EXHIBIT B (Pt. 1)securities.stanford.edu/filings-documents/1023/ACRT02-01/2013220_r01s_02CV1263.pdfIndividual Defendants and Askin violated Sections 10(b) and 20(a) of the Securities

Case 2:02-cv-01263-RMB-HBP Document 204-2 Filed 03/04/13 Page 1 of 46

EXHIBIT B (Pt. 1)


UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

IN RE ACTRADE FINANCIAL TECHNOLOGIES, Civil Action No. LTD. SECURITIES LITIGATION 02-CV-1263 (RMB)(HBP)

STIPULATION OF SETTLEMENT

This Stipulation of Settlement (including the Exhibits annexed hereto, the "Stipulation"),

dated as of February 20, 2013, is made and entered into by and among the following Settling

Parties (as defined in paragraph 34 herein), by and through their respective counsel: (i) Lead

Plaintiffs Gregory W. Tramontin, Kenneth Qi Ge, Peter Lupo and Zeng Hui Wang and Plaintiffs

Jerome Shapiro and Zakary Selbert (collectively referred to as "Plaintiffs"), on behalf of

themselves and each of the members of the Settlement Class (as defined in paragraph 32 herein);

and (ii) Defendants (as defined in paragraph 7 herein), pursuant to Rule 23 of the Federal Rules

of Civil Procedure and the terms and conditions set forth below, and subject to the approval of

the United States District Court for the Southern District of New York. This Stipulation is

intended by the Settling Parties to forever compromise, discharge and settle the Released Claims,

which includes Unknown Claims (as defined in paragraphs 26 and 40 herein), subject to the

terms and conditions of this Stipulation as follows:

WHEREAS,

THE CLASS ACTION LITIGATION: On February 15, 2002, a federal securities

class action complaint was filed in the first of eight related actions commenced in this Court

asserting claims against Actrade and certain of its officers and directors. In an Order dated May

8, 2002, this Court (i) consolidated the cases and designated the above-captioned Action as the

Lead Case; (ii) appointed plaintiffs Kenneth Qi Ge, Peter Lupo, Zeng Hui Wang, James E.


McGrew and Gregory W. Tramontin as Lead Plaintiffs; and (iii) designated the law firms of

Milberg Weiss Bershad Hynes & Lerach LLP nlk!a Milberg LLP and Shapiro Haber & Urmy

LLP as Plaintiffs' Co-Lead Counsel.

Pursuant to an Order of the Court, on February 20, 2003, a Second Amended Complaint

(the "SAC") was filed in this Action asserting claims against Amos Aharoni ("Aharoni"),

Alexander C. Stonkus, Joseph P. D'Alessandris (collectively referred to as "Individual

Defendants"),' David J. Askin ("Askin") and Actrade's independent auditor, Deloitte & Touche

LLP ("D&T"), arising from alleged material misstatements and omissions regarding the

purported growth in Actrade's revenues and earnings. As filed, the SAC alleged that the

Individual Defendants and Askin violated Sections 10(b) and 20(a) of the Securities Exchange

Act of 1934 (15 U.S.C. 78j(b) and 78t(a)), and Rule lOb-S promulgated thereunder. As to D&T,

the SAC, as filed, alleged a violation under Sections 10(b) of the Securities Exchange Act of

1934, and Rule 1 Ob-5 promulgated thereunder. Actrade was not named as a defendant in the

SAC as a result of its having filed a petition for relief under Chapter 11 of the Bankruptcy Code

on December 12, 2002.

By motions dated July 3, 2003, Defendants and Askin moved to dismiss the SAC

pursuant to Fed. R. Civ. P. 9(b) and 12(b)(6) and the Private Securities Litigation Reform Act of

1995 ("PSLRA"), 15 U.S.C. §78u-4, and Aharoni also challenged the sufficiency of process

upon hi'n\under Fed. R. Civ. P. 12(b)(5). On August 21, 2003, Plaintiffs filed a memorandum of

law in opposition to the motions to dismiss the SAC, which included a request for leave to

'Mr. D'Alessandris passed away on October 2, 2010, as reflected in the Suggestion of Death filed with the Court on January 21, 2011. (Docket Entry ("D.E.") 118.) The references herein to "D'Alessandris" include the Estate of Joseph D'Alessandris where appropriate.

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Page 4 of 46

replead should the motions to dismiss be granted. On September 24, 2003, Defendants and

Askin filed a reply memorandum of law.

The Court heard oral argument on February 10, 2004. On February 11, 2004, the Court

issued a memorandum and order granting Defendants' motions to dismiss the SAC, but gave

Plaintiffs leave to replead.

Subsequently, Plaintiffs stipulated to the dismissal with prejudice of the claims against

Askin, who is no longer a party to the Action. Plaintiffs effectuated a new service of process on

Aharoni, who continues to contest the sufficiency of the new service of process on him.

Prior to the time for Plaintiffs to file a further amended complaint, the parties entered into

a mediation process. An agreement on a settlement in principle was reached after two days of

mediation. That settlement was conditioned on certain judicial approvals. The parties were

unable to obtain the judicial approvals and, therefore, did not consummate that settlement.

Following a hearing with the Court on October 22, 2010, and a subsequent agreed upon

extension, Plaintiffs filed a Third Amended Complaint (the "TAC") on December 15, 2010. The

TAC asserted the same claims under Sections 10(b) and 20(a) of the Securities Exchange Act of

1934 and Rule lOb-5 promulgated thereunder as did the SAC.

By joint motion dated February 18, 2011, Defendants jointly moved to dismiss the TAC

pursuant to Fed. R. Civ. P. 9(b) and 12(b)(6) and the PSLRA, and Aharoni also moved to dismiss

under Fed. R. Civ. P. 12(b)(2). On April 7, 2011, Plaintiffs filed a memorandum of law in

opposition to the motion to dismiss the TAC. Prior to the time for Defendants to file a reply

memorandum of law, an agreement in principle on a settlement was reached among the Settling

Parties. The settlement of this Action, however, was not consummated in 2011 because one of

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the conditions precedent to such settlement, the delivery of a release by the Trust (as defined in

paragraph 38 herein) to the Defendants, did not occur.

On August 2, 2011, D&T filed a counterclaim against Plaintiffs (excluding Jerome

Shapiro and Zakary Selbert) and the Trust seeking, among other things, a declaratory judgment

that the Trust was obligated to provide a release to D&T in connection with D&T's agreement

with Plaintiffs to settle this Action. The parties engaged in discovery in connection with D&T's

counterclaim, and a trial on the Counterclaim was scheduled to begin on January 31, 2013, but

was adjourned as a result of an agreement to settle this Action following a mediation.

THE BANKRUPTCY PROCEEDINGS: On December 12, 2002, Actrade and its-

wholly owned subsidiary Actrade Capital, Inc. filed voluntary petitions for relief under chapter

11 of the Bankruptcy Code (the "Bankruptcy Proceedings"). Pursuant to an order of the United

States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"), these

proceeding were jointly administered under the caption In re Actrade Financial Technologies

Ltd., et al., Debtors, Case No. 02-1622 (alg). The Settlement herein is not subject to approval of

the Bankruptcy Court.

DEFENDANTS' DENIAL OF WRONGDOING: Defendants have asserted and

continue to assert that all claims and allegations raised in the TAC are without merit, and

Defendants have denied and continue to vigorously deny, all allegations of wrongdoing or

liability, whether by act or omission, with respect to each and all of the claims and contentions

that were alleged or that could have been alleged by the members of the Settlement Class, as well

as the allegations that such conduct as alleged in the TAC gives rise to legal liability or damage

to the Settlement Class.

ru


Defendants have asserted and continue to assert many defenses to the claims and

allegations in the TAC and, notwithstanding this Stipulation, Defendants expressly assert that

their defenses have merit and that they have no liability to the Settlement Class. Defendants also

deny that any members of the Settlement Class suffered any damages or were harmed by the

conduct, statements, acts or omissions alleged in the TAC against Defendants. There has been

no determination on the merits by any court, administrative agency, or other tribunal as to the

factual allegations made against Defendants. Defendants, while affirmatively denying any and

all allegations of wrongdoing, fault, liability or damage to the Settlement Class whatsoever, and

without conceding any infirmity in the defenses asserted or that could have been asserted,

consider it desirable that the Action be dismissed on the terms set forth herein in order to finally

put to rest any and all Released Claims and to avoid further expense and burdensome and

protracted litigation.

Neither this Stipulation nor any document referred to herein nor any action taken to carry

out this Stipulation is, may be construed as, or may be used as an admission by or against the

Defendants or any of the Releasees of any fault, wrongdoing, or liability whatsoever. Neither

this Stipulation nor the Settlement set forth herein, nor any act performed or document executed

pursuant to or in furtherance of this Stipulation or the Settlement: (i) is or shall be deemed to be

or shall be used as an admission of the Defendants, any of the Releasees, or any other person or

entity of the validity of any Released Claim, or any wrongdoing by or liability of any of the

Defendants or Releasees; (ii) is or shall be deemed to be or shall be used as an admission of any

fault or omission of the Defendants or any of the Releasees in any statement, release or written

document issued, filed or made; (iii) shall be offered or received in evidence against any of the

Defendants or the Releasees in any civil, criminal or administrative action or proceeding in any

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court, administrative agency or other tribunal, other than such proceedings as may be necessary

to consummate of enforce this Stipulation, the Settlement set forth herein, the releases provided

pursuant thereto, and/or the Final Approval Order, except that this Stipulation and the Exhibits

hereto may be filed in this Action or in any subsequent action brought against the Defendant,

their insurers and/or any of the Releasees in order to support a defense or counterclaim of the

Defendants and/or any of the Releasees of res judicata, collateral estoppel, release, good faith

settlement, or any theory of claims or issue preclusion or similar defense or counterclaim,

including, without limitation, specific performance of the Settlement embodied in this

Stipulation by way of injunctive relief; or (iv) shall be construed against the Defendants,

Releasees or the Plaintiffs and the Settlement Class as an admission or concession that the

consideration to be given hereunder represents the amount which could be or would have been

recovered after trial.

FAIR AND REASONABLE SETTLEMENT: Prior to entering into this Stipulation,

Plaintiffs' Co-Lead Counsel made a thorough investigation into the facts and circumstances

relevant to the allegations in the TAC. This investigation included, inter alia, examination of

Defendants' public statements and filings with the Securities and Exchange Commission; an

extensive independent investigation, including locating and interviewing former employees of

Actrade; reviewing documents provided to them by the Trust; and consultations with a financial

expert and forensic accountants. Based upon their investigation and negotiations with

Defendants' counsel and counsel to the Trust, Plaintiffs' Co-Lead Counsel have concluded that

the terms and conditions of this Stipulation are fair, reasonable and adequate to Plaintiffs and the

Settlement Class, and in their best interests, and have agreed to settle the claims raised in this

Action pursuant to the terms and provisions of this Stipulation, after considering (a) the

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substantial benefits that Plaintiffs and the members of the Settlement Class will receive from

settling the Action, (b) the attendant risks associated with further litigation; and (c) the

desirability of permitting the Settlement to be consummated as provided by the terms and

conditions of this Stipulation.

NOW THEREFORE, IT IS STIPULATED AND AGREED, by and among the

Settling Parties, each through their respective attorneys, subject to final approval of the Court

pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, that this Action be compromised,

settled and dismissed with prejudice upon and subject to the following terms and conditions:

A. DEFINITIONS:

As used in this Stipulation and the Exhibits attached hereto (the "Exhibits"), the

following terms shall have the meanings set forth below, unless otherwise indicated:

1. "Action" means In re Actrade Financial Technologies, Ltd. Securities Litigation,

Civil Action No. 02-CV- 1263 (RMB)(HBP).

2. "Actrade" means Actrade Financial Technologies Ltd.

3. "Authorized Claimant" means a member of the Settlement Class who files a

timely and valid Proof of Claim.

4. "Claims Administrator" means Kurtzman Carson Consultants LLC.

5. "Class Period" means the period from March 11, 1999 through August 22, 2002,

inclusive.

6. "Court" means the United States District Court for the Southern District of New

York.

7. "Defendants" means defendants Amos Aharoni, Alexander C. Stonkus, Joseph P.

D'Alessandris and D&T. As used in the singular "Defendant" means any of the "Defendants."

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8. "Defendants' Counsel" means the law firms of Skadden, Arps, Slate, Meagher &

Flom LLP; Brown Rudnick LLP; Friedman Kaplan Seiler & Adelman LLP; and Troutman

Sanders LLP, on behalf of their respective clients only.

9. "Final Approval Order" means the Order and Final Judgment to be entered in this

Action pursuant to paragraph 56 of this Stipulation giving approval of the Settlement and that is

substantially in the form attached hereto as Exhibit 2.

10. "Effective Date" means the date by which all of the following have occurred: (i)

the Settlement has been approved in all material respects by the Court (unless any material

change has been agreed upon by the Settling Parties); (ii) the Final Approval Order has been

entered by the Court; and (iii) the time to appeal the Final Approval Order has expired without

the filing of any appeals, or, in the event of any appeal, an Order has been entered dismissing the

appeal or affirming the Final Approval Order, and any time period for further appeal, including a

petition for writ of certiorari, has expired. The Effective Date shall occur even if an appeal is

taken from or review is sought of the Final Approval Order, if such appeal(s) or petition(s) for

review concern(s) solely one or more of the following: (i) any award to Plaintiffs' Co-Lead

Counsel of attorneys' fees and expenses or the allocation of said attorneys' fees and expenses

among counsel, or (ii) the allocation of the Net Settlement Fund among members of the

Settlement Class.

11. "Fee and Expense Application" means the application submitted by Plaintiffs'

Co-Lead Counsel seeking a Fee and Expense Award.

12. "Fee and Expense Award" means the attorneys' fees, expenses and costs,

including the fees of experts and consultants, as may be awarded by the Court to Plaintiffs'

counsel.

ri]

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13. "Gross Settlement Fund" means the sum of five million two hundred and fifty

thousand dollars ($5,250,000.00) plus Imputed Interest earned thereon.

14. "Imputed Interest" means Principal x Rate x Time, where Principal = $5.25

million, Rate = 0.30% and Time = n1365 (where n = the number of days from the date of entry of

the Preliminary Approval Order through the Effective Date, inclusive).

15. "Individual Defendants" means defendants Amos Aharoni, Alexander C. Stonkus,

and Joseph P. D'Alessandris.

Ifi

"National Union" means National Union Fire Insurance Company of Pittsburgh,

'A

17. "Net Settlement Fund" means the Gross Settlement Fund less all counsel fees,

taxes, and expenses paid out of the Settlement Fund in accordance with this Stipulation, the

Preliminary Approval Order, the Final Approval Order and any other orders of the Court.

18. "Notice" means the Notice of Settlement of Class Action, which is to be mailed to

members of the Settlement Class in the form attached hereto as Exhibit 1 -A.

19. "Person" means an individual or any type of legal entity, and their respective

heirs, successors, or assigns, as the case may be.

20. "Plaintiffs" means Lead Plaintiffs Gregory W. Tramontin, Kenneth Qi Ge, Peter

Lupo and Zeng Hui Wang and Plaintiffs Jerome Shapiro and Zakary Selbert.

21. "Plaintiffs' Co-Lead Counsel" means the law firms of Milberg LLP and Shapiro

Haber & Urmy LLP.

22. "Plan of Allocation" means the terms and procedures for allocating and

distributing the Net Settlement Fund as set forth in the Notice, or such other Plan of Allocation

as the Court shall approve.


23. "Preliminary Approval Order" means the Order of Preliminary Approval of

Settlement to be entered by the Court substantially in the form of Exhibit 1 hereto.

24. "Proof of Claim" means the Proof of Claim and Release form annexed hereto as

Exhibit 1-C which will be mailed to members of the Settlement Class with the Notice.

25. "Recognized Loss" means the formula that is set forth in the Plan of Allocation

described in the Notice which will be used to determine allocation of the Net Settlement Fund.

26. "Released Claims" means any and all claims, causes of action, debts, suits, rights

of action, dues, sums of money, accounts, bonds, bills, covenants, contracts, controversies,

agreements, promises, damages, judgments, variances, execution, demands or obligations of any

kind or nature whatsoever, matured or unmatured, liquidated or unliquidated, absolute or

contingent, known or Unknown Claims, suspected or unsuspected, whether or not asserted,

threatened, alleged or litigated, at law, admiralty, equity or otherwise, whether based on federal,

state, foreign, local, statutory or common law or any other law, rule or regulation, including,

without limitation, claims for contribution or indemnification, or all costs, expenses (including,

without limitation, amounts paid in settlement) and attorneys' fees, that the Releasors have, own

or hold, or might have had, owned or held, individually, representatively, derivatively, or in any

other capacity: (i) that have been, might have been, could have been, or could be asserted

against any Releasee or the Trust by the Releasors in the Action or in any court of competent

jurisdiction, that relate directly or indirectly to, or that are in any way based upon or arise from,

or are in any way connected with the purchase, sale, gift, retention, and/or other transfer of

Actrade common stock during the Class Period, or that are in any way based upon or arise from

or are in any way connected with, the claims asserted in the Action, or that arise out of, relate to,

or are in any way connected with any acts or omissions of, or statements made by, Actrade or (in

10


their capacities as such) the directors, officers, employees, agents or representatives of Actrade

or its subsidiaries, divisions, and affiliates; and/or (ii) that relate directly or indirectly to, or that

are in any way based upon or arise from, or are in any way connected with, any of the acts, facts,

events, circumstances, matters, claims, transactions, occurrences, omissions, representations,

misrepresentations, or matters of any kind or nature whatsoever, referred to or that could have

been asserted in the TAC in the Action relating to any and all services D&T performed or was

engaged to perform with respect to Actrade, for Actrade, or to or for any related entity or

individual, including, without limitation, its present or former parent companies, subsidiaries,

affiliates, predecessors or assigns, and their respective directors, officers, employees, partners,

principals, shareholders and owners, irrespective of whom such services were claimed to have

been performed for or on behalf of and/or (iii) that relate directly or indirectly to, or that are in

any way based upon or arise from, or are in any way connected with any and all services that

D&T performed or was engaged to perform with respect to Actrade, for Actrade or to or for any

related entity or individual, including, without limitation, its present or former parent companies,

subsidiaries, affiliates, successors, predecessors, or assigns, and their respective directors,

officers, employees, partners, principals, shareholders and owners, irrespective of whom such

services were claimed to have been performed for or on behalf of. "Released Claims" also

includes any Unknown Claims, as defined below. The provisions of this definition of "Released

Claims" shall, mutatis mutandis, also apply to each Defendant's release of the other Defendants

of Released Claims (including, but not limited to, any cross-claim, third-party claim, or other

claim for indemnification, contribution, or otherwise that could have been asserted or could be

asserted in the Action or any other action). For purposes of this paragraph 26, D&T means

Deloitte & Touche LLP, Deloitte LLP, Deloitte Consulting LLP, Deloitte Financial Advisory

11


Services LLP, Deloitte Tax LLP, Deloitte Services LP, Deloitte Touche Tohmatsu Limited

("DTTL") and any and all DTTL associate and member firms, all their respective past, present

and future parent companies, subsidiaries, affiliates, divisions, related entities, joint venturers,

subcontractors, agents, attorneys, insurers, subrogees, co-insurers and reinsurers, all their

respective past, present and future officers, directors, employees, members, partners, principals,

shareholders and owners, and all their respective heirs, executors, administrators, personal

representatives, predecessors, successors, transferees and assigns and any and all persons natural

or corporate in privity with them or acting in concert with any of them acting in their capacities

as such.

27. "Released Defendants' Claims" means any and all claims, rights or causes of

action or liabilities whatsoever, whether based on federal, state, local, statutory or common law

or any other law, rule or regulation, including both known claims and Unknown Claims, that

have been or could have been asserted in the Action or any forum by the Defendants, the Trust,

or any of them or the successors and assigns of any of them against any of the Plaintiffs, other

members of the Settlement Class or their attorneys, which arise out of or relate in any way to the

institution, prosecution, defense and the settlement of the Action or the counterclaim asserted in

the Action (except for claims to enforce the Settlement).

28. "Releasees" means (i) the Individual Defendants and all their respective heirs,

executors, administrators, personal representatives, predecessors, successors, transferees, assigns,

joint venturers, subcontractors, agents, attorneys, insurers, subrogees, co-insurers and reinsurers;

(ii) D&T, Deloitte LLP, Deloitte Consulting LLP, Deloitte Financial Advisory Services LLP,

Deloitte Tax LLP, Deloitte Services LP, Deloitte Touche Tohmatsu Limited ("DTTL") and any

and all DTTL associate and member firms, all their respective past, present and future parent

12


companies, subsidiaries, affiliates, divisions, related entities, joint venturers, subcontractors,

agents, attorneys, insurers, subrogees, co-insurers and reinsurers, all their respective past, present

and future officers, directors, employees, members, partners, principals, shareholders and

owners, and all their respective heirs, executors, administrators, personal representatives,

predecessors, successors, transferees and assigns and any and all persons natural or corporate in

privity with them or acting in concert with any of them acting in their capacities as such; (iii)

Actrade and its parents, subsidiaries, affiliates, and successors and predecessors, including, but

not limited to, Actrade International, Ltd., Actrade International Corp., Actrade Capital Inc.,

Actrade South America Ltd, Actrade Resources, Inc., Actrade Forfaiting Inc., Actrade Capital

Canada Inc., Actrade Funding Corp., E-Tad Clearing Center, Inc. and Actrade Commerce Ltd.,

and their past or present officers, directors, affiliates, controlling persons, representatives,

employees, agents, attorneys, counselors, underwriters, financial or investment advisors,

successors, predecessors, trustees, agents, attorneys, assigns, transferees, joint venturers,

subcontractors, administrators, executors, creditors, insurers, subrogees, co-insurers and

reinsurers, acting in their capacities as such and any and all persons natural or corporate in

privity with them or acting in concert with any of them acting in their capacities as such.

29. "Releasors" means Plaintiffs and the members of the Settlement Class,

collectively (each a Releasor), including, without limitation, in their capacities as such to the

Settlement Class member, respective past, present, and future partners, principals, members,

owners, parents, subsidiaries, affiliates, heirs, executors, administrators, personal representatives,

predecessors, successors, transferees, assigns, joint venturers, subcontractors, agents, attorneys,

insurers, subrogees, co-insurers and reinsurers all their respective past, present and future

officers, directors, employees, members, partners, principals, shareholders and owners, and all

13


their respective heirs, executors, administrators, personal representatives, predecessors,

successors, transferees and assigns and any and all persons natural or corporate in privity with

them or acting in concert with any of them acting in their capacities as such.

30. "Releasors' Released Claims" means all claims, causes of action, debts, suits,

rights of action, dues, sums of money, accounts, bonds, bills, covenants, contracts, controversies,

agreements, promises, damages, judgments, variances, execution, demands or obligations of any

kind or nature whatsoever, matured or unmatured, liquidated or unliquidated, absolute or

contingent, known or Unknown Claims, suspected or unsuspected, whether or not asserted,

threatened, alleged or litigated, at law, admiralty, equity or otherwise, whether based on federal,

state, foreign, local, statutory or common law or any other law, rule or regulation, including,

without limitation, claims for contribution or indemnification, or all costs, expenses (including,

without limitation, amounts paid in settlement) and attorneys' fees, that the Releasors have, own

or hold, or might have had, owned or held, individually, representatively, derivatively, or in any

other capacity that have been, might have been, could have been, or could be asserted directly or

indirectly against the Trust or its attorneys by the Releasors that relate directly or indirectly to, or

that are in any way based upon or arise from or are in any way connected with the institution,

prosecution, defense and the settlement of the Action or the counterclaim asserted in the Action

(except for claims to enforce the Settlement).

31. "Settlement" means the settlement provided for in this Stipulation.

32. "Settlement Class" means all Persons who purchased the common stock of

Actrade Financial Technologies Ltd. ("Actrade") during the period March 11, 1999 through

August 22, 2002, inclusive, and were damaged thereby. Excluded from the Settlement Class are

the Defendants in this Action, David J. Askin ("Askin"), the Actrade Liquidation Trust (the

14


"Trust"), members of the Individual Defendants' and Askin's immediate families, any person,

firm, trust, corporation, director, officer, or any other individual or entity in which any Defendant

or Askin or the Trust had a controlling interest at the time of such purchase of Actrade' s

common stock, or which is an affiliate of any of the Defendants, Askin, or Actrade, and the legal

representatives, heirs, successors and assigns of any and all of the foregoing.

33. "Settlement Hearing" means a hearing to be held by the Court on notice to the

Settlement Class, to consider approval of the Settlement, the Plan of Allocation and the Fee and

Expense Application.

34. "Settling Parties" means Plaintiffs, on behalf of themselves and the Settlement

Class, and each of the Defendants. In the case of D&T, Settling Parties shall, for purposes of this

Stipulation, also include any and all of D&T, Deloitte LLP, Deloitte Consulting LLP, Deloitte

Financial Advisory Services LLP, Deloitte Tax LLP, Deloitte Services LP, DTTL and any and

all DTTL associate and member firms, all their respective past, present and future parent

companies, subsidiaries, affiliates, divisions, related entities, joint venturers, subcontractors,

agents, attorneys, insurers, subrogees, co-insurers and reinsurers, all their respective past, present

and future officers, directors, employees, members, partners, principals, shareholders and

owners, and all their respective heirs, executors, administrators, personal representatives,

predecessors, successors, transferees and assigns and any and all persons natural or corporate in

privity with them or acting in concert with any of them acting in their capacities as such.

35. "Stipulation" means this Stipulation of Settlement, including the Exhibits annexed

hereto.

36. "Summary Notice" means the Summary Notice, which is to be published in the

form attached hereto as Exhibit 1-B;

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37. "TAC" means the Third Amended Complaint filed in the Action on December 15,

2010.

38. The "Trust" means the Actrade Liquidation Trust, as successor to any and all

claims, demands and causes of action of any type or description belonging to and previously held

by Actrade Financial Technologies Ltd. and Actrade Capital, Inc., the Actrade Liquidation Trust

Committee, the members of the Actrade Liquidation Trust Committee, in their capacities as

members of the Committee, and not in their individual capacities, Jonah Meer in his capacity as

Trustee of the Trust, and not in his individual capacity, and any prior Trustee of the Trust, in his

capacity as such, and all their respective past, present and future parent companies, subsidiaries,

affiliates, divisions, related entities, joint venturers, subcontractors, agents, attorneys, insurers,

subrogees, co-insurers and reinsurers, all their respective past, present and future officers,

directors, employees, members, partners, principals, shareholders and owners, and all their

respective heirs, executors, administrators, personal representatives, predecessors, successors,

transferees and assigns, and any and all persons natural or corporate in privity with them or

acting in concert with any of them acting in their capacities as such.

39. "Trust Release Agreement" means the Release and Stipulation of Settlement

Between and Among the Actrade Liquidation Trust, Actrade International Corp., Actrade

Funding Corp., Actrade South America Ltd., Actrade Commerce Ltd., Actrade Resource, Inc., B-

Tad Clearing Center Inc., Jonah M. Meer (As Trustee For The Actrade Liquidation Trust),

Deloitte & Touche LLP, Amos Aharoni, Kiara Aharoni, Alexander C. Stonkus, the Estate of

Joseph P. D'Alessandris and National Union Fire Insurance Company of Pittsburgh, PA.

40. "Unknown Claims" means any Released Claims or Releasors' Released Claims

which any Releasor does not know or suspect to exist in his, her or its favor as of the Effective

16


Date, and any Released Defendants' Claims which the Trust or any Defendant does not know or

suspect to exist in his, her or its favor as of the Effective Date, which if known by him, her or it

might have affected his, her or its decision(s) with respect to the Settlement. With respect to any

and all Released Claims, Releasors' Released Claims, and Released Defendants' Claims, the

Settling Parties and the Trust stipulate and agree that upon the Effective Date, Plaintiffs,

Defendants, and the Trust shall expressly waive, and each member of the Settlement Class shall

be deemed to have, and by operation of the Final Approval Order shall have, expressly waived

and relinquished any and all provisions, rights and benefits conferred by any law of any state or

territory of the United States, or principle of common law, that is similar, comparable or

equivalent to California Civil Code § 1542, which provides:

A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.

Plaintiffs, Defendants, and the Trust expressly acknowledge, and each member of the

Settlement Class by operation of law shall be deemed to have acknowledged, that any of them

may hereafter discover facts in addition to or different from those which any of them now know

or believe to be true with respect to the subject matter of the Released Claims, Releasors'

Released Claims, and Released Defendants' Claims, but Plaintiffs, Defendants, and the Trust

expressly, and each member of the Settlement Class, as and to the extent provided for in this

Stipulation, upon the Effective Date, intend to and shall be deemed to have by operation of the

Final Approval Order shall have fully, finally and forever settled and released any and all

Released Claims, Releasors' Released Claims, and Released Defendants' Claims, known or

unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or

hidden, which now exist, or heretofore have existed upon any theory of law or equity now

17


existing or coming into existence in the future, including, but not limited to, conduct which is

negligent, intentional, with or without malice, or a breach of any duty, law or rule, without

regard to the subsequent discovery or existence of such different or additional facts. Plaintiffs,

on behalf of themselves and each member of the Settlement Class, Defendants, and the Trust

acknowledge that the forgoing waiver and the inclusion of "Unknown Claims" in the definition

of "Released Claims," "Releasors' Released Claims," and "Released Defendants' Claims" was

separately bargained for and was a key element of the Settlement. The provisions of this

definition of "Unknown Claims" shall, mutatis mutandis, also apply to each Defendant's release

of Released Claims (including, but not limited to, any cross-claim, third-party claim, or other

claim for indemnification, contribution, or otherwise that could have been asserted or could be

asserted in the Action or any other action).

B. TERMS AND CONDITIONS

Gross Settlement Fund

41. In full settlement of any and all Released Claims that are, could have been, or

might in the future be asserted by Releasors against Releasees, Defendants shall cause the sum of

Five Million Two Hundred and Fifty Thousand Dollars ($5,250,000.00), plus Imputed Interest

(the "Gross Settlement Fund"), to be paid, by check(s) or wire transfer(s) to the Plaintiff Class

Escrow Account ("Plaintiff Class Escrow Account"), within ten (10) business days after the

Effective Date, but in no event prior to April 15, 2013. The amount of Defendants' respective

contributions to be paid into the Gross Settlement Fund, excluding Imputed Interest, will be as

follows: National Union, on behalf of D'Alessandris and Stonkus, shall contribute $2,803,559;

D&T shall contribute $2,298,135; and Aharoni shall contribute $148,306. The sum to be

contributed by Aharoni will be deposited in an account under the control of Brown Rudnick

FU1


LLP, and provided that as of the execution of this Stipulation, Brown Rudnick has received no

less than $148,000 from Aharoni.

42. For the avoidance of doubt, D&T, National Union and Aharoni shall be

responsible solely for the paying their respective pro rata share of Imputed Interest to the Gross

Settlement Fund.

43. Within ten (10) business days after the Effective Date, but in no event prior to

April 15, 2013, Defendants shall cause their respective contributions to the Gross Settlement

Fund, including Imputed Interest, to be paid to the Plaintiff Class Escrow Account pursuant to

instructions to be provided by Plaintiffs' Co-Lead Counsel. Plaintiffs' Co-Lead Counsel shall

cause the contributions to the Gross Settlement Fund, plus Imputed Interest, to be deposited into

the Plaintiff Class Escrow Account to be invested in short-term United States Agency or

Treasury Securities (or a mutual fund invested solely in such instruments), or in a fully U.S.

Government-insured account, and shall reinvest the proceeds as they mature.

44. All settlement funds held pursuant to this Stipulation shall be deemed and

considered to be in the legal custody of the Court until such time as such funds shall be

distributed pursuant to this Stipulation or further order(s) of the Court.

45. The Settling Parties agree that immediately upon transfer of the Gross Settlement

Fund to the Plaintiff Class Escrow Account, the Gross Settlement Fund is intended to be and

shall be a Qualified Settlement Fund within the meaning of Treasury Regulation § 1.46813- 1 and

that the escrow agent designated by Plaintiffs' Co-Lead Counsel shall be responsible for filing

tax returns for the Settlement Fund and paying from the Plaintiff Class Escrow Account any

taxes owed with respect to the Settlement Fund.


46. Apart from paying the agreed amounts into the Gross Settlement Fund, neither

Defendants nor their counsel shall have any responsibility for the administration of the

Settlement, including but not limited to the processing of claims, determination of the claimants

entitled to participate in the distribution of the Net Settlement Fund, making any payments to the

Claims Administrator or determination as to the amounts to be distributed to Authorized

Claimants.

47. Defendants are solely responsible for their respective shares of the Gross

Settlement Fund as set forth in paragraph 41 herein. Accordingly, neither Plaintiffs nor any

member of the Settlement Class may seek recovery from any Defendant for any portion of

another Defendant's share under this Stipulation. Plaintiffs acknowledge that payments due

under this Stipulation on behalf of the Individual Defendants shall be made by National Union.

Allocation of the Net Settlement Funds To Authorized Claimants

48. In order to distribute the Net Settlement Fund fairly among the members of the

Settlement Class, Plaintiffs' Co-Lead Counsel has determined, in consultation with an expert,

that the Net Settlement Fund shall be distributed to Authorized Claimants on a pro rata basis,

with each Authorized Claimant receiving an amount equal to the proportion of his/her/its

Recognized Loss to the aggregate Recognized Loss of all Authorized Claimants. In no case shall

an Authorized Claimant receive an amount in excess of his/her/its total Recognized Loss.

49. Each Authorized Claimant's Recognized Loss shall be determined in accordance

with the Plan of Allocation described in the Notice.

50. It is understood and agreed that any proposed Plan of Allocation or any

adjustment of an Authorized Claimant's Recognized Loss is not a part of this Stipulation and is

to be considered by the Court separately from its consideration of the fairness, reasonableness


and adequacy of the Settlement, and any order or proceeding relating to the Plan of Allocation,

or any appeal from any order relating thereto or reversal of modification thereof, shall not

operate to terminate or cancel this Stipulation or affect the finality of the Court's judgments

approving this Stipulation and the Settlement, or any other order entered pursuant to this

Stipulation.

51. No Person shall have any claim against Plaintiffs' Co-Lead Counsel, or any

claims administrator or other agent designated by Plaintiffs' Co-Lead Counsel based on

distributions made substantially in accordance with this Stipulation, the Plan of Allocation, or

further order(s) of the Court. No person shall have any claims against Defendants or their

counsel based on any distributions, including, without limitation, distributions made pursuant to

this Stipulation, to the Plan of Allocation, or pursuant to further order(s) of the Court. Further,

Defendants shall have no obligation or responsibility whatsoever with respect to the distribution

and/or allocation of attorneys' fees and expenses awarded by the Court pursuant to this

Stipulation

52. Unless a potential claimant has elected to be excluded from the proposed

Settlement Class, members of the Settlement Class who do not submit an acceptable Proof of

Claim, as more fully set forth below, or whose claims, in whole or in part, are not deemed

approved, will not share in the Net Settlement Fund. Notwithstanding, these persons described

in the preceding sentence shall still be bound by the terms and conditions of this Stipulation and

the Exhibits referenced therein, and will be forever barred from prosecuting the Released Claims

in this Action or in any other proceeding.

21


Administering Claims of Authorized Claimants

53. Any member of the Settlement Class who has not excluded himself, herself, or

itself from the Settlement Class shall be entitled to be treated as an Authorized Claimant for

purposes of this Stipulation if said member of the Settlement Class satisfies the following

conditions:

a. In order to be treated as an Authorized Claimant, a member of the

Settlement Class must return to the Claims Administrator a Proof of Claim substantially in the

form of Exhibit 1-C annexed hereto. Said Proof of Claims shall include a release of all Released

Claims against all Releasees, as set forth herein.

b. The determination of whether a potential claimant is an Authorized

Claimant is within the discretion of the Claims Administrator.

54. The Claims Administrator shall retain all Proof of Claim forms and shall, upon

request, provide copies to the Court and to the Defendants.

Order of Preliminary Approval of Settlement

55. As soon as practicable following execution of this Stipulation, the Settling Parties

shall jointly apply to the Court for the entry of a Preliminary Approval Order, substantially in the

form attached hereto as Exhibit 1. The Preliminary Approval Order shall preliminarily approve

the Settlement, provide for mailing of the Notice and Proof of Claim form to the members of the

Settlement Class, direct the publication of the Summary Notice, schedule the Settlement

Hearing, provide that any member of the Settlement Class who wishes to be excluded shall

notify the Claims Administrator, and address other matters referred to therein.

22


Final Judgment to be Entered

56. If the Court approves the Settlement, the Settling Parties shall jointly request that

the Court enter the Final Approval Order substantially in the form attached hereto as Exhibit 2.

The Final Approval Order shall include, at least, provisions: (a) directing consummation of the

Settlement; (b) confirming certification for settlement purposes only of the Settlement Class; (c)

approving the terms and conditions of the Stipulation; (d) providing for the payment of

attorneys' fees and expenses; (e) reserving jurisdiction over the effectuation of the Settlement; (f)

barring and enjoining the Releasors from prosecuting in this Action or any other action or

proceeding any Released Claims; (g) dismissing the Action with prejudice; (h) releasing all

Released Claims of the Releasors against the Releasees and Releasors' Released Claims of the

Releasors against the Trust; and (i) releasing any Released Defendants' Claims of the Releasees

and the Trust.

Settlement Administration

57. Within five (5) business days after entry of the Preliminary Approval Order, D&T

and National Union, on behalf of the Individual Defendants, shall each cause to be advanced

from the Gross Settlement Fund to the Plaintiff Class Escrow Account $25,000 (for a combined

total of $50,000) for reasonable actual out-of-pocket costs paid or incurred for settlement

administration, including but not limited to:

a. Printing and mailing the Notice and Proof of Claim form to members of

the Settlement Class;

b. Costs to reimburse brokers or nominees in connection with dissemination

of the Notice and Proof of Claim form to members of the Settlement Class who were beneficial

purchasers of Actrade common stock;

23


C. Publication of the Summary Notice;

d. Costs associated with the investment, maintenance, or administration of

the Gross or Net Settlement Fund;

e. Taxes on the Gross or Net Settlement Fund and costs of preparing and

filing related tax returns; and

f. Costs associated with the processing and administration of claims.

58. Plaintiffs' Co-Lead Counsel and/or the Claims Administrator shall maintain

accurate records of all expenditures and out-of-pocket costs for settlement administration paid or

incurred from the Gross Settlement Fund.

59. After ten (10) business days from the Effective Date, Plaintiffs' Co-Lead Counsel

shall have the authority and the obligation to pay settlement administration costs and to cause

distributions from the Net Settlement Fund to be made to Authorized Claimants pursuant to the

terms and conditions of this Stipulation.

60. The administration and disposition of the Gross Settlement Fund shall be the

responsibility of Plaintiffs' Co-Lead Counsel and the Claims Administrator in accordance with

the terms and conditions herein. Neither the Defendants nor their counsel shall have any

responsibility, liability, or obligation for the administration or disposition of the Gross Settlement

Fund or for any taxes or expenses owed in connection with the Gross Settlement Fund or any

portion thereof.

61. The Gross Settlement Fund shall at all times be treated as being one or more

qualified settlement funds within the meaning of IRC § 468B and Treas. Reg. §1.468B-1. All

funds and property in the Gross Settlement Fund, until distributed therefrom, shall be subject to

the continuing jurisdiction of the Court. In addition, Plaintiffs' Co-Lead Counsel or their duly

24


appointed agent(s) shall comply with IRC § 468B and the regulations promulgated thereunder,

and shall keep proper books and records of all transactions, file informational or other tax returns

necessary to report income earned by the Gross Settlement Fund as and when legally required

(including without limitation the returns described in Treas. Reg. § 1.468B-2(k)), make all

federal, state and local tax payments due on such income, and make the following election as is

necessary or advisable to carry out the provisions of this paragraph: the "relation-back election"

(as defined in Treas. Reg. § 1.46813-1) back to the earlier permitted date. Such election shall be

made in compliance with the procedures and requirements contained in such regulation. Such

tax returns and elections described above shall reflect that all taxes (including any interest or

penalties) on the income earned by the Gross Settlement Fund ("Taxes") shall be paid out of the

Gross Settlement Fund.

62. All (i) Taxes and (ii) expenses and costs incurred in connection with the Gross

Settlement Fund (including without limitation expenses of tax attorneys and accountants and

costs and expenses relating to filing or failing to file the returns described in the preceding

paragraph) ("Tax Expenses") and the distribution of the Net Settlement Fund shall be paid from

the Gross Settlement Fund. Defendants, Plaintiffs, members of the Settlement Class, and their

respective counsel shall have no responsibility therefor. Further, Taxes and the Tax Expenses

shall be treated as, and considered to be, a cost of administration of the Settlement and shall be

timely paid out of the Gross Settlement Fund without prior order from the Court, and Plaintiffs'

Co-Lead Counsel or their duly appointed agent(s) shall be obligated (notwithstanding anything

herein to the contrary) to withhold from distribution to Authorized Claimants any funds

necessary to pay such amounts (as well as any amounts that may be required to be withheld

under Treas. Reg. §1 .468B-2(1)(2)).

25


63. The Settling Parties agree to cooperate with each other, and their tax attorneys and

accountants, to the extent reasonably necessary to carry out the provisions of this Stipulation.

Releases

64. As of the Effective Date, the Releasors shall grant complete discharge, settlement,

dismissal with prejudice, release of, and agree to be barred by an injunction from the assertion

of, Released Claims against any of the Releasees or against the Trust and its attorneys. In

furtherance of such intention, the Plaintiffs, for themselves and the Settlement Class, and all

members of the Settlement Class, hereby acknowledge that this release shall be and remain in

effect as a full and complete release of the Released Claims, notwithstanding the subsequent

discovery or existence of any additional or different facts.

65. As of the Effective Date, each Defendant, on behalf of himself or itself, his or its

heirs, executors, administrators, predecessors, successors and assigns, and the Trust shall grant

complete discharge, settlement, dismissal with prejudice, release of, and agree to be barred by an

injunction from the assertion of, Released Defendants' Claims against Plaintiffs, the other

members of the Settlement Class, and their counsel. In furtherance of such intention, Defendants

and the Trust, hereby acknowledge that this release shall be and remain in effect as a full and

complete release of the Released Defendants' Claims, notwithstanding the subsequent discovery

or existence of any additional or different facts.

66. As of the Effective Date, the Releasors shall grant complete discharge, settlement,

dismissal with prejudice, release of, and agree to be barred by an injunction from the assertion

of, Releasors' Released Claims against the Trust or its attorneys. In furtherance of such

intention, the Plaintiffs, for themselves and the Settlement Class, and all members of the

Settlement Class, hereby acknowledge that this release shall be and remain in effect as a full and

WO


complete release of the Releasors' Released Claims, notwithstanding the subsequent discovery or

existence of any additional or different facts.

67. Notwithstanding the provisions of paragraphs 65-66 hereof, in the event that any

of the Releasees asserts any claim that is a Released Defendants' Claim against Plaintiffs, the

other members of the Settlement Class, or their counsel, then such Plaintiffs, the other members

of the Settlement Class, or their counsel shall be entitled to use and assert such factual matters

included within the Released Claims only against such Releasee in defense of such claim but not

for the purposes of affirmatively asserting any claim against any Releasee.

68. The Proof of Claim and Release to be executed by members of the Settlement

Class shall release all Released Claims against the Releasees and shall be substantially in the

form of Exhibit 1-C hereto. Members of the Settlement Class who do not file a Proof of Claim

and Release shall be deemed by operation of law to have released all Released Claims against the

Releasees.

69. As of the Effective Date, each of the Defendants and the Trust including, without

limitation, his or its respective past, present, and future partners, principals, members, owners,

parents, subsidiaries, affiliates, heirs, executors, administrators, personal representatives,

predecessors, successors, transferees, assigns, joint venturers, subcontractors, agents, attorneys,

insurers, subrogees, co-insurers and reinsurers all their respective past, present and future

officers, directors, employees, members, partners, principals, shareholders and owners, and all

their respective heirs, executors, administrators, personal representatives, predecessors,

successors, transferees and assigns and any and all persons natural or corporate in privity with

them or acting in concert with any of them acting in their capacities as such, shall grant complete

discharge, settlement, dismissal with prejudice, release of, and agree to be barred by an

27


injunction from the assertion of, Released Claims against any of the other Defendants or the

Trust, including, without limitation, his or its respective past, present, and future partners,

principals, members, owners, parents, subsidiaries, affiliates heirs, executors, administrators,

personal representatives, predecessors, successors, transferees, assigns, joint venturers,

subcontractors, agents, attorneys, insurers, subrogees, co-insurers and reinsurers all their

respective past, present and future officers, directors, employees, members, partners, principals,

shareholders and owners, and all their respective heirs, executors, administrators, personal

representatives, predecessors, successors, transferees and assigns and any and all persons natural

or corporate in privity with them or acting in concert with any of them acting in their capacities

as such.

Attorneys' Fees and Expenses

70. Plaintiffs' Co-Lead Counsel intend to apply to the Court for an award solely from

the Gross Settlement Fund of attorneys' fees in an amount not to exceed one-third (33'A%) of

the Gross Settlement Fund, and (ii) reimbursement of out-of-pocket costs and disbursements

incurred in connection with the Action. Defendants shall have no responsibility for any payment

of attorneys' fees and expenses to Plaintiffs' Co-Lead Counsel over and above payment of the

Gross Settlement Fund. Defendants and Releasees shall have no liability or responsibility for the

allocation among Plaintiffs' counsel of any fee and expense award that the Court may make, and

Defendants and Releasees take no position with respect to such matters. It shall be the sole

responsibility and obligation of Plaintiffs' Co-Lead Counsel to allocate attorneys' fees among

Plaintiffs' counsel, in accordance with their judgment as to each firm's contribution to the case.

71. The procedure for and the allowance or disallowance by the Court of any

applications by Plaintiffs' Co-Lead Counsel for attorneys' fees and expenses, including the fees


of experts and consultants, to be paid out of the Gross Settlement Fund, are not part of the

Settlement set forth in this Stipulation, and are to be considered by the Court separately from the

Court's consideration of the fairness, reasonableness and adequacy of the Settlement, and the

Court's consideration of Plaintiffs' Co-Lead Counsel's Fee and Expense Application, or any

order or proceeding relating to the Fee and Expense Application or the Fee and Expense Award,

or any appeal from any order relating thereto or reversal or modification thereof, shall not

operate to terminate or cancel this Stipulation, or affect or delay the entry of the Order of

Preliminary Approval of Settlement and/or the entry or finality of the Final Approval Order.

72. In the event that the Order or Judgment awarding the Fee and Expense Award is

reversed or modified on appeal, and in the event that the Fee and Expense Award has been paid

to any extent, then Plaintiff's Co-Lead Counsel shall within five (5) business day from receiving

notice from Defendants' Counsel or from a court of appropriate jurisdiction, refund to the Gross

Settlement Fund the fees, expenses, costs and interest previously paid to them, plus accrued

interest for the period of time the fee and/or expense award has been paid.

Supplemental Agreement

73. Concurrently with the execution of this Stipulation, Plaintiffs and Defendants are

executing a "Supplemental Agreement," the substance of which provides that the Defendants

shall, at their sole and absolute discretion (the Individual Defendants may not withdraw or

terminate without the consent of National Union as set forth in the Supplemental Agreement),

have the right to withdraw or terminate this Settlement if potential members of the Settlement

Class who purchased in the aggregate an amount equal to or greater than a certain number of

shares of Actrade common stock traded during the Class Period (as set forth in the Supplemental

Agreement) elect to exclude themselves from the Settlement Class. Defendants must notify

IM


Plaintiffs' Co-Lead Counsel of their decision to terminate this Settlement within seven (7)

business days of written notification to each of Defendants' Counsel that members of the

Settlement Class who purchased the requisite number of shares specified in the Supplemental

Agreement requested exclusion from the Settlement Class. The Supplemental Agreement may

be examined by the Court if so requested by the Court or by the Settling Parties. In the event of

termination of this Settlement pursuant to the Supplemental Agreement, this Settlement shall

become null and void and of no further force and effect and the provisions of paragraph 75 of

this Stipulation shall apply.

Termination of Stipulation

74. In the event that (i) the Court declines to enter the Preliminary Approval Order in

any material respect; (ii) this Stipulation or the Settlement is not finally approved by the Court;

(iii) the Court declines to enter the Final Approval Order in any material respect; (iv) the Final

Approval Order is modified or reversed in any material respect by the Court of Appeals or the

Supreme Court; (v) a Defendant withdraws from the Settlement pursuant to the terms of the

Supplemental Agreement; or (vi) any party to the Trust Release Agreement fails to execute or

deliver said agreement, then any Defendant or Plaintiffs (with respect to Plaintiffs, provided

Plaintiffs unanimously agree), shall have the right to terminate (hereinafter a "Termination"), the

Settlement and this Stipulation by providing written notice of its or their intention to do so to the

other parties to the Stipulation within thirty (30) days of any of the foregoing. In the event of a

Termination, this Stipulation shall be deemed null and void, and shall have no further force and

effect with respect to any Settling Party, and neither this Stipulation, the Exhibits thereto, nor the

settlement negotiations shall be used or referred to in any action or proceeding for any purpose,

30


except for the refund of any amounts remaining in the Gross Settlement Fund (as provided

below) to the parties who contributed to the Gross Settlement Fund.

75. In the event of a Termination, the costs of notice and settlement administration

expended or incurred, as well as any and all reasonable actual out-of-pocket costs resulting from

providing notice of such termination to the Settlement Class if the Court requires such notice,

shall be paid first from the $50,000 previously provided in paragraph 57 and then, if more than

$50,000 has been expended or incurred before the Termination, from the Gross Settlement Fund.

Any amounts thereafter remaining in the Gross Settlement Fund, including, but not limited to

each parties' pro rata contribution of the Gross Settlement Fund, shall revert to the Settling Party

or Settling Parties, or to National Union in the case of the Individual Defendants, who

contributed to the Gross Settlement Fund in proportion to their contribution, without further

order of the Court.

76. In the event of a Termination, the Action shall thereupon revert to the status prior

to the date of the execution of this Stipulation and shall proceed as if this Stipulation and related

orders and papers had not been executed, and the Settling Parties shall cooperate in seeking

appropriate extensions of the deadlines in the Action so that the Settling Parties have adequate

time to file pleadings and other papers.

77. If any Settling Party exercises its right to withdraw from the Settlement pursuant

to the terms of this Stipulation, the Settling Party exercising his or its right to withdraw from the

Settlement shall provide written notice to counsel for each of the other Settling Parties that are

signatories to this Stipulation and to the Court. Such notice shall be in written form, and shall be

made the same day, by facsimile and overnight mail, by the Settling Party that exercises his or its

right to withdraw from, and thereby terminate, the Settlement. Unless otherwise provided, the

31


notice provisions in this paragraph shall govern all notice effectuated with respect to this

Stipulation and any and all documents referenced therein or attached thereto. Notice shall be

provided as follows:

If to Plaintiffs:

If to Amos Aharoni:

If to Alexander Stonkus:

If to the Estate of Joseph D'Alessandris

Shapiro Haber & Urmy LLP 53 State Street Boston, Massachusetts 02109 Telephone: (617) 439-3939 Facsimile: (617) 439-0134 Attn: Thomas G. Shapiro, Esq.

-and-

Milberg LLP One Penn Plaza New York, New York 10119-0165 Telephone: (212) 594-5300 Facsimile: (212) 868-1229 Attn: Brad Friedman, Esq.

Brown Rudnick LLP 7 Times Square New York, New York 10036 Telephone: (212) 209-4800 Facsimile: (212) 209-4801 Attn: Sigmund S. Wissner-Gross, Esq.

Friedman Kaplan Seiler & Adelman LLP 7 Times Square New York, New York 10036 Telephone: (212) 833-1115 Facsimile: (212) 373-79151 Attn: Lance J. Gotko, Esq.

Troutman Sanders LLP The Chrysler Building 405 Lexington Avenue New York, New York 10174 Telephone: (212) 704-6000 Facsimile: (212) 704-6288 Attn: Elliot Cohen, Esq.

32


If to D&T:

If to the Trust:

Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036 Telephone: (212) 735-2628 Facsimile: (917) 777-2628 Attn: Jay B. Kasner, Esq.

-and-

Skadden, Arps, Slate, Meagher & Flom LLP One Rodney Square P.O. Box 636 Wilmington, Delaware 19899 Telephone: (302) 651-3000 Facsimile: (302) 651-3001 Attn: Paul J. Lockwood, Esq.

Bernstein Liebhard LLP 10 East 40th Street, 22nd Floor New York, New York 10016 Telephone: (212) 779-1414 Facsimile: (212) 779-3218 Attn: Stanley D. Bernstein, Esq.

78. No order of the Court, or modification or reversal on appeal of any order of the

Court, concerning the Plan of Allocation, or the amount of any attorneys' fees, interest, or costs

or expenses awarded to Plaintiffs' Counsel, shall constitute grounds for cancellation or

termination of this Stipulation.

No Admission of Wrongdoing

79. Defendants expressly deny liability with respect to any and all of the allegations

of the TAC. Neither this Stipulation, and any and all documents referred to herein, nor any

action taken to carry out this Stipulation is, may be construed as, or may be used as an admission

by or against any of the Defendants or any Releasee of any fault, wrongdoing or liability

whatsoever. Neither this Stipulation nor the Settlement set forth herein, nor any act performed or

33


document executed pursuant to or in furtherance of this Stipulation or the Settlement: (i) is or

shall be deemed to be or shall be used as an admission of any of the Defendants, any Releasee, or

any other person or entity of the validity or any Released Claims, or any wrongdoing by or

liability of any of the Defendants or Releasees; (ii) is or shall be deemed to be or shall be used as

an admission of any fault or omission of any of the Defendants or any Releasee in any statement,

release or written documents issued, filed or made; (iii) shall be offered or received in evidence

against any of the Defendants or Releasees in any civil, criminal or administrative action or

proceeding in any court, administrative agency or other tribunal other than such proceedings as

may be necessary to consummate or enforce this Stipulation, the Settlement set forth herein, the

release provided pursuant thereto, and/or the Final Approval Order, expect that this Stipulation

and the Exhibits hereto may be filed in this Action or in any subsequent action brought against

any of the Defendants, their insurers and/or any of the Releasees in order to support a defense or

counterclaim of any of the Defendants and/or any Releasee of res judicata, collateral estoppel,

release, good faith settlement, or any theory or claim of issue preclusion or similar defense or

counterclaim, including, without limitation, specific performance of the Settlement embodied in

this Stipulation by way of injunctive relief; (iv) shall be construed against the Defendant,

Releasees or Plaintiffs and members of the Settlement Class as an admission or concession that

the consideration to be given hereunder represents the amount which could be or would have

been recovered after trial; and (v) shall be construed as or received in evidence as an admission,

concession or presumption against Plaintiffs and members of the Settlement Class or any of them

that any of their claims are without merit or that damages recoverable in the Action would not

have exceeded the Gross Settlement Fund.

34


Miscellaneous

80. All of the Exhibits attached hereto are hereby incorporated by reference as though

fully set forth herein.

81. If a case is commenced in respect of any Defendant contributing to the Gross

Settlement Fund (or any insurer contributing funds to the Settlement Fund on behalf of any

Defendant) under Title 11 of the United States Code (Bankruptcy), or a trustee, receiver,

conservator, or other fiduciary is appointed under any similar law, and in the event of the entry

of a final order of a court of competent jurisdiction determining the transfer of money to the

Gross Settlement Fund or any portion thereof by or on behalf of such Defendant to be a

preference, voidable transfer, fraudulent transfer or similar transaction and any portion thereof is

required to be returned, and such amount is not promptly deposited to the Gross Settlement Fund

by others, then, at the election of Plaintiffs' Co-Lead Counsel, the Settling Parties shall jointly

move the Court to vacate and set aside the releases given and Judgment entered in favor of the

Defendants pursuant to this Stipulation, which releases and Judgment shall be null and void, and

the Settling Parties shall be restored to their respective positions in the litigation immediately

prior to the execution of this Stipulation and any cash amounts in the Gross Settlement Fund

(together with any interest earned thereon, less any Taxes due with respect to such income, and

less costs of administration and notice actually incurred and paid or payable from the Gross

Settlement Fund) and any funds paid as attorneys' fees or expenses shall be returned to the

respective Settling Party or insurer that contributed such funds. The provisions of this paragraph

shall expire upon the first payment of any of the Net Settlement amount to any Authorized

Claimant.

35


82. The Settling Parties intend this Stipulation and the Settlement to be a final and

complete resolution of all disputes between them with respect to the Action and the Released

Claims. This Stipulation and the Settlement comprise claims which are contested and shall not

be deemed an admission by a Settling Party as to the merits of any claim. Defendants expressly

deny liability with respect to any and all allegations and claims in the TAC. Accordingly,

Plaintiffs and their counsel shall not make any press release, or make any other public statements

other than what is contained in this Stipulation, the Notice and the Summary Notice. Further,

Plaintiffs and their counsel will not refer to or assist any other person or entity in making claims

against Defendants or any Releasee for any matters arising in or relating to the Action, except as

required by law. The Settling Parties agree that the amount of the Gross Settlement Fund and the

other terms of the Settlement reflect a good faith settlement of the claims in the Action, which

has been reached voluntarily after consultation with competent legal counsel.

83. All counsel executing this Stipulation and any of the Exhibits hereto, the

Supplemental Agreement, or any related settlement documents and releases, warrant and

represent that they have been duly authorized and empowered to do so by their respective clients

or by Court order.

84. All Settling Parties agree to use their best efforts to obtain all approvals necessary

and to do all things necessary or helpful to effectuate this Stipulation according to its terms, and

represent that this Stipulation is the product of arm's length negotiations.

85. This Stipulation, all Exhibits hereto, the releases contemplated herein, the

Supplemental Agreement and all related settlement documents shall be governed and interpreted

in accordance with the laws of New York as they apply to contracts negotiated, made, executed

MR


and to be performed entirely within New York without regard to conflicts of laws, except to the

extent that federal law requires that federal law govern.


Supplemental Agreement and all related settlement documents represent the entire agreement

between and among the Settling Parties hereto and supersede any prior agreements or

understandings between and among the Settling Parties with respect to the subject matter hereof,

except that certain rights and obligations are set forth in the Trust Release Agreement.


Supplemental Agreement and all related settlement documents may only be amended or

modified by a written instrument signed by all Settling Parties to this Stipulation or their

successors-in-interest.

88. This Stipulation, all Exhibits hereto, the Supplemental Agreement and all related

settlement documents may be executed in one or more counterparts, including by signature

transmitted by facsimile or PDF, all of which shall be one and the same instrument and all of

which shall be considered duplicate originals.


Supplemental Agreement and all related settlement documents shall be binding upon, and inure

to the benefit of, the Settling Parties hereto and their respective heirs, insurers, executors,

administrators, legal representatives, successors and assigns.

90. Upon receiving any objections to the Settlement or requests for exclusion

pursuant to the Notice, the Claims Administrator shall promptly provide Plaintiffs' Co-Lead

Counsel and Defendants' Counsel copies of those objections to the Settlement or requests for

exclusion.

37


91. The headings herein are used for the purpose of convenience only and are not

meant to have legal effect.

92. The waiver by one Settling Party of any breach of this Stipulation by any other

Settling Party shall not be deemed a waiver of any other prior or subsequent breaches of this

Stipulation.

93. This Stipulation shall not be construed more strictly against one Settling Party

than another merely by virtue of the fact that it, or any part of it, may have been prepared by

counsel for one of the parties, it being recognized that it is the result of arm's-length negotiations

between the parties, and all parties have contributed substantially and materially to the

preparation of this Stipulation. Each Settling Party hereto has consulted with such Settling

Party's own attorneys and fully understands the terms hereof and each Settling Party hereto has

received legal advice from such Settling Party's own attorneys regarding the advisability of

entering into this Stipulation and is voluntarily executing this Stipulation.

94. If any Settling Party is required to give notice to the other parties under this

Stipulation, such notice shall be in writing and shall be deemed to have been duly given upon

receipt of hand delivery or facsimile transmission with confirmation of receipt.

Retention of Jurisdiction

95. Without affecting the finality of the Final Approval Order entered in accordance

with this Stipulation, the Court shall retain jurisdiction for the purposes of allowing, disallowing

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or adjusting the claim of any Authorized Claimant on equitable grounds, administering the

Settlement, resolving any dispute hereunder, and awarding Plaintiffs' Co-Lead Counsel

attorneys' fees and reimbursing their expenses.

Dated: February Z-, 2013 Respectfully submitted,

BROWN RUDMCK LLP TROUTMAN SANDERS LLP

By: L, By: Sigmund S. Ji'ssner-Gross Elliot Cohen [email protected] Christina H. Bost Seaton 7 Times Square [email protected] New York, New York 10036 [email protected] T: (212) 209-4800 The Chrysler Building F: (212) 209-4801 405 Lexington Avenue

New York, New York 10174 Attorneys for Defendant Amos Aharoni T: (212) 704-6000

F: (212) 704-6288

Attorneys for the Estate of Defendant Joseph D 'Alessandris

39


or adjusting the claim of any Authorized Claimant on equitable grounds, administering the

Settlement, resolving any dispute hereunder, and awarding Plaintiffs' Co-Lead Counsel

attorneys' fees and reimbursing their expenses.

Respectfully submitted,

TROUTMAN SANDERS LLP

By: Elliot Cohen Christina H. Bost Seaton [email protected] [email protected] The Chrysler Building 405 Lexington Avenue New York, New York 10174 T: (212) 704-6000 F: (212) 704-6288

Attorneys for the Estate of Defendant Joseph D 'Alessandris

Dated: February, 2013

BROWN RUDNICK LLP

By: Sigmund S. Wissner-Gross swissnergrossbrownrudnick.com 7 Times Square New York, New York 10036 T: (212) 209-4800 F: (212) 209-4801

Attorneys for Defendant Amos Aharoni

39


FRIEDMAN KA

SElLER & ADE 2LLP

Lance J. Gotko V [email protected] 7 Times Square New York, New York 10036 T: (212) 833-1115 F: (212) 373-7915

Attorneys for Defendant Alexander Stonkus

SHAPIRO HABER & URMY LLP

By: Thomas G. Shapiro [email protected] 53 State Street Boston, Massachusetts 02109 T: (617) 439-3939 F: (617) 439-0134

SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP

By: Jay B. Kasner Jeremy A. Berman [email protected] [email protected] Four Times Square New York, New York 10036 T: (212) 735-3000 F: (212) 735-2000 and Paul J. Lockwood [email protected] One Rodney Square P.O. Box 636 Wilmington, Delaware 19899 T: (302) 651-3000 F: (302) 651-3001

Attorneys for Defendant Deloitte & Touche LLP

MILBERG LLP

By: Brad Friedman [email protected] One Penn Plaza New York, New York 10119-0165 T: (212) 594-5300 F: (212) 868-1229

Attorneys for Plaintiffs Attorneys for Plaintiffs

40


SKADDEN, ARPS, SLATE, ME HER & FLOM LLP

By: By: Lance J. Gotko Jay B. Kanr" [email protected] Jeremy A. Berman

7 Times Square [email protected]

New York, New York 10036 Jeremy.Bermanskaddefl.COm

T: (212) 833-1115 Four Times Square

F: (212) 373-7915 New York, New York 10036 T: (212) 735-3000

Attorneys for Dçfendant Alexander Stonkus , (2j1 2) 735-2000

Paul J Lockwood

J [email protected] One Rodney Square P.O. Box 636 Wilmington, Delaware 19899 T: (302) 651-3000 F: (302)651-3001

Attorneys for Defendant Deloilte & Touche LLP


MILB ERG LLP

By: - Thomas G. Shapiro [email protected] 53 State Street Boston, Massachusetts 02109 T: (617) 439-3939 F: (617) 439-0134

Attorneys for Plaintiffs

By: Brad Friedman [email protected] One Penn Plaza New York, New York 10119-0165 T: (212)594-5300 F: (212)868-1229


FRIEDMAN KAPLAN SElLER & ArT !tifAM TI P

40


FRIEDMAN KAPLAN SEUER & ADELMAN LLP

By: Lance J. Gotko [email protected] 7 Times Square New York, New York 10036 T: (212)833-1115 F: (212)373-7915



By: Thomas G. Shapiro tsl,[email protected] 53 State Street Boston, Massachusetts 02109 T: (617) 439-3939 F: (617) 439-0134

SKADDEN, .ARPS, SLATE, MEAGHER & FLOM LLP

By: Jay B. Kasner Jeremy A. Berman Jay. [email protected] [email protected] Four Times Square New York, New York 10036 T: (212) 735-3000 F: (212) 735-2000 and Paul I. Lockwood [email protected] One Rodney Square P.O. Box 636 Wilmington, Delaware 19899 T: (302)651-3000 F: (302) 651-3001


MTLBERG LLP

By: Brad Friedman [email protected] One Penn Plaza New York, New York 10119-0165 T: (212) 594-5300 F: (212)868-1229

Attorneys for Plaintiffs Attorneys for Plaintiffs

40


FRIEDMAN KAPLAN SElLER & ADELMAN LLP

By: Lance J. Gotko [email protected] 7 Times Square New York, New York 10036 T: (212) 833-1115 F: (212)373-7915



By: Thomas G. Shapiro [email protected] 53 State Street Boston, Massachusetts 02109 T: (617) 439-3939 F: (617) 439-0134


SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP

By: Jay B. Kasner Jeremy A. Berman [email protected] [email protected] Four Times Square New York, New York 10036 T: (212) 735-3000 F: (212) 735-2000 and Paul J. Lockwood [email protected] One Rodney Square P.O. Box 636 Wilmington, Delaware 19899 T: (302)651-3000 F: (302)651-3001


MILBERG LLP

By: Brad Friedman [email protected] One Penn Plaza New York, New York 10119-0165 T. (212)594-5300 F: (212) 868-1229


EEO


BERNSTEIN LIEBHARD LLP (as to paragraphs 26, 27, 30, 40, 64, 65, 66 and69)

By: Stanley 1) s4ty M. hcf' Michelle (. Zolnoski [email protected] [email protected] [email protected] 10 East 40th Street, 22nd Floor New York, New York 10016 T: (212)779-1414 F: (212)779-3218

Attorneys for the Trust

41

Documents

EXHIBIT B (Pt. 1)securities.stanford.edu/filings-documents/1023/ACRT02-01/2013220_r01s_02CV1263.pdfIndividual Defendants and Askin violated Sections 10(b) and 20(a) of the Securities