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UNITED STATES DISTRICT COURTFOR THE EASTERN DISTRICT OF PENNSYLVANIA
IN RE : THE LOEWEN GROUP, INC . MASTER FILE NO. 98-CV-6740SECURITIES LITIGATION (O'Neill, Jr ., J. )
STIPULATION AND AGREEMENT OF SETTLEMEN T
1 . Lead Plaintiffs, The City of Philadelphia, through its Board of Pensions and Retirement,
Phil Schwartz, Terry Roberts, and Harley Puff (the "Lead Plaintiffs"), on their own behalf and on
behalf of the Class (as defined below), and The Loewen Group, Inc . (n/k/a Alderwoods Group,
Inc.) ("Loewen Group"), Raymond L . Loewen, and Paul Wagler (collectively "Defendants"),
have entered into this Stipulation and Agreement of Settlement (the "Stipulation"), subject to the
approval of the United States District Court for the Eastern District of Pennsylvania (the
"Court") .
WHEREAS :
a. Beginning in 1998, a series of class action complaints were filed agains t
Defendants as well as other officers and directors of Loewen Group . On April 14,
1999, Judge Thomas N. O'Neill, Jr . consolidated those actions and appointed
plaintiffs The City of Philadelphia, through its Board of Pensions and Retirement,
Phil Schwartz, Terry Roberts, Harley Puff, James McGlathery and Morton Silas as
Lead Plaintiffs, pursuant to the Private Securities Litigation Reform Act . Plaintiffs
McGlathery and Silas subsequently withdrew as Lead Plaintiffs . The Court also
appointed the law firms of Berger & Montague, P .C., Wolf Popper LLP, and
Abbey Gardy, LLP as Co-Lead Counsel for Plaintiffs and Barrack, Rodos &
Bacine as Liaison Counsel for Plaintiffs .
b. By Order dated November 9, 2005, the Court certified as representatives of the
Class defined below : The City of Philadelphia, through its Board of Pensions and
Retirement, Phil Schwartz, Terry Roberts, and Harley Puff. By the same Order, the
Court appointed the law firms of Berger & Montague, P .C., Wolf Popper LLP and
Abbey Gardy, LLP as Class Counsel and Barrack, Rodos & Bacine as Liaison
Counsel for the Class .
c . Lead Plaintiffs have alleged in the Corrected Consolidated Amended Class Actio n
Complaint (the "Complaint") that from March 5, 1997 through January 14, 1999,
(the "Class Period") Defendants caused Loewen Group -- the second largest
operator of funeral homes and cemeteries in North America and the largest operator
of funeral homes in Canada -- to disseminate materially false and misleading
statements to the public. Among other things, Lead Plaintiffs allege that
Defendants materially misstated the value of Loewen Group's business and
properties, failed to record contingent losses on put/call agreements in connection
with certain key acquisitions, and failed to properly account for imputed interest on
zero interest finance plans. Lead Plaintiffs further allege that Defendants'
statements caused the market price of Loewen Group securities to be artificially
inflated during the Class Period and that the members of the Class suffered
substantial damages from the decline in the price of Loewen Group securities .
d. By Order and Opinion dated August 18, 2004, the Court ruled on Defendants'
Motion to Dismiss the Complaint, and dismissed several of the allegations while
allowing the case to proceed as to the following allegations: i) that Defendants
misstated the value of Loewen Group's business and property; ii) that Defendants
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failed to record contingent losses on put/call agreements ; and iii) that Defendants
failed to account properly for imputed interest and zero interest finance plans .
e. On September 30, 2004, Defendants filed answers to the Complaint denying any
liability or wrongdoing in connection with the allegations of the Complaint .
f. Plaintiffs' Counsel have investigated the claims and the underlying events and
transactions alleged in the Complaint . Among other things, Plaintiffs' Counsel
have reviewed thousands of pages of documents filed with the United States
Bankruptcy Court for the District of Delaware concerning the Loewen Group
bankruptcy and related proceedings ; reviewed thousands of pages provided by
Defendants and by third parties ; consulted with various specialists familiar with
Loewen Group and its business practices ; reviewed and analyzed various publicly
available reports by and concerning Loewen Group ; interviewed ex-Loewen Group
employees and former business associates of the Company; and consulted with a
damage expert concerning the potential impact of Defendants' alleged fraudulent
statements on the price of Loewen Group's securities . Plaintiffs' Counsel have
analyzed the results of their investigation and have researched the applicable law
regarding Plaintiffs' claims against the Defendants and the Defendants' potential
defenses. Plaintiffs' Counsel have negotiated the terms of this Stipulation at arms'
length with Defendants' Counsel, under the supervision of an experienced
mediator, Magistrate Judge Charles B . Smith, with a view toward achieving the
best relief possible for the Class . Based upon their investigation, Lead Plaintiffs
and Plaintiffs' Counsel have concluded that the terms and conditions of thi s
Stipulation are fair, reasonable and adequate to, and in the best interests of, the
Class. Lead Plaintiffs and Plaintiffs' Counsel have so concluded after considering
(a) the substantial and immediate benefits that the Settlement (as defined below)
provides the Class, (b) the attendant risks of litigation, and (c) the desirability of
permitting the Settlement to be consummated under this Stipulation's terms and
provisions ; and
g. Defendants specifically deny that any of them has committed any acts o f
wrongdoing and assert that, at all relevant times, they acted in a manner they
reasonably believed to be in the best interests of Loewen Group and those persons
that purchased or held Loewen Group securities . Defendants have agreed to this
Settlement in order to eliminate the burden and expense of further litigation.
NOW THEREFORE, it is hereby STIPULATED AND AGREED, by and among th e
Parties (as defined below) to this Stipulation, through their respective attorneys, subject to
approval by the Court under Rule 23(e) of the Federal Rules of Civil Procedure and the Private
Securities Litigation Reform Act of 1995 (the "PSLRA"), in consideration of the Settlement's
benefits flowing to the Parties and the Authorized Claimants (as defined below), that all Settled
Claims (as defined below) as against the Released Parties (as defined below) shall be released
and dismissed with prejudice, upon the following terms and conditions :
DEFINITIONS
2. As used in this Stipulation, the following terms shall have the following meanings :
a. "Action" means In re The Loewen Group, Inc . Securities Litigation, Master File
No. 98-CV-6740 (E.D. Pa.) and all cases that were consolidated under that
caption/docket number.
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b. "Administration Costs" means the costs and expenses incurred for:
(i) identifying Class members and Authorized Claimants ;(ii) printing and mailing the Notice (defined below) to the Class ;(iii) distributing Settlement proceeds to Authorized Claimants ;(iv) reimbursing nominee owners for forwarding the Notice to the
beneficial owners of Loewen Group securities ;(v) fees and expenses charged by the Settlement Administrator
(defined below); and(vi) fees and expenses charged by tax attorneys and accountants in
connection with any tax work done regarding the Gross or NetSettlement Fund (defined below) .
c. "Authorized Claimant" means a Class member who submits a timely and valid
Proof of Clam and Release form to the Settlement Administrator .
d. "Class" and "Class Members" means all persons or entities who purchased or
otherwise acquired Loewen Group publicly-traded common stock, preferred
stock, call options, or Monthly Insured Preferred Securities on the open market
from March 5, 1997 through January 14, 1999, inclusive, and who were injure d
thereby and who have not properly and timely excluded themselves from the
Class. The Class excludes defendants The Loewen Group, Inc . (n/k/a
Alderwoods Group, Inc .), Raymond L . Loewen, and Paul Wagler, directors and
officers of the Loewen Group during the Class Period, members of the immediate
family of any excluded party, and any person, firm, trust, corporation, officer,
director, or other individual or entity in which any excluded party has a
controlling interest or which is related to or affiliated with any of the excluded
parties, including legal representatives, agents, affiliates, heirs, successors-in-
interest or assigns of any such excluded party . Also excluded from the Class (and
from the definition of "Class Members") are all members of the Class wh o
5
properly and timely excluded themselves from the Class in accordance with the
procedures and deadlines to be established by the Court .
e. "Complaint" means the Corrected Consolidated Amended Class Action
Complaint filed by the Plaintiffs in this Action on or about August 29, 2003 .
f. "Defendants" means Loewen Group, Raymond L. Loewen and Paul Wagler .
g. "Defendants' Counsel" means the law firms of Montgomery, McCracken,
Walker & Rhoads, LLP and Jones Day .
h. "Effective Date" means the date that the Order and Final Judgment (define d
below) has been entered and the time for appeal or review of such Order and Final
Judgment has expired, or, if any appeal has been filed and not dismissed, after
such Order and Final Judgment is upheld on appeal in all material respects and is
no longer subject to review upon appeal or review by writ of certiorari .
i . "Gross Settlement Fund" means the Settlement Amount (defined below) plu s
any interest earned thereon .
j . "Net Settlement Fund" means the Gross Settlement Fund, minus (a) any taxes
on the interest earned thereon, (b) any award of attorneys' fees and expenses,
including interest on such amounts, made by the Court to Plaintiffs' Counsel or
Plaintiffs in this action, and (c) the amount of Administration Costs .
k. "Notice" means the Notice of Pendency and Proposed Settlement of Class Action
and Settlement Hearing which is to be sent to members of the Class substantially
in the form attached as Attachment 1 to Exhibit A of this Stipulation .
1 . "Order and Final Judgment" means the proposed order to be entered approving
the Settlement substantially in the form attached as Exhibit B hereto .
6
m. "Parties" means Plaintiffs and the Defendants .
n. "Plaintiffs" means any and all persons or entities selected by the Court as a Lead
Plaintiff or a Class Representative .
o. "Plaintiffs' Counsel " means Plaintiffs' Lead Counsel, Plaintiffs' Liaison
Counsel and Cohen, Milstein, Hausfeld & Toll, P .L.L.C .
p. "Plaintiffs ' Lead Counsel" means the law firms of Berger & Montague, P .C.,
Wolf Popper LLP and Abbey Gardy LLP .
q. "Plaintiffs ' Liaison Counsel " means the law firm of Barrack, Rodos & Bacine .
r. "Released Parties" means the Defendants, and any or all of their respective pas t
or present subsidiaries, parents, successors and predecessors, officers, directors,
agents, representatives, employees, attorneys, insurers, investment bankers,
accountants, and any person, firm, trust, corporation, officer, director or other
individual or entity in which any Defendant has a controlling interest or which is
related to or affiliated with any of the Defendants and the representatives, trustees,
executors, administrators, heirs, successors, assigns or spouses of any of them .
s. "Preliminary Approval Order" means the order entered by the Court with
respect to the Notice, settlement hearing and administration substantially in the
form attached as Exhibit A to this Stipulation.
t. "Settled Claims" means any and all claims, debts, demands, rights or causes o f
action or liabilities whatsoever (including , but not limited to, any claims for
damages, interest, attorneys' fees, expert or consulting fees, and any other costs,
expenses or liability whatsoever), whether based on federal, state , local, statutory,
common, foreign or international law or any other law, rule or regulation, whether
7
fixed or contingent, accrued or unaccrued, liquidated or unliquidated, at law or in
equity, matured or unmatured, whether class or individual in nature, including
both known claims and unknown claims, (i) that have been or could have been
asserted in the Action by the Class Members or any of them against any of the
Released Parties, or (ii) that could have been asserted in any forum by the Class
Members or any of them against any of the Released Parties which arise out of or
are based upon the allegations, transactions, facts, matters, occurrences,
representations or omissions involved, set forth, or referred to in the Complaint or
any of its predecessors .
U. "Settled Defendants ' Claims" means any and all claims, debts, demands, rights
or causes of action or liabilities whatsoever (including, but not limited to, any
claims for damages, interest, attorneys' fees, expert or consulting fees, and any
other costs, expenses or liability whatsoever), whether based on federal, state,
local, statutory, common, foreign or international law or any other law, rule or
regulation, whether fixed or contingent, accrued or unaccrued, liquidated or
unliquidated, at law or in equity, matured or unmatured, whether class or
individual in nature, including both known claims and unknown claims, that have
been or could have been asserted in this litigation or in any other forum by one or
more of the Defendants or their successors or assigns against any of the Plaintiffs,
the Class, members of the Class or their attorneys which arise out of or relate in
any way to the institution, prosecution, or settlement of this Action .
v. "Settlement" means the settlement contemplated by this Stipulation .
w. "Settlement Administrator" means Heffler, Radetich & Saitta L .L.P. ("HRS") .
8
X . "Settlement Amount" means the amount stated in paragraph 4 below .
Y. "Settlement Hearing" means the hearing to be held by the Court to consider
approval of the Settlement .
Z . "Summa ry Notice" means the summary of the Notice substantially in the form
attached as Attachment 2 to Exhibit A to this Stipulation .
THE SETTLEMENT AND THE RELEASE
3 . The obligations incurred pursuant to this Stipulation shall be in full and final disposition
of the claims asserted in the Complaint and any and all Settled Claims as against all Released
Parties, as well as the Settled Defendants' Claims.
4. Within the earlier of ten business days from the Court's entry of the Preliminary
Approval Order, or April 10, 2006, Defendants will cause their insurer to pay on their behalf
$6,000,000 in cash (the "Settlement Amount") into an interest-bearing escrow account
maintained by Royal Bank, America (the "Escrow Agents") for the benefit of Plaintiffs and the
Class. No later than five business days before payment of the Settlement Amount is to be made,
Plaintiffs' Counsel shall provide Defendants' Counsel, in writing, with the following information
concerning the wire transfer of the Settlement Amount : Name of Bank to Credit, Bank ABA
Number, Bank Address, Bank Account Name, and Bank Account Number. The Settlement
Amount and any interest earned on the Settlement Amount shall constitute the Gross Settlement
Fund. In accordance with the procedures set below, as promptly as possible following the
Effective Date, the Net Settlement Fund will be allocated and distributed to all Authorized
Claimants, pursuant to further Order of the Court .
5 . On the Effective Date, Plaintiffs and all Class Members shall be deemed to have fully,
finally and forever settled and released all Settled Claims against all Released Parties . Having
9
fully and finally dismissed the action with prejudice, the Plaintiffs and all Class Members shall
conclusively be deemed to have released any claims, actions, causes of action, rights or liabilities
against the Released Parties arising out of, based upon, or otherwise related in any way to the
Settled Claims . The Plaintiffs and all Class Members agree and acknowledge that the Settled
Claims may encompass claims or matters the nature of which have not yet been discovered, and
it is understood and agreed that, to the extent they may be alleged to be applicable, all
protections under California Civil Code § 1542, which reads :
A general release does not extend to claims which the creditor does notknow or suspect to exist in his or her favor at the time of executing therelease, which if known by him or her must have materially affected hissettlement with the debtor
or any similar provision of statutory or non-statutory law of any other jurisdiction, are hereby
waived. Plaintiffs and all Class Members are therefore barred and permanently enjoined from
instituting, asserting or prosecuting, either directly or indirectly, representatively, derivatively or
in any other capacity, any and all claims which they, or any of them, had, have or may have
against the Released Parties arising out of, based upon or otherwise related in any way to the
Settled Claims .
6. On the Effective Date, each Defendant shall be deemed to have released and forever
discharged the Settled Defendants' Claims and shall forever be enjoined from prosecuting such
claims against Plaintiffs, the Class, any member of the Class or their attorneys .
SUBMISSION OF SETTLEMENT TO THE COURT
7. As soon as practicable after the execution of this Stipulation, the Parties shall submit this
Stipulation, together with its exhibits to the Court, and shall apply for entry of the Preliminary
Approval Order, substantially in the form of Exhibit A attached hereto, providing for notice t o
10
Class Members of the Settlement Hearing . The Preliminary Approval Order shall specifically
include provisions that, among other things, will :
a. -. direct that the Settlement Hearing be held, among other things : (i) to determine
finally whether this Action satisfies the applicable prerequisites for class action
treatment under Rules 23(a) and 23(b)(3) of the Federal Rules of Civil Procedure ;
(ii) to determine finally whether Lead Plaintiffs who have been approved as Class
Representatives are adequate representatives of the Class ; (iii) to determine finally
whether the Settlement is fair, reasonable and adequate and whether the
Stipulation and the Settlement should be finally approved by the Court pursuant to
Rule 23(e) of the Federal Rules of Civil Procedure and the PSLRA; (iv) to
determine whether the Order and Final Judgment should be entered, dismissing
the Action on the merits and with prejudice and extinguishing and releasing any
and all Settled Claims, as well as releasing the Settled Defendants' Claims ; (v) to
hear and determine any objections to the Settlement ; (vi) in the event that th e
Court approves the Settlement, to determine whether to approve Plaintiffs'
proposed plan of allocation; (vii) in the event that the Court approves the
Settlement, to determine whether to grant Plaintiffs' Counsel's application for an
award of attorneys' fees and expenses; and (viii) to rule upon such other matters
as the Court may deem necessary and appropriate ;
b. approve the Notice substantially in the form of Attachment 1 to Exhibit A hereto,
and find that such Notice constitutes the best practicable form and method of
notice to Class Members ;
11
c. appoint HRS as the Settlement Administrator and direct that the Settlement
Administrator (i) cause the Notice, substantially in the form of Attachment 1 to
Exhibit A hereto, to be mailed to the purchasers of record of Loewen Group
securities at any time during the Class Period, as shown on the records maintained
by or on behalf of Loewen Group by first-class mail postage prepaid no later than
ten (10) business days after entry of the Scheduling Order ; (ii) cause the Summary
Notice, substantially in the form of Attachment 2 to Exhibit A hereto, to be
published once in the National Edition of The Wall Street Journal within ten (10)
days after the mailing of the Notice to the Class; and (iii) to provide additional
copies of the Notice to any record holder or nominee that requests such copies for
the purpose of distribution to any beneficial owners who are entitled thereto ;
d. provide that any Class Member who objects to the terms of the Stipulation, th e
proposed Settlement, the class action determination, entry of the Order and Final
Judgment approving the Settlement, the proposed plan of allocation, and/or
Plaintiffs' Counsel's application for attorneys' fees and reimbursement of
expenses, or who otherwise wishes to be heard, may appear in person or by his,
her, or its attorney at the Settlement Hearing and present any evidence or
argument that may be proper and relevant; provided, however, that no person
other than the Parties and their Counsel in this Action 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 twenty days prior to the Settlement Hearing, (i) a
12
written notice of intention to appear, (ii) a detailed statement of all of such
person's objections to any matter before the Court, and (iii) all of the grounds
therefor or the reasons for such person's desiring to appear and to be heard, as
well as all documents and writings which such person desires the Court to
consider, shall be filed by such person with the Clerk of the Court and,
simultaneously with or before such filing, shall be served by hand or overnight
delivery upon the Counsel to the Parties designated in the Scheduling Order;
e. provide that any person who would otherwise be a member of the Class who
wishes to be excluded from the Class shall send a written request for exclusion by
first-class mail to the Settlement Administrator at the address listed in the Notice
no later than twenty days before the date of the Settlement Hearing which set s
forth : (a) the name of the Action (In re The Loewen Group, Inc. Securities
Litigation, No. 98-6740 (E.D. Pa .)) ; (b) the Class Member's name, address and
telephone number, and the name and address of the record owner if different than
the Class Member's; (c) the number and type of Loewen Group securities
purchased and sold (if any) during the Class Period ; and (d) that said person
wishes to be excluded from the Class ;
f. provide that Plaintiffs' Counsel shall file all written requests for exclusion with
the Court at or before the Settlement Hearing ;
g. provide that, within five business days after the end of the period to request
exclusion from the Class, as set forth in the Notice, Plaintiffs' Lead Counsel shall
provide to Defendants' Counsel a written list of all potential Class Members who
have timely exercised their rights to be excluded from the Class . Plaintiffs' Lead
13
Counsel and Defendants' Counsel will then ascertain the total number and type of
shares of Loewen Group securities traded during the Class Period by those
persons or entities requesting exclusion from the Class (the "Opt-Out Amount") .
In the event that the Opt-Out Amount is equal to or greater than an agreed upon
percentage of the total number of Loewen Group securities traded during the
Class Period, then the Defendants may in their discretion elect to withdraw from
this Settlement by providing written notice to Plaintiffs' Lead Counsel within ten
business days after receipt of the list of opt-outs . This agreed upon percentage
shall be the subject of a Supplemental Stipulation to be filed with the Court by the
Parties under seal ; and
h. provide that the Settlement Hearing may, from time to time and without further
notice to the Class Members, be continued or adjourned by order of the Court .
The Settlement Administrator shall assume and undertake the administrative
responsibility of disseminating the Notice to the Class and arranging for publication of the
Summary Notice, as required by the Preliminary Approval Order . At least ten business days
before the Settlement Hearing, the Settlement Administrator shall file an affidavit with the Court
that the Notice required by the Preliminary Approval Order has been provided to Clas s
Members .
ORDER AND FINAL JUDGMENT
9. If the Settlement (including any modification made with the written consent of the
Parties) shall be approved by the Court following the Settlement Hearing as fair, reasonable, and
adequate and in the best interests of the Class, the Parties shall jointly request the Court to ente r
14
the Order and Final Judgment substantially in the form attached hereto as Exhibit B . The Order
and Final Judgment shall, among other things :
a. find that the prerequisites to a class action set forth in Rule 23(a) of the Federa l
Rules of Civil Procedure are satisfied, that those Lead Plaintiffs appointed as
Class Representatives are adequate representatives of the Class, and that the
action may properly be maintained as a class Action pursuant to Rule 23(b)(3) of
the Federal Rules of Civil Procedure, and finally certify the Class ;
b. approve the Settlement and all transactions preparatory or incident thereto, as fair ,
reasonable and adequate pursuant to Rule 23(e) of the Federal Rules of Civil
Procedure and the PSLRA ;
c. authorize and direct performance of the Settlement in accordance with all of it s
terms and conditions;
d. dismiss the Action with prejudice as against the Plaintiffs and Class Members or
any of them, without costs except as hereinafter provided, and extinguish al l
Settled Claims against the Released Parties, as well as the Settled Defendants '
Claims ;
e. determine that no Party has violated Rule 11 of the Federal Rules of Civi l
Procedure during this litigation ; and
f. reserve jurisdiction, without affecting the finality of the judgment, with respect to
all matters relating to the administration, consummation, construction and
enforcement of the Settlement and the Stipulation .
10. If the Court approves the Settlement, it will also be asked to approve Plaintiffs' propose d
plan of allocation and Plaintiffs' Counsel's application for an award of attorneys' fees an d
15
expenses . The determination of these requests will not impact the finality of the Order and Final
Judgment.
ADMINISTRATION OF THE SETTLEMENT
11 . Plaintiffs' Lead Counsel shall be responsible for supervising the administration of the
Settlement and disbursement of the Net Settlement Fund by the Settlement Administrator .
Except for their obligation to cause the Settlement Amount to be paid and to cooperate in the
administration of the Settlement to the extent reasonably necessary to effectuate its terms, the
Released Parties shall have no liability, obligation or responsibility for the administration of the
Settlement or disbursement of the Net Settlement Fund. Plaintiffs' Lead Counsel shall have th e
right, but not the obligation, to waive what it deems to be formal or technical defects in any
Proofs of Claim and Release and Substitute Form W-9 (the "Proof of Claim and Release")
submitted in the interests of achieving substantial justice .
12 . Plaintiffs' Lead Counsel may expend from the Gross Settlement Fund, without further
approval from the Defendants or the Court, up to the sum of $100,000 to pay the reasonable
costs and expenses associated with the costs of identifying members of the Class, the costs of
publication, printing and mailing the Notice, reimbursements to nominee owners for forwarding
Notice(s) to their beneficial owners, and the administrative expenses incurred and fees charged
by the Settlement Administrator in connection with providing notice and processing the
submitted claims . Administrative costs in excess of $100,000 shall be paid from the Gross
Settlement Fund after the Effective Date, upon Court approval .
13 . Plaintiffs' Lead Counsel will apply to the Court, on notice to the Defendants' Counsel,
for an order (the "Class Distribution Order") approving the Settlement Administrator's
administrative determinations concerning the acceptance and rejection of the claims submitted in
compliance herewith and approving any fees and expenses not previously applied for, includin g
16
the fees and expenses of the Settlement Administrator, and, if the Effective Date has occurred,
directing payment of the Net Settlement Fund to Authorized Claimants .
14. The Gross Settlement Fund, net of any Taxes (as defined below) on the income thereof,
shall be used first to pay (i) the Administration Costs and any award of the attorneys' fees and
expenses . The balance of the Gross Settlement Fund after these payments shall be the "Net
Settlement Fund" which shall be distributed to the Authorized Claimants pursuant to the terms of
the Settlement . Any sums required to be held in escrow hereunder shall be held by Royal Bank,
America as Escrow Agents for the Settlement Fund. All funds held by the Escrow Agent shall
be deemed to be in the custody of the Court and shall remain subject to the jurisdiction of the
Court until such time as the funds shall be distributed or returned to the person(s) paying the
same pursuant to this Stipulation or further order of the Court . The Escrow Agent shall invest
any funds in excess of $100,000 in short term United States Agency or Treasury Securities (or a
mutual fund invested solely in such instruments) and shall collect and reinvest all interest
accrued thereon . Any funds held in escrow in an amount of less than $100,000 may be held in an
interest bearing bank account insured by the FDIC . The parties hereto agree that the Gross
Settlement Fund is intended to be a Qualified Settlement Fund within the meaning of Treasury
Regulation § 1 .468B-1 and that the Escrow Agent, as administrator of the Gross Settlement Fund
within the meaning of Treasury Regulation § 1 .468B-2(k)(3), shall be responsible for filing tax
returns for the Gross Settlement Fund and paying from the Gross Settlement Fund any Taxes
owed with respect to the Gross Settlement Fund . In addition, the Escrow Agent shall timely
make such elections as necessary or advisable to carry out the provisions of this paragraph,
including the "relation-back election" as defined in Treasury Regulation § 1 .468B-1 to the
17
earliest permi tted date . Defendants ' Counsel agree , if requested, to provide promptly to the
Escrow Agent the statement described in Treasury Regulation § 1 .468B-3(e) .
15. All (i) taxes on the income of the Gross Se ttlement Fund and (ii) expenses and costs
incurred in connection with the taxation of the Gross Settlement Fund (including, without
limitation , expenses of tax attorneys and accountants) (collectively "Taxes") shall be paid out of
the Gross Se ttlement Fund, shall be considered to be a cost of administration of the Se ttlement
and shall be timely paid by the Escrow Agent without p rior Order of the Court . Under no
circumstances shall the Released Parties have any liability or responsibili ty for the Taxes .
DISTRIBUTION TO AUTHORIZED CLAIMANTS
16. The Net Settlement Fund shall be distributed to the Authorized Claimants in accordance
with the Plan of Allocation approved by the Court . The proposed Plan of Allocation is not a
necessary term of this Stipulation and it is not a condition of this Stipulation that this or any
particular Plan of Allocation be approved. The Plan of Allocation shall be determined solely by
Plaintiffs' Lead Counsel, subject to approval by the Court. The Defendants shall have no
involvement in determining the Plan of Allocation .
17 . Each Authorized Claimant shall be allocated a pro rata share of the Net Settlement Fund
based on his or her valid claim compared to the total valid claims of all accepted claimants . This
is not a claims-made settlement . The Defendants shall not be entitled to get back any of the
Settlement monies once the Settlement becomes final . Defendants shall have no involvement in
reviewing or challenging claims .
18 . For purposes of determining the extent, if any, to which a Class Member shall be entitled
to be treated as an "Authorized Claimant", the following shall apply :
a. Each Class Member shall be required to submit a Proof of Claim and Release (see
~'t
3attached to Exhibit A), supported by such documents as are designate d
18
therein, including proof of the claimant's transactions in Loewen Group
securities, or such other documents or proof as the Settlement Administrator,
subject to Plaintiffs' Lead Counsel's supervision, in its discretion, may deem
acceptable;
b. All Proofs of Claim and Release must be submitted by the date specified in th e
Notice unless such period is extended by order of the Court . Any Class Member
who fails to submit a Proof of Claim and Release by such date shall be forever
barred from receiving any payment pursuant to this Settlement (unless, by order
of the Court, a later submitted Proof of Claim and Release by such Class Member
is approved), but shall in all other respects be bound by all of the terms of this
Stipulation and the Settlement including the terms of the Order and Final
Judgment to be entered in the Action and the releases provided for in such Order
and Final Judgment and herein, and will be barred from bringing any action
against the Released Parties concerning the Settled Claims . Provided that it is
received before the motion for the Class Distribution Order is filed, a Proof of
Claim and Release shall be deemed to have been submitted when posted, if
received with a legible postmark on the envelope and if mailed by first-class mail
and addressed in accordance with the instructions thereon. In all other cases, the
Proof of Claim and Release shall be deemed to have been submitted when
actually received by the Settlement Administrator;
c. Each Proof of Claim and Release shall be submitted to and reviewed by th e
Settlement Administrator, under the supervision of Plaintiffs' Lead Counsel, who
shall determine in accordance with this Stipulation the extent, if any, to which
19
each claim shall be allowed, subject to review by the Court pursuant to
subparagraph (d) below ;
d. Proofs of Claim and Release that do not meet the submission requirements may
be rejected. Prior to rejection of a Proof of Claim and Release, the Settlement
Administrator shall communicate with the Claimant in order to remedy any
curable deficiencies in the Proof of Claims and Release submitted . The
Settlement Administrator, under supervision of Plaintiffs' Lead Counsel, shall
notify, in a timely fashion and in writing, all Claimants whose Proofs of Claim
and Release they propose to reject in whole or in part, setting forth the reasons
therefore, and shall indicate in such notice that the Claimant whose claim is to be
rejected has the right to a review by the Court if the Claimant so desires and
complies with the requirements of subparagraph (e) below ;
e. If any Claimant whose claim has been rejected in whole or in part desires to
contest such rejection, the Claimant must, within thirty days after the date of
mailing of the notice required in subparagraph (d) above, serve upon the
Settlement Administrator a notice and statement of reasons indicating the
Claimant's grounds for contesting the rejection along with any supporting
documentation, and requesting a review thereof by the Court . If a dispute
concerning a claim cannot be otherwise resolved, Plaintiffs' Lead Counsel shal l
thereafter present the request for review to the Court ;
f. The administrative determinations of the Settlement Administrator accepting and
rejecting claims shall be presented to the Court for approval in the Class
Distribution Order; and
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g. Each Claimant shall be deemed to have sub itted to the jurisdiction of the Court
with respect to the Claimant 's claim, and the claim will be subject to investigation
and discovery under the Federal Rules of Ci it Procedure , provided that such
investigation and discovery shall be limited to that Claimant 's status as a Clas s
Member and the validity and amount of the Claimant's claim . No discovery shall
be allowed on the merits of the Action or Settlement in connection with
processing of the Proofs of Claim.
19. Payment pursuant to this Stipulation shall be deemed final and conclusive against all
Class Members . All Class Members whose claims are not approved by the Court, including any
Class Member who does not submit a valid proof of claim, shall be barred from participating in
distributions from the Net Settlement Fund, but otherwise shall be bound by all of the terms of
this Stipulation and the Settlement, including the terms of the Order and Final Judgment to be
entered in the Action and the releases provided for in the Order and Final Judgment and herein,
and will be barred from bringing any action against the Released Parties concerning the Settled
Claims.
20. All proceedings with respect to the administration, processing and determination of
claims authorized by this Stipulation and the determination of all controversies relating thereto ,
including disputed questions of law and fact with respect to the validity of claims, shall be
subject to the jurisdiction of the Court .
21 . The Net Settlement Fund shall be distributed to Authorized Claimants by the Settlement
Administrator only after the Effective Date and after : (i) all Claims have been processed, and all
Claimants whose Claims have been rejected or disallowed, in whole or in part, have bee n
notified and provided the opportunity to be heard concerning such rejection or disallowance ;
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(ii) all objections with respect to all rejected or disallowed claims have been resolved by the
Court, and all appeals therefrom have been resolved or the time therefore has expired; (iii) all
matters with respect to attorneys' fees, costs, and disbursements have been resolved by the Court
and all appeals therefrom have been resolved or the time therefore has expired ; and (iv) all costs
of administration have been paid .
EFFECT OF DISAPPROVAL OR TERMINATION
22. The Settlement shall be conditioned upon the entry by the Court of the Order and Final
Judgment and either (i) the final affirmance of the Order and Final Judgment on appeal or (ii) the
expiration of the time in which the Order and Final Judgment is subject to review upon appeal or
review by writ of certiorari . If these conditions are not met following the Parties' reasonable
best efforts to satisfy them, the Stipulation shall be canceled and terminated unless Counsel for
the Settling Parties mutually agree in writing to proceed with the Stipulation .
23 . Except as otherwise provided herein, if the Settlement is terminated or fails to become
effective for any reason, the terms and provisions of this Stipulation (other than this paragraph
and the relevant provisions of paragraphs 15, 24 and 25 of this stipulation) shall have no further
force or effect with respect to the Parties and shall not be deemed to prejudice the respective
positions of the Parties. The Parties will continue with all proceedings that have been stayed
given the prospect of settlement, and except as otherwise expressly provided, the Parties shall
proceed in all respects as if this Stipulation and any related orders or memoranda had not been
entered or executed .
24 . Within five business days of the termination of the Settlement as described above, the
Escrow Agent will return to the Defendants' insurer that issues the payment described in
paragraph 4 the remaining portion of the Gross Settlement Fund, including the amount s
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withdrawn in accordance with paragraph 12 herein, less any amount for Administration Costs o r
Taxes either paid out or already incurred but unpaid .
NO ADMISSION OF WRONGDOING
25 . This Stipulation, whether or not consummated, and any proceedings taken pursuant to it :
a. shall not be offered or received as evidence of the truth of any allegation or th e
validity of any claim that has been or could have been made or asserted agains t
any of the Released Parties in this Action or any other litigation, or the deficienc y
of any defense that has been or could have been asse rted in this Action or any
other litigation ;
b. shall not be offered or received as evidence of any liability, negligence , fault o r
wrongdoing on the part of any of the Released Parties , or deemed to give rise to
any presumption with respect to any liability, negligence , fault or wrongdoing on
the part of any of the Released Parties ;
c. shall not be deemed an admission or concession by any of the Released Part ies
that the consideration to be paid pursuant to the Settlement represents the amoun t
which could be or would have been recovered after trial ; and
d. shall not be offered or received as evidence, and shall not be deemed a n
admission or concession by Plaintiffs or any Class Member, that any of the
Settled Claims are without merit or that any defenses of the Released Parties with
respect thereto have any merit.
ATTORNEYS' FEES AND EXPENSE S
26. Plaintiffs' Counsel will apply to the Court for an award from the Gross Settlement Fund
of attorneys ' fees in an amount not to exceed thirty-three and V3 percent (33.3%) of the Gross
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Settlement Fund and reimbursement of expenses . The amount of the attorneys' fees and
expenses to be awarded shall be determined by the Court . The failure of the Court to award the
full amount of fees and expenses requested by Plaintiffs' Counsel shall not affect the finality of
the Stipulation . The award may be paid from the Gross Settlement Fund to Plaintiffs' Lead
Counsel and Liaison Counsel within five business days after entry by the Court of any Order
awarding attorneys' fees and expenses . Fees and expenses, as awarded by the Court will be
allocated among Plaintiffs' Counsel in a fashion, which, in their opinion, fairly compensates
Plaintiffs' Counsel for their respective contributions to the progress of, and results obtained, in
the Action . Neither the filing of objections to the award of attorneys' fees and expenses or to the
Settlement, nor any appeal from the order awarding attorneys' fees and expenses or approving
the Settlement or collateral attack on the order awarding attorneys' fees and expenses or
approving the Settlement shall delay payment of the award to Plaintiffs' Counsel ; provided,
however, that in the event the order awarding attorneys' fees and expenses is reversed on appeal
or the amount of attorneys' fees and expenses awarded by the Court is reduced on appeal,
Plaintiffs' Counsel agrees that they are jointly and severally liable to make appropriate refunds or
repayments to the Gross Settlement Fund plus accrued interest at the same net rate as is or would
have been earned by the Gross Settlement Fund . Plaintiffs' Counsel shall make the appropriate
refund or repayment within ten business days of (a) the entry of an order reducing an award of
attorneys' fees or expenses, or (b) the termination of the Settlement . Plaintiffs' Counsel agrees,
as a condition of receiving such fees and expenses, that they are subject to the orders and
jurisdiction of the United States District Court for the Eastern District of Pennsylvania for the
purpose of enforcing the provisions of this paragraph.
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MISCELLANEOUS PROVISION S
27. Each exhibit to this Stipulation is incorporated by reference .
28. The Parties acknowledge that the Settlement Amount is being paid by the Defendants'
insurer on behalf of the Defendants . Defendants each acknowledge that none of them has any
claim to any portion of the Settlement Amount in his or its own right .
29. If a case is commenced with respect to any of the Defendants (or any insurer contributing
funds to the Settlement Fund on behalf of Defendants) under Title 11 of the United States Code
(Bankruptcy), or a trustee, receiver or conservator is appointed under any similar law, and in the
event of the entry of a final order of a court of competent jurisdiction determining the transfer of
money to the Gross Settlement Fund or any portion thereof by or on behalf of a 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' Lead Counsel, the parties shall jointly move
the Court to vacate and set aside the releases given and Order and Final Judgment entered in
favor of the Settling Defendant pursuant to this Stipulation, which releases and Order and Final
Judgment shall be null and void, and the parties shall be restored to their respective positions in
the litigation as of the date a day prior to the date of this Stipulation and the cash amounts in th e
Gross Settlement Fund shall be returned subject to Paragraph 11 above .
30. The Parties intend that this Settlement resolve all disputes asserted or which could be
asserted by the Class Members against the Released Parties regarding the Settled Claims .
Accordingly, the Parties agree not to assert in any forum that the litigation was brought or
defended in bad faith or without a reasonable basis . The Parties shall assert no claim that any
other Party violated Rule 11 of the Federal Rules of Civil Procedure in prosecuting or defendin g
25
this Action . The Parties agree that the amounts paid and the other terms of this Stipulation and
the Settlement were negotiated at arm's length in good faith by the Parties, and reflect a
settlement that was reached voluntarily after consultation with experienced legal counsel .
31 . This Stipulation may not be modified or amended, nor may any of its provisions be
waived, except by a writing signed by all Parties or their successors in interest .
32. The headings herein are used for the purpose of convenience only and are not meant to
have any legal effect.
33. In the event of any dispute with respect to the meaning, effect or interpretation of the
Stipulation or an attached exhibit or a claimed breach of the Stipulation or an attached exhibit,
the Parties hereto agree that such dispute will be adjudicated only in the Court . The Court shall
retain jurisdiction to administer the Settlement, resolving any disputes hereunder and enforcing
the terms of the Stipulation .
34. Any failure by any Party to insist upon the strict performance by any other Party of any
of the provisions of the Stipulation shall not be deemed a waiver of any of the provisions and,
notwithstanding such failure, such Party shall have the right to insist upon strict performance of
any and all provisions of the Stipulation to be performed by such other Party . The waiver by one
Party of any breach of this Stipulation by any other Party shall not be deemed a waiver of any
other prior or subsequent breach of this Stipulation .
35. This Stipulation and its exhibits constitute the entire agreement among the Parties and
supersede any and all prior agreements or understandings concerning the subject matter hereof .
36. This Stipulation may be executed in one or more counterparts . All executed counterparts
and each of them shall be deemed to be one and the same instrument .
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37. This Stipulation shall be binding upon, and shall inure to the benefit of, the Parties'
successors and assigns.
38 . The construction, interpretation, operation, effect and validity of this Stipulation, and all
documents necessary to effectuate it, shall be governed by the internal laws of the
Commonwealth of Pennsylvania, without regard to conflicts of laws, except to the extent that
federal law governs .
39. This Stipulation together with its exhibits, shall be deemed to have been mutually
prepared by .the Parties and shall not be construed against any of them by reason of authorship .
40. The Parties and their attorneys agree to cooperate fully with one another in seeking Court
approval of the Stipulation and the Settlement, and to use their best efforts to effect, as promptly
as practicable, the consummation of the Stipulation and the Settlement and the dismissal of the
Action, with prejudice and without costs to any Party, except as provided for herein .
41 . All counsel executing this Stipulation represent and warrant that they have the ful l
authority to do so on behalf of their respective clients .
DATED : 2006 SHERRIE R. AVETTBERGER ONTAGUE,
By: AA.Sherrie R . Save1622 Locust StreetPhiladelphia, PA 19103
DATED: , 2006 CHET B. WALDMANWOLF POPPER LLP
By :Chet B. Waldman845 Third AvenueNew York, NY 1002 2
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37. This Stipulation shall be binding upon, and shall inure to the benefit of, the Parties'
successors and assigns .
38. The construction, interpretation, operation, effect and validity of this Stipulation, and all
documents necessary to effectuate it, shall be governed by the internal laws of the
Commonwealth of Pennsylvania, without regard to conflicts of laws, except to the extent that
federal law governs .
39. This Stipulation together with its exhibits, shall be deemed to have been mutually
prepared by the Parties and shall not be construed against any of them by reason of authorship .
40. The Parties and their attorneys agree to cooperate fully with one another in seeking Court
approval of the Stipulation and the Settlement, and to use their best efforts to effect, as promptly
as practicable, the consummation of the Stipulation and the Settlement and the dismissal of the
Action, with prejudice and without costs to any Party, except as provided for herein .
41 . All counsel executing this Stipulation represent and warrant that they have the full
authority to do so on behalf of their respective clients .
DATED: , 2006 I SHERRIE R. SAVETTBERGER & MONTAGUE, P.C .
By :Sherrie R . Savett1622 Locust StreetPhiladelphia, PA 19103
DATED :.2006 CHET B. WALDMAN
WOLF PO PER LLP
By-Chet
Jam' ~/"B . Waldm an
845 Third AvenueNew York, NY 1002 2
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DATED : 5 /30 , 2006 KARIN E . FISCHABBEY GARDY, LLP
By : 1 .z E. x S&4Karin E. Fisch .,,,j4212 East 39th Street jtl*v r . -• /New York, NY 1001 6
Plaintiffs' Lead Counsel
DATED: 3301 2006, JEFFREY W. GOLANBARRACK, RODOS & BACINE
By : ;? ;~~V=e . Golan
3300 Two Commerce Square2001 Market StreetPhiladelphia, PA 19103
Plaintiffs' Liaison Counse l
DATED: , 2006 DAVID H . MARIONCRAIG E . ZIEGLERMONTGOMERY, McCRACKEN, WALKER
& RHOADS, LLP
By :David H. MarionCraig E . Ziegler123 South Broad StreetPhiladelphia, PA 19109
Counselfor Defendants Raymond L. Loewenand Paul Wagler
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DATED: , 2006 KARIN E. FISCHABBEY GARDY, LLP
By :Karin E . Fisch212 East 39th StreetNew York, NY 1001 6
Plaintiffs' Lead Counsel
DATED: , 2006 JEFFREY W. GOLANBARRACK, RODOS & BACIN E
By :Jeffrey W. Golan3300 Two Commerce Square2001 Market StreetPhiladelphia, PA 1910 3
Plaint if~ js' Liaison Counsel
A0a 3 1DATED : , 2006 DAVID H. MARIONCRAIG E. ZIEGLERMONTGOMERY, McCRACKEN, WALKER& RHO S, LLP
By :av' ri n
Cri i er123 South Broad StreetPhiladelphia, PA 19109
Counsel for Defendants Raymond L . Loewenand Paul Wagler
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