance with the terms of the Stipulation shall be treated as vacated, nunc
pro tunc. No order of the Court or modification or reversal on appeal of any
order of the Court concerning the Plan of Allocation or the amount of any
attorneys' fees, costs, expenses, and/or interest awarded by the Court to
Plaintiffs' Counsel shall constitute grounds for cancellation or termination of
this Stipulation.
8. If a case is commenced in respect to Broadcom or any of
Defendants' Insurers contributing funds to the Settlement Fund on behalf of any
Defendant under Title 11 of the United States Code (Bankruptcy), or a trustee,
receiver, or conservator is appointed under any similar law, and in the event of
the entry of a final order of a court of competent jurisdiction determining the
transfer of the Settlement Fund, or any portion thereof, by or on behalf of
Broadcom or such Defendants' Insurer to be a preference, voidable transfer,
fraudulent conveyance or similar transaction and any portion thereof is required
to be returned, and such amount is not promptly deposited to the Settlement Fund
by Broadcom, then, at the election of Plaintiffs' Lead Counsel, the parties
shall jointly move the Court to vacate and set aside the releases given and
Judgment entered in favor of the
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STIPULATION OF SETTLEMENT OF CLASS ACTION
Defendants pursuant to this Stipulation, which releases and Judgment shall be
null and void, and the parties shall be restored to their respective positions
in the litigation as of June 20, 2005 and any cash amounts in the Settlement
Fund shall be returned as provided in Section V.C.1.b above.
9. In the event this Stipulation shall be cancelled as set forth in
Section V.H.5 above, the settling Parties shall, within two weeks of such
cancellation, jointly request a status conference with the Court to be held on
the Court's first available date. At such status conference, the settling
Parties shall ask the Court's assistance in scheduling continued proceedings in
the Class Action between the settling Parties. Pending such status conference or
the expiration of sixty (60) calendar days from the settling Parties' joint
request for a status conference, whichever occurs first, none of the settling
Parties shall file or serve any further motions on any of the other settling
Parties in connection with this Class Action nor shall any response be due by
any settling Party to any outstanding pleading or motion by any other settling
Party.
I. ENTRY OF JUDGMENT.
The Parties agree to the entry of Judgment substantially in the form and
with the content as set forth in Exhibit B hereto.
J. MISCELLANEOUS PROVISIONS.
1. The Parties (a) acknowledge that it is their intent to consummate
this Settlement and Stipulation; and (b) agree to cooperate to the extent
necessary to effectuate and implement all terms and conditions of the
Stipulation and to exercise their best efforts to accomplish the foregoing terms
and conditions of the Stipulation.
2. Broadcom warrants that, at the time of the payments provided for
herein are made on its behalf, it is not insolvent and the payment will not
render it insolvent. This representation is made by Broadcom as to itself and is
not made by counsel to Broadcom.
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STIPULATION OF SETTLEMENT OF CLASS ACTION
3. The Parties agree that the amount of the Settlement Fund, as well
as the other terms of the settlement, were negotiated in good faith by the
Parties and reflect a settlement that was reached voluntarily after consultation
with experienced legal counsel. Neither the Stipulation, nor the Settlement
contained herein, nor any term of this Stipulation of Settlement, nor any act
performed or document executed pursuant to or in furtherance of the Stipulation
of the Settlement: (i) is or may be deemed to be or may be used as an admission
of, or evidence of, the validity of any Released Claim, or of any wrongdoing or
liability of the Released Persons; or (ii) is, may be deemed to be, may be used
as, or may be argued to be an admission of, or evidence of, any fault or
omission of any of the Released Persons in any civil, criminal, or
administrative proceeding in any court, administrative agency or tribunal; or
(iii) shall be identified or described in any public statement by any Party as
an admission of, or evidence of, any fault or omission of any of the Released
Persons.
4. Unless ordered by a Court, no Party or counsel shall disseminate,
refer to, or otherwise distribute to any third party any information regarding
the negotiation of the Settlement between the Parties, or any information or
documents they obtained from another Party in connection with the Settlement.
5. Defendants' Released Persons may file the Stipulation and/or the
Judgment from this action in any other action that may be brought against 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 theory of claim preclusion or issue preclusion or similar
defense or counterclaim.
6. The settling Parties intend for this Settlement to be a final and
complete resolution of all disputes asserted or which could be asserted by the
Class Members against the Defendants' Released Persons with respect to the
Released Claims, and all disputes asserted or which could be asserted by the
Defendants against the Lead Plaintiff's Released Persons with respect to the
Released
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Defendants' Claims. Accordingly, the Parties agree not to assert in the Class
Action or in any other judicial forum that the Class Action was brought or
defended in bad faith or without a reasonable basis. Defendants agree not to
assert any claim under Rule 11 of the Federal Rules of Civil Procedure or any
similar law, rule or regulation, that the Class Action or any pleading filed,
motion made, or position taken by Lead Plaintiff or Plaintiffs' Lead Counsel was
brought or made in bad faith or without a reasonable basis; provided, however,
that this clause shall not bar Defendants from asserting that the Arenson Action
and/or pleadings filed, motions made, or positions taken in that action were
brought or made in bad faith, without a reasonable basis, or in violation of
Rule 11. Lead Plaintiff and Plaintiffs' Lead Counsel take no position on whether
the Arenson action and/or pleadings filed, motions made or positions taken in
that action were brought or made in bad faith, without reasonable basis, or in
violation of Rule 11. Lead Plaintiff and the Class agree not to assert any claim
under Rule 11 of the Federal Rules of Civil Procedure or any similar law, rule
or regulation, that any pleading filed, motion made, or position taken by
Defendants or their counsel was brought or made in bad faith or without a
reasonable basis. The settling Parties agree that the amount paid and the other
terms of the Settlement were negotiated at arms' length and in good faith by the
settling Parties, and reflect a settlement that was reached voluntarily based
upon adequate information and after consultation with experienced legal counsel,
and under the supervision of the mediator.
7. To the extent permitted by law, all agreements made and orders
entered during the course of the Class Action relating to the confidentiality of
information shall survive this Stipulation.
8. The waiver by one Party of any breach of this Stipulation by any
other Party shall not be deemed a waiver of any other prior or subsequent breach
of this Stipulation.
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9. All of the exhibits to this Stipulation, except any Plan of
Allocation, to the extent incorporated in those exhibits, are material and
integral parts hereof and are fully incorporated herein by this reference.
10. Nothing in this Stipulation, or the negotiations relating
thereto, is intended to or shall be deemed to constitute a waiver of any
applicable privilege or immunity, including, without limitation, attorney/client
privilege, joint defense privilege, or work product protection.
11. The Stipulation may be amended or modified only by a written
instrument signed by or on behalf of all Parties or their
successors-in-interest.
12. The Stipulation and the exhibits attached hereto constitute the
entire Settlement agreement among the Parties hereto and no representations,
warranties, or inducements have been made to any Party concerning the
Stipulation or its exhibits other than the representations, warranties, and
covenants contained and memorialized in such documents.
13. Plaintiffs' Lead Counsel, on behalf of the Class, is expressly
authorized by the Lead Plaintiff to take all appropriate action required or
permitted to be taken by the Class pursuant to the Stipulation to effectuate its
terms and also is expressly authorized to enter into any modifications or
amendments to the Stipulation on behalf of the Class which it deems appropriate.
14. Each counsel or other Person executing the Stipulation or any of
its exhibits on behalf of any Party hereto hereby warrants that such person has
the full authority to do so.
15. The Stipulation may be executed by facsimile and in one or more
counterparts. All executed counterparts and each of them shall be deemed to be
one and the same instrument. Counsel for the Parties to the Stipulation shall
exchange among themselves original signed counterparts and a complete set of
original executed counterparts shall be filed with the Court.
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STIPULATION OF SETTLEMENT OF CLASS ACTION
16. The Stipulation shall be binding upon, and inure to the benefit
of, the successors and assigns of the settling Parties hereto.
17. The Court shall retain jurisdiction with respect to the
implementation and enforcement of the terms of the Stipulation, and all Parties
hereto and their counsel submit to the exclusive jurisdiction of the Court for
purposes of implementing and enforcing the settlement embodied in the
Stipulation.
18. The Stipulation and the exhibits hereto shall be considered to
have been negotiated, executed, and delivered, and to be wholly performed, in
Orange County in the State of California, and the rights and obligations of the
parties to the Stipulation shall be construed and enforced in accordance with,
and governed by, the laws of the State of California without giving effect to
that State's choice-of-law principles.
19. No press announcement, press release, or other public statement,
either directly or indirectly, concerning the Settlement or Stipulation may be
made by Class Plaintiffs or Plaintiffs' Counsel prior to the filing or issuance
of a press release or Form 8-K filing concerning this Settlement by Broadcom,
unless they obtain prior approval from Broadcom, except as required by law. In
any press announcement, press release, or public statement concerning the
Settlement, Class Plaintiffs and/or Plaintiffs' Counsel shall state that the
Settlement is not an admission of misconduct and that Defendants continue to
deny liability and wrongdoing.
20. In consideration of this Settlement, Plaintiffs in this Class
Action agree that any plaintiff in the Arenson Action who has previously
requested exclusion from the Class (including any plaintiff in the Arenson
Action as to whose claims Defendants have already obtained summary judgment) may
rescind such request for exclusion from the Class by serving a Notice of
Rescission of Request for Exclusion from Class upon Plaintiffs' Lead Counsel (a
"Notice of Rescission"), with a copy to Defendants' counsel, on or before the
deadline for Class Members to
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STIPULATION OF SETTLEMENT OF CLASS ACTION
provide a Proof of Claim and Release as set forth in Section V.F.3.a. The Notice
of Rescission shall be in substantially the same form and with the same content
as set forth in Exhibit C hereto. Any plaintiff in the Arenson Action who timely
serves a Notice of Rescission pursuant to this paragraph shall be a Class Member
and shall have the same rights and obligations as any other similarly-situated
Class Member, including the right to receive a distribution from the Settlement
Fund if such person is an Authorized Claimant, timely submits a Proof of Claim
and Release, and is entitled to receive a distribution pursuant to any approved
Plan of Allocation. Notwithstanding the foregoing, neither Class Members, nor
Plaintiffs' Counsel, nor any Released Party shall have any obligation to counsel
for plaintiffs in the Arenson Action, including any obligation to pay or
reimburse such counsel's fees, costs, or expenses.
21. The Parties recognize that the Class's interests may diverge
from the interests of any plaintiffs in the Arenson Action who do not elect to
rescind their requests to be excluded from the Class. Plaintiffs' Counsel's
obligations shall be to the Class and not to the Arenson Plaintiffs, and
Plaintiffs' Counsel's obligations to the Class, including the obligation to
facilitate this Settlement, shall continue until full distribution of the
Settlement Fund and resolution of all appeals and collateral attacks on the
settlement, if any. In addition, in connection with the Settlement, Defendants'
counsel has communicated or will communicate to Plaintiffs' Counsel certain
confidential, privileged, and/or protected information, including information
pertaining to damages. Such confidential information provided to Plaintiffs'
Counsel shall be used only in furtherance and aid of settlement, and shall not
be used for any other purpose, and Plaintiffs and Plaintiffs' Counsel have a
continuing obligation to maintain such information in confidence.
22. The Parties agree to the transfer of this case to the Hon.
Dickran Tevrizian for the purpose of facilitation of settlement upon the
retirement of the Hon. Gary L. Taylor. In the interim, the parties agree to a
stand-down on all
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STIPULATION OF SETTLEMENT OF CLASS ACTION
discovery, motions, appeals, time for filing of appeals, pretrial disclosure
obligations, trial dates, and other pending matters in the Class Action and all
consolidated actions. The parties agree to apply jointly to the Court at the
time they seek preliminary approval of the Settlement for a stay and adjournment
of all deadlines as between the parties in the Class Action and all consolidated
actions. In the event that the Settlement conditions are not satisfied, the
parties agree that the matter shall be reassigned to another United States
District Judge within the Central District of California for resolution of all
pending matters, further motions, appeals, and pretrial proceedings, and trial
if necessary.
23. To assist in obtaining approval of the settlement, Defendants
have shared with Plaintiffs' Counsel certain expert damages analysis developed
by Defendants' experts (the "Materials"). Neither Plaintiffs nor Plaintiffs'
Counsel shall use the Materials for any purpose except to aid in obtaining
settlement approval, and should the Settlement described herein not be approved,
Plaintiffs' Counsel shall return or destroy all copies of the Materials. The
provision of any Materials or other information in furtherance of settlement
approval shall not be a waiver or limitation of any applicable privilege or
protection, and no party shall make any argument to the contrary.
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IN WITNESS WHEREOF, the Parties hereto have caused the Stipulation to
be executed by their duly-authorized attorneys as of June 24, 2005.
Dated: June 27, 2005 HEINS MILLS & OLSON, P.L.C.
By: /s/ SAMUEL D. HEINS
-----------------------------------
Samuel D. Heins
Plaintiffs' Lead Counsel
Dated: June 27, 2005 IRELL & MANELLA LLP
RYAN WHALEY & COLDIRON
By: /s/ DAVID SIEGEL
-----------------------------------
David Siegel
Attorneys for Defendants
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STIPULATION OF SETTLEMENT OF CLASS ACTION