UNITED STATES DISTRICT COURT
DISTRICT OF KANSAS
LEWIS F. GEER, et al., )
)
Plaintiffs, )
)
v. ) Case No. 01-2583-JAR
WILLIAM D. COX, et al., )
)
Defendants. )
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DAVID GROGAN, )
)
Plaintiff, )
)
v. ) Case No. 03-2091-KHV
)
TIMOTHY P. O'NEIL, et al., )
)
Defendants. )
STIPULATION AND AGREEMENT OF SETTLEMENT
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Plaintiffs Lewis F. Geer and David Grogan ("Plaintiffs")<F1> on behalf of
(i) themselves in any and all capacities, (ii) TransFinancial Holdings, Inc.
("TransFinancial" or the "Company") in Plaintiffs' capacity as derivative
plaintiffs, and (iii) all members of the class defined below in Plaintiffs'
capacity as class representatives, on the one hand, and the Settling Defendants,
identified below, on the other hand, by and through their undersigned attorneys,
hereby enter into the following Stipulation and Agreement of Settlement (the
"Settlement" or "Stipulation"), dated as of October 18, 2004, and subject to the
approval of the United States District Court for the District of Kansas (the
"Court").
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<F1> All capitalized terms not otherwise defined shall carry the meaning set
forth in paragraph 1 below.
RECITALS
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WHEREAS, on or after January 12, 2000, Plaintiff David Grogan, for himself
and for all others similarly situated, filed an action in the Court of Chancery
of Delaware, New Castle County, entitled David Grogan v. Timothy P. O'Neil, et.
al., C.A. No. 17733, alleging that the defendants, the directors of
TransFinancial, violated their fiduciary duty in approving a proposed management
buyout; and
WHEREAS, following the withdrawal of the proposed management buyout and
amendments to the complaint to add claims relating to the sale of assets without
shareholder approval and liquidation of the Company, such case was dismissed
without prejudice pursuant to agreement of the parties and, on or after February
28, 2003, was refiled in the United States District Court for the District of
Kansas, entitled David Grogan v. Timothy P. O'Neil, et. al., Case No.
03-2091-KHV (the "Grogan case"); and
WHEREAS, on or after December 7, 2001, Plaintiff Lewis F. Geer, for himself
and for all others similarly situated, filed an action in the United States
District Court for the District of Kansas, entitled Lewis F. Geer, et. al. v.
William D. Cox, et al., Case No. 01-2583-JAR (the "Geer case"), alleging that
the sale of the assets of one of TransFinancial's subsidiaries without
shareholder approval constituted a violation of Del. Corp. Code ss.271 and
conversion; and
WHEREAS, by Order dated August 15, 2003, the Grogan case was consolidated
with the Geer case for purposes of discovery; and
WHEREAS, by Order dated September 23, 2004, the Grogan case was
consolidated with the Geer case solely for purposes of review and consideration
of the Settlement; and
WHEREAS, counsel for Plaintiffs and counsel for the Settling Defendants
have engaged in substantial arms'-length negotiations spanning a period of over
two years in an effort to resolve the Actions, including exchanging written
demands and offers, conducting numerous
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telephone conferences, and engaging in a thorough, month-long mediation process
before a nationally recognized mediator, Jonathan Marks of MarksADR, culminating
in a two-day mediation session in Washington, D.C. where the merits of the
claims and defenses and the terms of any agreement were extensively debated and
negotiated, and including a subsequent settlement conference with a federal
magistrate to facilitate resolution of outstanding issues; and
WHEREAS, the Settling Defendants vigorously deny that they committed any
violations of any state or federal laws, vigorously deny that they did anything
but fully fulfill their duties, vigorously deny all charges and allegations
asserted against them, and disclaim any wrongdoing or liability whatsoever; and
WHEREAS, the Settling Defendants have agreed to the compromise and
settlement of these Actions subject to the terms and conditions set forth herein
solely to avoid the substantial burden, expense, and uncertainties that would be
involved in protracted litigation, and to terminate the Released Claims against
them; and
WHEREAS, Plaintiffs have agreed to settle their claims and those of both
the Company (asserted derivatively) and Class Members upon the terms and
provisions set forth herein after and as a result of extensive investigation and
thorough research of the law applicable to the claims underlying the Actions;
after balancing these benefits that all plaintiffs will receive from the
Settlement against the uncertain outcomes, risks, difficulties, and delays of
litigation, in general, and in complex litigation such as these Actions, in
particular, and after concluding that the Settlement is in the best interest of
the Class Members and the Company; and
WHEREAS, the Settling Parties and their counsel believe that the terms and
conditions of this Stipulation are fair, reasonable, adequate, and proper, and
acknowledge that this Stipulation is a result of arms'- length negotiations
between the parties:
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NOW, THEREFORE, in consideration of the promises and agreements, covenants,
representations, and warranties set forth herein, intending to be legally bound;
IT IS HEREBY STIPULATED AND AGREED, by and among the Settling Parties that
these Actions and all Released Claims are settled and compromised and that the
Actions shall be dismissed with prejudice and without costs, except as otherwise
provided for herein, subject to approval of the Court pursuant to Rules 23 and
23.1 of the Federal Rules of Civil Procedure on the following terms and
conditions:
DEFINITIONS
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1. In addition to terms defined in other provisions, the following
definitions shall apply to this Stipulation:
A. "Actions" means the Geer case and the Grogan case, collectively.
B. The "Class" means all persons and entities who, at any time
from June 21, 1999 to the close of business on April 29, 2002 (the "Class
Period"), owned publicly-traded common stock issued by TransFinancial
("TransFinancial Stock") and their heirs, successors, assigns, and
transferees. Excluded from the Class are the Defendants, including any
shares owned directly or indirectly of record or beneficially by any of
them.
C. "Class Member" means any person or entity who is a member of
the Class, including beneficial owners of the TransFinancial Stock
purchased on their behalf by others, but excluding those persons or
entities who submit (or for whom are submitted) valid and timely requests
for exclusion from the Class in accordance with the procedure set forth in
the Notice of Proposed Settlement of Derivative and Class Actions, Request
for Attorneys' Fees and Reimbursement of Expenses, and Settlement Fairness
Hearing substantially in the form annexed hereto as Exhibit B (the
"Notice"). This definition
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includes Plaintiffs and both Shareholders and Selling Shareholders, as
those terms are defined below.
D. "Escrow Agent" means UMB Bank, N.A. or such other subsequent entity
that the Court shall appoint.
E. "Final Judgment" means a judgment to be entered by the Court that
will direct the implementation of the Settlement in accordance with the
terms of the Stipulation or as the Court may otherwise direct, approve a
method of allocating the settlement proceeds, approve the payment of any
remaining or anticipated expenses incurred in administering the Settlement,
determine the amount of attorneys' fees and expenses to award to Plaintiff
Class Counsel, determine the amount of any incentive award for Plaintiffs,
and take any other action to fully and finally dispose of the Actions. A
proposed form of Final Judgment shall be submitted by Plaintiff Class
Counsel at or before the Settlement Hearing.
F. "Final Order" means that order to be entered by the Court,
substantially in the form of Exhibit E hereto, approving the Settlement,
dismissing all claims in the Actions against the Settling Defendants with
prejudice, releasing all Released Claims, and enjoining Class Members and
the Company from instituting, continuing, or prosecuting any action
asserting one or more of the Released Claims.
G. "Individual Defendants" means William D. Cox, Harold C. Hill, Jr.,
Roy R. Laborde, Timothy P. O'Neil, Clark D. Stewart, and David D. Taggert.
H. "Released Claims" means any and all claims, rights, demands, causes
of action, suits, matters, and issues whether known or unknown, suspected
or unsuspected, liquidated or unliquidated (including but not limited to
all Unknown Claims and claims
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for attorneys' fees), arising under any state or federal statutory or
common law, that have been, might have been, or could be asserted against
any Released Party by any Class Member, or derivatively on behalf of or by
TransFinancial, arising out of or related, directly or indirectly, in any
way to the allegations, transactions, facts, matters, occurrences,
representations, or omissions involved in, set forth in, referred to, or
that could have been asserted in one or both of the Actions.
I. "Released Parties" means each of the Settling Defendants and each
of their parents, subsidiaries, and affiliates, and each Settling
Defendant's present or former directors, officers, employees, agents,
insurers, attorneys, advisors, successors, heirs, assigns, executors, and
personal representatives.
J. "RLR Defendants" means R.L.R. Investments, L.L.C. and R&L Transfer,
Inc.
K. "Selling Shareholder" means any Class Member who sold some or all
of his, her, or its shares during the Class Period.
L. "Settlement Administrator" means Berdon Claims Administration LLC
or such other or subsequent person or entity that the Court shall appoint.
M. "Settling Defendants" means TransFinancial, the Individual
Defendants, and the RLR Defendants.
N. "Settlement Effective Date" means the date upon which the Final
Order becomes final and no longer subject to appeal or review (or further
appeal or review), whether by exhaustion of any possible appeal, or the
expiration of any applicable appeal period.
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O. "Settlement Hearing" means a hearing to be held by the Court to
consider final approval of the Settlement pursuant to Rule 23(e) and Rule
23.1 of the Federal Rules of Civil Procedure.
P. "Settling Parties" means all Class Members and the Settling
Defendants.
Q. "Shareholder" means any Class Member who was the record or
beneficial owner of the TransFinancial Stock as of the close of business on
April 29, 2002.
R. "Unknown Claims" means any and all claims, rights, demands, causes
of action, suits, matters, and issues which any Class Member does not know
or suspect to exist in his, her, or its favor at the time of the release of
the Released Parties which, if known by him, her, or it, might have
reasonably affected his, her, or its settlement with and release of the
Released Parties, or might have affected his, her, or its decision not to
object to this Settlement. With respect to any and all Released Claims,
upon the Settlement Effective Date, each Class Member, by operation of the
Final Judgment, waives any and all provisions, rights, and benefits
conferred by Cal. Civ. Code ss.1542, 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,
and any other law of any jurisdiction (domestic or foreign), or principle
of common law, which is similar, comparable, or equivalent to said
provision.
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SCOPE AND EFFECT OF SETTLEMENT
------------------------------
2. The obligations incurred pursuant to this Stipulation shall be in full
and final disposition of the Actions and any and all Released Claims as against
any and all Released Parties.
3. Upon the Settlement Effective Date, each Class Member shall release and
forever discharge, and shall forever be enjoined from prosecuting, each Released
Claim, including without limitation any and each Unknown Claim, against any and
all of the Released Parties.
SETTLEMENT CONSIDERATION
4. Subject to completion and execution of an escrow agreement, within ten
(10) days of entry of a Preliminary Approval and Scheduling Order substantially
in the form annexed hereto as Exhibit A ("Scheduling Order"), the Individual
Defendants' insurance carrier, Federal Insurance Company ("Federal") will cause
the amount of two million five hundred thousand dollars ($2,500,000.00) (the
"Settlement Fund") in cash to be deposited into an interest bearing escrow
account (the "Escrow Account"). Each Settling Party agrees to execute any
standard escrow agreements presented by the Escrow Agent, including without
limitation indemnification and hold harmless provisions.
5. The Escrow Account is to be a "Qualified Settlement Fund" within the
meaning of Treasury Regulations ss. 1.468B-1. The Escrow Agent, as administrator
of the Qualified Settlement Fund within the meaning of Treasury Regulations ss.
1.468B-2(k)(3), shall be responsible for the tax returns for the Escrow Account
and paying from the Escrow Account any taxes owed with respect to the Escrow
Account. The Settling Defendants agree to have their counsel promptly provide to
the Escrow Agent the statement described in Treasury Regulations ss.
1.468B-3(e). The Settling Defendants shall not be liable for filing any tax
returns or paying any taxes with respect to the Settlement Fund.
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6. No funds held in the Escrow Account shall be distributed except in
accordance with this Stipulation or with an order of the Court. The Settlement
Fund shall be deemed to be in the custody of the Court and shall remain subject
to the jurisdiction of the Court until such time as the funds are applied to
expenses, distributed to Class Members, and/or delivered to Federal pursuant to
this Stipulation or further order of the Court.
7. The following shall be considered part of the cost of the administration
of the Settlement and, subject to Court approval in the Scheduling Order, shall
be paid timely by the Escrow Agent in advance of the Settlement Hearing with the
funds deposited into the Escrow Account:
A. All fees and expenses charged or incurred by the Escrow Agent for
or while acting in that capacity, including without limitation generating a
list of record owners during the Class Period;
B. All (i) taxes on the income of the Escrow Account and (ii) expenses
and costs incurred in connection with the taxation of the Escrow Account,
including without limitation expenses of tax attorneys and accountants; and
C. All fees and expenses incurred by the Settlement Administrator
in connection with the administration of the proposed settlement prior
to the Settlement Hearing, including all costs related to the giving
of notice to the Class as ordered by the Court and receiving
communications from Class Members and maintaining correspondence, such
as any requests for exclusion from the Class. Items A, B, and C above
are collectively referred to as "Preliminary Administrative Expenses."
8. In the event that the Settlement is terminated or for any other reason
the Settlement is not approved and implemented, the remaining funds in the
Escrow Account (which
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should equal the Settlement Fund, including any interest earned thereon, net of
the Preliminary Administrative Expenses) shall be delivered to Federal within
three (3) business days.
9. In the event the Settlement is approved by the Court in the Final Order,
and the Settlement Effective Date occurs, the Escrow Account, including any
interest earned thereon, net of the Preliminary Administrative Expenses, shall
be used to pay, as directed by the Court in a Final Judgment, (i) the remaining
or any anticipated administration expenses incurred in administering the
Settlement, including without limitation any fees charged or to be charged by
the Settlement Administrator; (ii) any attorneys' fees and expenses awarded to
Plaintiff Class Counsel; and (iii) any incentive award to Plaintiffs. The
remaining balance of the Escrow Account after payment of these items (the "Net
Settlement Fund") shall be distributed to Class Members as provided below in
paragraph 20. The Settlement Administrator and the Escrow Agent shall cooperate
to determine the most economical method of distribution. To the extent checks
are used to make payments to Class Members (as opposed to wire transfers), the
following language shall appear on the back of each: "By cashing or endorsing
this check, I affirm my personal release of claims identified in the
____________, 2005 Final Order in Case Nos. 01-2583 and 03-2091 in the Federal
District Court of Kansas." Class Members shall look solely to the Net Settlement
Fund for settlement and satisfaction of any and all Released Claims.
PRELIMINARY APPROVAL AND SCHEDULING ORDER
-----------------------------------------
10. As soon as practicable after execution of this Stipulation, the
Settling Parties shall apply to the Court for entry of a Preliminary Approval
and Scheduling Order substantially in the form annexed hereto as Exhibit A
("Scheduling Order"), which order shall, inter alia:
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A. Conditionally (i) certify the Class for settlement purposes only,
(ii) appoint Plaintiffs as class representatives, and (iii) appoint
Plaintiffs' counsel as counsel for the Class ("Plaintiff Class Counsel");
B. Preliminarily approve the Settlement as fair, reasonable, and
adequate;
C. Appoint the Escrow Agent and Settlement Administrator;
D. Review the anticipated notice procedures and determine, pursuant to
Rule 23(c)(2) and Rule 23.1 of the Federal Rules of Civil Procedure, that
the giving of notice as provided herein meets the requirements of
applicable law and due process, constitutes the best notice practicable
under the circumstances to all persons entitled thereto, and constitutes
due and sufficient notice of the Settlement Hearing an the rights of Class
Members with respect thereto.
E. Approve the Notice and Proof of Claim substantially in the form
annexed hereto as Exhibits B and C, respectively, and direct the Settlement
Administrator to mail the Notice and Proof of Claim, no later than
seventy-five (75) days prior to the Settlement Hearing, to all Class
Members who are or were record holders of TransFinancial common stock
during the Class Period, with instructions to record holders who hold or
held the shares for the benefit of others either (i) to deliver copies of
the Notice and Proof of Claim to each such beneficial owner on whose behalf
the shares are held or were held during the Class Period or (ii) to provide
a list of the names and addresses of all such beneficial owners to the
Settlement Administrator so that it can promptly mail the Notice and Proof
of Claim to them.
F. Approve the Summary Notice for Publication of Settlement of
Derivative and Class Actions substantially in the form annexed hereto as
Exhibit D ("Summary
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Notice") and direct the Settlement Administrator to cause the Summary
Notice to be published in The Wall Street Journal and in The Kansas City
Star;
G. Direct the Settlement Administrator to post on its internet site
this Stipulation, all exhibits annexed hereto, and such other pleadings,
documents, and orders of the Court as the Settling Parties may agree or the
Court may order;
H. Approve the payment of up to $125,000 of all Preliminary
Administrative Expenses out of the funds to be deposited into the Escrow
Account by the Settling Defendants;
I. Approve the delivery directly to Federal of all funds in the Escrow
Account in the event that, and at such time as, the Settlement is
terminated pursuant to the terms of the Stipulation or is not approved by
the Court or, if appealed, the appellate court(s).
J. Schedule a Settlement Hearing to be held before the Court, at a
time and date to be set by the Court, as set forth in the Notice, finally
to consider and determine, or to direct the later determination without
further notice of, (i) the reasonableness, adequacy, and fairness of the
Settlement, (ii) whether the Final Order should be entered pursuant to this
Stipulation, (iii) whether the method of allocating the Net Settlement Fund
should be approved, and (iv) whether the applications of Plaintiff Class
Counsel for attorneys' fees and reimbursement of expenses and for
Plaintiffs' incentive awards should be approved;
K. Require any person who is a Class Member and who does not want to
participate in and/or be bound by the Settlement to submit to the
Settlement Administrator a request for exclusion from the Class no later
than thirty (30) days prior to
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the Settlement Hearing, in such manner and containing such
information as required by the Notice; and
L. Require any Class Member who has not requested exclusion from the
Class or any Shareholder who wants to object to the approval of this
Stipulation and the Settlement to file and serve in writing no later than
twenty-four (24) days prior to the Settlement Hearing, in the manner
provided in the Notice, a statement of the objection and the grounds for
such objection, and provide that any Class Member or Shareholder who does
not follow the objection procedure in the Notice will be barred from making
any objection to any aspect of the Settlement.
SETTLEMENT ADMINISTRATION
-------------------------
11. The Settlement Administrator shall administer the Settlement subject to
supervision of Plaintiff Class Counsel and the Court as circumstances may
require.
12. TransFinancial and/or the Individual Defendants shall authorize the
Company's transfer agent to provide to the Settlement Administrator (A) the list
of record owners of the Company's stock as of April 29, 2002, the day on which
TransFinancial filed a certificate of liquidation and closed its stock record
books, which list was used for the purposes of making the liquidation
distribution to shareholders and will be used for making the final liquidation
distribution in the future; and (B) the list of all record owners of the
Company's stock during the Class Period. Within ten (10) days after the entry of
the Scheduling Order, Individual Defendants shall also provide the Settlement
Administrator a list, with respect to each Individual Defendant, of all shares
held directly or indirectly by such defendant as of April 29, 2002, and, if such
shares were or are held beneficially, the name, address and telephone number, of
the nominee or broker holding such shares, and the account number in which such
shares were or are held.
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13. Following entry of the Scheduling Order, the Settlement Administrator
shall comply with the directives therein, including providing notice of the
Class. The Settlement Administrator shall also receive and maintain all requests
for exclusion from the Class. The Escrow Agent shall maintain the Escrow Account
and work with the Settlement Administrator to effectuate payment of the
Preliminary Administrative Expenses.
14. Upon or after the Settlement Effective Date, Settlement Administrator
and the Escrow Agent shall make the distributions approved by the Court and
further distribute the Net Settlement Fund in accordance with the method of
allocation approved by the Court. The Settlement Administrator and/or the
Settling Parties may apply to the Court to resolve any issue that arises in the
administration of the Settlement which cannot be resolved by agreement. If there
is a balance remaining in the Escrow Account a year after the initial
distribution to Class Members in accordance to the Court-approved method of
allocation and such balance is not needed for satisfaction of remaining unpaid
or accrued administration expenses, such balance shall be donated to an
appropriate 501(c)(3) non-profit organization designated by Plaintiff Class
Counsel.
15. The Settling Defendants and their insurers, counsel, and other agents
shall have no responsibility for or liability whatsoever with respect to:
A. Any act, omission, or determination of Plaintiff Class Counsel or
their designees or agents in connection with the administration of the
Settlement;
B. Any act, omission, or determination of the Escrow Agent or
Settlement Administrator;
C. The management, investment, or distribution of the Settlement Fund
or the Net Settlement Fund;
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D. The determination, administration, calculation, or payment of any
distribution from or claims asserted against the Settlement Fund or the Net
Settlement Fund; or
E. The method of allocating the Net Settlement Fund.
FINAL ORDER
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16. If the Court ultimately approves the terms of the Settlement set forth
in this Stipulation, a Final Order substantially in the form annexed hereto as
Exhibit E shall be entered and shall, inter alia:
A. Approve the Settlement, adjudge its terms to be fair, reasonable,
and adequate, and retain jurisdiction to effectuate the same;
B. Completely discharge, settle, dismiss with prejudice, release, and
permanently bar and enjoin the assertion, prosecution, or continuation by
any and all Class Members of any Released Claim, including without
limitation any Unknown Claim, against each Released Party; provided,
however, that the Final Order shall not bar any action or claim to enforce
the terms of the Settlement as approved by the Court or the Final Order;
and
C. Certify the determination as to the fairness, reasonableness, and
adequacy of the Settlement and the dismissal and injunction of all Released
Claims against the Released Parties as final pursuant to Rule 54(b).
INCENTIVE AWARDS, ATTORNEYS' FEES, AND DISBURSEMENTS
----------------------------------------------------
17. Plaintiff Class Counsel may apply to the Court for an award of
attorneys' fees, not to exceed one third of the Settlement Fund, and for the
reimbursement of all expenses incurred in these Actions from the Settlement
Fund. Such fees and expenses shall be payable solely out of the Settlement Fund
and shall be deducted from the Settlement Fund prior to any distribution to
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the Class Members. In addition, Plaintiffs may apply to the Court for an
incentive award of up to $10,000 each. Settling Defendants will not oppose such
applications.
18. As part of a Final Judgment, a form of which shall be submitted at or
before the Settlement Hearing, the Court may approve Plaintiffs' incentive
awards and Plaintiff Class Counsel's fees and expenses. If the Final Judgment is
not appealed, or after any such appeal is resolved, the Escrow Agent may
withdraw from the Escrow Account for distribution to Plaintiff Class Counsel the
fees and expenses approved by the Court (or appellate court) and to Plaintiffs
the incentive awards approved by the Court (or appellate court).
19. Notwithstanding any other provision of this Stipulation to the
contrary, the procedure for and the allowance or disallowance (in whole or in
part) by the Court of any application by Plaintiff Class Counsel for attorneys'
fees and expenses to be paid out of the Settlement Fund and/or any application
for an incentive award on behalf of Plaintiffs should be considered by the Court
separately and apart from its consideration of the fairness, reasonableness, and
adequacy of the Settlement, and any order or proceeding relating to the award of
attorneys' fees and expenses or the incentive awards, or any appeal of any order
relating thereto, shall not operate to terminate or cancel this Stipulation or
affect or delay the finality of the Final Order approving the Settlement of the
Actions.
ALLOCATION AND ADMINISTRATION OF NET SETTLEMENT FUND
----------------------------------------------------
20. The Net Settlement Fund shall be allocated and administered, subject to
approval by the Court in a Final Judgment, as follows:
A. The Net Settlement Fund, as described in paragraph 9, shall be
divided into two parts, one to be distributed to Class Members who are
Shareholders (the "Shareholder Fund"), and one to be distributed to Class
Members who are Selling
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Shareholders (the "Selling Shareholders' Fund"). Unless otherwise ordered
by the Court, 75% of the Net Settlement Fund shall be allocated to the
Shareholder Fund, and 25% of the Net Settlement Fund shall be allocated to
the Selling Shareholders' Fund.
B. The Shareholder Fund, net of any costs incurred by the Settlement
Administrator with respect to its administration, shall be distributed, pro
rata in proportion to the number of shares held on April 29, 2002, to
Shareholders. In making such distribution, the Settlement Administrator
shall use the list of shareholders to whom the dissolution distribution was
made on or about July 2, 2002. With respect to any distribution of funds to
record holders or nominees of record holders who hold shares for the
benefit of others, the Settlement Administrator shall deduct from the
distribution to such nominee any pro-rata amounts attributable to shares
beneficially owned, directly or indirectly, by the Individual Defendants,
and the Settlement Administrator shall forward instructions to such record
holders or nominees that no distribution of funds shall be made to, or for
the benefit of, any of the Individual Defendants. The administrative costs
of distributing the Shareholder Fund shall be paid from the Shareholder
Fund.
C. The Selling Shareholders Fund, net of the fees and costs of the
Settlement Administrator with respect to its administration, including the
processing of claims submitted by the Selling Shareholders, shall be
distributed pro rata to those Selling Shareholders who submit a timely and
valid Proof of Claim. The pro rata distribution will be based upon the
greatest number of shares held and sold by a Selling Shareholder during the
Class Period, which will be calculated as the difference between (i) the
maximum number of shares that a Selling Shareholder held at any point
during the Class Period and (ii) the number of shares held at the close of
business on April 29, 2002. The
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Settlement Administrator shall sum the total of the greatest number of
shares held and sold by all Selling Shareholders submitting timely and
valid Proofs of Claim, and shall distribute the Selling Shareholder Fund to
each Selling Shareholder in the same proportion that such Selling
Shareholder's greatest number of shares held and sold bears to the total of
all shares held and sold by all Selling Shareholders who have submitted
timely and valid Proofs of Claim. In order to be considered for a
distribution, a Selling Shareholder must submit to the Settlement
Administrator, by no later than the date of the Settlement Hearing, a Proof
of Claim in the form attached as Exhibit C, and provide adequate
documentation of (i) the maximum number of shares held at any point during
the Class Period and (ii) the sale of such shares before April 29, 2002,
which may be demonstrated either by documentation of the number of shares
held at the close of business on April 29, 2002 or by documentation of
individual sales transactions. Any Proof of Claim that is postmarked after
the date of the Settlement Hearing will not be considered by the Settlement
Administrator. All fees and costs of the Settlement Administrator in
connection with the processing of claim forms and the administration of the
Selling Shareholders Fund shall be paid from the Selling Shareholders Fund.
Prior to distribution to the Selling Shareholders, the Settlement
Administrator shall make a report to Plaintiff Class Counsel of the
proposed distributions.
21. Notwithstanding any other provision of this Stipulation to the
contrary, the proposed method of allocating the Net Settlement Fund, including,
but not limited to, any adjustments thereto the Court may approve or require,
may be considered by the Court separately and apart from its consideration of
the fairness, reasonableness, and adequacy of the Settlement, and any order or
proceeding relating to the method of allocation, or any appeal of any order
18
relating thereto, shall not operate to terminate or cancel this Stipulation or
affect or delay the finality of the Final Order approving the Settlement of
these Actions.
CONTINGENCIES, EFFECT OF DISAPPROVAL,
-------------------------------------
OR TERMINATION OF SETTLEMENT
----------------------------
22. This Settlement and the consideration therefor are given by the
Settling Defendants in return for, and are contingent upon, entry of a Final
Order, substantially in the form annexed hereto as Exhibit E, approving the
Settlement, dismissing with prejudice all of the claims against the Settling
Defendants, and a full and complete release of all Released Claims (including
without limitation any and all Unknown Claims) by any and all Class Members
against any and all Released Parties, which release may no longer be challenged
by any Class Member.
23. In the event that the Court or, in the event of an appeal, an appellate
court having jurisdiction over the Actions, refuses to approve or materially
modifies this Stipulation or any proposed order to be entered pursuant thereto,
then counsel for a Settling Party may terminate this Stipulation and the
Settlement by giving counsel for all other Settling Parties and the Court
written notice of the termination no later than thirty (30) days following the
date of such refusal or modification giving rise to the right of termination.
24. Notwithstanding any other provision of this Stipulation to the
contrary, in the event that any event permitting termination of the Settlement
occurs, as described in the Supplemental Stipulation executed concurrently with
this Stipulation, then the Individual Defendants may, in the exercise of their
absolute discretion, terminate this Stipulation and the Settlement in the manner
provided in the Supplemental Stipulation.
25. This Settlement and the obligations of the Settling Parties are
conditioned upon and subject to:
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A. Entry of the Scheduling Order substantially in the form annexed
hereto as Exhibit A preliminarily approving the Settlement and approving
the Class notice;
B. Receipt and review by the Individual Defendants of all requests for
exclusion from the Class and the Individual Defendants' determination not
to exercise, or failure to exercise within the time provided, their rights
under the Supplemental Stipulation;
C. The Settling Parties' determination not to exercise their
termination rights (if any) under paragraphs 22-24;
D. Entry of the Final Order substantially in the form annexed hereto
as Exhibit E;
E. The occurrence of the Settlement Effective Date; and
F. The existence of a valid and binding settlement agreement between
the Company and the RLR Defendants.
26. If for any reason this Stipulation is terminated or fails to become
effective, then, in such event:
A. The Settling Parties shall be deemed to have reverted to their
respective status in the Actions as of April 1, 2004, and, except as
otherwise expressly provided, the Settling Parties shall proceed in all
respects as if this Stipulation and any related orders, including the Final
Judgment, had not been entered;
B. Within three (3) business days of such termination or failure to
become effective, the Escrow Agent shall deliver the Settlement Fund,
including any interest earned thereon, net of any Preliminary
Administrative Expenses, directly to Federal. During that time the Settling
Parties shall cooperate to facilitate this delivery.
20
C. The Settling Defendants shall thereafter have the right to object,
inter alia, (i) to the maintenance of either or both of these Actions as a
class action pursuant to Rule 23 of the Federal Rules of Civil Procedure,
all such objections to class certification having been preserved; and (ii)
to the consolidation of these Actions for any purpose other than discovery,
all such objections to consolidation having been preserved.
NO ADMISSION OF WRONGDOING
--------------------------
27. Each of the Settling Defendants (i) has denied, and continues to deny,
that he or it has committed any violation of federal or state statutory or
common law, (ii) has denied and continues to deny all allegations of wrongdoing
or liability whatsoever with respect to the Released Claims, including all facts
or claims alleged in the Actions, and (iii) repeatedly has maintained that he or
it fully and properly fulfilled any and all fiduciary duties and legal
obligations. Each of the Settling Defendants states that he or it is agreeing to
this Settlement solely because it will eliminate the burden, expense, and
uncertainties of further litigation and the concomitant distraction of resources
and efforts.
28. This Stipulation, any of its terms (or any agreement or order relating
thereto), any payment or consideration provided for herein, or any statement
made in connection with the approval of the Settlement shall not be construed as
an admission or evidence of any kind with respect to the existence, or absence
of, any fault, wrongdoing, or liability of the Settling Defendants. Neither this
Stipulation nor any statements made in connection with the approval of this
Settlement (nor any agreement or order relating thereto) shall be deemed,
offered, or received in evidence in any civil, criminal, administrative, or
other proceeding or utilized in any manner whatsoever by any of the Settling
Parties, including as a presumption, a concession, or an admission of any fault,
wrongdoing, or liability whatsoever, or lack thereof, on the part of any
Settling Defendants; provided, however, that nothing contained in this paragraph
shall prevent
21
this Stipulation (or any agreement or order relating thereto) from being used,
offered, or received in evidence in any proceeding to approve, enforce, or
otherwise effectuate the Settlement (or any agreement or order relating thereto)
or the Final Judgment, or in which the reasonableness, fairness, or good faith
of the Settling Parties in participating in the Settlement (or any agreement or
order relating thereto) is an issue, or to enforce or effectuate provisions of
this Settlement, the Final Judgment, or the Release.
MISCELLANEOUS
29. All counsel who execute this Stipulation represent and warrant that
they have authority to do so on behalf of their respective clients.
30. The Settling Parties and all signatories to this Stipulation agree to
use their best efforts, including all steps contemplated by this Stipulation,
and any other steps and efforts that may become necessary by order of the Court
or otherwise, to effectuate this Stipulation and the Settlement contemplated
hereunder.
31. This Stipulation (including exhibits hereto, agreements and
stipulations referenced herein, and documents executed pursuant to the
foregoing) contain the entire agreement among the Settling Parties with respect
to the subject matter hereof and supersedes any prior written or oral
agreements, representations, warranties, or statements. No representation,
warranty, statement, or inducement has been made to any party hereto concerning
this Stipulation other than the representations, warranties, and covenants
contained herein. This Stipulation may not be altered, modified, or amended, or
any of its provisions waived, unless by a writing, executed by counsel for all
of the Settling Parties affected by such change.
32. Plaintiffs and Plaintiffs' counsel expressly warrant that, in entering
into this Stipulation, they relied solely upon their own knowledge and
investigation, and not upon any
22
promise, representation, warranty, or other statement by any or all of the
Settling Defendants not expressly contained in this Stipulation or its Exhibits.
33. This Stipulation may be executed in one or more counterparts, all of
which shall be considered the same as if a single document shall have been
executed, and shall become effective when such counterparts have been signed by
each of the Settling Parties and delivered to each of the other Settling
Parties.
34. Upon prior notice to the Court and after approval of the Court, the
Settling Parties may agree to reasonable extensions of time to carry out any of
the provisions of this Stipulation, as contemplated in the attached exhibits,
incorporated herein by reference.
35. The Court shall retain jurisdiction with respect to the enforcement of
the terms of this Stipulation and the Settlement embodied herein.
36. The section headings used throughout this Stipulation are for
convenience only and shall not effect the interpretation or construction of this
Stipulation.
37. In the event the Court or any other court is called upon to interpret
this Stipulation, no one party or group of parties shall be deemed to have
drafted this Stipulation, nor may any party offer in evidence or otherwise use,
for purposes of suggesting any interpretation of this Stipulation, any prior
drafts of this Stipulation.
38. Nothing in this Stipulation, Settlement, or the negotiations or
proceedings relating to the foregoing is intended to or shall be deemed to
constitute a waiver of any applicable privilege or immunity, including, without
limitation, the accountants' privilege, the attorney-client privilege, the joint
defense privilege, or the work product immunity.
[SIGNATURES FOLLOW ON THE NEXT PAGE]
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PLAINTIFF DAVID GROGAN, by and through his
counsel:
/s/ Gregory E. Keller
-------------------------------------------
Gregory E. Keller
Harnes & Keller LLP
964 Third Avenue, 7th Floor
New York, NY 10022
-and-
James M. Crabtree
Crabtree Law Office
13420 Santa Fe Trail Drive
Lenexa, KS 66215
PLAINTIFF LEWIS F. GEER, by and
through his counsel:
/s/ James G. Flynn
-------------------------------------------
Robert I. Harwood
James G. Flynn
Wechsler Harwood LLP
488 Madison Avenue, 8th Floor
New York, NY 10022
-and-
James M. Crabtree
Crabtree Law Office
13420 Santa Fe Trail Drive
Lenexa, KS 66215
24
DEFENDANTS WILLIAM D. COX; HAROLD
C. HILL, JR.; ROY R. LABORDE;
TIMOTHY P. O'NEIL; CLARK D.
STEWART; and DAVID TAGGART, by
and through their counsel:
/s/ Matthew J. Salzman
-------------------------------------------
Matthew J. Salzman
John G. Hansen
Stinson Morrison Hecker LLP
1201 Walnut Street
Kansas City, Missouri 64106
DEFENDANT TRANSFINANCIAL
HOLDINGS, INC., by and through
its counsel:
/s/ Timothy M. O'Brien
-------------------------------------------
Timothy M. O'Brien
Shook, Hardy & Bacon L.L.P.
84 Corporate Woods
10801 Mastin, Suite 1000
Overland Park, KS 66210-1669
R. L. R. INVESTMENTS, LLC and R&L TRANSFER, INC.,
by and through its counsel:
/s/ David R. Buchanan
-------------------------------------------
David R. Buchanan
Brown & James, P.C.
1900 City Center Square
1100 Main Street-2153
Kansas City, MO 64105
25
INDEX OF EXHIBITS
-----------------
A. Preliminary Approval and Scheduling Order
B. Notice of Proposed Settlement of Derivative and Class Actions, Request
for Attorneys' Fees and Reimbursement of Expenses, and Settlement
Fairness Hearing
C. Proof of Claim
D. Summary Notice for Publication of Settlement of Derivative and Class
Actions
E. Final Order
26