IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
WILLIAM N. STRASSBURGER, )
)
Plaintiff, )
)
v. ) C.A. No. 14267
)
MICHAEL M. EARLEY, LUTHER A. )
HENDERSON, JOHN C. STISKA, )
N. RUSSELL WALDEN, and )
TRITON GROUP, LTD., a )
Delaware corporation, )
)
Defendants, )
)
and )
)
RIDGEWOOD PROPERTIES, INC., )
a Delaware corporation, )
)
Nominal Defendant, )
)
and )
)
FOUNTAINHEAD DEVELOPMENT )
CORP., )
)
Intervenor. )
STIPULATION OF SETTLEMENT
-------------------------
The parties to the above-captioned action, by and through their respective
attorneys, hereby enter into the following Stipulation of Settlement (the
"Stipulation"), subject to the approval of the Court of Chancery of the State of
Delaware in and for New Castle County (the "Court"):
WHEREAS:
A. There is now pending a derivative action in the Court captioned
Strassburger v. Earley, et al., Civil Action No. 14267 (the "Action"), brought
on behalf of Ridgewood Hotels, Inc. (formerly named Ridgewood Properties, Inc.),
a Delaware corporation ("Ridgewood" or the "Company");
B. The complaint in the Action challenged certain repurchases by Ridgewood
of shares of its common stock in August of 1994 (the "Repurchases");
C. The action was filed in May 1995 not only derivatively, but also on
behalf of a class consisting of all common shareholders of Ridgewood (except the
defendants and any person related to or affiliated with any of the defendants)
and their successors in interest, who allegedly had the value of their Ridgewood
common stock damaged by the acts of the defendants;
D. The Court certified the class under Court of Chancery Rule 23(b)(1)(B),
but subsequently granted the defendants' motion to dismiss the class claim for
failure to state a claim on which relief could be granted;
E. The action thereafter proceeded to trial on the derivative claims;
F. In a January 24, 2000, opinion, Strassburger v. Earley, 752 A.2d 557
(Del. Ch. 2000), the Court determined that certain defendants were jointly and
severally liable to Ridgewood by reason of the Repurchases and that the issuance
to defendant Triton Group, Ltd. ("Triton") of 450,000 shares of Series A
Convertible Preferred Stock of Ridgewood (the "Preferred Stock") in connection
with the Repurchases should be rescinded;
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G. On August 18, 2000, defendants John C. Stiska, Michael N. Earley and
Triton Group, Ltd. moved to amend their answer to assert certain cross-claims
against defendants N. Russell Walden and Luther C. Henderson
(the "Motion to Amend");
H. On November 28, 2000, the motion of Fountainhead Development Corp.,
Inc. (together with its successor Fountainhead Development LLC and Fountainhead
Holdings, Inc., "Fountainhead") to intervene in the Action was granted and the
Motion to Amend was deferred;
I. By order dated November 28, 2000 (the "November 28 Order"), the Court
ordered rescission of the Preferred Stock, but stayed compliance therewith
pending the entry of a final order on all remaining issues;
J. The November 28 Order also provided that, at the time of entry of a
final order on the amount of rescissory damages, if any, for which other
defendants might be liable, judgment would be granted in favor of defendant
Henderson on all counts;
K. Following discovery relating to damages allegedly suffered by Ridgewood
by reason of the Repurchases, issues relating to damages were tried to the Court
in January, 2002, post-trial briefing was completed and oral argument was
presented to the Court in June of 2002;
L. Following oral argument on the damages issues plaintiff's counsel and
counsel for defendants Stiska, Earley and ADT Security Services, Inc. (the
successor by merger to Triton) ("ADT" and together with Messrs. Stiska and
Earley the "ADT Defendants") engaged in arm's length negotiations concerning a
possible settlement of the
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Action as to the ADT Defendants;
M. Plaintiff and the ADT Defendants entered into a Memorandum of
Understanding dated as of September 30, 2002, relating to the settlement of the
Action as to the ADT Defendants;
N. Subsequent arm's length negotiations among counsel for the parties
resulted in an agreement concerning a settlement of the Action as to defendant
Walden;
O. Subsequent arm's length negotiations among counsel for the parties
resulted in an agreement concerning a settlement of the Action satisfactory in
form and substance to Ridgewood and Fountainhead;
P. Defendant Luther Henderson died in October, 2002, as a consequence of
injuries resulting from a motor vehicle accident;
Q. In light of the events, negotiations and agreements described above,
the facts that were determined by the Court's January 2000 opinion, the facts
developed in discovery relating to the damages issues, the facts introduced at
the hearing on the damages issues, analysis of applicable law, and defendants'
right to appeal the factual and legal conclusions in the Court's January 2000
opinion, counsel for plaintiff in the Action has concluded that the terms and
conditions of the settlement provided for in this Stipulation (the "Settlement")
are fair, reasonable, adequate and in the best interests of plaintiff, Ridgewood
and the Minority Stockholders (as hereinafter defined).
R. Plaintiff enters into this Stipulation after taking into account (i)
the substantial benefits to Ridgewood and Minority Stockholders provided by the
Settlement, (ii) the risk of
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continued litigation, including risks on appeal, (iii) the desirability of
permitting the Settlement to be consummated as provided by the terms of this
Stipulation, and (iv) the conclusion of plaintiff's counsel that the terms of
the Settlement are fair, reasonable, adequate and in the best interests of
plaintiff, Ridgewood and the Minority Stockholders.
S. Defendants in the Action have denied and continue to deny any
wrongdoing and any liability with respect to all claims alleged in the Action.
While denying any fault or wrongdoing, and relying on the provisions of the
Stipulation that it shall in no event be construed as or deemed to be evidence
of any admission or concession on the part of defendants or any Released Party
(as defined below) of any fault or liability whatsoever, and without conceding
any infirmity in their defenses against the claims alleged in the Action,
defendants consider it desirable that the Action be settled and dismissed,
subject to the terms and conditions of the Stipulation, because the Settlement
will (i) be beneficial to Ridgewood and the Minority Stockholders, (ii) halt the
substantial expense, inconvenience and distraction of continued litigation of
the claims alleged in the Action, (iii) finally put to rest those claims, and
(iv) dispel any uncertainty that may exist as a result of the Action.
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED, subject to the
approval of the Court pursuant to Court of Chancery Rule 23.1, that:
A. Any and all claims, rights, demands, suits, matters, issues, causes of
action, liabilities, damages, losses, obligations and judgments of any kind or
nature whatsoever, whether known or unknown, that have been or could have been
asserted in the Action or in any court, tribunal or proceeding, by or on behalf
of plaintiff, Ridgewood or any Minority
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Stockholder who accepts the tender offer to be made by Ridgewood pursuant to
this Stipulation (collectively the "Releasing Parties"), against any and all
defendants, ADT, Fountainhead and each and all of their respective present or
former officers, directors, employees, stockholders, insurers, agents and
attorneys, and their respective affiliates, heirs, executors, personal
representatives, estates, administrators or predecessors, successors and assigns
(collectively, the "Released Parties"), whether directly, individually,
derivatively, representatively or in any other capacity, and whether arising
under state or federal law, in connection with, or that arise now or hereafter
out of, or which relate in any way to, the acts, facts, events, transactions or
occurrences embraced by, involved in, set forth in or otherwise related to the
complaint filed in the Action, including without limitation claims against any
of the defendants for reimbursement of litigation expenses advanced on behalf of
such defendants (collectively, the "Settled Claims"), shall be fully, finally,
and forever compromised, settled, discharged, dismissed with prejudice, released
and barred pursuant to the terms and conditions set forth herein; provided,
however, that the Settled Claims shall not include any claims or causes of
action that any party hereto may have to enforce compliance with the terms of
the Settlement.
B. Defendant Walden and the ADT Defendants, on behalf of themselves and
their respective present or former officers, directors, stockholders, agents and
attorneys, and their respective affiliates, heirs, executors, personal
representatives, estates, administrators or predecessors, successors and
assigns, release and discharge Ridgewood and Fountainhead and each of their
respective present or former officers, directors, employees, insurers,
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attorneys and agents and their respective affiliates, heirs, executors, personal
representatives, estates, administrators or predecessors, successors and assigns
from any and all claims, rights, demands, suits, matters, issues, causes of
action, liabilities, damages losses, obligations and judgments of any kind or
nature whatsoever, whether known or unknown, arising out of or relating to the
Action or the Settled Claims (including, without limitation, any claim for
indemnification or advancement of expenses in connection with defending the
Action and any claim that could be made against Fountainhead arising out of or
relating to the stock purchase agreement dated January 11, 2002 between ADT
Security Services, Inc. and Fountainhead Development Corp., Inc.); provided,
however, that the foregoing release and discharge shall not affect any claim
that defendant Walden may have against Ridgewood (whether arising out of that
certain Security Agreement between Ridgewood and defendant Walden entered into
in January 2002 or otherwise) for advancement and/or indemnification for
attorneys fees and expenses incurred in connection with the Action if such fees
and expenses were incurred either (i) after June 30, 2002 but on or before the
date the Settlement becomes Final or (ii) in connection with defendant Walden's
compliance with paragraph 1(c) of this Stipulation, and, further provided, that
the foregoing release by defendant Walden and the ADT Defendants shall not
include any claims or causes of action that defendant Walden or the ADT
Defendants may have to enforce compliance with the terms of the Settlement.
C. Fountainhead, on behalf of itself and its respective present or former
officers, directors, stockholders, agents and attorneys, and their respective
affiliates, heirs, executors,
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personal representatives, estates, administrators or predecessors, successors
and assigns, releases and discharges defendant Walden and the ADT Defendants and
each of their respective present or former officers, directors, employees,
insurers, attorneys and agents and their respective affiliates, heirs,
executors, personal representatives, estates, administrators or predecessors,
successors and assigns from any and all claims, rights, demands, suits, matters,
issues, causes of action, liabilities, damages losses, obligations and judgments
of any kind or nature whatsoever, whether known or unknown, arising out of or
relating to the Action or the Settled Claims (including, without limitation, any
claim that could be made against ADT arising out of or relating to the stock
purchase agreement dated January 11, 2002 between ADT Security Services, Inc.
and Fountainhead Development Corp., Inc.); provided, however, that the foregoing
release by Fountainhead shall not include any claims or causes of action that
Fountainhead may have to enforce compliance with the terms of the Settlement.
The Settlement
--------------
1. In consideration for the full settlement, satisfaction, compromise and
release of the Settled Claims, the parties agree as follows:
(a) Ridgewood, ADT and Fountainhead shall within ten (10) business
days following the date on which the Settlement becomes Final (as defined below)
cause the issuance of the Preferred Stock to Triton in connection with the
Repurchases to be fully and completely rescinded in the following manner: (i)
Fountainhead shall surrender to
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Ridgewood for cancellation the certificate or certificates evidencing the
Preferred Stock; and (ii) simultaneously upon receipt from Fountainhead of the
certificates evidencing the Preferred Stock, Ridgewood shall issue to
Fountainhead 1,350,000 shares of Ridgewood common stock and deliver to
Fountainhead one or more certificates, as may be requested by Fountainhead,
registered in the name of Fountainhead or its designees, evidencing such
1,350,000 shares of common stock. Ridgewood shall have no obligation to pay any
dividends on the Preferred Stock that were accrued and unpaid at the effective
time of the rescission of the Preferred Stock.
(b) Within ten (10) business days following the date the Settlement
becomes Final, ADT shall pay or cause to be paid to Ridgewood the amount of One
Million Seven Hundred Sixty Thousand Dollars ($1,760,000.00).
(c) Within ten (10) business days following the date the Settlement
becomes Final, defendant Walden shall pay or cause to be paid to Ridgewood the
amount of Ten Thousand Dollars ($10,000.00) and shall cause to be transferred to
Ridgewood 32,000 shares of Ridgewood common stock owned by defendant Walden.
(d) Of the $1,770,000 received by Ridgewood pursuant to subparagraphs
(b) and (c) above, Ridgewood shall retain $125,000 as partial compensation for
various litigation expenses incurred by Ridgewood in connection with the Action.
(e) Within thirty (30) business days following the date the
Settlement becomes Final, Ridgewood shall commence a tender offer for shares of
Ridgewood common
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stock owned by Minority Stockholders, provided that Ridgewood will not be
required to commence a tender offer prior to 100 days after the end of its
fiscal year ending March 31, 2003, and provided further that Ridgewood's
obligation to commence a tender offer within the above time period shall be
satisfied if Ridgewood has made any filings that may be required under
applicable federal or state securities laws to commence the tender offer within
such time period and Ridgewood is using reasonable efforts to proceed with the
tender offer. Notwithstanding the foregoing, if Ridgewood is prohibited from
commencing a tender offer within such time period as a result of any applicable
law or judicial or administrative order and such prohibition was not the result
of Ridgewood's failure to file any reports required to be filed pursuant to the
requirements of the Securities Exchange Act of 1934 (the "Act"), then the time
period within which Ridgewood has to commence the tender offer shall be extended
until such prohibition is removed or otherwise ceases. Ridgewood represents that
as of the date of this Stipulation it does not know of any applicable law or
judicial or administrative order that would prohibit Ridgewood from commencing
the tender offer contemplated by this Stipulation, provided that Ridgewood files
all reports required to be filed by the Act. The net offering price to Minority
Stockholders shall be equal to the sum of $1,645,000 divided by the number of
shares of Ridgewood common stock owned by Minority Stockholders. The tender
offer shall remain open for a minimum of thirty-five days. Upon expiration of
the tender offer, any part of the $1,645,000 not used to purchase tendered
shares shall be retained by Ridgewood. For purposes of the Settlement, the term
"Minority Stockholders" means the beneficial owners of common stock of Ridgewood
as of the date the tender offer commences, exclusive of (a) ADT, Ridgewood,
Fountainhead, and any of their respective directors, officers, executive
employees, affiliates, successors or assigns and (b) the four individual
defendants (but not including any such defendant's
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present or former spouse or other family members except in their capacity as
heirs or beneficiaries) in the Action, and any of their heirs, beneficiaries,
personal representatives, executors or affiliates. In addition to the foregoing,
the tender offer may include (i) a requirement that any Minority Stockholder
electing to accept the offer tender all of the shares of Ridgewood common stock
held of record or beneficially by such Minority Stockholder or controlled by
such Minority Stockholder, (ii) a requirement that a Minority Stockholder, by
accepting the tender offer and receiving the consideration, releases and
discharges any and all claims of any kind or nature, whether known or unknown,
existing or occurring on or before the date of the tender offer that such
Minority Stockholder may have against Ridgewood, ADT, Fountainhead and the
individual defendants that arises out of or relates to such Minority
Stockholder's ownership of shares of Ridgewood Common Stock, and (iii) any terms
required by applicable law.
(f) In the event that for any reason Ridgewood is unable to commence
the tender offer contemplated by this Stipulation within 180 days from the date
the Settlement becomes Final, Ridgewood will deposit with the Court of Chancery
the $1,645,000 intended under this Stipulation to be used for the tender offer,
and Ridgewood and plaintiff shall use their best efforts to structure and obtain
the approval of the Court of Chancery to an alternative method of distributing
the $1,645,000 to Minority Stockholders that effects, as nearly as practical
under the circumstances, the equivalent of the tender offer contemplated by this
Stipulation.
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(g) All claims asserted in the Action by plaintiff against all
defendants and all cross claims asserted or that could have been asserted in the
Action by any defendant (including, without limitation, the Motion to Amend)
against any other defendant shall be released and dismissed on the merits and
with prejudice.
Submission and Application to the Court
---------------------------------------
2. Promptly following the execution of this Stipulation, the parties shall
jointly apply to the Court for an order substantially in the form attached
hereto as Exhibit A (the "Scheduling Order"), which shall include provisions
that:
(a) Direct that a settlement hearing (the "Settlement Hearing") be
held to determine whether the Court should (i) approve the Settlement pursuant
to Court of Chancery Rule 23.1 as fair, reasonable and adequate and in the best
interests of Ridgewood and the Minority Stockholders, (ii) enter an Order and
Final Judgment dismissing the Action with prejudice and on the merits, each
party to bear its own costs (except as provided herein) and extinguish, release
and enjoin prosecution of any and all Settled Claims, (iii) approve any
application of counsel for plaintiff for an allowance of fees and reimbursement
of expenses, and (iv) hear such other matters as the Court may deem necessary
and appropriate;
(b) Provide that the Notice of Pendency of Derivative Action,
Proposed Settlement of Derivative Action and Settlement Hearing (the "Notice"),
substantially in the form attached hereto as Exhibit B, is approved and that the
mailing of the Notice substantially in the manner set forth in the Scheduling
Order constitutes the best notice practicable under the circumstances, meets the
requirements of applicable law and due process, is due and sufficient notice of
all matters relating to the Settlement, and fully satisfies the requirements of
due process and of Rule 23.1 of the Court of Chancery Rules.
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Notice to Ridgewood Stockholders
--------------------------------
3. All costs incurred in notifying by mail the stockholders of Ridgewood
of the Settlement, including the printing and copying of the Notice as set forth
in the Scheduling Order, shall be paid by ADT.
Final Order and Judgment
------------------------
4. If the Settlement (including any modification thereto made with the
consent of the parties as provided for herein) is approved by the Court, the
parties shall promptly request the Court to enter an Order and Final Judgment
substantially in the form attached hereto as Exhibit C, which among other
things:
(a) Approves the Settlement, adjudges the terms thereof to be fair,
reasonable, adequate and in the best interests of Ridgewood and the Minority
Stockholders, directs consummation of the Settlement in accordance with the
terms and conditions of this Stipulation and reserves jurisdiction to supervise
the consummation of the Settlement;
(b) Dismisses the Action on the merits and with prejudice as to all
Released Parties, extinguishes, discharges and releases any and all Settled
Claims as against plaintiff and Ridgewood, without costs except as herein
provided, said dismissal subject only to compliance by the parties with the
terms of this Stipulation and any Order of the Court concerning this
Stipulation, and permanently enjoining plaintiff, Ridgewood and all stockholders
of Ridgewood from asserting, commencing, prosecuting or continuing to prosecute,
either directly, individually, representatively, derivatively or in any other
capacity, any of the Settled Claims;
(c) Dismisses on the merits and with prejudice all cross claims
asserted or that could have been asserted by any defendant against any other
defendant or Ridgewood;
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(d) Without affecting the finality of the Order and Final Judgment,
reserves the Court's jurisdiction over all of the parties for the administration
of the terms of the Settlement and this Stipulation.
Finality of Settlement
----------------------
5. The approval by the Court of the Settlement shall be considered final
("Final" or "Finally Approved") for purposes of this Stipulation upon (i) entry
of the Order and Final Judgment approving the Settlement and (ii) the expiration
of any applicable appeal period for the appeal of the Order and Final Judgment
without an appeal having been filed or, if an appeal is taken, upon entry of an
order affirming the Order and Final Judgment appealed therefrom and the
expiration of any applicable period for the reconsideration, rehearing or appeal
of such affirmance without any motion for reconsideration or rehearing or
further appeal having been filed.
Effect of Disapproval of Settlement
-----------------------------------
6. In the event the Settlement proposed herein is not approved by the
Court, or the Court approves the Settlement but such approval is reversed or
vacated on appeal, reconsideration or otherwise and such order reversing or
vacating the Settlement becomes final by lapse of time or otherwise, then the
Settlement proposed herein shall be of no further force and effect, and this
Stipulation and all negotiations, proceedings and statements relating thereto
and any amendment thereof shall be null and void and without prejudice to any
party hereto, and each party shall be restored to his, her or its respective
position as it existed prior to the execution of this Stipulation.
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Defendants' Denial of Liability
-------------------------------
7. The defendants in the Action specifically deny and disclaim any fault,
wrongdoing and liability whatsoever relating to any of the Settled Claims,
expressly deny having engaged in any wrongful or illegal activity, or having
violated any law, regulation or duty, including fiduciary duties, expressly deny
that any person or entity has suffered any harm or damages as a result of the
Settled Claims, and are entering into this Stipulation and the Settlement solely
to avoid the distraction, burden and expense occasioned by continued litigation.
Stipulation Not an Admission
----------------------------
8. The provisions contained in this Stipulation and all negotiations,
statements and proceedings in connection therewith shall not be deemed a
presumption, a concession or an admission by any defendant of any fault,
liability or wrongdoing as to any fact or claim alleged or asserted in the
Action or any other action or proceeding and shall not be interpreted,
construed, deemed, invoked, offered or received in evidence or otherwise used by
any person in these or any other action or proceeding, whether civil, criminal
or administrative, except in a proceeding to enforce the terms or conditions of
this Stipulation or the Settlement.
Attorneys' Fees and Expenses
----------------------------
9. At the Settlement Hearing, plaintiff's counsel may apply for an award
of attorneys' fees and an allowance of expenses in an amount not exceeding in
the aggregate One Million Eight Hundred Twenty Five Thousand Dollars
($1,825,000). Defendants, Ridgewood and Fountainhead agree that they will not
oppose such application, and plaintiff's counsel agrees not to make any other
application for fees or expenses. Plaintiff's counsel's application for fees and
expenses shall be presented to the Court at the same time
-15-
as the Settlement is presented to the Court. The fairness, reasonableness and
adequacy of the Settlement may be considered and ruled upon by the Court
independently of any award of attorneys' fees and reimbursement of expenses.
10. ADT agrees to pay the fees and expenses awarded by the Court to
plaintiff's counsel in connection with this Stipulation and the Settlement up
to, but not exceeding, the aggregate amount of $1,825,000. In the event the
Court does not award the full amount requested by plaintiff's counsel or the
Court's award is reduced on appeal, the obligation of ADT under this paragraph
10 shall be reduced to the amount of the fees and expenses actually awarded by
the Court or as reduced on appeal.
11. Subject to the terms and conditions of this Stipulation, the award of
attorneys' fees and expenses shall be paid by ADT to plaintiff's counsel within
ten (10) business days of the later of (i) the date on which the Settlement
becomes Final or (ii) the date when the Order of the Court granting the
application of plaintiff's counsel for an award of fees and expenses has become
final and no longer subject to further appeal or review, whether by exhaustion
of any possible appeal, lapse of time or otherwise.
12. Plaintiff's counsel may apply to the Court for permission to pay to
plaintiff $10,000 out of the fees and expenses awarded by the Court to
plaintiff's counsel as reimbursement to plaintiff for his substantial
professional assistance to plaintiff's counsel during the course of the Action.
Defendants, Ridgewood and Fountainhead agree that they will not oppose such
application. The parties agree that Ridgewood and Fountainhead shall have no
obligation to pay for any fees or expenses of plaintiff or plaintiff's counsel.
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Release of Insurer
------------------
13. In order to assist ADT in obtaining payment of insurance policy
proceeds from Evanston Insurance Company ("Evanston") to be used to reimburse or
discharge a portion of ADT's obligations under the Settlement, each of the
parties hereto agrees to execute a Release and Settlement Agreement with
Evanston in the form attached hereto as Exhibit D.
Authority
---------
14. Each of the attorneys executing this Stipulation on behalf of one or
more of the parties hereto warrants and represents that he or she has been duly
authorized and empowered to execute this Stipulation on behalf of his or her
respective client or clients.
Counterparts
------------
15. This Stipulation may be executed in any number of actual or telecopied
counterparts and by each of the different parties thereto on several
counterparts, each of which when so executed and delivered shall be an original.
The executed signature page(s) from each actual or telecopied counterpart may be
joined together and attached to one such original and shall constitute one and
the same instrument.
Waiver
------
16. The waiver by any party of any breach of this Stipulation shall not be
deemed or construed as a waiver of any other breach, whether prior, subsequent
or contemporaneous, of this Stipulation.
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Entire Agreement; Amendments
----------------------------
17. This Stipulation constitutes the entire agreement among the parties
with respect to the subject matter hereof, and may not be amended, or any of its
provisions waived, except by a writing executed by all of the parties hereto.
18. This Stipulation, upon becoming operative, shall be binding upon and
inure to the benefit of the signatories hereto, the parties hereto, and their
respective successors, assigns, heirs, executors and administrators and upon any
corporation, partnership or other entity into or with which any party may merge,
consolidate or convert.
19. All of the annexes and exhibits hereto are incorporated herein by
reference as if set forth herein verbatim, and the terms of all exhibits are
expressly made a part of this Stipulation.
Governing Law
-------------
20. This Stipulation shall be governed by, construed and enforced in
accordance with the laws of the State of Delaware, without regard to conflict of
laws principles.
Best Efforts
------------
21. The parties hereto and their attorneys agree to cooperate fully with
one another in seeking the Court's approval of this Stipulation and the
Settlement and to use their best efforts to effect the confirmation of this
Stipulation and the Settlement.
22. If any claims which are or would be Settled Claims are asserted
against any person in any court prior to or following Final Approval of the
Settlement, the plaintiff shall join, where possible, in an motion to dismiss or
stay such proceedings and shall otherwise use his best efforts to effect
withdrawal or dismissal of the claims.
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IN WITNESS WHEREOF, the parties, by their respective counsel, have
executed this Stipulation as of the 19th day of March, 2003.
[SIGNATURE PAGE FOLLOWS]
-19-
SMITH, KATZENSTEIN & FURLOW, LLP
/s/ Craig B. Smith
-------------------------------------------
Craig B. Smith, Esquire
800 Delaware Avenue, 7th Floor
P.O. Box 410
Wilmington, Delaware 19899
Attorneys for Plaintiff
POTTER ANDERSON & CORROON LLP
/s/ James F. Burnett
-------------------------------------------
James F. Burnett, Esquire
Hercules Plaza
1313 North Market Street
Wilmington, Delaware 19801
Attorneys for defendants
Michael M. Early,John C. Stiska,
Triton Group Ltd. and ADT Security
Services, Inc. (successor by merger to
Triton Group Ltd.)
RICHARDS, LAYTON & FINGER, P.A.
/s/ Robert J. Stearn
-------------------------------------------
Robert J. Stearn, Jr., Esquire
One Rodney Square
10th and King Streets
Wilmington, Delaware 19801
Attorneys for defendant
N. Russell Walden
ASHBY & GEDDES
/s/ Stephen E. Jenkins
--------------------------------------------
Stephen E. Jenkins, Esquire
222 Delaware Avenue
Wilmington, Delaware 19801
Attorneys for defendants Luther J.
Henderson and Ridgewood Hotels, Inc.
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MORRIS, NICHOLS, ARSHT & TUNNELL
/s/ Alan J. Stone
--------------------------------------
Alan J. Stone, Esquire
1201 North Market Street
Wilmington, Delaware 19801
Attorneys for intervenor
Fountainhead Development Corp., Inc.
Fountainhead Development LLC and
Fountainhead Holdings, Inc.
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EXHIBIT A
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
WILLIAM N. STRASSBURGER, )
)
Plaintiff, )
)
v. ) C.A. No. 14267
)
MICHAEL M. EARLEY, LUTHER A. )
HENDERSON, JOHN C. STISKA, )
N. RUSSELL WALDEN, and )
TRITON GROUP, LTD., a )
Delaware corporation, )
)
Defendants, )
)
and )
)
RIDGEWOOD PROPERTIES, INC., )
a Delaware corporation, )
)
Nominal Defendant, )
)
and )
)
FOUNTAINHEAD DEVELOPMENT )
CORP., )
)
Intervenor. )
SCHEDULING ORDER
----------------
The parties to the above-captioned action (the "Action") having applied
pursuant to Court of Chancery Rule 23.1 for an Order approving a proposed
settlement of the Action in accordance with a Stipulation of Settlement entered
into by the parties, dated as of March __, 2003 (the "Stipulation"), and for the
dismissal of the Action with prejudice on the terms and conditions set forth in
the Stipulation (the "Settlement"), and the Court having read and
considered the Stipulation and accompanying documents, and all parties having
consented to the entry of this Order,
Now, this day of , 2003, upon
application of the parties, IT IS HEREBY ORDERED as follows:
1. The Court adopts and incorporates the definitions in the Stipulation
for purposes of this Order.
2. A hearing shall be held on _______________, 2003, at ___.m. in the
Court of Chancery in the New Castle County Courthouse, 500 North King Street,
Wilmington, Delaware (the "Settlement Hearing") to determine the fairness,
reasonableness and adequacy of the Stipulation and the Settlement, whether the
Stipulation and the Settlement should be finally approved by the Court and
judgment entered thereon, and to hear and determine any objections to the
Settlement. At the Settlement Hearing, counsel for the plaintiff may apply for
an award of attorneys' fees and expenses as set forth in the Stipulation, which
application shall be heard by the Court at the Settlement Hearing or at such
time thereafter as the Court in its discretion deems appropriate.
3. The Court reserves the right to adjourn the Settlement Hearing,
including consideration of the application for attorneys' fees and costs,
without further notice other than by announcement at the Settlement Hearing or
any adjournment thereof.
4. The Court reserves the right to approve the Settlement at or after the
Settlement Hearing with such modifications as may be consented to by the parties
to the Stipulation and without further notice to stockholders of Ridgewood.
-2-
5. No later than thirty-five (35) days prior to the date of the Settlement
Hearing, defendants shall mail, or cause to be mailed, by first-class mail,
postage prepaid, the Notice, substantially in the form attached to the
Stipulation as Exhibit B, to all holders of record of common stock of Ridgewood
on the date of this Order.
6. The form and method of notice specified herein is the best notice
practicable and shall constitute due and sufficient notice of the Settlement
Hearing to all persons entitled to receive such notice, and fully satisfies the
requirements of due process and of Rule 23.1 of the Rules of the Court of
Chancery. Defendants shall, on or before the date of the Settlement Hearing,
file with the Court an affidavit certifying compliance with paragraph 5 of this
Order.
7. Any owner of common stock of Ridgewood who objects to the Stipulation,
the Settlement, the Order and Final Judgment to be entered herein, and/or the
application for attorneys' fees and expenses, or who otherwise wishes to be
heard, may appear in person or by his attorney at the Settlement Hearing and
present any evidence or argument that may be proper and relevant, provided,
however, that other than the parties to the Action and counsel for the parties
to the Action, no person shall be heard, and no papers, briefs, pleadings or
other documents submitted by any such person shall be received and considered by
the Court (unless the Court in its discretion shall thereafter otherwise direct,
upon application of such person and for good cause shown) unless no later than
ten (10) days prior to the Settlement Hearing directed herein written notice of
the intention to appear shall be filed by such person
-3-
with the Register in Chancery and, on or before such filing, shall be served by
hand or overnight mail on the following counsel of record:
Craig B. Smith, Esquire
Smith, Katzenstein & Furlow LLP
800 Delaware Avenue, 7th Floor
P.O. Box 410 Wilmington, Delaware 19899
Attorneys for Plaintiff
James F. Burnett, Esquire
Potter Anderson & Corroon LLP
Hercules Plaza, Sixth Floor
1313 North Market Street
Wilmington, Delaware 19801
Attorneys for defendants Michael M. Early,
John C. Stiska, Triton Group Ltd. and ADT
Security Services, Inc. (successor by merger to
Triton Group Ltd.)
Robert J. Stearn, Jr., Esquire
Richards, Layton & Finger, P.A.
One Rodney Square
10th and King Streets
Wilmington, Delaware 19801
Attorneys for defendant N. Russell Walden
Stephen E. Jenkins, Esquire
Ashby & Geddes
222 Delaware Avenue
Wilmington, Delaware 19801
Attorneys for defendants Luther J. Henderson
and Ridgewood Hotels, Inc.
Alan J. Stone, Esquire
Morris, Nichols, Arsht & Tunnell
1201 North Market Street
Wilmington, Delaware 19801
Attorneys for intervenor Fountainhead Development Corp., Inc.
-4-
8. Any person who fails to object in the manner prescribed above shall be
deemed to have waived any objection to the Stipulation and the Settlement and
shall be forever barred from raising any objection to the Stipulation and
Settlement in the Action or in any other action or proceeding.
9. Pending final determination of whether the Stipulation and Settlement
should be approved, plaintiff and all stockholders of Ridgewood are barred and
enjoined from commencing or prosecuting any action asserting any claims, either
directly or indirectly, representatively, derivatively or in any other capacity,
against any defendant herein that constitute Settled Claims.
10. If the Settlement provided for in the Stipulation shall be approved by
the Court following the Settlement Hearing, an Order and Final Judgment shall be
entered as described in the Stipulation.
11. If the Stipulation is not approved by the Court, the Action shall
proceed without prejudice to any party as to any matter of law or fact, as if
the Stipulation had not been made and had not been submitted to the Court, and
neither the Stipulation nor any provision contained in the Stipulation nor any
action undertaken pursuant thereto nor the negotiation thereof by any party
shall be deemed an admission or offered or received in evidence at any
proceeding in the Action or any other action or proceeding.
Jack B. Jacobs, Vice Chancellor
-5-
EXHIBIT B
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
WILLIAM N. STRASSBURGER, )
)
Plaintiff, )
)
v. ) C.A. No. 14267
)
MICHAEL M. EARLEY, LUTHER A. )
HENDERSON, JOHN C. STISKA, )
N. RUSSELL WALDEN, and )
TRITON GROUP, LTD., a )
Delaware corporation, )
)
Defendants, )
)
and )
)
RIDGEWOOD PROPERTIES, INC., )
a Delaware corporation, )
)
Nominal Defendant,)
)
and )
)
FOUNTAINHEAD DEVELOPMENT )
CORP., )
)
Intervenor. )
NOTICE OF PENDENCY OF DERIVATIVE ACTION,
PROPOSED SETTLEMENT OF DERIVATIVE
ACTION AND SETTLEMENT HEARING
TO: ALL RECORD AND BENEFICIAL OWNERS OF SHARES OF COMMON STOCK OF RIDGEWOOD
HOTELS, INC. ("STOCKHOLDERS"). PLEASE READ THIS NOTICE CAREFULLY
AND IN ITS ENTIRETY. YOUR RIGHTS WILL BE AFFECTED BY THE LEGAL
PROCEEDINGS
IN THIS LITIGATION. IF YOU ARE NOT THE BENEFICIAL OWNER OF SHARES OF
RIDGEWOOD COMMON STOCK, BUT OWN SHARES FOR A BENEFICIAL OWNER, PLEASE
TRANSMIT THIS NOTICE TO SUCH BENEFICIAL OWNER.
1. This notice to Stockholders of Ridgewood Hotels, Inc. (formerly
Ridgewood Properties, Inc.), a Delaware corporation ("Ridgewood" or the
"Company"), is given pursuant to Rule 23.1 of the Rules of the Court of Chancery
of the State of Delaware in and for New Castle County (the "Court") and pursuant
to an Order of the Court entered in Strassburger v. Earley, et al., Civil Action
No. 14267, the above-captioned action (the "Action").
2. Stockholders have an interest in these proceedings and are hereby
notified that a hearing will be held before the Court in the New Castle County
Courthouse, 500 North King Street, Wilmington, Delaware, on __________ __, 2003,
at ______ _.m. (the "Settlement Hearing") for the purpose of: (i) determining
whether a Stipulation of Settlement dated as of March __, 2003 (the
"Stipulation"), and the terms and conditions of the settlement proposed in the
Stipulation (the "Settlement"), are fair, reasonable and adequate and in the
best interests of Ridgewood and Minority Stockholders of Ridgewood; (ii)
determining whether final judgment should be entered dismissing the Action as to
all defendants and their affiliates and with prejudice as to plaintiff and
Ridgewood (the "Order and Final Judgment"); (iii) hearing and determining any
objections to the Settlement; (iv) if the Court approves the Stipulation and the
Settlement and enters the Order and Final Judgment, determining whether the
Court should award attorneys' fees and expenses to plaintiff's attorneys
pursuant to their application for fees and expenses described in this notice.
2
3. The Court has reserved the right to adjourn the Settlement Hearing,
including consideration of the application for attorneys' fees and expenses, by
oral announcement at the Settlement Hearing or any adjournment thereof, and
without further notice of any kind. The Court also has reserved the right to
approve the Settlement at or after the Settlement Hearing with such
modifications as may be consented to by the parties to the Stipulation and
without further notice to Stockholders.
THE FACTUAL BACKGROUND
----------------------
4. The Action was commenced by plaintiff on May 2, 1995.
5. The complaint in the Action challenged the repurchase by Ridgewood in
August of 1994 of (i) 4,365,840 shares of Ridgewood's common stock from Triton
Group, Ltd. ("Triton") for $8,042,240 in cash and the issuance to Triton of
450,000 shares of Ridgewood Series A Convertible Preferred Stock (the "Preferred
Stock") and (ii) 539,640 shares of Ridgewood's common stock from Hesperus
Limited Partners ("Hesperus") in exchange for the assignment to Hesperus of a
$1.45 million promissory note received by Ridgewood in connection with the sale
of Ridgewood's operating assets to Sun Communities. The repurchases of common
stock from Triton and Hesperus are referred to as the "Repurchases."
6. The Action was filed in May 1995 not only derivatively, but also on
behalf of a class consisting of all common shareholders of Ridgewood (except the
defendants and any person related to or affiliated with any of the defendants)
and their successors in interest, who allegedly had the value of their Ridgewood
common stock damaged by the acts of the defendants.
3
7. The Court certified the class under Court of Chancery Rule 23(b)(1)(B),
but subsequently granted the defendants' motion to dismiss the class claim for
failure to state a claim on which relief could be granted.
8. The action thereafter proceeded to trial on the derivative claims.
9. A trial on the issue of liability was held in April of 1999. In an
opinion issued by the Court on January 24, 2000, Strassburger v. Earley, 752
A.2d 557 (Del. Ch. 2000), the Court determined that defendants Michael N.
Earley, John C. Stiska and N. Russell Walden had breached their duty of loyalty
to Ridgewood in causing Ridgewood to effect the Repurchases and were jointly and
severally liable to Ridgewood by reason of such breach. Defendant Luther A.
Henderson (now deceased) was found by the Court to have no monetary liability to
Ridgewood. The Court further determined that the appropriate remedy was
rescission of the issuance of Preferred Stock to Triton and recovery of
rescissory damages, if any, from defendants Earley, Stiska and Walden.
10. On or about January 11, 2000, Fountainhead Development Corp., Inc.
(together with its successor Fountainhead Development LLC and Fountainhead
Holdings, Inc., "Fountainhead") purchased the Preferred Stock from Triton's
corporate successor, purchased 650,000 shares of common stock from defendant
Walden, and entered into an agreement with Ridgewood for Ridgewood to manage
certain hotel properties owned by Fountainhead in return for the issuance to
Fountainhead of 1,000,000 shares of Ridgewood common stock (the "Fountainhead
transaction"). As a result of the Fountainhead transaction, Fountainhead became
the owner of approximately 79.3% of Ridgewood's common stock (assuming
conversion into common stock of the Preferred Stock).
4
11. On August 18, 2000, defendants Stiska, Earley and Triton Group, Ltd.
moved to amend their answer to assert certain cross-claims against defendants
Walden and Henderson (the "Motion to Amend").
12. On November 28, 2000, Fountainhead intervened in the Action so that it
could be heard on issues relating to damages and the Motion to Amend was
deferred by the Court.
13. By order dated November 28, 2000, the Court ordered rescission of the
Preferred Stock (but stayed compliance therewith pending the entry of a final
order on all remaining issues) and established procedures for resolving, among
other things, remaining issues relating to the amount, if any, of rescissory
damages for which defendants Earley, Stiska and Walden might be liable.
14. Following discovery relating to damages allegedly suffered by
Ridgewood by reason of the Repurchases, issues relating to damages were tried to
the Court in January, 2002. Following post-trial briefing, oral argument was
presented to the Court on June 14, 2002.
15. Following oral argument on the damages issues, plaintiff's counsel and
counsel for defendants Stiska, Earley and ADT Security Services, Inc. (the
successor by merger to Triton) ("ADT" and together with Messrs. Stiska and
Earley the "ADT Defendants") engaged in arm's length negotiations concerning a
possible settlement of the Action as to the ADT Defendants. Those negotiations
resulted in a Memorandum of Understanding dated as of September 30, 2002,
relating to the settlement of the Action as to the ADT Defendants.
5
16. Subsequent arm's length negotiations among counsel for the parties
resulted in an agreement concerning a settlement of the Action as to defendant
Walden.
17. Subsequent arm's length negotiations among counsel for the parties
resulted in an agreement concerning a settlement of the Action satisfactory in
form and substance to Ridgewood and Fountainhead.
18. In light of the events, negotiations and agreements described above,
the facts that were determined by the Court's January 2000 opinion, the facts
developed in discovery relating to the damages issues, the facts introduced at
the hearing on the damages issues, analysis of applicable law, and defendants'
right to appeal the factual and legal conclusions in the Court's January 2000
opinion, plaintiff and counsel for plaintiff in the Action concluded that the
terms and conditions of the Settlement provided for in the Stipulation are fair,
reasonable, adequate and in the best interests of plaintiff, Ridgewood and
Ridgewood's Minority Stockholders (as hereinafter defined).
19. Plaintiff entered into the Stipulation after taking into account (i)
the substantial benefits to Ridgewood and Minority Stockholders provided by the
Settlement, (ii) the risk of continued litigation, including risks on appeal,
(iii) the desirability of permitting the Settlement to be consummated as
provided by the terms of the Stipulation, and (iv) the conclusion of plaintiff's
counsel that the terms of the Settlement are fair, reasonable, adequate and in
the best interests of plaintiff, Ridgewood and Ridgewood's Minority
Stockholders.
20. Defendants in the Action have denied and continue to deny any
wrongdoing and any liability with respect to all claims alleged in the Action.
While denying any fault or
6
wrongdoing, and relying on the provisions of the Stipulation that it shall not
be construed as or deemed to be evidence of any admission or concession on the
part of defendants or any Released Party (as defined below) of any fault or
liability whatsoever, and without conceding any infirmity in their defenses
against the claims alleged in the Action, defendants consider it desirable that
the Action be settled and dismissed, subject to the terms and conditions of the
Stipulation, because the Settlement will (i) be beneficial to Ridgewood and the
Minority Stockholders, (ii) halt the substantial expense, inconvenience and
distraction of continued litigation of the claims alleged in the Action, (iii)
finally put to rest those claims, and (iv) dispel any uncertainty that may exist
as a result of the Action.
THE SETTLEMENT TERMS
--------------------
21. The Settlement provides that, in consideration for the full
settlement, satisfaction, compromise and release of the Settled Claims:
(a) Ridgewood, ADT and Fountainhead will within ten (10) business
days following the date on which the Settlement becomes Final (as defined in the
Stipulation) cause the issuance of the Preferred Stock to Triton in connection
with the Repurchases to be fully and completely rescinded by having Fountainhead
surrender the Preferred Stock to Ridgewood for cancellation in exchange for the
simultaneous issuance to Fountainhead of 1,350,000 shares of Ridgewood common
stock, which represent the shares of common stock repurchased by Ridgewood for
shares of Preferered Stock in connection with the 1994 Repurchases. Following
the rescission the Preferred Stock will no longer be outstanding and Ridgewood
will have no obligation to pay any dividends on the Preferred Stock that were
accrued and unpaid at the time the rescission of the Preferred Stock became
effective.
7
(b) Within ten (10) business days following the date the Settlement
becomes Final, ADT will pay or cause to be paid to Ridgewood the amount of One
Million Seven Hundred Sixty Thousand Dollars ($1,760,000.00).
(c) Within ten (10) business days following the date the Settlement
becomes Final, defendant Walden will pay or cause to be paid to Ridgewood the
amount of Ten Thousand Dollars ($10,000) and will transfer to Ridgewood 32,000
shares of Ridgewood common stock owned by defendant Walden.
(d) Of the aggregate amount of $1,770,000 in cash received by
Ridgewood pursuant to the Settlement, Ridgewood will retain $125,000 as partial
compensation for various litigation expenses incurred by Ridgewood in connection
with the Action.
(e) Within thirty (30) business days following the date the
Settlement becomes Final, Ridgewood shall commence a tender offer for shares of
Ridgewood common stock owned by Minority Stockholders, provided that Ridgewood
will not be required to commence a tender offer prior to 100 days after the end
of its fiscal year ending March 31, 2003, and provided further that Ridgewood's
obligation to commence a tender offer within the above time period shall be
satisfied if Ridgewood has made any filings that may be required under
applicable federal or state securities laws to commence the tender offer within
such time period and Ridgewood is using reasonable efforts to proceed with the
tender offer. Notwithstanding the foregoing, if Ridgewood is prohibited from
commencing a tender offer within such time period as a result of any applicable
law or judicial or administrative order and such prohibition was not the result
of Ridgewood's failure to file any reports required to
8
be filed pursuant to the requirements of the Securities Exchange Act of 1934
(the "Act"), then the time period within which Ridgewood has to commence the
tender offer shall be extended until such prohibition is removed or otherwise
ceases. The net offering price to Minority Stockholders shall be equal to the
sum of $1,645,000 divided by the number of shares of Ridgewood common stock
owned by Minority Stockholders. The tender offer shall remain open for a minimum
of thirty five (35) days. Upon expiration of the tender offer, any part of the
$1,645,000 not used to purchase tendered shares shall be retained by Ridgewood.
For purposes of the Settlement, the term "Minority Stockholders" means the
beneficial owners of common stock of Ridgewood as of the date the tender offer
commences, exclusive of (a) ADT, Ridgewood, Fountainhead, and any of their
respective directors, officers, executive employees, affiliates, successors or
assigns and (b) the four individual defendants (but not including any such
defendant's present or former spouse or other family members except in their
capacity as heirs or beneficiaries) in the Action, and any of their heirs,
beneficiaries, personal representatives, executors or affiliates. In addition to
the foregoing, the tender offer may include (i) a requirement that any Minority
Stockholder electing to accept the offer tender all of the shares of Ridgewood
common stock held of record or beneficially by such Minority Stockholder or
controlled by such Minority Stockholder, (ii) a requirement that a Minority
Stockholder, by accepting the tender offer and receiving the consideration,
releases and discharges any and all claims of any kind or nature, whether known
or unknown, existing or occurring on or before the date of the tender offer that
such Minority Stockholder may have against Ridgewood, ADT, Fountainhead and the
individual defendants that arises out of or relates to such Minority
Stockholder's ownership of shares of Ridgewood Common Stock, and (iii) any terms
required by applicable law.
9
(f) In the event that for any reason Ridgewood is unable to commence
the tender offer contemplated by this Stipulation within 180 days from the date
the Settlement becomes Final, Ridgewood will deposit with the Court of Chancery
the $1,645,000 intended under this Stipulation to be used for the tender offer,
and Ridgewood and plaintiff shall use their best efforts to structure and obtain
the approval of the Court of Chancery to an alternative method of distributing
the $1,645,000 to Minority Stockholders that effects, as nearly as practical
under the circumstances, the equivalent of the tender offer contemplated by this
Stipulation.
(g) All claims asserted in the Action by plaintiff against all
defendants and all cross claims asserted or that could have been asserted in the
Action by any defendant against any other defendant (including, without
limitation, the Motion to Amend) will be released and dismissed on the merits
and with prejudice.
(h) Ridgewood and Fountainhead, on the one hand, and the defendants
and ADT, on the other hand, will mutually release all claims arising out of or
related to the Action or the Settled Claims.
22. If the Settlement (including any modification thereto made with the
consent of the parties) is approved by the Court, the Court will enter an Order
and Final Judgment which, among other things, will provide that any and all
claims, rights, demands, suits, matters, issues, causes of action, liabilities,
damages, losses, obligations and judgments of any kind or nature whatsoever,
whether known or unknown, that have been or could have been asserted in the
Action or in any court, tribunal or proceeding, by or on behalf of plaintiff,
Ridgewood or any Minority Stockholder who accepts the tender offer made by
Ridgewood pursuant to the Settlement (the "Releasing Parties"), against any and
all
10
defendants, ADT, Fountainhead and each and all of their respective present
or former officers, directors, employees, stockholders, insurers, agents and
attorneys, and their respective affiliates, heirs, executors, personal
representatives, estates, administrators or predecessors, successors and assigns
(collectively, the "Released Parties"), whether directly, individually,
derivatively, representatively or in any other capacity, and whether arising
under state or federal law, in connection with, or that arise now or hereafter
out of, or which relate in any way to, the acts, facts, events, transactions or
occurrences embraced by, involved in, set forth in or otherwise related to the
complaint filed in the Action, including without limitation claims against any
of the defendants for reimbursement of litigation expenses advanced on behalf of
such defendants (collectively, the "Settled Claims"), shall be fully, finally,
and forever compromised, settled, discharged, dismissed with prejudice, released
and barred pursuant to the terms and conditions set forth herein; provided,
however, that the Settled Claims shall not include any claims or causes of
action that any party to the Stipulation may have to enforce compliance with the
terms of the Settlement.
23. THE COURT HAS NOT FINALLY DETERMINED WHETHER RIDGEWOOD IN FACT
SUFFERED DAMAGES AS A RESULT OF THE REPURCHASES OR, IF RIDGEWOOD SUFFERED
DAMAGES, THE AMOUNT OF RESCISSORY DAMAGES APPROPRIATE TO COMPENSATE RIDGEWOOD
FOR SUCH DAMAGES. THE COURT HAS NOT FINALLY DETERMINED THE MERITS OF THE
DEFENSES OF THE DEFENDANTS TO ANY AWARD OF RESCISSORY DAMAGES. THIS NOTICE DOES
NOT IMPLY THAT THERE HAS BEEN OR WOULD BE ANY FINDING THAT RIDGEWOOD WOULD
RECEIVE RESCISSORY DAMAGES IN ANY AMOUNT IF THE ACTION WERE NOT SETTLED.
11
DISMISSAL AND RELEASE
---------------------
24. It is the intent of the parties to the Action that the Settlement, if
approved by the Court, shall extinguish for all time all rights, claims and
causes of action that are or relate to the Settled Claims against any of the
Released Parties.
25. The Settlement will become effective at such time as the Order and
Final Judgment entered by the Court approving the Settlement shall become final
and not subject to further appeal or review. In the event the Settlement is not
approved by the Court or does not become effective, then the Settlement will be
of no further force or effect and each party will be restored to his, her or its
respective position prior to entering into the Stipulation, except that all
costs incurred in connection with notifying Stockholders of the proposed
settlement will be the obligation of ADT.
26. If the Settlement is approved by the Court, the Action will be
dismissed on the merits with respect to all defendants and with prejudice as to
the plaintiff and Ridgewood. The Stipulation provides that the Settlement is a
full compromise, settlement and release of all claims, known or unknown, which
have been or which might have been asserted by plaintiff or Ridgewood against
any of the Released Parties arising now or hereafter from or relating to matters
alleged in the Action. Under the terms of the Stipulation, such release and
dismissal will bar the institution or prosecution by plaintiff, Ridgewood, or
any stockholder of Ridgewood of any other action asserting any Settled Claim
against any of the Released Parties.
27. As of February 10, 2003, Ridgewood had outstanding 2,513,257 shares of
common stock. Based on Ridgewood's stockholder list, information set forth in
Ridgewood's most recent filing on Form 10-K for the fiscal year ended March 31,
2002, and
12
information supplied to plaintiff's counsel by Ridgewood, plaintiff believes
that approximately 790,457 shares of Ridgewood common stock are owned
beneficially by Minority Stockholders. Assuming Minority Stockholders holding
790,457 shares are eligible to participate in the tender offer to be made by
Ridgewood under the Settlement, the tender offer price would be approximately
$2.08 per share. The actual tender offer price may vary if the actual number of
shares held by Minority Stockholders is more or less than 790,457 shares.
ATTORNEYS' FEES AND EXPENSES
----------------------------
28. At the Settlement Hearing, plaintiff's counsel will apply for an award
of attorneys' fees and an allowance of expenses in an amount not exceeding in
the aggregate $1,825,000. Defendants, Ridgewood and Fountainhead have agreed
that they will not oppose such application, and plaintiff's counsel agrees not
to make any other application for fees or expenses. Plaintiff's counsel's
application for fees and expenses will be presented to the Court at the same
time as the Settlement is presented to the Court. The fairness, reasonableness
and adequacy of the Settlement may be considered and ruled upon by the Court
independently of any award of attorneys' fees and reimbursement of expenses.
29. ADT has agreed to pay the fees and expenses awarded by the Court to
plaintiff's counsel in connection with the Stipulation and the Settlement up to,
but not exceeding, the aggregate amount of $1,825,000. Neither Ridgewood nor any
defendant other than ADT will be liable to pay attorneys' fees and expenses.
30. Plaintiff's counsel has incurred in excess of $155,000 in expenses in
connection with the prosecution of the Action. The $1,825,000 that ADT has
agreed to pay,
13
if awarded by the Court, represents approximately $1,670,000 in fees and
$155,000 in expenses.
31. The Action was maintained as a derivative action. In a derivative
action, any recovery ordinarily belongs to the corporation on whose behalf the
action was brought, and the corporation ordinarily bears the fees and expenses
awarded to counsel for the shareholder bringing the derivative action. The
Settlement deviates from the typical settlement in that as a part of the
settlement, plaintiff and plaintiff's counsel were able to obtain the commitment
of Ridgewood to distribute substantially all of the monetary recovery to
Minority Stockholders pursuant to the tender offer provided for in the
Settlement.
32. Plaintiff and plaintiff's counsel estimate the total direct benefit to
Ridgewood from the Settlement to be approximately $9,285,000, consisting of the
$1,770,00 in cash to be received by Ridgewood, the elimination of $1,290,000 in
accrued, unpaid dividends owed by Ridgewood on the Preferred Stock, the value to
Ridgewood of the elimination of the Preferred Stock apart from the liability for
accrued, unpaid dividends, which plaintiff's expert has valued at approximately
$4,400,000, and the $1,825,000 that ADT has agreed to pay towards the fees and
expenses of plaintiff's counsel (fees and expenses that, if approved by the
Court, would typically be payable by Ridgewood out of the Settlement funds). The
$1,670,000 in fees that plaintiff's counsel will request represents
approximately 17.9% of the $9,285,000 value plaintiff and plaintiff's counsel
attribute to the Settlement.
33. Under the Settlement, the defendants and Fountainhead (the owner of
approximately 79.4% of Ridgewood's stock) are not eligible to tender their
shares of Ridgewood stock, which has the effect of increasing substantially the
per share amount to be offered to the Minority Stockholders in the tender offer.
The per share amount to be received
14
by a Minority Stockholder who tenders its shares equates to an implied benefit
of approximately $8,800,000 if all shares of all stockholders are taken into
consideration. Adding to that implied benefit the value ascribed by plaintiff to
the rescission of the Preferred Stock and ADT's obligation to pay the fees and
expenses of plaintiff's attorneys results in an implied total settlement value
of approximately $16,315,000. The $1,670,000 in fees that plaintiff's counsel
will request represents only approximately 10% of that implied value of the
Settlement.
34. Plaintiff's counsel believes that in derivative actions similar to the
Action and that (like the Action) have proceeded through trial, fees in the
range of 25% of the value of the recovery are typically awarded to plaintiff's
counsel. Accordingly, plaintiff's counsel believe that the fees they will
request from the Court are substantially less than the fees they would likely be
awarded were there no settlement of the Action and the Court were to award
damages on the order of magnitude of the damages implied by the Settlement. For
example, were there no settlement of the Action, and were the Court to award
rescissory damages of $8,800,000, such that the aggregate benefit to Ridgewood
were, as described above, approximately $16,315,000, and were the Court to award
fees of 25% of that amount, or $4,078,750, the net benefit to Ridgewood would be
$12,081,250 after payment of such fees and $155,000 in expenses. However,
because a portion of the benefit would not be in cash, but in the value of the
rescission of the Preferred Stock, Ridgewood would be left with approximately
$4,566,250 in cash, or approximately $1.18 per share, available for distribution
to stockholders, were Ridgewood to elect to make a distribution. The Settlement
requires Ridgewood to make a cash tender offer to Minority Stockholders at a
price
15
substantially in excess of $1.18, thereby ensuring not only that Minority
Stockholders will benefit directly from the Settlement but making it likely that
they will benefit to a substantially greater degree than would be likely, in the
judgement of plaintiff and plaintiff's counsel, if the matter proceeded. THE
FOREGOING DISCUSSION IS SOLELY FOR THE PURPOSE OF EXPLAINING THE BASIS OF
PLAINTIFF'S COUNSEL'S FEE APPLICATION. IT REPRESENTS THE VIEWS OF PLAINTIFF AND
PLAINTIFF'S COUNSEL AND NOT THE VIEWS OF THE OTHER PARTIES. IT DOES NOT, AND IS
NOT INTENDED TO, IMPLY THAT IF THE SETTLEMENT IS NOT APPROVED, AND THE ACTION
CONTINUES, THAT THE COURT WILL IN FACT AWARD RESCISSORY DAMAGES TO RIDGEWOOD OR,
IF RESCISSORY DAMAGES ARE AWARDED, THAT SUCH DAMAGES WOULD BE ON THE ORDER OF
MAGNITUDE DISCUSSED ABOVE. THE COURT HAS NOT MADE ANY DETERMINATION WITH RESPECT
TO THE MATTERS PRESENTED IN THE FOREGOING DISCUSSION.
35. In the event that the Court reduces the award of the fees and expenses
sought by plaintiff's counsel, the reduction will not benefit Ridgewood or
Minority Stockholders. Rather, it will only reduce the amount of fees and
expenses which ADT is obligated to pay to plaintiff's counsel pursuant to the
Stipulation and the Settlement.
36. During the course of the litigation, the plaintiff, who has
considerable professional experience in accounting and in litigation support,
provided substantial professional assistance to plaintiff's counsel. In
consideration of that assistance, plaintiff's counsel intends to apply to the
Court for permission to pay to plaintiff $10,000 out of the fees and expenses
awarded by the Court to plaintiff's counsel.
16
RIGHT TO APPEAR AT SETTLEMENT HEARING
-------------------------------------
37. Any stockholder of Ridgewood who objects to the Stipulation, the
Settlement, the Order and Final Judgment to be entered herein, and/or the
application for attorneys' fees and expenses, or who otherwise wishes to be
heard, may appear in person or by his attorney at the Settlement Hearing and
present any evidence or argument that may be proper and relevant, provided,
however, that other than the parties to the Action and counsel for the parties
to the Action, no person shall be heard, and no papers, briefs, pleadings or
other documents submitted by any such person shall be received and considered by
the Court (unless the Court in its discretion shall thereafter otherwise direct,
upon application of such person and for good cause shown) unless no later than
ten (10) days prior to the Settlement Hearing directed herein written notice of
the intention to appear shall be filed by such person with the Register in
Chancery and, on or before such filing, shall be served by hand or overnight
mail on the following counsel of record:
Craig B. Smith, Esquire
Smith, Katzenstein & Furlow, LLP
800 Delaware Avenue, 7th Floor
P.O. Box 410 Wilmington, Delaware 19899
Attorneys for Plaintiff
James F. Burnett, Esquire
Potter Anderson & Corroon LLP
Hercules Plaza, Sixth Floor
1313 North Market Street
Wilmington, Delaware 19801
Attorneys for defendants Michael M. Early,
John C. Stiska, Triton Group Ltd. and ADT Security
Services, Inc. (successor by merger to Triton Group Ltd.)
17
Robert J. Stearn, Jr., Esquire
Richards, Layton & Finger, P.A.
One Rodney Square
10th and King Streets
Wilmington, Delaware 19801
Attorneys for defendant N. Russell Walden
Stephen E. Jenkins, Esquire
Ashby & Geddes
222 Delaware Avenue
Wilmington, Delaware 19801
Attorneys for defendants Luther J. Henderson
and Ridgewood Hotels, Inc.
Alan J. Stone, Esquire
Morris, Nichols, Arsht & Tunnell
1201 North Market Street
Wilmington, Delaware 19801
Attorneys for intervenor Fountainhead
Any person who fails to object in the manner prescribed above shall be deemed to
have waived any objection to the Stipulation and the Settlement and shall be
forever barred from raising any objection to the Stipulation and the Settlement
in the Action or in any other action or proceeding.
INTERIM INJUNCTION
------------------
38. Pending final determination of whether the Stipulation and Settlement
should be approved, plaintiff and all stockholders of Ridgewood are barred and
enjoined from commencing or prosecuting any action asserting any claims, either
directly or indirectly, representatively, derivatively or in any other capacity,
against any defendant herein that constitute Settled Claims.
SCOPE OF THIS NOTICE AND FURTHER INFORMATION
--------------------------------------------
39. This notice does not purport to be a comprehensive description of the
Action, the allegations or transactions related thereto, the terms of the
Stipulation, the Settlement, or
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the Settlement Hearing. For a more detailed
statement of the matters involved in this litigation, you may inspect the
pleadings, the Stipulation, the Orders entered by the Court and other papers
filed in this litigation, unless sealed, at the Office of the Register in
Chancery of the Court of Chancery of the State of Delaware in and for New Castle
County, 500 North King Street, Wilmington, Delaware, during regular business
hours of each business day. DO NOT WRITE OR TELEPHONE THE COURT.
NOTICE TO PERSONS OR ENTITIES HOLDING
RECORD OWNERSHIP ON BEHALF OF OTHERS
-------------------------------------
40. Brokerage firms, banks and other persons or entities who are
stockholders of record of Ridgewood common stock, but who are not the beneficial
owner of such stock, are requested to send this notice promptly to beneficial
owners. Additional copies of this notice for transmittal to beneficial owners
are available on request directed to
[Name and Address of Appropriate Person]
BY ORDER OF THE COURT
------------------------------------
Register in Chancery
Dated: _______________, 2003
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EXHIBIT C
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
WILLIAM N. STRASSBURGER, )
)
Plaintiff, )
)
v. ) C.A. No. 14267
)
MICHAEL M. EARLEY, LUTHER A. )
HENDERSON, JOHN C. STISKA, )
N. RUSSELL WALDEN, and )
TRITON GROUP, LTD., a )
Delaware corporation, )
)
Defendants, )
)
and )
)
RIDGEWOOD PROPERTIES, INC., )
a Delaware corporation, )
)
Nominal Defendant, )
)
and )
)
FOUNTAINHEAD DEVELOPMENT )
CORP., )
)
Intervenor. )
ORDER AND FINAL JUDGMENT
-------------------------
A hearing having been held before this Court (the "Court") on
_______________, 2003, pursuant to the Court's Order of _______________, 2003
(the "Scheduling Order"), upon a Stipulation of Settlement (the "Stipulation")
filed March ___, 2003, in the above-captioned action (the "Action"), which
Stipulation is incorporated herein by reference, and it
appearing that due notice of said hearing has been given in accordance with the
Scheduling Order, and the respective parties having appeared by their attorneys
of record, and the Court having heard and considered evidence in support of the
proposed Settlement, and the attorneys for the respective parties having been
heard, and an opportunity to be heard having been given to all other persons
requesting to be heard in accordance with the Scheduling Order, and the Court
having determined that notice to stockholders of Ridgewood Hotels, Inc.
("Ridgewood") pursuant to the Scheduling Order was adequate and sufficient, and
the entire matter of the proposed Settlement having been heard and considered by
the Court,
IT IS HEREBY ORDERED, ADJUDGED AND DECREED this _______ day of
__________, 2003, that:
1. Unless otherwise defined herein, all capitalized terms shall have the
meaning set forth in the Stipulation.
2. The form and manner of notice given to the stockholders of Ridgewood is
hereby determined to have been the best notice practical under the circumstances
and to have been given in full compliance with the requirements of due process
and Rule 23.1 of the Rules of the Court of Chancery.
3. The Stipulation and Settlement are approved as procedurally and
substantively fair, reasonable and adequate and in the best interests of
Ridgewood and the Minority Stockholders.
4. The Action is hereby dismissed on the merits with respect to all
defendants and with prejudice. In consideration for the terms and conditions of
the Stipulation and the
2
Settlement, any and all claims, rights, demands, suits, matters, issues, causes
of action, liabilities, damages, losses, obligations and judgments of any kind
or nature whatsoever, whether known or unknown, that have been or could have
been asserted in the Action or in any court, tribunal or proceeding, by or on
behalf of plaintiff, Ridgewood or any Minority Stockholder who accepts the
tender offer to be made by Ridgewood pursuant to the Settlement (the "Releasing
Parties"), against any and all defendants, ADT Security Services, Inc. ("ADT"),
Fountainhead Development Corp., Inc. (together with its successor Fountainhead
Development LLC and Fountainhead Holdings, Inc, "Fountainhead"), and each and
all of their respective present or former officers, directors, employees,
stockholders, insurers, agents and attorneys, and their respective affiliates,
heirs, executors, personal representatives, estates, administrators or
predecessors, successors and assigns (collectively, the "Released Parties'),
whether directly, individually, derivatively, representatively or in any other
capacity, and whether arising under state or federal law, in connection with, or
that arise now or hereafter out of, or which relate in any way to, the acts,
facts, events, transactions or occurrences embraced by, involved with, set forth
in or otherwise related to the complaint filed in the Action, including without
limitation claims against any of the defendants for reimbursement of litigation
expenses advanced on behalf of such defendants (collectively, the "Settled
Claims"), shall be fully, finally, and forever compromised, settled, discharged,
dismissed on the merits and with prejudice, released and barred pursuant to the
terms and conditions set forth herein and in the Stipulation; provided, however,
that the Settled Claims shall not include any claims or causes of action that
any party to the Stipulation may have to enforce compliance with the terms of
the Settlement.
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6. All cross claims asserted or that could have been asserted in the
Action by any defendant against any other defendant (including, without
limitation, the Motion to Amend) are hereby released and dismissed on the merits
and with prejudice.
7. All claims arising out of or relating to the Action or the Settled
Claims (including, without limitation, any claim for indemnification or
advancement of expenses in connection with defending the Action ) that Defendant
Walden or the ADT Defendants may have against Ridgewood or Fountainhead are
released to the extent and in accordance with the terms and conditions of the
Stipulation.
8. All claims arising out of or relating to the Action or the Settled
Claims (including, without limitation, any claim for indemnification or
advancement of expenses in connection with defending the Action) that
Fountainhead may have against defendant Walden or the ADT Defendants are
released to the extent and in accordance with the terms and conditions of the
Stipulation.
9. The plaintiff, Ridgewood and all stockholders of Ridgewood, either
directly, indirectly, individually, derivatively, representatively or in any
other capacity, are permanently barred and enjoined from instigating,
instituting, commencing, asserting, prosecuting, continuing or participating in
any way in the maintenance in any court or tribunal of this or any other
jurisdiction of any action or proceeding asserting any of the Settled Claims
against any of the Released Parties.
10. The attorneys for the plaintiff are awarded attorney's fees in the
amount of $_______________ and reimbursement of expenses in the amount of
$_______________. The Court finds the fees and expenses in such amounts to be
fair and reasonable. The award
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of attorney's fees and expenses shall be paid by ADT in accordance with the
terms of the Stipulation. The attorneys for the plaintiff are permitted to pay
the amount of $__________ to the plaintiff from the fees and expenses awarded by
the Court to the attorneys for the plaintiff as compensation to the plaintiff
for his substantial professional assistance in connection with the prosecution
of the Action.
11. Without affecting the finality of this Order and Final Judgment in any
way, the Court reserves jurisdiction over all matters relating to the
administration and consummation of the Settlement and all matters relating to
the enforcement of the Stipulation and the Settlement.
Jack B. Jacobs, Vice Chancellor
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EXHIBIT D
RELEASE AND SETTLEMENT AGREEMENT
This Release and Settlement Agreement (the "Agreement") is entered into this __
day of ___________, 2003, by and between the Parties identified in Part I below.
I. PARTIES
The Parties to this Agreement are:
1. Evanston;
2. Ridgewood;
3. Triton; and
4. Defendants.
II. DEFINITIONS
1. The term "Evanston" means Evanston Insurance Company and all of its
past, present and former employees, agents, attorneys, parents,
subsidiaries, assigns, successors, predecessors, other associated or
affiliated entities or individuals, subrogees, reinsurers,
representatives, brokers, directors and officers.
2. The term "Ridgewood" means Ridgewood Hotels, Inc., f/k/a Ridgewood
Properties, Inc., and all of its past, present and former employees,
agents, attorneys, parents, subsidiaries, assigns, successors,
predecessors, other associated or affiliated entities or individuals.
3. The term "Triton" means ADT Security Services, Inc., as successor by
merger to Triton Group, Inc. and all of their past, present and former
employees, agents, attorneys, parents, subsidiaries, assigns,
successors, predecessors, other associated or affiliated entities or
individuals.
4. The term "Defendants" means: (1) the entities Ridgewood and Triton;
and (2) the individuals Michael M. Earley ("Earley"), John C. Stiska
("Stiska"), N. Russel Walden ("Walden") and Luther A. Henderson
("Henderson") and their respective estates, heirs, predecessors, legal
representatives, successors and assigns.
5. The term "Litigation" means the litigation filed in Delaware Chancery
Court styled Strassburger v. Earley, et al., No. 14267.
6. The term "Policy" means the Evanston Directors' and Officers'
Liability Insurance Policy No. DOL8811070 issued to Triton for the
Policy Period September 1, 1994 to September 1, 1995, which provides
a $1 million limit of liability per claim and in the aggregate, which
limit of liability is subject to a $100,000 retention.
III. RECITALS
1. The Litigation alleged, inter alia, that Ridgewood improperly
repurchased common stock from Triton and another entity, and that
Stiska, Earley, Walden and Henderson breached their fiduciary duties
to Ridgewood's minority shareholders by approving those repurchase
transactions.
2. Triton provided notice to Evanston and requested coverage under the
Policy.
3. Evanston reserved its rights with respect to lack of coverage for
certain aspects of the Litigation, including, but not limited to lack
of coverage for Triton and Ridgewood's own liability and/or any
Defendant's intentional misconduct. Evanston further advised Triton of
the Policy's requirement of allocation.
4. Defendants have now entered an agreement to settle the Litigation
pursuant to a Stipulation of Settlement which provides for Defendants'
total payment of $1,760,000 to Ridgewood, subject to and for the
purposes specified in the Stipulation of Settlement, and up to
$1,825,000 in plaintiff's attorneys' fees and expenses (the
"Settlement").
5. Evanston has been advised that defense expenses in excess of $420,000
have been incurred on behalf of Defendants Stiska and Earley, in
excess of $77,000 on behalf of Defendant Henderson, and that defense
expenses also were incurred on behalf of Defendant Walden.
6. Evanston and Defendants, through good faith negotiation, have reached
an agreement to resolve any and all mutual issues or disputes
concerning or relating to coverage or claims handling in connection
with the Litigation.
7. Evanston consented to the settlement of the Litigation and has further
agreed to contribute to the Settlement as set forth below.
NOW, THEREFORE, in consideration of the mutual covenants, promises and
conditions set forth in this Agreement, and for good and valuable consideration,
the sufficiency and receipt of which is hereby acknowledged, intending to be
legally bound hereby, the Parties agree as follows:
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IV. TERMS OF AGREEMENT
1. In consideration of the releases set forth in paragraphs 3 and 5 below,
Evanston agrees to contribute its full $1 million Limit of Liability to the
Settlement of the Litigation (the "Settlement Payment").
2. Evanston will make the Settlement Payment of $1 million to Triton or its
designee within seven (7) business days following the date the Settlement
becomes "Final," as defined in the Stipulation of Settlement, and the releases
set forth below shall become effective upon receipt by Triton or its designee of
the Settlement Payment.
3. In consideration of Evanston entering into this Agreement and in
consideration of Evanston making the Settlement Payment, Defendants agree to
remise, release, and forever discharge Evanston of and from any and all actual
or alleged claims, demands, debts, losses, obligations, liabilities, costs,
expenses, rights of action and causes of action, contractual, extra-contractual
or otherwise, whether known or unknown, suspected or unsuspected, asserted or
unasserted, actual or potential, contingent or noncontingent, which Defendants
now have or claim to have, or which may at any time hereafter accrue, arising
out of, in connection with, in consequence of, or in any way involving: (i) the
Litigation; (ii) any and all claims asserted or which could have been asserted
against Defendants in connection with the Litigation of any kind or character
whatsoever; and (iii) any matter, fact, circumstance or situation asserted in,
or in issue in, or underlying, arising out of, in connection with, in
consequence of, in any way involving, or relating to the Litigation. The
foregoing release shall include without limitation any assertion that Evanston
has breached any obligation under the Policy.
4. In consideration of the mutual covenants, promises and conditions set
forth in this Agreement, Evanston agrees to remise, release and forever
discharge Ridgewood, Triton and Defendants of and from any and all actual or
alleged claims, demands, debts, losses, obligations, liabilities, costs,
expenses, rights of action and causes of action, contractual, extra-contractual
or otherwise, whether known or unknown, suspected or unsuspected, asserted or
unasserted, actual or potential, contingent or noncontingent, which Evanston now
has or claims to have, or which may at any time hereafter accrue, arising out
of, in connection with, in consequence of, or in any way involving: (i) the
Policy; (ii) the Litigation; and (iii) the Settlement.
5. Defendants acknowledge that the Settlement Payment shall fully exhaust
the Limit of Liability under the Policy.
6. This Agreement and the releases set forth in paragraphs 3 and 4 above
shall bind and inure to the benefit of the agents, representatives, successors,
heirs, subsidiaries, and assigns of the Parties hereto, and shall inure to the
benefit of all of the persons, entities, individuals, agents, attorneys or
principals against whom the claims herein released might be asserted.
3
7. The Parties represent and warrant that they have read and understood the
contents of this Agreement, that they had a reasonable opportunity to consult
with counsel before signing this Agreement, and that they have executed this
Agreement knowingly, voluntarily and willfully.
8. The Parties represent and warrant that the person or persons who execute
and attest to this Agreement on their behalf have full and complete authority to
perform said acts.
9. Evanston and Defendants acknowledge that they may hereafter discover
facts different from, or in addition to, those which they now know or believe to
be true with respect to the matters herein released and agree that this Release
shall be and shall remain effective in all respects notwithstanding such
different or additional fact or the discovery thereof.
10. The terms of this Agreement are contractual, and may not be changed,
modified, altered or supplemented, nor may any covenant, representation,
warranty or other provision hereof be waived, except by agreement in writing
signed by the party against whom enforcement of the change, modification,
alteration, interlineation, or supplementation is sought, nor may any covenant,
representation, warranty, or other provision hereof be waived, except by
agreement in writing signed by the party against whom enforcement of the waiver
is sought.
11. This Agreement shall be construed in accordance with the laws of the
State of Delaware, without regard to conflict of laws principles.
12. This Agreement may be executed in any number of counterparts and by
different Parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original. The executed signature page(s) from
each original may be joined together and attached to one such original and shall
constitute one in the same instrument.
13. The foregoing constitutes the entire Agreement among the Parties with
respect to the subject matter herein and may not be modified or amended except
in writing signed by all Parties hereto.
5
EVANSTON INSURANCE COMPANY RIDGEWOOD HOTELS,
INC.
(f/k/a RIDGEWOOD PROPERTIES,
INC.)
By:
-----------------------
By:
----------------------
Its:
----------------------
Dated: __________ __, 2003 Its:
----------------------
Dated: __________ __, 2003
ADT SECURITY SERVICES, INC., MICHAEL M. EARLEY
Successor to Triton Group, Inc.
By: By:
----------------------- ----------------------
Its: His:
---------------------- ---------------------
Dated: __________ __, 2003 Dated: ________ __, 2003
JOHN C. STISKA N. RUSSELL WALDEN
By: By:
----------------------- ----------------------
His: His:
---------------------- ---------------------
Dated: __________ __, 2003 Dated: _________ __, 2003
ESTATE OF LUTHER A. HENDERSON
By:
-----------------------
Its:
----------------------
Dated: __________ __, 2003
5