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3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 1 of 99
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA APR 2= 5 2005COLUMBIA DIVISION Y: Y
W DES, CLEF
IN RE SAFETY-KLEEN CORP. ) Consol. Case No. 3-00-1145 17BONDHOLDERS LITIGATION )
STIPULATION AND AGREEMENT OF SETTLEMENT
This Stipulation and Agreement of Settlement (the "Stipulation") is submitted pursuant to
Rule 23 of the Federal Rules of Civil Procedure. Subject to the approval of the United States
District Court for the District of South Carolina, Columbia Division (the "Court"), this
Stipulation is entered into by Lead Plaintiffs American High Income Trust and State Street
Research Income Trust (together, the "Lead Plaintiffs"), on behalf of themselves and the Class
(as defined herein), and defendants and former defendants James R. Bullock, Leslie W. Haworth,
John W. Rollins, Jr., the Estate of John Rollins, Sr., Henry B. Tippie, Robert W. Luba, David E.
Thomas, Jr., Grover C. Wrenn, Michael J. Bragagnolo, John Grainger and James L. Wareham
(collectively, the "D&O Defendants"). The Stipulation provides for a settlement of this Action as
against the D&O Defendants only (the "Partial Settlement"), and does not constitute a settlement
of any claims by the Plaintiffs (as hereinafter defined) against any other defendants in the Action.
WHEREAS:
A. On April 13, 2000, the first of the Complaints consolidated into this Action was
filed in the United States District Court for the District of South Carolina, Columbia Division,
alleging violations of the federal securities laws against Safety-Kleen Corp. and others.
B. On July 15, 2002, the Lead Plaintiffs filed an Amended Consolidated Class
Action Complaint (the "Complaint") alleging violations of the federal securities laws by
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PricewaterhouseCoopers LLP ("PwC"), Kenneth W. Winger, Paul R. Humphreys, Michael J.
Bragagnolo, James R. Bullock, Henry B. Tippie, the Estate of John W. Rollins, Sr., John W.
Rollins, Jr., Leslie W. Haworth, Robert W. Luba, David E. Thomas, Jr., James L. Wareham,
Grover C. Wrenn, Laidlaw Inc., TD Securities (USA) Inc., NationsBanc Montgomery Securities
LLC, and Raymond James & Associates, Inc. (collectively, the "Defendants").
C. On October 30, 2003, Plaintiffs dismissed defendants the Estate of John W.
Rollins, Sr., John W. Rollins, Jr., David E. Thomas, Jr., and Grover C. Wrenn. In addition, the
claims against Laidlaw Inc. were extinguished in connection with its bankruptcy proceedings.
D. On December 12, 2002, the United States Attorney for the Southern District of
New York filed a criminal indictment against Paul R. Humphreys for, among other things:
conspiracy to commit securities fraud, file false reports with the Securities and Exchange
Commission ("SEC"), falsify books and records, and make false statements to auditors; and
securities fraud. On November 19, 2003, the SEC entered a default judgment against Mr.
Humphreys and Kenneth W. Winger for violations of several securities laws, including § 10(b)
of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated
thereunder. On March 19, 2004, this Court granted summary judgment against Mr. Humphreys
and Mr. Winger as to liability under § 11 of the Securities Act of 1933. Mr. Humphreys and Mr.
Winger have both asserted their Fifth Amendment right against self-incrimination when deposed
in connection with the Action and accordingly did not testify at trial on their own behalf.
E. The Complaint alleges that one or more of the D&O Defendants violated § 11 and
§ 15 of the Securities Act of 1933 (the "Securities Act") and § 10(b), § 18 and § 20(a) of the
Exchange Act, and Rule IOb-5 promulgated under § 10(b).
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F. On January 8, 2003, the Court certified the Action as a class action with respect to
all claims asserted therein.
G. On October 29, 2004, the Court issued an order decertifying the Plaintiffs' claims
pursuant to the Exchange Act. By order of the Court, the decertification of the Exchange Act
claims became effective on January 22, 2005.
H. In February, March and April 2005, the Individual Plaintiffs (as defined below),
former members of the Exchange Act class, filed separate complaints in the Court against the
D&O Defendants and others, and/or entered tolling agreements with respect to the filing of such
complaints.
I. On March 1, 2005, a jury was selected for the trial of this Action and the trial
began on March 10, 2005.
J. On April 4 and 5, 2005, the Court granted certain D&O Defendants' motions for
judgment as a matter of law with regard to the Plaintiffs' claims under § 15 of the Securities Act
and the Lead Plaintiffs' claims under § 10(b) and § 20(a) of the Exchange Act and Rule IOb-5
under the Exchange Act, and the Court granted certain D&O Defendants' motion for judgment
as a matter of law that they did not knowingly commit a violation of the securities laws.
K. The D&O Defendants deny all allegations of wrongdoing, fault, liability or
damage to the Plaintiffs, deny that they engaged in wrongdoing, deny that they committed any
violation of law, deny that they acted improperly in any way and believe they acted properly at
all times. The D&O Defendants recognize, however, the uncertainty and risk inherent in any
litigation, especially complex securities litigation, and the difficulties and substantial expense
and length of time necessary to defend this action through trial and any appeal. To eliminate the
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burden and expense of further litigation and the risk of a judgment at trial, the D&O Defendants
wish to settle the litigation against them on the terms and conditions stated in this Stipulation,
and to put the Settled Claims (as hereinafter defined) to rest finally and forever.
L. The parties to this Stipulation recognize that this litigation has been filed by the
Lead Plaintiffs and the Individual Plaintiffs and defended by the D&O Defendants in good faith
and with adequate basis in fact under Federal Rule of Civil Procedure 11, that the litigation is
being voluntarily settled after advice of counsel, and that the terms of the settlement are fair,
adequate and reasonable. This Stipulation shall not be construed or deemed to be a concession
by any Plaintiff of any infirmity in any of the claims asserted in the Action or the Individual
Actions (as defined below), nor shall it be construed or deemed to be evidence of or an
admission or concession on the part of the D&O Defendants with respect to any claim or of any
fault or liability or wrongdoing or damage whatsoever, or any infirmity in the defenses that the
D&O Defendants have asserted.
M. The Plaintiffs' Lead Counsel, Grant & Eisenhofer, P.A. ("Lead Counsel"), has
completed an extensive investigation relating to the claims and the underlying events and
transactions alleged in the Complaint and the Individual Actions. Lead Counsel has analyzed the
evidence adduced during pretrial discovery to date and has researched the applicable law with
respect to the claims of the Plaintiffs against the D&O Defendants and the potential defenses
thereto.
N. The Lead Plaintiffs and Individual Plaintiffs, by their counsel, have conducted
discussions and arm's length negotiations with counsel for the D&O Defendants with respect to a
compromise and settlement of the Action and the Individual Actions with a view to settling the
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a. "Action" shall mean the captioned lawsuit, Case No. 3-00-1145 17.
b. "Bonds" refers to the 9 1/4% senior subordinated notes due 2008 issued by
Laidlaw Environmental Services, Inc. ("2008 Bonds") and the 9 1/4% senior notes due 2009
issued by Safety-Kleen Corp. ("2009 Bonds"), collectively.
C. "Class" means all persons or entities that purchased the Bonds during the Class
Period and were damaged thereby under the Securities Act. Excluded from the Class are the
following persons and entities which would otherwise fall within the Class definition: (1) the
Company and Defendants, (2) members of the families of the Individual Defendants, (3) the
subsidiaries or affiliates of the Company or of any Defendant, (4) any person or entity who is a
partner, officer, director, employee or controlling person of the Company or any Defendant, (5)
any entity in which any Defendant has a controlling interest, and (6) the legal representatives,
heirs, successors or assigns of any such excluded person.
d. "Class Members" means all persons or entities who are members of the Class.
e. "Class Period" means the period from April 17, 1998 through and including
March 5, 2000.
f. "Plaintiffs" means the Lead Plaintiffs, the Individual Plaintiffs, and all members
of the Class.
g. "Individual Plaintiffs" means (i) American High Income Trust, (ii) State Street
Research Income Trust, and (iii) the entities which have filed separate Exchange Act claims
against the D&O Defendants and others and/or have executed tolling agreements with respect to
such claims, as listed on Exhibit F attached hereto.
h. "Individual Actions" means all lawsuits listed on Exhibit F attached hereto, the
individual claims brought by American High Income Trust and State Street Research Income
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Trust as part of the Action, which are all of the lawsuits brought by Lead Counsel relating to
Safety-Kleen.
i. "Lead Counsel' means attorneys for the Plaintiffs, the law firm of Grant &
Eisenhofer, P.A., Chase Manhattan Centre, 1201 N. Market St., Wilmington, DE 19801, (302)
622-7000.
j. "Authorized Claimant" means a Class Member who submits a timely and valid
Proof of Claim form to the Claims Administrator.
k. "Claims Administrator" means the firm of The Garden City Group, Inc., which
shall administer the Partial Settlement.
1. "Court" means the United States District Court for the District of South Carolina,
Columbia Division, the Honorable Joseph F. Anderson, Jr. presiding.
M. "Defendants" means PwC, Kenneth W. Winger, Paul R. Humphreys, Michael J.
Bragagnolo, James R. Bullock, Henry B. Tippie, the Estate of John W. Rollins, Sr., John W.
Rollins, Jr., Leslie W. Haworth, Robert W. Luba, David E. Thomas, Jr., James L. Wareham,
Grover C. Wrenn, Laidlaw Inc., TD Securities (USA) Inc., NationsBanc Montgomery Securities
LLC, and Raymond James & Associates, Inc.
n. "D&O Defendants" means Michael J. Bragagnolo, James R. Bullock, Henry B.
Tippie, the Estate of John W. Rollins, Sr., John W. Rollins, Jr., Leslie W. Haworth, Robert W.
Luba, David E. Thomas, Jr., James L. Wareham, John Grainger and Grover C. Wrenn.
o. "Individual Defendants" refers to the individuals who remain as defendants in the
Action as of the date hereof: James R. Bullock, Leslie W. Haworth, Henry B. Tippie, Robert W.
Luba, James L. Wareham, Kenneth W. Winger, Michael Bragagnolo, Paul R. Humphreys, and
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all agents, attorneys, representatives and consultants and all other persons purporting to act on
their behalf.
P ."D&O Defendants' Counsel" means the law firms of (1) Nelson Mullins Riley &
Scarborough LLP, 1320 Main Street, 17t` Floor, Columbia, SC 29201, (2) Sidley Austin Brown
& Wood LLP, Bank One Plaza, 10 South Dearborn Street, Chicago, IL 60603, (3) Cotsirilos,
Tighe & Streicker, Ltd., 33 Dearborn St., Ste. 600, Chicago, IL 60602, (4) Stone, McGuire &
Benjamin, 801 Skokie Boulevard, Suite 100, Northbrook, Illinois 60062, and (5) Law Offices of
Wilmot Irvin, 1522 Lady Street, P.O. Box 7816, Columbia, SC 29202.
q. "Effective Date" means the date upon which the Partial Settlement contemplated
by this Stipulation shall become effective, as set forth in Paragraph 30 below.
r. "Company" or "Safety-Kleen" refers to Safety-Kleen Corp., its predecessors
(including Rollins Environmental Services, Inc. and Laidlaw Environmental Services, Inc.),
successors, parents, consolidated and unconsolidated subsidiaries, divisions, affiliates, operating
units, controlling persons, controlled persons, officers, directors, employees, representatives and
agents.
S. "Partial Settlement" means the settlement with the D&O Defendants
contemplated by this Stipulation.
t. "Insurers" means American Home Assurance Company ("American Home"),
Reliance Insurance Company ("Reliance"), National Union Fire Insurance Company of
Pittsburgh, Pa. ("National Union") and Starr Excess Liability Insurance International, Ltd.
U. "Released Parties" means the D&O Defendants, trusts for which any of the D&O
Defendants is the settlor or which is for the benefit of them or their families; the D&O
Defendants' personal or legal representatives, heirs, executors, administrators, and any other
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person acting on their behalf, the Insurers; and all of the D&O Defendants' past and present
agents, employees, attorneys, other insurers, co-insurers, reinsurers, accountants, advisors,
successors, and assigns; provided, however, that the term "Released Parties" does not include
Kenneth W. Winger, Paul R. Humphreys, PricewaterhouseCoopers LLP, TD Securities (USA)
Inc., NationsBanc Montgomery Securities LLC, or Raymond James & Associates, Inc.
V. "Settled Claims" means all (i) all claims, rights, demands, suits, matters, issues or
causes of action against the D&O Defendants or any Released Party, whether known or
unknown, asserted or unasserted, whether under state or federal law, including the federal
securities laws, and whether directly, indirectly, derivatively, representatively or in any other
capacity, arising out of any losses sustained by the Class with respect to any transaction in or
related to the Bonds (but excluding any claims to enforce the terms of the Partial Settlement);
and (ii) all claims, rights, demands, suits, matters, issues or causes of action by the D&O
Defendants or any Released Party against Lead Plaintiffs, Class Members, or any of their present
and former partners, principals, employees, predecessors, successors, affiliates, officers,
attorneys, agents, insurers and assigns (including Lead Counsel), whether known or unknown,
whether under state or federal law, and whether directly, indirectly, derivatively, representatively
or in any other capacity, arising out of, or relating in any way to the institution, prosecution, or
Partial Settlement of the Action (but excluding any claims to enforce the terms of the Partial
Settlement).
W. "Order and Final Judgment" means the proposed order to be entered approving
the Partial Settlement substantially in the form attached hereto as Exhibit A.
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X. "Preliminary Approval Order" means the proposed order preliminarily approving
the Partial Settlement and directing notice thereof to the Class substantially in the form attached
hereto as Exhibit B.
Y. "Publication Notice" means the summary notice of the proposed Partial
Settlement and hearing for publication substantially in the form attached as Exhibit C.
Z. "Settlement Notice" means the Notice of (i) Proposed Partial Settlement of Class
Action, (ii) Hearing on Proposed Settlement with Certain Individual Defendants and Attorneys'
Fee Petition and (iii) Right to Share in Settlement Funds, which is sent to members of the Class
substantially in the form attached hereto as Exhibit D.
aa. "Plan of Allocation" refers to the manner in which the Net Class Settlement
Funds shall be allocated among Authorized Claimants. It does not include the allocation of the
Gross Settlement Amount as between the Class and the Individual Plaintiffs.
SCOPE AND EFFECT OF SETTLEMENT
2. The obligations incurred pursuant to this Stipulation shall be in full and final
disposition of the Action and any and all Settled Claims between members of the Class and the
D&O Defendants and all Released Parties.
3. It is hereby expressly understood and agreed that the Individual Plaintiffs and the
D&O Defendants shall execute separate stipulations for each of the Individual Actions in
substantially the form attached hereto as Exhibit E, and that the Individual Plaintiffs' claims
against the D&O Defendants under the Exchange Act or other provincial, national, state or
federal law arising out of the Bonds will thereby be settled.
4. Pursuant to the Order and Final Judgment, upon the Effective Date of the Partial
Settlement with the D&O Defendants, (a) the Lead Plaintiffs and the Class Members, on behalf
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of themselves, their heirs, executors, administrators, successors and assigns shall, with respect to
each and every Settled Claim, release and forever discharge, and shall forever be enjoined from
prosecuting, any Settled Claims against any Released Parties, and (b) the D&O Defendants and
each Released Party shall release and forever discharge, and shall forever be enjoined from
prosecuting, any Settled Claims against Plaintiffs and/or Plaintiffs' present and former partners,
principals, employees, predecessors, successors, affiliates, officers, attorneys, agents, insurers
and assigns (including Lead Counsel).
THE SETTLEMENT CONSIDERATION
5. On or prior to May 6, 2005 or the entry of the Preliminary Approval Order,
whichever is later (the "Payment Date"), certain of the Insurers shall severally, in the amounts
set forth in Exhibit G, cause the total sum of Thirty-Six Million Dollars ($36,000,000) in cash to
be wire transferred into one or more escrow accounts as instructed by Lead Counsel, subject to
Order of the Court. It is understood and agreed that this amount is being paid for the benefit of
the D&O Defendants by certain of the Insurers severally, in the amounts set forth in Exhibit G,
and not by the D&O Defendants, who shall have no liability or responsibility to pay such
amounts in the event of a failure by the Insurers to pay such amounts. It is understood and
agreed that Reliance's payment is subject to appropriate court approval, and that Reliance shall
use its best efforts to expeditiously seek any necessary approval as soon as reasonably possible,
and shall deliver its portion of the settlement amount by wire transfer as set forth above forthwith
upon receipt of final court approval from the Ontario Superior Court of Justice. In the event that
such sums are not wire transferred by the Payment Date, then interest shall be paid at the rate of
2.7% per annum until such sums are paid. National Union shall pay any interest accruing to the
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Reliance portion of the Partial Settlement, and shall have no right of recourse to Reliance for
reimbursement of same.
6. Also on or prior to the Payment Date, Michael J. Bragagnolo shall cause the sum
of Ten Thousand Dollars ($10,000) to be wire transferred to one or more escrow accounts as
instructed by Lead Counsel, subject to Order of the Court.
7. The amounts to be paid pursuant to paragraphs 5 and 6 hereof shall be referred to
as the "Gross Settlement Amount." Of the Gross Settlement Amount, $14,410,000 (the "Class
Settlement Amount") shall be allocated to, and held in escrow on behalf of, the Class in
consideration of the settlement of the claims by the Class Members against the D&O Defendants
in this Action (the "Class Settlement Fund"), and $21,600,000 (the "Individual Plaintiffs
Settlement Amount") shall be allocated to, and held in escrow on behalf of, the Individual
Plaintiffs in consideration of the settlement of the claims against the D&O Defendants in the
Individual Actions (the "Individual Plaintiffs Settlement Fund"). The Class Settlement Fund and
the Individual Plaintiffs Settlement Fund are collectively referred to herein as the "Settlement
Funds," and the Class Settlement Amount and the Individual Plaintiff Settlement Amount are
referred to herein collectively as the "Settlement Amounts."
8. The Class Settlement Fund, net of any Taxes (as defined below) on the income
thereof, shall be used to pay (i) the notice and administration costs as provided in Paragraph 13
hereof, (ii) the attorneys' fee and expense award as provided in Paragraph 14 hereof, and (iii) the
administration expenses as provided in Paragraph 16 hereof.
a. The balance of the Class Settlement Fund after the above payments shall
be the Net Class Settlement Fund and shall be distributed to the Authorized Claimants as
provided in Paragraphs 23-27 hereof.
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b. The Net Class Settlement Fund shall be held in escrow by Lead Counsel.
C. All funds held in the escrow account 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 persons paying the same pursuant to this Stipulation and/or
further order of the Court.
d. Any funds in the escrow account shall be held by, and invested and
reinvested by, one of the one hundred (100) largest banks in the United States.
9. The parties hereto agree that the Net Class Settlement Fund is intended to be a
Qualified Settlement Fund within the meaning of Treasury Regulation § 1.468B-1 and that Lead
Counsel, as administrator of the Net Class Settlement Fund within the meaning of Treasury
Regulation § 1.468B-2(k)(3), shall be responsible for filing tax returns for the Net Class
Settlement Fund and paying from the Net Class Settlement Fund any Taxes (as defined below)
owed with respect to the Net Class Settlement Fund. Counsel for the D&O Defendants agree to
provide promptly to Lead Counsel the statement described in Treasury Regulation § 1.468B-3(e).
10. All (i) taxes on the income of the Net Class Settlement Fund and (ii) expenses and
costs incurred in connection with the taxation of the Net Class Settlement Fund (including,
without limitation, expenses of tax attorneys and accountants) (collectively "Taxes") shall be
paid out of the Net Class Settlement Fund, shall be considered to be a cost of administration of
the Partial Settlement, and shall be timely paid by the escrow agents without prior Order of the
Court.
11. This Partial Settlement between the Plaintiffs and the D&O Defendants is in no
way affected by other settlements entered into by the D&O Defendants or any of the Plaintiffs,
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or any judgments obtained by any of the Plaintiffs with respect to other Safety-Kleen related
matters, including, but not limited to, with respect to Kenneth W. Winger and/or Paul R.
Humphreys, except as provided in this Stipulation. Plaintiffs are entitled to an assignment of any
judgment PwC may obtain for contribution against Kenneth W. Winger and/or Paul R.
Humphreys arising out of the action entitled Toronto Dominion (Texas), Inc., et al. v.
PricewaterhouseCoopers, et al., Civil Action No. 00 VS 012679 F, in the State Court of Fulton
County, Georgia. To the extent that PwC or any of the Plaintiffs obtain a judgment for
contribution against Mr. Winger and/or Mr. Humphreys, and to the extent Mr. Winger and/or
Mr. Humphreys obtain any judgment against any of the D&O Defendants for contribution arising
out of such claims, Plaintiffs shall reduce their recovery against Mr. Winger and/or Mr.
Humphreys to the extent of such judgment for contribution in favor of Mr. Winger or Mr.
Humphreys against any of the D&O Defendants, in order to satisfy PwC's or the Plaintiffs'
contribution claim. For the reasons set forth in Recital D, inter alia, the D&O Defendants and the
Plaintiffs do not dispute that there is no coverage under any insurance policy for Mr. Humphreys
and/or Mr. Winger. The Plaintiffs acknowledge that they are releasing the Insurers with respect
to any judgments against or settlements with Mr. Humphreys and/or Mr. Winger, whether
obtained directly or by assignment from PwC, and covenant not to claim against or sue the
Insurers with respect thereto, and to reduce any judgment which they may obtain against Mr.
Humphreys and/or Mr. Winger by any amount (up to the amount of the judgment) for which a
court determines any of the Insurers to be liable in order to satisfy any claims by them against the
Insurers.
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ADMINISTRATION
12. The Claims Administrator shall administer the Partial Settlement under Lead
Counsel's supervision and subject to the jurisdiction of the Court. The D&O Defendants'
Counsel and the Insurers shall cooperate in the administration of the Partial Settlement to the
extent reasonably necessary to effectuate its terms.
13. Lead Counsel may expend from the Net Class Settlement Amount, without further
approval from the D&O Defendants or the Court, up to the sum of Five Hundred Thousand
Dollars ($500,000) to pay the reasonable costs and expenses associated with the administration
of the Partial Settlement, including without limitation the costs of identifying members of the
Class, the costs of publication, printing and mailing the Settlement Notice, reimbursements to
nominee owners for forwarding notice to their beneficial owners, and the administrative
expenses incurred and fees charged by the Claims Administrator in connection with providing
notice and processing the submitted claims.
ATTORNEYS' FEES AND EXPENSES
14. Lead Counsel will apply to the Court for an award of attorneys' fees and
reimbursement of expenses, plus interest, from the Class Settlement Fund. The D&O Defendants
take no position regarding the amount of attorneys' fees or costs payable to Lead Counsel. Such
attorneys' fees, expenses, and interest as are awarded by the Court from the Class Settlement
Fund (the "Fee Award") shall be payable from the Class Settlement Fund to Lead Counsel
immediately upon entry of an Order of the Court approving the Partial Settlement and awarding
such fees and expenses, subject to Lead Counsel's obligation to make appropriate refunds or
repayments to the Class Settlement Fund plus accrued interest at the same net rate as is earned by
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the Class Settlement Fund, if and when, as a result of any appeal and/or further proceedings on
remand, or successful collateral attack, the fee and cost award is reduced or reversed.
15. Except as provided herein, neither the Plaintiffs nor the D&O Defendants shall
bear responsibility for the attorneys' fees and costs incurred by the other in connection with the
Action and the Individual Actions.
ADMINISTRATION EXPENSES
16. Lead Counsel will apply to the Court, on notice to the D&O Defendants' Counsel
and counsel to the Insurers listed on Exhibit G, for an order (the "Class Distribution Order")
approving the Claims Administrator's administrative determinations concerning the acceptance
and rejection of the claims submitted herein and approving any fees and expenses not previously
applied for, including the fees and expenses of the Claims Administrator, and, if the Effective
Date has occurred, directing payment of the Net Class Settlement Fund to Authorized Claimants.
ADMINISTRATION OF THE SETTLEMENT
17. Any Class Member who does not submit a valid Proof of Claim will not be
entitled to receive any of the proceeds from the Net Class Settlement Fund but will otherwise 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 herein, and will be
barred from bringing any action against the Released Parties concerning any Settled Claims.
18. Lead Counsel shall be responsible for supervising the administration of the
Settlement and disbursement of the Net Class Settlement Fund by the Claims Administrator. The
D&O Defendants and Insurers shall have no liability, obligation or responsibility for the
administration of the Partial Settlement or disbursement of the Net Class Settlement Fund. Lead
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Counsel shall have the right, but not the obligation, to waive what they deem to be formal or
technical defects in any Proofs of Claims submitted in the interests of achieving substantial
justice.
19. 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 conditions shall apply, subject
to Lead Counsel's discretion to waive any such conditions in the interests of achieving
substantial justice:
a. Each Class Member shall be required to submit a Proof of Claim,
supported by such documents as are designated therein, including proof of the Claimant's loss, or
such other documents or proof as the Claims Administrator, in its discretion (subject to Lead
Counsel's supervision), may deem acceptable;
b. All Proofs of Claim must be submitted by the date specified in the
Settlement Notice unless such period is extended by Order of the Court. Any Class Member who
fails to submit a Proof of Claim by such date shall be forever barred from receiving any payment
pursuant to this Stipulation (unless, by Order of the Court, a later submitted Proof of Claim by
such Class Member is approved), but shall in all other respects be bound by all of the terms of
this Stipulation and the Partial Settlement, including the terms of the Order and Final Judgment
to be entered in this Action and the releases provided for herein. Provided that it is received
before the motion for the Class Distribution Order is filed, a Proof of Claim shall be deemed to
have been submitted when posted, if received with a postmark indicated on the envelope and if
mailed by first-class mail and addressed in accordance with the instructions in the Settlement
Notice. In all other cases, the Proof of Claim shall be deemed to have been submitted when
actually received by the Claims Administrator;
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C. Each Proof of Claim shall be submitted to and reviewed by the Claims
Administrator, under the supervision of Lead Counsel, who shall determine in accordance with
this Stipulation the extent, if any, to which each claim shall be allowed, subject to review by the
Court pursuant to Subparagraph a below;
d. Proofs of Claim that do not meet the submission requirements may be
rejected. Prior to rejection of a Proof of Claim, the Claims Administrator shall communicate with
the Claimant in an effort to remedy the curable deficiencies in the Proof of Claims submitted.
The Claims Administrator, under the supervision of Lead Counsel, shall notify, in a timely
fashion and in writing, all Claimants whose Proofs of Claim they propose to reject in whole or in
part, setting forth the reasons therefor, and shall indicate in such notice that the Claimant whose
claim is to be rejected has the right to 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 the rejection, the Claimant must, within twenty (20) days after the date of mailing of
the notice required in Subparagraph d above, serve upon the Claims 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, Lead Counsel shall present the request for
review to the Court; and
f. The administrative determinations of the Claims Administrator accepting
and rejecting claims shall be presented to the Court, without notice to the D&O Defendants or
the D&O Defendants' Counsel, for approval by the Court in the Class Distribution Order.
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20. Each Claimant shall be deemed to have submitted 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 Civil Procedure, provided that such investigation and discovery shall
be limited to that Claimant's status as a Class Member and the validity and amount of the
Claimant's claim. No discovery shall be allowed on the merits of the Action or Partial
Settlement in connection with processing the Proofs of Claim.
21. 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 shall be
barred from participating in distributions from the Net Class Settlement Fund, but otherwise shall
be bound by all of the terms of this Stipulation and the Settlement, including the terms of the
Judgment to be entered in the Action and the releases provided for herein, and will be barred
from bringing any action against the Released Parties concerning the Settled Claims.
22. All proceedings with respect to the administration, processing and determination
of claims described 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.
DISTRIBUTION TO AUTHORIZED CLAIMANTS
23. The Claims Administrator shall determine each Authorized Claimant's pro rata
share of the Net Class Settlement Fund based upon each Authorized Claimant's Recognized
Claim (as defined in the Plan of Allocation approved by the Court).
24. The Plan of Allocation is not a necessary term of this Stipulation and it is not a
condition of this Stipulation that any particular Plan of Allocation be approved.
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25. Each Authorized Claimant shall be allocated a pro rata share of the Net Class
Settlement Fund based on his or her Recognized Claim compared to the total Recognized Claims
of all accepted Authorized Claimants. This is not a claims-made settlement. The D&O
Defendants and the Insurers shall not be entitled to get back any of the settlement monies once
the Partial Settlement becomes final. The D&O Defendants and the Insurers shall have no
involvement in reviewing or challenging Proofs of Claim.
26. The Net Class Settlement Fund shall be distributed to Authorized Claimants by
the Claims 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 been notified and provided the opportunity to be heard concerning such rejection or
disallowance; (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 therefor has
expired; (iii) all matters with respect to attorneys' fees, costs, and disbursements have been
resolved by the Court, all appeals therefrom have been resolved or the time therefor has expired;
and (iv) all costs of administration have been paid.
27. If any funds remain in the Net Class Settlement Fund by reason of uncashed bank
drafts or otherwise, then, after the Claims Administrator has made reasonable and diligent efforts
to have Class Members who are entitled to participate in the distribution of the Net Class
Settlement Fund cash their bank drafts, any balance remaining in the Net Class Settlement Fund
one year after the initial distribution of such funds shall be re-distributed, after payment of any
unpaid costs or fees incurred in administering the Net Class Settlement Fund for such re-
distribution, to Authorized Claimants who have cashed their bank drafts and who would receive
at least $10.00 from such re-distribution. If after six months after such redistribution any funds
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shall remain in the Net Class Settlement Amounts, then such balance shall be contributed to non-
sectarian, not-for-profit, 501(c)(3) organization(s) designated by Lead Counsel.
TERMS OF PRELIMINARY APPROVAL ORDER
28. Promptly after this Stipulation has been fully executed, Lead Counsel and D&O
Defendants' Counsel jointly shall apply to the Court for entry of a Preliminary Approval Order,
substantially in the form annexed hereto as Exhibit B.
TERMS OF ORDERS AND FINAL JUDGMENT
29. If the Partial Settlement contemplated by this Stipulation is approved by the
Court, counsel for the parties shall request that the Court enter the Order and Final Judgment in
the Action substantially in the form annexed hereto as Exhibit A.
EFFECTIVE DATE OF PARTIAL SETTLEMENT AND WAIVER OR TERMINATION
30. The Effective Date of the Partial Settlement shall be the date when all the
following shall have occurred:
a. entry of the Preliminary Approval Order in all material respects in the
form annexed hereto as Exhibit B;
b. approval by the Court of the Partial Settlement, following notice to the
Class and a hearing, as prescribed by Rule 23 of the Federal Rules of Civil Procedure;
C. the Insurers (severally, in the amounts listed in Exhibit G) shall have paid
the Gross Settlement Amount;
d. entry by the Court of an Order and Final Judgment, in all material respects
in the form set forth in Exhibit A annexed hereto, and the expiration of any time for appeal or
review of such Order and Final Judgment, or, if any appeal is filed and not dismissed, after such
Order and Final Judgment is upheld on appeal in all material respects and is no longer subject to
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review upon appeal or review by writ of certiorari, or, in the event that the Court enters an order
and final judgment in a form other than that provided above ("Alternative Judgment") and none
of the parties hereto or the Insurers, through their counsel, elect to terminate such Partial
Settlement, the date that such Alternative Judgment becomes final and no longer subject to
appeal or review; and
e. the settlement of this Action is contingent upon the settlement of the
Individual Actions, and vice versa, subject to paragraph 32 below.
31. D&O Defendants' Counsel, counsel for the Insurers, or Lead Counsel, on behalf
of their respective clients, shall have the right to terminate the Partial Settlement and this
Stipulation by providing written notice of their election to do so ("Termination Notice") to
counsel for all other parties hereto within thirty (30) days after: (a) the Court's declining to enter
the Preliminary Approval Order in any material respect; (b) the Court's refusal to approve this
Stipulation or any material part of it; (c) the Court's declining to enter the Order and Final
Judgment in any material respect; (d) the date upon which the Order and Final Judgment is
modified or reversed in any material respect by the Court of Appeals or the Supreme Court; (e)
the date upon which an Alternative Judgment with respect to the Settlement is modified or
reversed in any material respect by the Court of Appeals or the Supreme Court; or (f) the
Insurers' failure to pay the Gross Settlement Amount as set forth in paragraph 5.
32. Without limiting any other rights under this Stipulation, by no later than ten (10)
calendar days before the Fairness Hearing, the D&O Defendants or the Insurers may unilaterally
withdraw from and terminate this Stipulation and the Partial Settlement if requests for exclusion
are received from the Plaintiffs exceeding an amount as set forth in a separate written agreement
among Lead Counsel, the Insurers through their counsel and D&O Defendants' Counsel.
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33. Except as otherwise provided herein, in the event the Partial Settlement is
terminated or fails to become effective for any reason, then the Plaintiffs and the D&O
Defendants shall be deemed to have reverted to their respective status in the Action and the
Individual Actions as of April 21, 2005 and, except as otherwise expressly provided, the parties
shall proceed in all respects as if the Partial Settlement and any related orders had not been
entered, and any portion of the Gross Settlement Amount previously paid by the Insurers and/or
Michael J. Bragagnolo, 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 Class Settlement Amount (not to exceed $500,000.00 without the prior
approval of the D&O Defendants or the Court), shall be returned to the Insurers and/or Michael
J. Bragagnolo, according to their several payments.
BAR ORDER AND JUDGMENT REDUCTION PROVISIONS
34. To the maximum extent permitted by law, the Order and Final Judgment (Exhibit
A) contemplated herein shall include an order that bars (1) all claims against the D&O
Defendants for indemnity or contribution or any other claim against the D&O Defendants arising
out of the Action or otherwise where the injury to the claimant is the claimant's actual or
threatened liability to the Plaintiffs arising out of or related to any transactions with respect to the
Bonds, (2) all claims by the D&O Defendants against any person for indemnity or contribution
arising out of the Action or otherwise where the injury is the actual or threatened liability to the
Plaintiffs arising out of or related to any transactions with respect to the Bonds, each to the
fullest extent permitted by 15 U.S.C. § 78u-4(f)(7), any common law, and any other law, rule or
regulation, and (3) any claim by any person or entity which is not a Released Party against the
Insurers arising out of or related to any of the obligations of the Insurers with respect to the
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Settled Claims of the Class, the Partial Settlement, and the Insurance Policies applicable thereto
(except claims to enforce the terms of the Partial Settlement); any person not a Defendant in the
Action may obtain relief from this part of the bar order upon a showing of prior and greater
entitlement to insurance proceeds. A challenge to the bar order set forth in this paragraph shall
not prevent or delay the completion of the Partial Settlement, the occurrence of the Effective
Date, or the entry of the Order and Final Judgment, and any appeal with respect to the bar order
shall not delay or otherwise affect the distribution of the Settlement Funds as provided herein. In
the event that any court finds that this paragraph is not enforceable as written, it shall be
modified or limited only to the extent necessary to allow it to be enforced to the fullest extent
allowed by law in accordance with its intent. The Class shall be entitled to distribution of the
Settlement Funds notwithstanding the pendency of any appeal of the bar order and the resolution
of any such appeal shall not disturb any Class Members' rights to retain the proceeds of the
Partial Settlement.
35. The Order and Final Judgment shall also provide that any non-settling party shall
be entitled to a reduction in any final verdict or judgment in an amount calculated as provided for
in 15 U.S.C. § 78u-4(f)(7)(B). In addition, any non-settling party who claims to be covered
under any insurance policy issued by an Insurer, if any, shall also be entitled to a credit against
any final judgment equal to the amount of coverage actually available, if any, that the Court
determines would have been available to such non-settling party under such insurance policy but
for the operation of the bar order in the Order and Final Judgment. A challenge to the provisions
of this paragraph shall not prevent or delay the completion of the Partial Settlement, the
occurrence of the Effective Date, or the entry of the Order and Final Judgment, and any appeal
with respect to this paragraph shall not delay or otherwise affect the distribution of the
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Settlement Funds as provided herein. In the event that any court finds that this paragraph is not
enforceable as written, it shall be modified or limited only to the extent necessary to allow it to
be enforced to the fullest extent allowed by law in accordance with its intent. The Class shall be
entitled to distribution of the Settlement Funds notwithstanding the pendency of any appeal of
the order based on this paragraph and the resolution of any such appeal shall not disturb any
Class Members' rights to retain the proceeds of the Partial Settlement.
NO ADMISSION OF WRONGDOING
36. This Stipulation, whether or not consummated, and any proceedings taken
pursuant to it:
a. shall not be offered or received against the D&O Defendants as evidence
of or construed as or deemed to be evidence of any presumption, concession, or admission by the
D&O Defendants with respect to the truth of any fact alleged by the Plaintiffs or the validity of
any claim that had been or could have been asserted in the Action, the Individual Actions, or in
any litigation, or the deficiency of any defense that has been or could have been asserted in the
Action, the Individual Actions, or in any litigation, or of any liability, negligence, fault, or
wrongdoing of the D&O Defendants;
b. shall not be construed as or received in evidence as an admission,
concession or presumption against the Plaintiffs or any of them that any of their claims are
without merit or are subject to any infirmities, or that damages recoverable under the Complaint
would not have exceeded the Settlement Amount;
C. shall not be construed against the D&O Defendants or the Plaintiffs 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;
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d. shall not be construed as an admission or agreement or concession by any
Insurer that there is coverage for this Action or any other action or for any other proceedings and
that the Insurers expressly do not waive and expressly reserve their rights with respect to
coverage for this Action or the validity of any insurance policy, whether or not this Partial
Settlement shall be consummated; provided however, that if this Partial Settlement is
consummated, the Insurers shall pay their several shares as set forth on Exhibit G, without
recourse to any D&O Defendant; and
e. shall not be used by the Insurers as a basis to deny coverage to any D&O
Defendants in this or any other matter, and the D&O Defendants and the Insurers agree that any
judgment as a matter of law which may be entered with regard to the claims against Mr. Winger
and/or Mr. Humphreys does not affect in any way any of the D&O Defendants' coverage under
any policy issued by any of the Insurers, and the Insurers agree not to contest coverage of the
D&O Defendants in any matter on that basis.
37. Promptly following the Court's preliminary approval of the Partial Settlement,
Plaintiffs shall request that the Court:
a. Enter judgment as a matter of law in favor of Plaintiffs and against
defendants Kenneth W. Winger and Paul R. Humphreys as to all claims;
b. Enter judgment as a matter of law finding that each of defendants Kenneth
W. Winger and Paul R. Humphreys committed a knowing violation of the federal securities laws
including but not limited to the anti-fraud provisions; and
C. Enter judgment as a matter of law awarding damages to Plaintiffs and
against defendants Kenneth W. Winger and Paul R. Humphreys as to all claims.
In the event the Court declines to enter any of the judgments set forth in subparagraphs
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37(a)-(c) above, the trial of the Action shall proceed against defendants Kenneth W. Winger and
Paul R. Humphreys in the manner directed by the Court.
MISCELLANEOUS PROVISIONS
38. All of the exhibits attached hereto are hereby incorporated by reference as though
fully set forth herein.
39. Each of the Insurers except Reliance hereby warrants that it is not insolvent and
that the payments required to be made by it pursuant to this Stipulation will not render it
insolvent within the meaning of and/or for the purposes of the United States Bankruptcy Code,
including §§ 101 and 547 thereof. This warranty is made by the Insurers (except Reliance) and
not by their counsel.
40. In the event of the entry of an order of a court of competent jurisdiction
determining the transfer of money to the Settlement Funds or any portion thereof by or on behalf
of any Insurer 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
Settlement Funds by others, then, at the election of 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 D&O Defendants pursuant to this Stipulation; and the Order and Final Judgment
shall be null and void, and the parties shall be restored to their respective positions in the
litigation as of April 21, 2005 and any cash amounts in the Settlement Funds shall be returned as
provided in Paragraph 33 above.
41. The parties to this Stipulation intend the Partial Settlement to be a final and
complete resolution of all disputes asserted or which could be asserted by the Class Members
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against the D&O Defendants or any Released Party with respect to the Settled Claims.
Accordingly, the Plaintiffs and the D&O Defendants agree not to assert in any forum that the
Action was brought by the Plaintiffs or defended by the D&O Defendants in bad faith or without
a reasonable basis. The parties hereto shall assert no claims of any violation of Rule 11 of the
Federal Rules of Civil Procedure relating to the prosecution, defense, or settlement of the Action.
The parties agree that the amounts paid and the other terms of the Partial 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.
42. This Stipulation may not be modified or amended, nor may any of its provisions
be waived, except by a writing signed by all parties hereto or their successors-in-interest.
43. The headings herein are used for the purpose of convenience only and are not
meant to have legal effect.
44. The administration and consummation of the Partial Settlement as embodied in
this Stipulation shall be under the authority of the Court and the Court shall retain jurisdiction for
the purpose of entering orders providing for awards of attorneys' fees and expenses to Lead
Counsel, enforcing the terms of this Stipulation, and other matters relating to the Partial
Settlement.
45. 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.
46. This Stipulation and its exhibits constitute the entire agreement among the parties
hereto concerning the Partial Settlement, and no representations, warranties, or inducements have
been made by any party hereto concerning this Stipulation and its exhibits other than those
contained and memorialized in such documents.
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47. 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 provided that
counsel for the parties to this Stipulation shall exchange among themselves original signed
counterparts.
48. This Stipulation shall be binding upon, and inure to the benefit of, the successors
and assigns of the parties hereto.
49. 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 State of
South Carolina without regard to conflicts of laws, except to the extent that federal law requires
that federal law governs.
50. This Stipulation shall not be construed more strictly against one 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.
51. All counsel and any other person executing this Stipulation and any of the
exhibits hereto, or any related settlement documents, warrant and represent that they have the full
authority to do so and that they have the authority to take appropriate action required or
permitted to be taken pursuant to the Stipulation to effectuate its terms.
52. Lead Counsel and the D&O Defendants' Counsel agree to cooperate fully with
one another in seeking Court approval of the Preliminary Approval Order, the Stipulation and the
Partial Settlement, and to promptly agree upon and execute all such other documentation as may
be reasonably required to obtain final approval by the Court of the Partial Settlement.
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DATED: April 02 , 2005
GRANT Al EISENHOFER, P.A.Stuart M. w antMegan D. McIntyreDiane ZilkaChase Manhattan Centre1201 N. Market Street, Suite 2100Wilmington, DE 19801(302) 622-7000On Behalf of the Class
C^'t^ ^ PtA—̂ SIDLEY AUSTIN BROWN & WOOD LLPJohn N. GalloEric S. MattsonPreya S. TarsneyBank One Plaza10 S. Dearborn StreetChicago, IL 60603(312) 853-7000(312) 853-7036 (Fax)Counsel r James '. Bullock
OT Vi F r, G ;^ ► ICKER, LTD.Terence bellJames Str icker33 N. De. s orn St.Ste. 600Chicago, IL 60602Counsel for Leslie W. Haworth and JohnGrainger
30
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 30 of 99
& ' -' OROUGH, LLPStephen G. MorrisonJames J. McGovernWilliam P. SimpsonMeridian/17th Floor1320 Main StreetColumbia, SC 29201(803) 799-2000Counsel for John W. Rollins, Jr., the Estate ofJohn W. Rollins, Sr., David W. Thomas, Jr.,Grover.r. Wrenn, Henry B. Tippie, and JamesL. Wakham, Robert W. Luba
LAW OFFICES OF WILMOT IRVINWilmot B. IrvinRebecca G. Fulmer1522 Lady StreetP.O. Box 7816Columbia, SC 29202Counsel for Michael Bragagnolo
LEWIS BRISBOIS BISGARD & SMITH LLPRichard George199 Water Street, 25a' FloorNew York, NY 1003 8(212) 232-1300(212) 232-1399 (Fax)Counsel for American Home AssuranceCompany and National Union Fire InsuranceCompany of Pittsburgh Pa.
KPMG Inc., in its capacity as liquidator ofRELIANCE INSURANCE COMPANY — CanadianBranch, in liquidation
By: Robert O. SandersonPresident, KPMG Inc., and not in its personal
capacity
31
R 3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 31 of 99pr 3a Linda S. George 908-273-8058 p,2
NELSON MULLINS RILEY& SCARBOROUGH, LLPStephen G. MorrisonJames J. McGovernWilliam P. SimpsonMeridian/17th Floor1320 Main StreetColumbia, SC 29201(803)799-2000
Counsel for John W. Rollins, Jr., the Estate ofJohn W. Rollins, Sr., David W. Thomas, Jr.,Grover C. Wrenn, Henry B. Tippie, and JamesL. Wareham, Robert W. Luba
LAW OFFICES OF WILMOT IRVINWilmot B. IrvinRebecca G. Fulmer1522 Lady StreetP.O. Box 7816Columbia, SC 29202Counsel for Michael Bragagnolo
L f ^LEWIS BRISBOIS BISGARD & SMITH LRichard George
199 Water Street, 25 th FloorNew York, NY 10038(212)232-1300
(212) 232-1399 (Fax)
Counsel for American Home AssuranceCompany and National Union Fire InsuranceCompany of Pittsburgh Pa.
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3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 32 of 99
EXHIBIT
A
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 33 of 99
IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF SOUTH CAROLINA
COLUMBIA DIVISION
IN RE SAFETY-KLEEN CORP. ) Consol. Case No. 3-00-1145 17BONDHOLDERS LITIGATION )
ORDER AND FINAL JUDGMENT
On , 2005, a hearing having been held before this Court to determine: (1)
whether the terms and conditions of the Stipulation and Agreement of Settlement dated April 21,
2005 (the "Stipulation"), including the releases provided for in the Stipulation, are fair,
reasonable and adequate for the settlement of all claims asserted by the Class against defendants
and former defendants James R. Bullock, Leslie W. Haworth, John W. Rollins, Jr., the Estate of
John W. Rollins, Sr., David E. Thomas, Jr., Grover C. Wrenn, Henry B. Tippie, Michael J.
Bragagnolo, Robert W. Luba and James L. Wareham (collectively, the "D&O Defendants") in
the Complaint now pending in this Court under the above caption, and should be approved; (2)
whether judgment should be entered dismissing the Complaint with prejudice as to the D&O
Defendants; and (3) whether and in what amount to award Plaintiffs' Lead Counsel fees and
reimbursement of expenses.
The Court having considered all matters submitted to it at the hearing and otherwise; and
it appearing that a notice of the hearing substantially in the form approved by the Court was
mailed to all persons or entities reasonably identifiable who purchased the Bonds at issue in this
Action from April 17, 1998 through March 5, 2000 (dates inclusive) (the "Class Period"), and
who were damaged thereby, except those persons or entities excluded from the definition of the
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 34 of 99
Class or who previously excluded themselves from the Class, and that a summary notice of the
hearing substantially in the form approved by the Court was published on one occasion in the
national edition of Investors' Business Daily, and the Court having considered and determined
the fairness and reasonableness of the award of attorneys' fees and expenses requested; and all
capitalized terms used herein having the meanings as set forth and defined in the Stipulation.
NOW, THEREFORE, IT IS HEREBY ORDERED THAT:
1. The Court has jurisdiction over the subject matter of the Action, the Plaintiffs, the
Class Members, and the D&O Defendants.
2. Notice of the pendency of this Action as a class action and of the proposed Partial
Settlement was given to all Class Members who could be identified with reasonable effort. The
form and method of notifying the Class of the pendency of the action as a class action and the
terms and conditions of the proposed Partial Settlement met the requirements of Rule 23 of the
Federal Rules of Civil Procedure, Section 21D(a)(7) of the Securities Exchange Act of 1934, 15
U.S.C. § 78u-4(a)(7) as amended by the Private Securities Litigation Reform Act of 1995 (the
"PSLRA" ), due process, and any other applicable law; constituted the best notice practicable
under the circumstances; and constituted due and sufficient notice to all persons and entities
entitled thereto.
3. The Partial Settlement is approved as fair, reasonable and adequate, and the
parties are directed to and shall consummate and abide by the Partial Settlement in accordance
with the terms and provisions of the Stipulation.
4. The Complaint, which the Court finds was filed on a good faith basis in
accordance with the PSLRA and Rule 11 of the Federal Rules of Civil Procedure based upon all
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publicly available information, is hereby dismissed with prejudice and without costs, except as
provided in the Stipulation, as against the D&O Defendants only.
5. Class Members who have not previously excluded themselves from the Class and
the successors and assigns of any of them are hereby permanently barred and enjoined from
instituting, commencing or prosecuting all claims, rights, demands, suits, matters, issues or
causes of action, whether known or unknown, asserted or unasserted, whether under state or
federal law, including the federal securities laws, and whether directly, indirectly, derivatively,
representatively or in any other capacity, arising out of losses sustained by the Class with respect
to any transaction in or related to the Bonds (the "Settled Claims") (but excluding any claims to
enforce the terms of the Partial Settlement) against the D&O Defendants, trusts for which any of
the D&O Defendants is the settlor or which is for the benefit of them or their families; the D&O
Defendants' personal or legal representatives, heirs, executors, administrators, and any other
Person acting on their behalf, the Insurers; and all of the D&O Defendants' past and present
agents, employees, attorneys, insurers, co-insurers, reinsurers, accountants, advisors, successors,
and assigns; provided, however, that nothing herein shall bar or enjoin any members of the Class
from instituting or pursuing any claims against Kenneth W. Winger, Paul R. Humphreys,
PricewaterhouseCoopers LLP, TD Securities (USA) Inc., NationsBanc Montgomery Securities
LLC, or Raymond James & Associates, Inc. The Settled Claims are hereby compromised,
settled, released, discharged and dismissed as against the D&O Defendants and any Released
Party with prejudice by virtue of the proceedings herein and this Order and Final Judgment.
6. The D&O Defendants, trusts for which any of the D&O Defendants is the settlor
or which is for the benefit of them or their families; the D&O Defendants' personal or legal
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representatives, heirs, executors, administrators, and any other Person acting on their behalf, and
all of the D&O Defendants' past and present agents, employees, attorneys, Insurers, co-insurers,
reinsurers, accountants, advisors, successors, and assigns are hereby permanently barred and
enjoined from instituting, commencing or prosecuting all claims, rights, demands, suits, matters,
issues or causes of action against the Lead Plaintiffs, the Class Members, or any of their present
and former partners, principals, employees, predecessors, successors, affiliates, officers,
attorneys, agents, insurers and assigns (including Plaintiffs' Lead Counsel), whether known or
unknown, whether under state or federal law, and whether directly, indirectly, derivatively,
representatively or in any other capacity, arising out of, or relating in any way to the institution,
prosecution, or settlement of the Action (but excluding any claims to enforce the terms of the
Partial Settlement).
7. To the maximum extent permitted by law, the Court hereby bars (1) all claims
against the D&O Defendants for indemnity or contribution or any other claim against the D&O
Defendants arising out of the Action or otherwise where the injury to the claimant is the
claimant's actual or threatened liability to the Plaintiffs arising out of or related to any
transactions with respect to the Bonds, (2) all claims by the D&O Defendants against any person
for indemnity or contribution arising out of the Action or otherwise where the injury to the
claimant is the claimant's actual or threatened liability to the Plaintiffs arising out of or related to
any transactions with respect to the Bonds, other than a person whose liability has been
extinguished by the Partial Settlement, each to the fullest extent permitted by 15 U.S.C. § 78u-
4(f)(7), any common law, and any other law, rule or regulation, and (3) any claim against the
Insurers arising out of or related to any of the obligations of the Insurers with respect to the
Settled Claims of the Class, the Partial Settlement, and the Insurance Policies applicable thereto
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(except claims to enforce the terms of the Partial Settlement); any person not a Defendant in the
Action may obtain relief from this part of the bar order upon a showing of prior and greater
entitlement to insurance proceeds. A challenge to this bar order shall not prevent or delay the
completion of the Partial Settlement, the occurrence of the Effective Date, or the entry of this
Order and Final Judgment, and any appeal with respect to the bar order shall not delay or
otherwise affect the distribution of the Settlement Funds as provided in the Stipulation. In the
event that any court finds that this paragraph is not enforceable as written, it shall be modified or
limited only to the extent necessary to allow it to be enforced to the fullest extent allowed by law
in accordance with its intent. The Class shall be entitled to distribution of the Settlement Funds
notwithstanding the pendency of any appeal of this bar order, and the resolution of any such
appeal shall not disturb any Class Members' rights to retain the proceeds of the Partial
Settlement.
8. Any non-settling party shall be entitled to a reduction in any final verdict or
judgment in an amount calculated as provided for in 15 U.S.C. § 78u-4(f)(7)(B). In addition, any
non-settling party who claims to be covered under any insurance policy issued by an Insurer, if
any, shall also be entitled to a credit against any final judgment equal to the amount of coverage
actually available, if any, that a court determines would have been available to such non-settling
party under such insurance policy but for the operation of the bar order in the Order and Final
Judgment. A challenge to the provisions of this paragraph of this order shall not prevent or delay
the completion of the Partial Settlement, the occurrence of the Effective Date, or the entry of this
Order and Final Judgment, and any appeal with respect to this paragraph shall not delay or
otherwise affect the distribution of the Settlement Funds as provided in the Stipulation. In the
event that any court finds that this paragraph is not enforceable as written, it shall be modified or
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limited only to the extent necessary to allow it to be enforced to the fullest extent allowed by law
in accordance with its intent. The Class shall be entitled to distribution of the Settlement Funds
notwithstanding the pendency of any appeal of the order based on this paragraph, and the
resolution of any such appeal shall not disturb any Class Members' rights to retain the proceeds
of the Partial Settlement.
8. Neither this Order and Final Judgment, the Stipulation, nor any of their terms and
provisions, nor any of the negotiations or proceedings connected therewith, nor any of the
documents or statement referred to therein shall be:
a. offered or received against the D&O Defendants as evidence of or
construed as or deemed to be evidence of any presumption, concession, or admission by the
D&O Defendants with respect to the truth of any fact alleged by the Plaintiffs or the validity of
any claim that had been or could have been asserted in the Action or in any litigation, or the
deficiency of any defense that has been or could have been asserted in the Action or in any
litigation, or of any liability, negligence, fault, or wrongdoing of the D&O Defendants;
b. construed as or received in evidence as an admission, concession or
presumption against the Plaintiffs or any of them that any of their claims are without merit or are
subject to any infirmities, or that damages recoverable under the Complaint would not have
exceeded the Settlement Amounts; or
C. construed against the D&O Defendants or the Plaintiffs 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.
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9. The Court finds that all parties to the Stipulation and their counsel have complied
with each requirement of Rule 11 of the Federal Rules of Civil Procedure as to all proceedings
herein.
10. Plaintiffs' Lead Counsel are hereby awarded $ in attorneys' fees,
which shall be paid from the Class Settlement Fund and which the Court finds to be fair and
reasonable, and $ in reimbursement of expenses, which shall be paid to
Plaintiffs' Lead Counsel from the Class Settlement Fund with interest from the date such Class
Settlement Fund was funded to the date of payment at the same net rate that the Class Settlement
Fund earns.
11. Exclusive jurisdiction is hereby retained over the parties and the Class Members
for all matters relating to this Action, including the administration, interpretation, effectuation or
enforcement of the Stipulation and this Order and Final Judgment, and including any application
for fees and expenses incurred in connection with administering and distributing the settlement
proceeds to the members of the Class.
12. Without further order of the Court, the parties may agree to reasonable extensions
of time to carry out any provisions of the Stipulation.
13. There is no just reason for delay in the entry of this Order and Final Judgment and
immediate entry by the Clerk of Court is expressly directed pursuant to Rule 54(b) of the Federal
Rules of Civil Procedure.
DATED: HONORABLE JOSEPH F. ANDERSON, JR.UNITED STATES DISTRICT JUDGE
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EXHIBIT
B
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 41 of 99
ftAPR
IN THE UNITED STATES DISTRICT COURT 44&Ay ^V 21045PR
FOR THE DISTRICT OF SOUTH CAROLINA ^^COLUMBIA DIVISION $
IN RE SAFETY-KLEEN CORP. ) Consol. Case No. 3-00-1145 17BONDHOLDERS LITIGATION )
PRELIMINARY APPROVAL ORDER
WHEREAS, by Order dated January 9, 2001, the Court appointed American High
Income Trust and State Street Research Income Trust as Lead Plaintiffs in the above captioned
action (the "Action"), and Grant & Eisenhofer, P.A. as Lead Counsel;
WHEREAS, the parties having made application, pursuant to Rule 23 of the Federal
Rules of Civil Procedure, for an order preliminarily approving the partial settlement of the
Action ("Partial Settlement") in accordance with the Stipulation of Settlement, dated April 21,
2005 ("Stipulation") as between Lead Plaintiffs and defendants and former defendants James R.
Bullock, Leslie W. Haworth, John W. Rollins, Jr., the estate of John W. Rollins, Sr., David E.
Thomas, Jr., Grover C. Wrenn, Henry B. Tippie, Michael J. Bragagnolo, Robert W. Luba and
James L. Wareham (collectively, the "D&O Defendants"), which sets forth the terms and
conditions for a proposed Partial Settlement of the Action and for the release of certain claims
(defined in the Stipulation as "Settled Claims") and the dismissal of the Action against the D&O
Defendants with prejudice upon the terms and conditions set forth therein;
WHEREAS, this Court has previously certified a plaintiff class consisting of all persons
or entities who purchased registered 9'/4% senior subordinated notes issued by Laidlaw
Environmental Services, Inc. due 2008 (the "2008 Bonds") and/or registered 9'/4% senior notes
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 42 of 99
issued by Safety-Kleen Corp. due 2009 (the "2009 Bonds") during the period from April 17,
1998 through and including March 5, 2000 (the "Class Period"), and who were damaged thereby
under the Securities Act of 1933 (the "Class"); and
WHEREAS, the Class excludes the following persons and entities who would otherwise
fall within the Class definition: (1) Safety-Kleen Corp. and its predecessor, Laidlaw
Environmental Services, Inc. (collectively, the "Company") and the Defendants, (2) members of
the families of the Individual Defendants, (3) the subsidiaries or affiliates of the Company or of
any Defendant, (4) any person or entity who is a partner, officer, director, employee or
controlling person of the Company or any Defendant, (5) any entity in which any Defendant has
a controlling interest, and (6) the legal representatives, heirs, successors or assigns of any such
excluded person;
WHEREAS, the Court has read and considered the Stipulation and the exhibits attached
thereto, and has heard and considered arguments by counsel for Plaintiffs and the D&O
Defendants in favor of preliminary approval of the Partial Settlement;
WHEREAS, the Court finds, upon a preliminary evaluation, that the proposed Partial
Settlement appears to fall within the range of possible approval criteria, as it provides a
beneficial result for the Class and appears to be the product of good faith, informed and non-
collusive negotiations between experienced and able counsel for the settling parties;
WHEREAS, the Court also finds, upon a preliminary evaluation, that the Class should be
apprised of the Partial Settlement, allowed to file objections thereto and to appear at the Partial
Settlement Hearing, or alternatively, be afforded a reasonable opportunity to opt out of the
Action;
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WHEREAS, the Court finds, upon a preliminary evaluation, that the Publication Notice
and Notice attached to the Stipulation as Exhibits C and D, respectively, and the methodology
described in Paragraph 4 of this Order for the publication and dissemination of such Notice and
Publication Notice: (i) are the best practicable notice; (ii) are reasonably calculated, under the
circumstances, to apprise Class Members of the pendency of the Action and of their right to
object or exclude themselves from the proposed Partial Settlement; (iii) are reasonable and
constitute due, adequate and sufficient notice to all persons and entities entitled to receive notice;
and (iv) meet all applicable requirements of the Federal Rules of Civil Procedures, the United
States Constitution (including the Due Process Clause), the PSLRA, the Rules of the Court and
any other applicable law;
WHEREAS, unless otherwise stated herein, all defined terms contained herein shall have
the same meanings set forth in the Stipulation;
NOW THEREFORE, IT IS HEREBY ORDERED:
1. The Court does hereby preliminarily approve the Partial Settlement, as embodied
in the Stipulation, as being fair, reasonable and adequate as to the members of the Class, subject
to further consideration at the Partial Settlement Hearing described below.
2. A hearing (the :...'4V ement Hearing") shall be held before this Court on
June 21, 2005 at /0.'6a at the Matthew J. Perry, Jr. Courthouse, 901 Richland Street,
Columbia, South Carolina 29201. The purpose of the Partial Settlement Hearing will be to
determine whether the proposed Partial Settlement on the terms and conditions provided for in
the Stipulation is fair, reasonable and adequate to the Class and should be approved by the Court;
whether the Final Judgment as provided in the Stipulation should be entered herein; and to
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determine the amount of fees and expenses that should be awarded to Lead Plaintiffs and Lead
Counsel.
3. The Court approves, as to form and content, the Publication Notice and the Notice
of (i) Proposed Partial Settlement of Class Action, (ii) Hearing on Proposed Settlement With
D&O Defendants and Attorneys' Fee Petition, and (iii) Right to Share in Settlement Funds (the
"Notice"), attached to the Stipulation as Exhibits C and D, respectively, and finds that the
mailing and distribution of the Notice and publication of the Publication Notice in the manner
and form set forth in Paragraph 4 of this Order meet the requirements of Rule 23 of the Federal
Rules of Civil Procedure and due process, and is the best notice practicable under the
circumstances and shall constitute due and sufficient notice to all persons and entities entitled,
thereto.
4. The Class Settlement Amount shall be held by Lead Counsel in escrow in
custodia legis. Lead Counsel are hereby authorized to retain The Garden City Group, Inc.,
Claims Administrator, P.O. Box 9000, Merrick, NY 11566-9000 ("Claims Administrator") to
supervise and administer the notice procedure as well as the processing of claims as more fully
set forth below:
(a) Not later than May 2, 2005 (the "Notice Date"), Lead Counsel shall cause
a copy of the Notice substantially in the form attached to the Stipulation as Exhibit D, as well as
a Proof of Claim form, to be mailed by first class mail to all Class Members who can be
identified with reasonable effort;
(b) Not later than May 2, 2005, Lead Counsel shall cause the Publication
Notice, substantially in form attached to the Stipulation as Exhibit C, to be published on one
occasion in the national edition of Investors' Business Daily; and
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(c) Not later than May 13, 2005, Lead Counsel shall serve on the D&O
Defendants' counsel and file with the Court proof, by affidavit or declaration, of such mailing
and publication.
5. Nominees who purchased or acquired registered 2008 Bonds and/or registered
2009 Bonds for the benefit of another person or entity during the Class Period shall be requested
to send the Notice and the Proof of Claim to all such beneficial owners of the Bonds within ten
(10) days after receipt thereof, or send a list of the names and addresses of such beneficial
owners to the Claims Administrator within ten (10) days of receipt thereof in which event the
Claims Administrator shall promptly mail the Notice and Proof of Claim to such beneficial
owners.
6. All Class Members who do not timely and validly request exclusion from the
Class shall be bound by all proceedings, determinations, orders and judgments in the Action
relating to the Partial Settlement, including, but not limited to, the releases provided for therein,
whether favorable or unfavorable to the Classes.
7. Class Members who wish to exclude themselves from the Classes shall request
exclusion within the time and in the manner set forth in the Notice, including mailing or
delivering a written request for exclusion such that it is postmarked by June 3, 2005, to: Safety--
Kleen Bondholder Litigation, c/o The Garden City Group, Inc, Exclusions, P.O. Box 9000
#6070, Merrick, New York 11566-9000, as provided in the Notice.
8. Class Members who wish to participate in the Partial Settlement shall complete
and submit Proof of Claim forms in accordance with the instructions contained therein. Class
Members who submitted valid and timely Proof of Claim forms in connection with the
settlement between the Class and PwC shall not be required to submit further proof. Unless the
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Court orders otherwise, all Proof of Claim forms must be submitted to the Claims Administrator
by first-class mail, postmarked by August 15, 2005. Any Class Member who does not validly
and timely submit a Proof of Claim shall be barred from sharing in the distribution of the
proceeds of the Partial Settlement, unless otherwise ordered by the Court.
9. Any Class Member may enter an appearance in the Action, at their own expense,
individually or through counsel of their own choice, in which case such counsel must file with
the Clerk of Court and deliver to Lead Counsel and the D&O Defendants' counsel a notice of
appearance such that it is received by June 6, 2005, or as the Court may otherwise direct. Any
Class Member who does not enter an appearance will be represented by Lead Counsel.
10. All proceedings against the D&O Defendants in the Action are stayed until further
order of the Court, except as may be necessary to implement the Partial Settlement or comply
with the terms of the Stipulation. This stay shall not apply to or affect any proceedings in the
Action as against any defendants or former defendants other than the D&O Defendants.
11. Any Class Member may appear and show cause, if he, she or it has any such
cause, why the proposed Partial Settlement of the Action should or should not be approved as
fair, reasonable and adequate, or why a Final Judgment should or should not be entered thereon,
why the Plan of Allocation should or should not be approved, or why attorneys' fees and
expenses should or should not be awarded to Lead Counsel; provided, however, that no Class
Member or any other person or entity shall be heard or entitled to contest the approval of the
terms and conditions of the proposed Partial Settlement, or, if approved, the Final Judgment to be
entered thereon approving the same, or the order approving the Plan of Allocation, or the
attorneys' fees and expenses to be awarded to Lead Counsel, unless that person or entity has
filed written objections and copies of any such papers and briefs with the Clerk of the Court for
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the United States District Court for the District of South Carolina, Columbia Division, on or
before June 6, 2005 and unless copies of such written objection papers and briefs are received by
each of the following:
Eric S. MattsonSIDLEY AUSTIN BROWN & WOOD LLP10 S. Dearborn StreetChicago, IL 60603
Terry CampbellCOTSIRILOS, TIGHE & STREICKER, LTD.33 Dearborn St.Ste. 600Chicago, IL 60602
Stephen G. MorrisonNELSON MULLINS RILEY & SCARBOROUGH, LLPMeridian/17th Floor1320 Main StreetColumbia, SC 29201
Rebecca G. FulmerLAW OFFICES OF WILMOT IRVIN1522 Lady StreetP.O. Box 7816Columbia, SC 29202
Richard GeorgeLEWIS BRISBOIS BISGARD & SMITH LLP199 Water Street, 25t` FloorNew York, NY 10038
Megan D. McIntyreGRANT & EISENHOFER, P.A.Chase Manhattan Centre1201 N. Market Street, Suite 2100Wilmington, DE 19801
The Garden City Group, Inc.Claims AdministratorSafety-Kleen Bondholder LitigationP.O. Box 9000 #6070Merrick, NY 11566-9000
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The objections and/or briefs filed by the objecting Class Member must contain a statement of his,
her or its objection, as well as the specific reasons, if any, for each objection, including the legal
support the Class Member wishes to bring to the Court's attention and any evidence the Class
Member wishes to introduce in support of his, her or its objection. Any Class Member who does
not make his, her or its objection in the manner provided herein shall be deemed to have waived
such objection and shall be forever barred and foreclosed from making any objection to the
fairness, reasonableness or adequacy of the proposed Partial Settlement, to the Plan of
Allocation, and to the award of attorneys' fees and expenses to the Lead Plaintiffs and/or Lead
Counsel.
12. Neither the D&O Defendants nor the D&O Defendants' counsel shall have any
responsibility for any application for reimbursement of attorneys' fees or reimbursement of
expenses submitted by Lead Counsel, and such matters will be considered separately from the
fairness, reasonableness and adequacy of the Partial Settlement.
13. At or after the Partial Settlement Hearing, the Court shall determine whether any
application for attorneys' fees or reimbursement of expenses shall be approved.
14. All reasonable costs incurred in identifying and notifying Class Members, as well
as in administering the Partial Settlement, shall be paid as set forth in the Stipulation. In the
event the Partial Settlement is not approved by the Court, or otherwise fails to become effective,
neither the Lead Plaintiffs nor Lead Counsel shall have any obligation to repay to the D&O
Defendants or its insurers the reasonable and actual costs of Class Notice and of administration.
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15. The Court reserves the right to adjourn the date of the Partial Settlement Hearing
without further notice to Class Members and retains jurisdiction to consider all further
applications arising out of or connected with the proposed Partial Settlement. The Court may
approve the Partial Settlement, with such modifications as may be agreed to by the parties to the
Stipulation, if appropriate, without further notice to the Class.
IT IS SO ORDERED.
DATED 'ZL ),;() ;
40-r&I •..4 "o__.9F^: 0^HON - --LE JOSEPH F. ANDE - S : ikTED STATES DISTRICT JUDGE
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EXHIBIT
C
10
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IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF SOUTH CAROLINA
COLUMBIA DIVISION
IN RE SAFETY-KLEEN CORP. ) Consol. Case No. 3-00-1145 17BONDHOLDERS LITIGATION )
SUMMARY NOTICE OF PROPOSED PARTIAL SETTLEMENTOF CLASS ACTION AND SETTLEMENT HEARING
TO: ALL PERSONS OR ENTITIES (THE "CLASS") WHO PURCHASED ORACQUIRED ANY OF THE FOLLOWING BONDS (THE "BONDS"):
• Registered 9 1/4% Senior Subordinated Notes due 2008 issued by LaidlawEnvironmental Services, Inc. ("2008 Bonds");
• Registered 9 1/4% Senior Notes due 2009 issued by Safety-Kleen Corp. ("2009Bonds");
If you purchased these Bonds betweenApril 17, 1998 through and including March 5, 2000 (the "Class Period"),
and you lost money on the Bonds, you may be entitled to share in a settlement.
YOU ARE HEREBY NOTIFIED that the Lead Plaintiffs in the above-captioned action
have proposed a Partial Settlement with defendants and former defendants James R. Bullock,
Leslie W. Haworth, John W. Rollins, Jr., the estate of John W. Rollins, Sr., David E. Thomas,
Jr., Grover C. Wrenn, Henry B. Tippie, Michael J. Bragagnolo, Robert W. Luba and James L.
Wareham (the "Settling Defendants") whereby the Class Members will dismiss their claims
against the Settling Defendants arising out of any losses sustained with respect to any transaction
in or related to the 2008 Bonds or the 2009 Bonds, and the Settling Defendants' Insurance
Carriers will pay a settlement amount to the Class totaling Fourteen Million Four Hundred
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 52 of 99
Thousand Dollars ($14,400,000) in cash and one Settling Defendant will pay a settlement
amount to the Class totaling Ten Thousand Dollars ($10,000) in cash.
This Partial Settlement is in addition to a previous settlement with defendant
PricewaterhouseCoopers LLP, which provides for payment to the class in the amount of
$19,200,000. Two defendants, Kenneth W. Winger (the former Chief Executive Officer of the
Company) and Paul R. Humphreys (the former Chief Financial Officer of the Company), remain
in the case.
A hearing will be held before the Honorable Joseph F. Anderson, Jr. in the United States
District Court for the District of South Carolina, Columbia Division at )b: Oberon June 21, 2005
to determine whether the Partial Settlement should be approved by the Court as fair, reasonable,
and adequate, and to consider the application of Plaintiffs' Lead Counsel for attorneys' fees and
reimbursement of expenses, and to advise of the proposed release of claims.
IF YOU ARE A MEMBER OF THE CLASS DESCRIBED ABOVE, YOUR RIGHTS
WILL BE AFFECTED AND YOU MAY BE ENTITLED TO SHARE IN THE SETTLEMENT
FUNDS. If you have not yet received a Proof of Claim form and the full printed Notice of (i)
Proposed Partial Settlement of Class Action, (ii) Hearing on Proposed Settlement With Certain
Individual Defendants and Attorneys' Fees Petition and (iii) Right to Share in Settlement Funds,
you may obtain copies of these documents by contacting the Claims Administrator at:
Safety-Kleen Bondholder Litigationc/o The Garden City Group, Inc.Claims AdministratorP.O. Box 9000 #6070Merrick, NY 11566-9000
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Inquiries, other than requests for the forms of Notice and Proof of Claim form, may be made to
Plaintiffs' Lead Counsel:
Kimberly WierzelGRANT & EISENHOFER, P.A.Chase Manhattan Centre1201 N. Market StreetWilmington, DE 19801(302) 622-7000
To participate in the Partial Settlement, you must submit a Proof of Claim no later than
August 15, 2005. If you have submitted a timely and valid Proof of Claim in connection with the
partial settlement of the Action against PricewaterhouseCoopers LLP, that Proof of Claim will be
deemed effective for purposes of the Partial Settlement with the D&O Defendants and you need
not submit another Proof of Claim. If you are a Class Member and do not submit a proper Proof
of Claim, you will not share in the Partial Settlement, but you will be bound by the Order and
Final Judgment of the Court.
Further information may be obtained by directing your inquiry in writing to the Claims
Administrator at the address above.
DATED: 6#4
00$ e9tlu BY ORDER OF THE COURT
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EXHIBIT
D
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IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF SOUTH CAROLINA
COLUMBIA DIVISION
IN RE SAFETY-KLEEN CORP. )BONDHOLDERS LITIGATION
Consol. Case No. 3-00-1145 17)
NOTICE OF (1) PROPOSED PARTIAL SETTLEMENT OF CLASS ACTION.,(In HEARING ON PROPOSED SETTLEMENT WITH
CERTAIN INDIVIDUAL DEFENDANTS AND ATTORNEYS' FEE PETITION AND(III) RIGHT TO SHARE IN SETTLEMENT FUNDS
TO: ALL PERSONS OR ENTITIES WHO PURCHASED OR ACQUIRED ANY OF THEFOLLOWING BONDS (THE "BONDS'):
• Registered 9 1/4% Senior Subordinated Notes due 2008 issued by LaidlawEnvironmental Services, Inc. ("2008 Bonds");
• Registered 9 1/4% Senior Notes due 2009 issued by Safety-Kleen Corp.("2009 Bonds");
If you purchased these Bonds betweenApril 17, 1998 through and including March 5, 2000 (the "Class Period")
and you lost money on the Bonds, you may be entitled to share in asettlement.
To claim benefits that may be due to you, you must submit a Proof of Claim on the form attached to this Notice postmarked on or
before August 15, 2005
PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR RIGHTSWILL BE AFFECTED BY PROCEEDINGS IN THIS ACTION. IF YOU ARE A CLASSMEMBER, YOU ULTIMATELY MAY BE ENTITLED TO RECEIVE BENEFITSPURSUANT TO THE PROPOSED SETTLEMENT DESCRIBED HEREIN.
CLAIMS DEADLINE: CLAIMANTS MUST SUBMIT PROOFS OF CLAIM, ON THEFORM ACCOMPANYING THIS NOTICE, POSTMARKED ON OR BEFORE AUGUST 15,2005.
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I. PURPOSE OF THIS NOTICE
This Notice is given pursuant to Rule 23 of the Federal Rules of Civil Procedure and anOrder of the United States District Court for the District of South Carolina (the "Court"). Thepurpose of this Notice is to inform you that this Action, and the proposed Partial Settlement, willaffect all Class Members' rights. This Notice describes rights you may have under the proposedPartial Settlement and what steps you may take in relation to this Action. This Notice is not anexpression of any opinion by the Court as to the merits of any claims or any defenses asserted byany party in this Action, or the fairness or adequacy of the proposed Partial Settlement.
You are receiving this Notice because you may have purchased registered 2008 Bonds orregistered 2009 Bonds during the Class Period.
The above captioned lawsuit is a class action lawsuit (the "Action") in which the Courthas certified a Class (the "Class"), described more fully below, on whose behalf this lawsuit isbeing prosecuted.
By Order of the Court, this Notice is being sent to you in the belief that you may bea member of the Class, to inform you as follows:
• THE COURT HAS CERTIFIED THE ACTION AS A CLASS ACTION ONBEHALF OF THE CLASS DEFINED IN SECTION III BELOW.
• A PARTIAL SETTLEMENT OF THE ACTION HAS BEEN REACHED,SUBJECT TO COURT APPROVAL. THIS PARTIAL SETTLEMENT IS WITHONLY CERTAIN INDIVIDUAL DEFENDANTS, AND THE ACTION ISCONTINUING AGAINST OTHER DEFENDANTS. THE TERMS OF THEPARTIAL SETTLEMENT ARE DESCRIBED IN SECTION IV BELOW.
• IF YOU MEET THE CLASS DEFINITION, YOU ARE A MEMBER OF THECLASS AND YOU WILL BE BOUND BY THE PARTIAL SETTLEMENTAND THE RELEASES THAT ARE GIVEN PURSUANT THERETO, UNLESSYOU ACT TO EXCLUDE YOURSELF PURSUANT TO THEINSTRUCTIONS IN SECTION VII BELOW. IF YOU WISH TO REMAIN AMEMBER OF THE CLASS AND TO BE BOUND BY THE PARTIALSETTLEMENT AND RELEASES, YOU DO NOT NEED TO TAKE ANYACTION IN RESPONSE TO THIS NOTICE OTHER THAN WHAT ISOUTLINED IN SECTION VIII BELOW TO ESTABLISH THE DOLLARAMOUNT OF YOUR CLAIM.
• NO DETERMINATION HAS BEEN MADE ON THE MERITS OF THE CASE.ANY FINAL JUDGMENT WILL BIND ALL MEMBERS OF THE CLASS
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EXCEPT THOSE MEMBERS WHO ACT TO EXCLUDE THEMSELVESNOW.
• YOU MAY OBTAIN MORE DETAILED INFORMATION ABOUT THEACTION BY ACCESSING THE COURT FILE.
U. NATURE OF THE ACTION AND STATUS OF THE PROCEEDINGS
The Amended Consolidated Class Action Complaint (the "Complaint"), which was filedin the Action on July 15, 2002, alleges that, during the Class Period, the Defendants violated thefederal securities laws in numerous ways, including but not limited to engaging in accountingpractices that violated generally accepted accounting principles and that caused the publishedfinancial statements of Safety-Kleen Corp. and its predecessor, Laidlaw Environmental Services,Inc. (together, the "Company") for the years ended August 31, 1997, 1998, and 1999 to bematerially false. Those financial statements were audited by PricewaterhouseCoopers LLP("PwC"). The 1997 financial statements were contained within the registration statement for the2008 Bonds, and the 1997 and 1998 financial statements were contained within the registrationstatement for the 2009 Bonds.
On March 6, 2000, the Company announced that it had commenced an internalinvestigation into allegations of accounting irregularities. On March 9, 2000, it was disclosedthat PwC had withdrawn its audit opinions on the Company's fiscal 1997, 1998 and 1999financial statements. On July S, 2001, the Company published restated financial statements forthose three years which, in the aggregate, reflected a reduction in the Company's net income ofmore than $530 million.
This Action is pending against certain current and former officers and directors of theCompany (defendants James Bullock, Leslie Haworth, Henry Tippie, James Wareham, RobertLuba, Kenneth Winger, Paul Humphreys, and Michael Bragagnolo) (the "IndividualDefendants"); and the Company's former outside auditor, PwC. The Individual Defendants andPwC are collectively referred to herein as the "Defendants." The Complaint alleges that theIndividual Defendants either actively participated in the Company's manipulative accountingpractices and misstatements during the Class Period, or knew or should have known about themin the exercise of due diligence. The Complaint also alleges that Defendant PwC knew or shouldhave known about the Company's improper accounting practices and the resulting misstatementsof the Company's reported financial results.
The Complaint originally asserted claims against the Defendants under the SecuritiesExchange Act of 1934 (the "Exchange Act"), as well as under the Securities Act of 1933 (the"Securities Act"). Although the Class was certified with respect to all claims on January 8, 2003,it was subsequently decertified with respect to the Exchange Act claims effective January 22,2005. The Class remains certified for purposes of claims under the Securities Act. TheDefendants deny the claims against them and specifically deny any wrongdoing or liability toany Class member.
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The trial of the Action commenced with the selection of a jury on March 1, 2005. ThePartial Settlement was reached on April 21, 2005, during the trial, and after certain judgmentswere entered as a matter of law in favor of certain of the Individual Defendants. No finaldetermination on the merits of the Class's claims has been made. Any final judgment made bythe Court will be binding on all members of the Class except those members who excludethemselves as provided herein.
M. THE CLASS
The Court has certified the Action as a class action on behalf of a Class consisting of allpersons and entities that acquired registered 2008 Bonds or registered 2009 Bonds between April17, 1998 and March 5, 2000, inclusive, and suffered damages under the Securities Act. Excludedfrom the Class are the following persons and entities who would otherwise fall within the Classdefinition: (1) the Company and Defendants, (2) members of the families of the IndividualDefendants, (3) the subsidiaries or affiliates of the Company or of any Defendant, (4) any personor entity who is a partner, officer, director, employee or controlling person of the Company orany Defendant, (5) any entity in which any Defendant has a controlling interest, and (6) the legalrepresentatives, heirs, successors or assigns of any such excluded person.
The Court has certified American High Income Trust and State Street Research IncomeTrust as Class representatives to prosecute the Action on behalf of the Class, and as leadplaintiffs in the Action pursuant to the Private Securities Litigation Reform Act of 1995, 15U.S.C. § 78u-4 & 77z-1. Oak Hill Securities Fund II, L.P. has been certified as a Classrepresentative for Class members that purchased 2009 Bonds.
The Court has approved the law firm of Grant & Eisenhofer, P.A., 1201 N. Market St.,Suite 2100, Wilmington, DE 19801, (302) 622-7000 ("Lead Counsel") to serve as Lead Counselfor the Class.
IV. THE PARTIAL SETTLEMENT
On April 21, 2005, the Lead Plaintiffs signed a Stipulation and Agreement of Settlement(the "Stipulation") with defendants and former defendants James R. Bullock, Leslie W. Haworth,John W. Rollins, Jr., the estate of John W. Rollins, Sr., David E. Thomas, Jr., Grover C. Wrenn,Henry B. Tippie, Michael J. Bragagnolo, Robert W. Luba and James L. Wareham (the "SettlingDefendants"), and certain Insurers of the Settling Defendants. The Stipulation provides for asettlement of this Action as against the Settling Defendants only (the "Partial Settlement"), anddoes not constitute a settlement of any claims by Lead Plaintiffs or the Class against any otherDefendants in the Action.
The Settling Defendants served as officers or directors of the Company. Lead Plaintiffshave made claims on behalf of the Class against the Settling Defendants under Sections 11 and15 of the Securities Act. Because of the dismissal of certain claims, only the Section 11 claimsremain pending on behalf of the Class against the Settling Defendants.
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The Settling Defendants deny all allegations of wrongdoing, fault, liability or damage tothe Lead Plaintiffs or the Class, deny that they engaged in any wrongdoing, deny that theycommitted any violation of law, deny that they acted improperly in any way and believe that theyacted properly at all times. The Settling Defendants recognize, however, the uncertainty and riskinherent in any litigation, especially complex securities litigation, and the difficulties andsubstantial expense and length of time necessary to defend this action through trial and anyappeal. To eliminate the burden and expense of further litigation and the risk of a judgment attrial, the Settling Defendants wish to settle the litigation against them on the terms and conditionsstated in the Stipulation, and to put the claims alleged in this Action to rest finally and forever.
Lead Counsel has completed an extensive investigation relating to the claims and theunderlying events and transactions alleged in the Complaint. Lead Counsel has analyzed theevidence adduced during pretrial discovery and at trial, and has researched the applicable lawwith respect to the claims of the Lead Plaintiffs and the Class against the Settling Defendants andthe potential defenses thereto. The Partial Settlement was reached after the jury had beenselected for the trial of the Action, and after 5 weeks of evidence had been presented, and afterjudgments as a matter of law had been entered by the Court in favor of certain of the SettlingDefendants on some of the claims made.
Based upon their investigation and pretrial discovery as set forth above, Lead Counseland the Lead Plaintiffs have concluded that the terms and conditions of this Stipulation are fair,reasonable and adequate to the Class, and in the Class's interests, and have agreed to settle theclaims raised in the Action as against the Settling Defendants pursuant to the terms andprovisions of the Stipulation, after considering (a) the substantial benefits that the Class willreceive from the Partial Settlement, (b) the attendant risks of litigation, and (c) the desirability ofpermitting the Partial Settlement to be consummated as provided by the terms of the Stipulation.From the perspective of the Lead Plaintiffs, the principal reason for the Partial Settlement is thesubstantial monetary benefits to be provided to the Class now. These benefits must be comparedto the risk that recovery might not be achieved after a contested trial and likely appeals—possibly years into the future. Assuming the Lead Plaintiffs won at trial, they anticipated that theSettling Defendants would have appealed the verdict and that would have created furtheruncertainty and delay. From the perspective of the Settling Defendants, the principal reasons forthe Settlement is to settle and terminate all existing or potential claims against them, and toeliminate the risk of a judgment against them, without in any way acknowledging any fault orliability, in order to eliminate the burden and expense of further litigation and possible appeals.
Pursuant to the Stipulation, if the Partial Settlement is approved by the Court, allmembers of the Class will be deemed to have released the following claims against the SettlingDefendants and certain related parties:
all claims, rights, demands, suits, matters, issues or causes ofaction, whether known or unknown, asserted or unasserted,
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whether under state or federal law, including the federal securitieslaws, and whether directly, indirectly, derivatively,representatively or in any other capacity, arising out of any lossessustained by members of the Class with respect to any transactionin or related to the Bonds (but excluding any claims to enforce theterms of the Partial Settlement).
This means that, upon Court approval, all Class members will be permanently barred fromasserting any of the claims described above against the Settling Defendants. In addition, if theCourt approves the Partial Settlement, the Settling Defendants will be precluded from suing theLead Plaintiffs, members of the Class, or Lead Counsel in connection with the Action.
Under the terms of the Partial Settlement, the Settling Defendants' insurance carriers andone settling defendant will deposit Fourteen Million Four Hundred and Ten Thousand Dollars($14,410,000) (the "Gross Partial Settlement Amount") into escrow on behalf of the Class.
The D&O Defendants and the Plaintiffs do not dispute the Insurers' position that there isno coverage under any insurance policy for Mr. Humphreys and Mr. Winger. The ClassMembers have released the Insurers and will not pursue the Insurers in the event of any judgmentagainst Mr. Humphreys and/or Mr. Winger.
If you have any questions about the proposed Partial Settlement, you may contact:Kimberly Wierzel, Grant & Eisenhofer, P.A., 1201 N. Market St., Wilmington, Delaware 19801,(302) 622-7000.
V. PLAN OF ALLOCATION OF THE PROCEEDS OF THE SETTLEMENTAMONG CLASS MEMBERS
As stated above, the Gross Partial Settlement Amount is Fourteen Million Four Hundredand Ten Thousand Dollars ($14,410,000). The Lead Plaintiffs and the Defendants, including theSettling Defendants, have retained damages experts who have calculated widely varyingestimates of the damages in these actions. As discussed below, the percentage recovery of theGross Partial Settlement Amount differs widely depending on whether you credit the Plaintiffs'damage analysis or that of the Defendants.
The Lead Plaintiffs' damages expert has calculated Securities Act damages of OneHundred Twenty Four Million Three Hundred Thousand Dollars ($124,300,000). The GrossPartial Settlement is approximately 11.5% of this amount. The Settling Defendants' damagesexperts have calculated Securities Act damages of between $5.25 million and $24.3 million. TheGross Partial Settlement is between 60% and 274% of those amounts. The bulk of the differencebetween the Settling Defendants' view and the Plaintiffs' view centers on how much of theeconomic losses suffered by the Class are attributable to the alleged misrepresentations and howmuch is attributable to other factors, and on when the damages occurred.
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From the Gross Partial Settlement Amount of Fourteen Million Four Hundred and TenThousand Dollars ($14,410,000) up to Five Hundred Thousand Dollars ($500,000) will bededucted for Lead Plaintiffs' actual expenses in connection with the Action. After actualexpenses are deducted, the Gross Partial Settlement is reduced to approximately Thirteen MillionNine Hundred and Ten Thousand Dollars ($13,910,000). From that amount, Lead Plaintiffs'counsel will request attorneys' fees. In accordance with the fee agreement between LeadPlaintiffs and their counsel, Lead Plaintiffs' counsel will request fifteen percent (15%) of the firstTen Million Eight Hundred Thousand Dollars ($10,800,000) of net recovery on behalf of theClass (after payment of expenses) and eighteen percent (18%) of the other Three Million OneHundred Thousand Dollars of net recovery for the Class. Lead Plaintiffs calculate that theattorneys' fees from this Partial Settlement will total approximately Two Million One HundredSeventy-Nine Thousand and Eight Hundred Dollars ($2,179,800) leaving a net amount ofapproximately Eleven Million Seven Hundred Thirty Thousand and Two Hundred Dollars($11,730,200) to be distributed to the Class (the "Net Settlement Amount").
The Net Settlement Amount will be divided pro-rata amongst the Class. Therefore, theamount of your recovery depends on the amount of your claim which is determined to be timelyand valid, and how many other Class Members come forward with timely and valid claims.Lead Plaintiffs estimate that Class Members will recover approximately 8.5% of their maximumpossible damages under the Securities Act pursuant to this Partial Settlement. When consideredin combination with the previously announced settlement with PricewaterhouseCoopers LLP,Lead Plaintiffs estimate that the net recovery to Class members in the two partial settlements willtotal in excess of 20% of Class members' maximum possible damages under the Securities Act.
Lead Plaintiffs anticipate the possibility of some additional recoveries from the remainingDefendants. However, no such additional recovery can be assured.
VI. CONSEQUENCES OF CLASS MEMBERSHIP AND CLASS MEMBERS'RIGHTS
If you fall within the Class definition and you wish to remain in the Class, you must fileyour Proof of Claim attached hereto by August 15, 2005. If you have already submitted a timelyand valid Proof of Claim in connection with the settlement with PwC, that Proof of Claim will bedeemed effective for purposes of this Partial Settlement and you need not submit another Proofof Claim.
If you remain in the Class, then: (a) your interests in the Action will be represented byLead Counsel for the Class, as identified in Section III above; (b) you will not have to pay any ofLead Counsel's attorneys' fees or expenses, except to the extent the Court may direct that suchfees and expenses be paid out of any settlements or recoveries obtained for the Class (includingthe Partial Settlement); (c) you may be entitled to share in the benefits of any settlements orrecoveries obtained in the Action, and you will be bound by any such settlements (including thePartial Settlement) and by any favorable or unfavorable judgments entered in the Action; (d) youwill have the right to appear and be heard regarding Court approval of the Partial Settlement and
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any future settlements, and any applications for payment of attorneys' fees and expenses; and (e)you will have the right to receive notice of and object to any settlements.
If you elect to remain in the Class, you have a right to object to the Partial Settlement inthe manner set forth below. If your objection is rejected, you will be bound by the PartialSettlement and the releases described herein, just as if you had not objected.
If you do not wish to have your interests represented by Lead Counsel for the purpose ofappearing, objecting to, and/or otherwise being heard regarding the Partial Settlement and/or anyfuture settlements or applications for payment of attorneys' fees and expenses, you may enter aseparate appearance through counsel of your choice, or personally, at your own expense.
In order for you to benefit from any future recoveries against other Defendants in theAction, should there be any, you should retain copies of all records pertaining to your ownershipof, as well as all purchases and sales of, the 2008 Bonds and/or 2009 Bonds during the periodfrom April 17, 1998 through the present.
VII. HOW TO EXCLUDE YOURSELF FROM THE CLASS
Under the law, you have the right to exclude yourself from the Class certified by theCourt. You may exclude yourself from the Class if you wish to pursue a separate lawsuit againstthe Defendants, or for any reason at all. If you exclude yourself from the Class, you will not beentitled to participate in any recovery by such Class in the Action, and you will not be bound bythe Partial Settlement or any settlement in the Action, or by any favorable or unfavorablejudgment in the Action.
If you do not wish to remain a member of the Class, then you must timely request inwriting to be excluded from the Class. Your request for exclusion must legibly set forth yourname and address, and must include a statement that you wish to be excluded from the Class inthe Safety-Kleen Bondholders Litigation. Your request for exclusion must be sent by UnitedStates mail, postmarked no later than June 3, 2005 to the Claims Administrator.
Safety-Kleen Bondholder Litigationc/o The Garden City Group, Inc.ExclusionsClaims AdministratorP.O. Box 9000 #6070Merrick, NY 11566-9000
If you request exclusion from the Class on behalf of any person, entity, or individualother than yourself (such as, for example, a trust, a minor, or a pension fund), you also must statethe basis of your legal authority to make a request for exclusion on behalf of that person, entity,or other individual.
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In order to ensure proper processing of your request for exclusion, please include with therequest the Social Security Number or Taxpayer Identification Number of the person, entity, orindividual requesting exclusion from the Class, as well as a list stating the par amount of 2008Bonds and/or 2009 Bonds that person, entity, or individual purchased and/or sold during theClass Period, and the date or dates of each such purchase and sale.
VIII. SUBMISSION AND PROCESSING OF PROOFS OF CLAIM
In order to be eligible to receive any distribution from the Net Settlement Amount, youmust complete and sign the accompanying Proof of Claim and Release form and send it by firstclass mail postmarked on or before August 15, 2005, addressed as follows:
Safety-Kleen Bondholder Litigationc/o The Garden City Group, Inc.Claims AdministratorP.O. Box 9000 #6070Merrick, NY 11566-9000
If you do not submit a proper Proof of Claim form, you will not be entitled to any shareof the Settlement Funds.
Each Claimant shall be deemed to have submitted to the jurisdiction of the United StatesDistrict Court for the District of South Carolina, Columbia Division with respect to his, her or itsProof of Claim. The Court has reserved jurisdiction to allow, disallow, or adjust any claim onequitable grounds.
Nominees who purchased or acquired the Bonds for the benefit of another person orentity during the Class Period are requested to send the Notice and the Proof of Claim to all suchbeneficial owners of the Bonds within ten (10) days after receipt thereof, or send a list of thenames and addresses of such beneficial owners to the Claims Administrator within ten (10) daysof receipt thereof in which event the Claims Administrator shall promptly mail the Notice andProof of Claim to such beneficial owners.
IX. STATEMENT OF ATTORNEYS' FEES AND COSTS SOUGHT
Lead Counsel has expended considerable time and effort in the prosecution of thislitigation on a contingent fee basis, and has advanced substantial expenses for the litigation, inthe expectation that if they were successful in obtaining a recovery for the Class they would bepaid from such recovery. Plaintiffs' Lead Counsel intends to apply to the Court for an award ofattorneys' fees from the Gross Partial Settlement Fund in the approximate amount of TwoMillion One Hundred Seventy-Nine Thousand and Eight Hundred Dollars ($2,179,800), and forreimbursement of expenses incurred in connection with the prosecution of this Action against theSettling Defendants of not more than Five Hundred Thousand Dollars ($500,000). LeadCounsel, without further notice to the Class, may subsequently apply to the Court for fees andexpenses incurred in connection with administering and distributing the proceeds of the Partial
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Settlement to the members of the Class and any proceedings subsequent to the SettlementFairness Hearing.
X. NOTICE OF PARTIAL SETTLEMENT HEARING
A hearing on the proposed Partial Settlement (the "Partial Settlement Hearing") will beheld on June 21, 2005 at 10:00 a.m. before the Honorable Joseph F. Anderson, Jr. in the U.S.District Court for the District of South Carolina, Columbia Division, Matthew J. Perry, Jr.Courthouse, 901 Richland Street, Columbia, South Carolina 29201. The purpose of the PartialSettlement Hearing will be to determine: (1) whether the Partial Settlement should be approvedas fair, just and reasonable; (2) whether the Action should be dismissed with prejudice againstthe Settling Defendants; and (3) to consider the proposed Plan of Allocation for the proceeds ofthe Partial Settlement and the application of Lead Counsel for attorneys' fees and reimbursementof expenses.
Any member of the Class who has not requested exclusion may appear at the PartialSettlement Hearing to show cause why the proposed Partial Settlement should not be approved,why the Action should not be dismissed with prejudice as against the Settling Defendants, orwhy Lead Counsel should not be awarded attorneys' fees and reimbursement of expenses;provided, however, that no such person shall be heard, unless his, her or its objection oropposition is made in writing and filed, together with copies of any and all supporting papers andbriefs, with the Court no later than June 6, 2005, with copies sent to:
Attorney for the Settling Defendants:
Eric S. MattsonSIDLEY AUSTIN BROWN & WOOD LLP10 S. Dearborn StreetChicago, IL 60603
Terry CampbellCOTSIRILOS, TIGHE & STREICKER, LTD.33 Dearborn St.Ste. 600Chicago, IL 60602
Stephen G. MorrisonNELSON MULLINS RILEY & SCARBOROUGH, LLPMeridian/ I 7th Floor1320 Main StreetColumbia, SC 29201
Rebecca G. FulmerLAW OFFICES OF WILMOT IRVIN1522 Lady Street
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P.O. Box 7816Columbia, SC 29202
Richard GeorgeLEWIS BRISBOIS BISGARD & SMITH LLP199 Water Street, 25th FloorNew York, NY 10038
The Claims Administrator:
The Garden City Group, Inc.Claims AdministratorSafety-Kleen Bondholder LitigationP.O. Box 9000 #6070Merrick, NY 11566-9000
Attorney for Lead Plaintiffs:
Megan D. McIntyreGRANT & EISENHOFER, P.A.Chase Manhattan Centre1201 N. Market Street, Suite 2100Wilmington, DE 19801
Once an objection to the proposed Partial Settlement is made, it cannot be withdrawn without theCourt's approval. Unless otherwise ordered by the Court, any member of the Class who does notmake his/her/its objection or opposition in the manner provided above shall be deemed to havewaived all objections and opposition to the fairness, reasonableness and adequacy of theproposed Partial Settlement.
XI. MULTIPLE MAILINGS AND CHANGE OF ADDRESS
If you receive multiple copies of this Notice, it may be because you had multiplebrokerage accounts, holdings or transactions in the 2008 Bonds and/or 2009 Bonds.
If this Notice was sent to a wrong address, or if your address changes in the future, pleasesend prompt written notification of your correct address to the Claims Administrator at theaddress stated at the end of this Notice.
FOR MORE INFORMATION
This Notice contains only a summary of the Action and the terms of the proposed PartialSettlement. Anyone interested in more detail regarding the Action is invited to: (1) visit theOffice of the Clerk of the United States District Court for the District of South Carolina at theMatthew J. Perry, Jr. Courthouse, 901 Richland Street, Columbia, South Carolina 29201, during
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regular business hours, to inspect the Stipulation, the pleadings, and the other papers maintainedthere in Case No. 3 00-1145 17; and/or (2) contact the Claims Administrator at the followingaddress:
Safety-Kleen Bondholder Litigationc/o The Garden City Group, Inc.Claims AdministratorP.O. Box 9000 #6070Merrick, NY 11566-9000
ALL INQUIRIES CONCERNING THIS SETTLEMENT NOTICE OR THE PROOF OFCLAIM FORM BY CLASS MEMBERS SHOULD BE MADE TO THE CLAIMSADMINISTRATOR IN WRITING AT THE ADDRESS INDICATED IMMEDIATELYABOVE.
Dated: April , 2005
BY ORDER OF THE COURTUNITED STATES DISTRICT COURT FORTHE DISTRICT OF SOUTH CAROLINA
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EXHIBITE
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IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF SOUTH CAROLINA
COLUMBIA DIVISION
[PLAINTIFF(S)] )
V. ) Case No. 3:05-CV- 17
PRICEWATERHOUSECOOPERS LLP, )JAMES R. BULLOCK, LESLIE W. )HAWORTH, HENRY B. TIPPIE, )JAMES L. WAREHAM, PAUL R. )HUMPHREYS, KENNETH W. WINGER, )MICHAEL J. BRAGAGNOLO, )and TD SECURITIES (USA) INC., )
Defendants. )
STIPULATION AND AGREEMENT OF SETTLEMENT
This Stipulation and Agreement of Settlement (the "Stipulation") is entered into by and
between [PLAINTIFF(S)] ("Plaintiff(s)") and James R. Bullock, Leslie W. Haworth, John W.
Rollins, Jr., the Estate of John Rollins, Sr., Henry B. Tippie, Robert W. Luba, David E. Thomas,
Jr., Grover C. Wrenn, Michael J. Bragagnolo, John Grainger and James L. Wareham
(collectively, the "D&Os") and American Home Assurance Company ("American Home"),
Reliance Insurance Company ("Reliance"), National Union Fire Insurance Company of
Pittsburgh, Pa. ("National Union") and Starr Excess Liability Insurance International, Ltd.
(collectively "D&O Insurers").
. This Stipulation provides for a settlement of this Action as against the D&Os only (the
"Partial Settlement"), and does not constitute a settlement of any claims by the Plaintiff(s)
against any other defendants in the Action.
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WHEREAS:
A. On [FILING DATE], Plaintiff(s) filed this action (the "Action") alleging that
certain D&Os and others violated § 10(b), § 18, and § 20(a) of the Exchange Act and Rule l Ob-5
promulgated under the Exchange Act, and alleging that certain D&Os and others committed
fraud in violation of common law.
B. The D&Os deny all allegations of wrongdoing, fault, liability or damage to the
Plaintiffs, deny that they engaged in wrongdoing, deny that they committed any violation of law,
deny that they acted improperly in any way and believe they acted properly at all times. The
D&Os recognize, however, the uncertainty and risk inherent in any litigation, especially complex
securities litigation, and the difficulties and expense and length of time necessary to defend this
action through trial and any appeal. To eliminate the burden and expense of further litigation
and the risk of a judgment at trial, the D&Os wish to settle the litigation on the terms and
conditions stated in this Stipulation, and to put the Settled Claims (as hereinafter defined) to rest
finally and forever.
C. The parties to this Stipulation recognize that this litigation has been filed by the
Plaintiff(s) and defended by certain D&Os in good faith and with adequate basis in fact under
Federal Rule of Civil Procedure 11, that the litigation is being voluntarily settled after advice of
counsel, and that the terms of the settlement are fair, adequate and reasonable. This Stipulation
shall not be construed or deemed to be a concession by the Plaintiff(s) of any infirmity in any of
the claims asserted in the Action, nor shall it be construed or deemed to be evidence of or an
admission or concession on the part of the D&Os with respect to any claim or of any fault or
liability or wrongdoing or damage whatsoever, or any infirmity in the defenses that certain
D&Os have asserted.
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NOW THEREFORE, without any admission or concession on the part of the Plaintiff(s)
of any lack of merit of the Action whatsoever, and without any admission or concession on the
part of the D&Os of any liability or wrongdoing or lack of merit in their defenses whatsoever, it
is hereby STIPULATED AND AGREED, by and among the parties to this Stipulation, through
their respective attorneys, in consideration of the benefits flowing to the parties hereto from the
Partial Settlement, that all Settled Claims (as defined below) shall be compromised, settled,
released and dismissed with prejudice, upon and subject to the following terms and conditions:
CERTAIN DEFINITIONS
I . As used in this Stipulation the following terms shall have the following meanings:
a. "Action" shall mean the captioned lawsuit, Case No. 3-00- 17.
b. "Bonds" refers to the 9 1/4% senior subordinated notes due 2008 issued by Laidlaw
Environmental Services, Inc. ("2008 Bonds") and the 9 1/4% senior notes due 2009 issued by
Safety-Kleen Corp. ("2009 Bonds"), collectively.
C. "Plaintiff(s)" means [PLAINTIFF NAME(S)].
d. "Individual Actions" means all lawsuits listed on Exhibit 2 attached hereto, and
the individual claims brought by American High Income Trust and State Street Research Income
Trust as part of the Action.
e. "Individual Plaintiffs" means (i) American High Income Trust, (ii) State Street
Research Income Trust, and (iii) the entities which have filed Individual Actions against the
D&O Defendants and others and/or have executed tolling agreements with respect to such
claims, as listed on Exhibit 2 attached hereto.
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f. "Plaintiffs' Counsel" means attorneys for the Plaintiff(s), the law firm of Grant &
Eisenhofer, P.A., Chase Manhattan Centre, 1201 N. Market St., Wilmington, DE 19801, (302)
622-7000.
g. "Court" means the United States District Court for the District of South Carolina,
Columbia Division, the Honorable Joseph F. Anderson, Jr. presiding.
h. "Defendants" means PricewaterhouseCoopers LLP, James R. Bullock, Leslie W.
Haworth, Henry B. Tippie, James L. Wareham, Kenneth W. Winger, Paul R. Humphreys,
Michael J. Bragagnolo, and TD Securities (USA) Inc.
i. "D&Os" means James R. Bullock, Leslie W. Haworth, John W. Rollins, Jr., the
Estate of John Rollins, Sr., Henry B. Tippie, Robert W. Luba, David E. Thomas, Jr., Grover C.
Wrenn, Michael J. Bragagnolo, and James L. Wareham
j. "D&O Counsel" means the law firms of (1) Nelson Mullins Riley & Scarborough
LLP, 1320 Main Street, 17t` Floor, Columbia, SC 29201, (2) Sidley Austin Brown & Wood LLP,
Bank One Plaza, 10 South Dearborn Street, Chicago, IL 60603, (3) Cotsirilos, Tighe & Streicker,
Ltd., 33 Dearborn St., Ste. 600, Chicago, IL 60602, (4) Stone, McGuire & Benjamin, 801 Skokie
Boulevard, Suite 100, Northbrook, Illinois 60062, and (5) Law Offices of Wilmot Irvin, 1522
Lady Street, P.O. Box 7816, Columbia, SC 29202.
k. "Company" or "Safety-Kleen" refers to Safety-Kleen Corporation, its
predecessors (including Rollins Environmental Services, Inc. and Laidlaw Environmental
Services, Inc.), successors, parents, consolidated and unconsolidated subsidiaries, divisions,
affiliates, operating units, controlling persons, controlled persons, officers, directors, employees,
representatives and agents.
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1. "Partial Settlement" means the settlement with the D&Os contemplated by this
Stipulation.
M. "Insurers" means American Home Assurance Company ("American Home"),
Reliance Insurance Company ("Reliance"), National Union Fire Insurance Company of
Pittsburgh, Pa. ("National Union") and Starr Excess Liability Insurance International, Ltd.
n. "Released Parties" means the D&Os, the Insurers, trusts for which any of the
D&Os are the settlor or which are for the benefit of them or their families; the D&Os' personal
or legal representatives, heirs, executors, administrators, and any other Person acting on their
behalf; the Insurers' and all of the D&Os' past and present agents, employees, attorneys, other
insurers, co-insurers, reinsurers, accountants, advisors, successors, and assigns; provided..
however, that the term "Released Parties" does not include Kenneth W. Winger, Paul R.
Humphreys, PricewaterhouseCoopers LLP, TD Securities (USA) Inc., NationsBanc Montgomery
Securities LLC, or Raymond James & Associates, Inc.
o. "Settled Claims" means (i) all claims, rights, demands, suits, matters, issues or
causes of action by Plaintiffs against the D&Os or any Released Party, whether known or
unknown, asserted or unasserted, whether under state or federal law, including the federal
securities laws, and whether directly, indirectly, derivatively, representatively or in any other
capacity, arising out of any transaction in or related to the Bonds (but excluding any claims to
enforce the terms of the Partial Settlement); and (ii) all claims, rights, demands, suits, matters,
issues or causes of action by the D&Os or any Released Party against Plaintiffs or any of their
present and former partners, principals, employees, predecessors, successors, affiliates, officers,
attorneys, agents, insurers and assigns (including Plaintiff's Counsel), whether known or
unknown, whether under state or federal law, and whether directly, indirectly, derivatively,
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representatively or in any other capacity, arising out of, or relating in any way to the institution,
prosecution, or settlement of the Action (but excluding any claims to enforce the terms of the
Partial Settlement).
P ."Order of Dismissal" means the proposed order to be entered dismissing the
Action, substantially in the form attached hereto as Exhibit 1.
SCOPE AND EFFECT OF SETTLEMENT
2. The obligations incurred pursuant to this Stipulation shall be in full and final
disposition of the Action and any and all Settled Claims as against the D&Os and the Released
Parties.
3. Plaintiff(s), on behalf of itself [themselves], its [their] predecessors, successors,
shareholders, participants, administrators, parents, subsidiaries, affiliated entities and assigns,
with respect to each and every Settled Claim, hereby release(s) and forever discharge(s), and
shall forever be enjoined from prosecuting, any Settled Claim against the D&Os and the
Released Parties. The D&Os, on behalf of themselves and the Released Parties, hereby release
and forever discharge, and shall forever be enjoined from prosecuting, any Settled Claim against
Plaintiff(s) and its [their] present and former partners, principals, employees, predecessors,
successors, affiliates, officers, attorneys, agents, and assigns (including Plaintiffs' Counsel).
THE SETTLEMENT CONSIDERATION
4. On or prior to May 6, 2005, the Insurers, for the benefit of the D&Os, shall cause
the total sum of Twenty-One Million Six Hundred Thousand Dollars ($21,600,000) in cash (the
"Gross Settlement Amount") to be wire transferred into one or more escrow accounts as
instructed by Plaintiffs' Counsel, for the benefit of the Individual Plaintiffs collectively. It is
understood and agreed that this amount is being paid by the Insurers, and not by the D&Os, who
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shall have no liability or responsibility to pay such amounts in the event of a failure by the
Insurers to pay such amounts. It is understood and agreed that Reliance's payment is subject to
appropriate court approval, and that Reliance shall use its best efforts to expeditiously seek any
necessary approval as soon as reasonably possible, and shall deliver its portion of the settlement
amount by wire transfer as set forth above forthwith upon receipt of final court approval from the
Ontario Superior Court of Justice. In the event that such sums are not wire transferred by the
Payment Date, then interest shall be paid at the rate of 2.7% per annum until such sums are paid.
National Union shall pay any interest accruing to the Reliance portion of the Partial Settlement,
and shall have no right of recourse to Reliance for reimbursement of same.
5. Of the Gross Settlement Amount, $ shall be allocated to, and held
in escrow on behalf of, [PLAINTIFF NAME(S)] (the "Settlement Fund"). The balance in the
Settlement Fund after payment of attorneys' fees and expenses in accordance with Plaintiff(s)'
engagement agreement with Plaintiffs' Counsel will be paid to Plaintiff(s).
6. This Partial Settlement between the Plaintiff(s) and the D&Os is in no way
affected by other settlements entered into by the D&Os or the Plaintiff(s), or any judgments
obtained by the Plaintiff(s) with respect to other Safety-Kleen related matters, including, but not
limited to, with respect to Kenneth W. Winger and/or Paul R. Humphreys, except as provided in
this Stipulation. The Individual Plaintiffs may be entitled to an assignment of any judgment
PricewaterhouseCoopers LLP ("PwC") may obtain for contribution against Kenneth W. Winger
and/or Paul R. Humphreys arising out of the action entitled Toronto Dominion (Texas), Inc., et
al. v. PricewaterhouseCoopers, et al., Civil Action No. 00 VS 012679 F, in the State Court of
Fulton County, Georgia. To the extent that any judgment for contribution against Mr. Winger
and/or Mr. Humphreys is assigned to Plaintiff(s), and to the extent Mr. Winger and/or Mr.
7
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 75 of 99
Humphreys obtain any judgment against any of the D&Os for contribution arising out of such
claims, Plaintiff(s) shall reduce their recovery against Mr. Winger and/or Mr. Humphreys to the
extent of such judgment for contribution in favor of Mr. Winger or Mr. Humphreys against any
of the D&Os, in order to satisfy the contribution claim. In no event shall the reduction for any
judgment exceed the value of that judgment. The D&Os and the Plaintiff(s) do not dispute that
there is no coverage under any insurance policy for Mr. Humphreys and/or Mr. Winger. The
Plaintiff(s) acknowledge that they are releasing the Insurers with respect to any judgments
against or settlements with Mr. Humphreys and/or Mr. Winger, whether obtained directly or by
assignment from PwC, and covenant not to claim against or sue the Insurers with respect thereto,
and to reduce any judgment which they may obtain against Mr. Humphreys and/or Mr. Winger
by any amount (up to the amount of the judgment) for which a court determines any of the
Insurers to be liable.
ATTORNEYS' FEES AND EXPENSES
7. Except as provided herein, Plaintiff(s) and the D&Os shall bear their own
attorneys' fees and costs incurred in connection with the Action.
TERMS OF ORDER OF DISMISSAL
8. Promptly after the Effective Date of the settlement set forth in the Stipulation of
Settlement dated April 21, 2005 in the class action styled IN RE SAFETY-KLEEN CORP.
BONDHOLDERS LITIGATION, Consol. Case No. 3-00-1145 17 (the "Class Action"), Counsel
for the parties shall request that the Court enter the Order of Dismissal in the Action substantially
in the form annexed hereto as Exhibit 1.
BAR ORDER AND JUDGMENT REDUCTION PROVISIONS
9. To the maximum extent permitted by law, the Order of Dismissal contemplated
8
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 76 of 99
herein shall include an order that bars (1) all claims against the D&Os for indemnity or
contribution or any other claim against the D&Os arising out of the Action or otherwise where
the injury to the claimant is the claimant's actual or threatened liability to the Plaintiff(s) arising
out of or related to any transactions with respect to the Bonds, (2) all claims by the D&Os
against any person for indemnity or contribution arising out of the Action or arising out of or
related to any transactions with respect to the Bonds, each to the fullest extent permitted by 15
U.S.C. § 78u-4(0(7), any common law, and any other law, rule or regulation, and (3) any claim
by any person or entity which is not a Released Party against the Insurers arising out of or related
to any of the obligations of the Insurers with respect to the Settled Claims of the Plaintiff(s), the
Partial Settlement, and the Insurance Policies applicable thereto (except claims to enforce the
terms of the Partial Settlement); any person not a Defendant in the Action may obtain relief from
this part of the bar order upon a showing of prior and greater entitlement to insurance proceeds.
A challenge to the bar order set forth in this paragraph shall not prevent or delay the completion
of the Partial Settlement, or the entry of the Order of Dismissal, and any appeal with respect to
the bar order shall not delay or otherwise affect the distribution of the Settlement Fund as
provided to the Plaintiffs. In the event that any court finds that this paragraph is not enforceable
as written, it shall be modified or limited only to the extent necessary to allow it to be enforced to
the fullest extent allowed by law in accordance with its intent. The Plaintiff(s) shall be entitled
to distribution of the Settlement Fund notwithstanding the pendency of any appeal of the order
based on this paragraph and the resolution of any such appeal shall not disturb any Plaintiff(s)
rights to retain the proceeds of the Partial Settlement.
10. The Order of Dismissal shall also provide that any non-settling party shall be
entitled to a reduction in any final verdict or judgment in an amount calculated as provided for in
9
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 77 of 99
15 U.S.C. § 78u-4(0(7)(B). In addition, any non-settling party who claims to be covered under
any insurance policy issued by an Insurer, if any, shall also be entitled to a credit against any
final judgment equal to the amount of coverage actually available, if any, that a court determines
would have been available to such non-settling party under such insurance policy but for the
operation of the bar order in the Order of Dismissal. A challenge to the provisions of this
paragraph shall not prevent or delay the completion of the Partial Settlement, or the entry of the
Order of Dismissal, and any appeal with respect to this paragraph shall not delay or otherwise
affect the distribution of the Settlement Fund as provided herein. In the event that any court
finds that this paragraph is not enforceable as written, it shall be modified or limited only to the
extent necessary to allow it to be enforced to the fullest extent allowed by law in accordance with
its intent. The Plaintiff(s) shall be entitled to distribution of the Settlement Fund notwithstanding
the pendency of any appeal of the order based on this paragraph and the resolution of any such
appeal shall not disturb any Plaintiff(s) rights to retain the proceeds of the Partial Settlement.
NO ADMISSION OF WRONGDOING
11. This Stipulation, whether or not consummated, and any proceedings taken
pursuant to it:
a. shall not be offered or received against the D&Os as evidence of or
construed as or deemed to be evidence of any presumption, concession, or admission by the
D&Os with respect to the truth of any fact alleged by the Plaintiff(s) or the validity of any claim
that had been or could have been asserted in the Action, or in any litigation, or the deficiency of
any defense that has been or could have been asserted in the Action, or in any litigation, or of
any liability, negligence, fault, or wrongdoing of the D&Os;
10
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 78 of 99
b. shall not be construed as or received in evidence as an admission,
concession or presumption against the Plaintiff(s) or any of them that any of their claims are
without merit or are subject to any infirmities, or that damages recoverable under the Complaint
would not have exceeded the Gross Settlement Amount;
C. shall not be construed against the D&Os or the Plaintiff(s) 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;
d. shall not be construed as an admission or agreement or concession by any
Insurer that there is coverage for this Action or any other action or for any other proceedings and
that the Insurers expressly do not waive and expressly reserve their rights with respect to
coverage for this Action or the validity of any insurance policy, whether or not this Partial
Settlement shall be consummated; provided however, that if this Partial Settlement is
consummated, the Insurers shall pay their several shares of the Gross Settlement Amount without
recourse to any D&Os; and
e. shall not be used by the Insurers as a basis to deny coverage to any D&O
Defendants in this or any other matter, and the D&Os and the Insurers agree that any judgment
as a matter of law which may be entered with regard to the claims of any Individual Plaintiffs
against Mr. Winger and/or Mr. Humphreys does not affect in any way any of the D&Os'
coverage under any policy issued by any of the Insurers, and the Insurers agree not to contest
coverage of the D&Os in any matter on that basis.
MISCELLANEOUS PROVISIONS
12. All of the exhibits attached hereto are hereby incorporated by reference as though
fully set forth herein.
11
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 79 of 99
13. The parties to this Stipulation intend the Partial Settlement to be a final and
complete resolution of all disputes asserted or which could be asserted by the Plaintiff(s) against
the D&Os or any Released Party with respect to the Settled Claims. Accordingly, the Plaintiff(s)
and the D&Os agree not to assert in any forum that the Action was brought by the Plaintiff(s) or
defended by the D&Os in bad faith or without a reasonable basis. The parties hereto shall assert
no claims of any violation of Rule 11 of the Federal Rules of Civil Procedure relating to the
prosecution, defense, or settlement of the Action. The parties agree that the amounts paid and
the other terms of the Partial 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.
14. Each of the Insurers except Reliance hereby warrants that it is not insolvent and
that the payments required to be made by it pursuant to this Stipulation will not render it
insolvent within the meaning of and/or for the purposes of the United States Bankruptcy Code,
including §§ 101 and 547 thereof. This warranty is made by the Insurers and not by their
counsel.
15. In the event of the entry of an order of a court of competent jurisdiction
determining the transfer of money to the Settlement Funds or any portion thereof by or on behalf
of any Insurer 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
Settlement Funds by others, then, at the election of Plaintiff(s)' Counsel, the parties shall jointly
move the Court to vacate and set aside the releases given and Order of Dismissal entered in favor
of the D&O Defendants pursuant to this Stipulation; and, the Order of Dismissal shall be null
and void, and the parties shall be restored to their respective positions in the litigation as of April
12
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 80 of 99
21, 2005 and any cash amounts in the Settlement Funds shall be returned.
16. This Stipulation may not be modified or amended, nor may any of its provisions
be waived, except by a writing signed by all parties hereto or their successors-in-interest.
17. The headings herein are used for the purpose of convenience only and are not
meant to have legal effect.
18. 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.
19. This Stipulation and its exhibits constitute the entire agreement among the parties
hereto concerning the Partial Settlement, and no representations, warranties, or inducements have
been made by any party hereto concerning this Stipulation and its exhibits other than those
contained and memorialized in such documents.
20. 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 provided that
counsel for the parties to this Stipulation shall exchange among themselves original signed
counterparts.
21. This Stipulation shall be binding upon, and inure to the benefit of, the successors
and assigns of the parties hereto.
22. 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 State of
South Carolina without regard to conflicts of laws, except to the extent that federal law requires
that federal law governs.
23. This Stipulation shall not be construed more strictly against one party than
another merely by virtue of the fact that it, or any part of it, may have been prepared by counsel
13
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 81 of 99
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.
24. All counsel and any other person executing this Stipulation and any of the
exhibits hereto, or any related settlement documents, warrant and represent that they have the full
authority to do so and that they have the authority to take appropriate action required or
permitted to be taken pursuant to the Stipulation to effectuate its terms.
25. This Partial Settlement of this Action is contingent upon the settlement of the
Class Action as between Plaintiff(s) and the D&Os, and vice versa. In the event of a termination
of the Stipulation and Agreement of Settlement executed on April 21, 2005 in the Class Action,
this Stipulation shall automatically terminate and become void and have no further effect.
26. Except as otherwise provided herein, in the event the Partial Settlement is
terminated or fails to become effective for any reason, then the Plaintiff(s) and the D&Os shall
be deemed to have reverted to their respective status in the Action as of April 21, 2005 and,
except as otherwise expressly provided, the parties shall proceed in all respects as if the Partial
Settlement and any related orders had not been entered, and any portion of the Gross Settlement
Amount previously paid by the Insurers and/or Michael J. Bragagnolo, 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 Amount, shall be
returned to the Insurers and/or Michael J. Bragagnolo, according to their several payments.
14
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 82 of 99
DATED: April , 2005
GRANT & EISENHOFER P.A.Stuart M. GrantMegan D. McIntyreChase Manhattan Centre1201 N. Market Street, Suite 2100Wilmington, DE 19801(302) 622-7000Counsel for Plaintiff(s)
15
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 83 of 99
SIDLEY AUSTIN BROWN & WOOD LLPJohn N. GalloEric S. MattsonErin E. KellyPreya S. TarsneyBank One Plaza10 S. Dearborn StreetChicago, IL 60603(312) 853-7000(312) 853-7036 (Fax)Counsel for James R. Bullock
COTSIRILOS, TIGHE & STREICKER, LTD.Terence CampbellJames Streicker33 N. Dearborn St.Ste. 600Chicago, IL 60602Counsel for Leslie W. Haworth and JohnGrainger
NELSON MULLINS RILEY& SCARBOROUGH, LLPStephen G. MorrisonJames J. McGovernWilliam P. SimpsonMeridian/17th Floor1320 Main StreetColumbia, SC 29201(803) 799-2000Counsel for Henry B. Tippie and James L.Wareham
16
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 84 of 99
LAW OFFICES OF WILMOT IRVINWilmot B. IrvinRebecca G. Fulmer1522 Lady StreetP.O. Box 7816Columbia, SC 29202Counsel for Michael Bragagnolo
LEWIS BRISBOIS BISGARD & SMITH LLPRichard George199 Water Street, 25th FloorNew York, NY 10038(212) 232-1300(212) 232-1399 (Fax)Counsel for American Home AssuranceCompany and National Union Fire InsuranceCompany of Pittsburgh Pa.
KPMG Inc., in its capacity as liquidator ofRELIANCE INSURANCE COMPANY — CanadianBranch, in liquidation
By: Robert O. SandersonPresident, KPMG Inc., and not in its personal
capacity
17
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 85 of 99
EXHIBIT
1
18
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 86 of 99
IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF SOUTH CAROLINA
COLUMBIA DIVISION
[PLAINTIFF(S)] )
V. ) Case No. 3:05-CV- 17
PRICEWATERHOUSECOOPERS LLP, )JAMES R. BULLOCK, LESLIE W. )HAWORTH, HENRY B. TIPPIE, )JAMES L. WAREHAM, PAUL R. )HUMPHREYS, KENNETH W. WINGER, )MICHAEL J. BRAGAGNOLO, )and TD SECURITES (USA) INC., )
Defendants. )
ORDER OF DISMISSAL
Pursuant to the Stipulation and Agreement of Settlement dated April 21, 2005 (the
"Stipulation") between [PLAINTIFF NAME(S)] ("Plaintiff(s)") and James R. Bullock, Leslie
W. Haworth, John W. Rollins, Jr., the Estate of John Rollins, Sr., Henry B. Tippie, Robert W.
Luba, David E. Thomas, Jr., Grover C. Wrenn, Michael J. Bragagnolo, and James L. Wareham
(collectively, the "D&Os") and American Home Assurance Company ("American Home"),
Reliance Insurance Company ("Reliance"), National Union Fire Insurance Company of
Pittsburgh, Pa. ("National Union") and Starr Excess Liability Insurance International, Ltd.
(collectively "D&O Insurers") ; and all capitalized terms used herein having the meanings as set
forth and defined in the Stipulation, IT IS HEREBY ORDERED THAT:
I. The Court has jurisdiction over the subject matter of the Action, the Plaintiff(s),
the D&Os and the Insurers.
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 87 of 99
2. The Action is hereby dismissed with prejudice and without costs, except as
provided in the Stipulation, as against the D&Os who are named as Defendants only.
3. Plaintiff(s), and the successors and assigns of any of them are hereby permanently
barred and enjoined from instituting, commencing or prosecuting all claims, rights, demands,
suits, matters, issues or causes of action, whether known or unknown, asserted or unasserted,
whether under state or federal law, including the federal securities laws, and whether directly,
indirectly, derivatively, representatively or in any other capacity, arising out of any transaction in
or related to the Bonds (the "Settled Claims") (but excluding any claims to enforce the terms of
the Partial Settlement) against the D&Os, trusts for which any of the D&Os are the settlor or
which are for the benefit of them or their families; the D&Os personal or legal representatives,
heirs, executors, administrators, and any other Person acting on their behalf; the Insurers; and all
of the D&Os past and present agents, employees, attorneys, insurers, co-insurers, reinsurers,
accountants, advisors, successors, and assigns; provided, however, that nothing herein shall bar
or enjoin the Plaintiff(s) from instituting or pursuing any claims against Kenneth W. Winger,
Paul R. Humphreys, PricewaterhouseCoopers LLP, or TD Securities (USA) Inc. The Settled
Claims are hereby compromised, settled, released, discharged and dismissed as against the
D&Os who are Defendants with prejudice.
4. The D&Os, trusts for which any of the D&Os are the settlor or which are for the
benefit of them or their families; the D&Os' personal or legal representatives, heirs, executors,
administrators, and any other Person acting on their behalf, the Insurers; and all of the D&Os'
past and present agents, employees, attorneys, insurers, co-insurers, reinsurers, accountants,
advisors, successors, and assigns are hereby permanently barred and enjoined from instituting,
2
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 88 of 99
commencing or prosecuting all claims, rights, demands, suits, matters, issues or causes of action
against the Plaintiff(s), or any of their present and former partners, principals, employees,
predecessors, successors, affiliates, officers, attorneys, agents, insurers and assigns (including
Plaintiffs' Counsel), whether known or unknown, whether under state or federal law, and
whether directly, indirectly, derivatively, representatively or in any other capacity, arising out of,
or relating in any way to the institution, prosecution, or settlement of the Action (but excluding
any claims to enforce the terms of the Partial Settlement).
5. To the maximum extent permitted by law, the Court hereby bars (1) all claims
against the D&Os for indemnity or contribution or any other claim against the D&Os arising out
of the Action or otherwise where the injury to the claimant is the claimant's actual or threatened
liability to the Plaintiff(s) arising out of or related to any transactions with respect to the Bonds,
(2) all claims by the D&Os against any person for indemnity or contribution arising out of the
Action or arising out of or related to any transactions with respect to the Bonds, other than a
person whose liability has been extinguished by the Partial Settlement, each to the fullest extent
permitted by 15 U.S. C. § 78u-4(f)(7), any common law, and any other law, rule or regulation,
and (3) any claim by any person or entity which is not a Released Party against the Insurers
arising out of or related to any of the obligations of the Insurers with respect to the Settled
Claims of the Plaintiff(s) the Partial Settlement, and the Insurance Policies applicable thereto
(except claims to enforce the terms of the Partial Settlement); any person not a Defendant in the
Action may obtain relief from this part of the bar order upon a showing of prior and greater
entitlement to insurance proceeds. A challenge to the bar order set forth in this paragraph shall
not prevent or delay the completion of the Partial Settlement, or the entry of the Order of
Dismissal, and any appeal with respect to the bar order shall not delay or otherwise affect the
3
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 89 of 99
distribution of the Settlement Fund as provided herein. In the event that any court finds that this
paragraph is not enforceable as written, it shall be modified or limited only to the extent
necessary to allow it to be enforced to the fullest extent allowed by law in accordance with its
intent. The Plaintiff(s) shall be entitled to distribution of the Settlement Fund notwithstanding
the pendency of any appeal of the bar order and the resolution of any such appeal shall not
disturb any Plaintiff(s) rights to retain the proceeds of the Partial Settlement.
6. Any non-settling party shall be entitled to a reduction in any final verdict or
judgment in an amount calculated as provided for in 15 U.S.C. § 78u-4(f)(7)(B). In addition, any
non-settling party who claims to be covered under any insurance policy issued by an Insurer, if
any, shall also be entitled to a credit against any final judgment equal to the amount of coverage
actually available, if any, that a court determines would have been available to such non-settling
party under such insurance policy but for the operation of the bar order in this Order of
Dismissal. A challenge to the provisions of this paragraph shall not prevent or delay the
completion of the Partial Settlement, or the entry of this Order of Dismissal, and any appeal with
respect to this paragraph shall not delay or otherwise affect the distribution of the Settlement
Fund as provided herein. In the event that any court finds that this paragraph is not enforceable
as written, it shall be modified or limited only to the extent necessary to allow it to be enforced to
the fullest extent allowed by law in accordance with its intent. The Plaintiff(s) shall be entitled
to distribution of the Settlement Fund notwithstanding the pendency of any appeal of the order
based on this paragraph and the resolution of any such appeal shall not disturb any Plaintiff(s)
rights to retain the proceeds of the Partial Settlement.
4
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 90 of 99
7. Neither this Order of Dismissal, the Stipulation, nor any of their terms and
provisions, nor any of the negotiations or proceedings connected with them, nor any of the
documents or statement referred to therein shall be:
a. offered or received against the D&Os as evidence of or construed as or
deemed to be evidence of any presumption, concession, or admission by the D&Os with respect
to the truth of any fact alleged by the Plaintiff(s) or the validity of any claim that had been or
could have been asserted in the Action or in any litigation, or the deficiency of any defense that
has been or could have been asserted in the Action or in any litigation, or of any liability,
negligence, fault, or wrongdoing of the D&Os;
b. construed as or received in evidence as an admission, concession or
presumption against the Plaintiff(s) or any of them that any of their claims are without merit or
are subject to any infirmities, or that damages recoverable in the Action would not have
exceeded the Gross Settlement Amounts; or
C. construed against the D&Os or the Plaintiff(s) 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.
8. The Court finds that all parties to the Stipulation and their counsel have complied
with each requirement of Rule 11 of the Federal Rules of Civil Procedure as to all proceedings
herein.
9. There is no just reason for delay in the entry of this Order of Dismissal and
immediate entry by the Clerk of Court is expressly directed pursuant to Rule 54(b) of the Federal
Rules of Civil Procedure.
5
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 91 of 99
DATED: HONORABLE JOSEPH F. ANDERSON, JR.UNITED STATES DISTRICT JUDGE
6
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 92 of 99
EXHIBIT
2
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 93 of 99
EXHIBIT 2INDIVIDUAL PLAINTIFFS
WX
1. American Funds Insurance Series: High PricewaterhouseCoopers 3:05-CV-554-17
Income Bond Fund and American Funds LLP, James R. Bullock,Insurance Series: Bond Fund Leslie W. Haworth, Henry
B. Tippie, James L.Wareham, Paul R.Humphreys, Kenneth W.Winger, Michael J.Bragagnolo, and TDSecurities (USA) Inc.
2. The Income Fund of America, Inc. same 3:05-CV-555-17 3. Western Asset Funds, Inc. same 3:05-CV-556-17 4. Pacific American Income Shares, Inc. same 3:05-CV-558-17 5. TCW Galileo Funds, Inc. same 3:05-CV-559-17 6. TCW High Yield Fund same 3:05-CV-560-17 7. TCW High Yield Limited Partnership same 3:05-CV-561-17 8. TCW Leveraged Income Trust, L.P. same 3:05-CV-562-17 9. TCW Leveraged Income Trust II, L.P. same 3:05-CV-563-17 10. San Francisco City and County Employees' same 3:05-CV-564-17Retirement System
11. Los Angeles County Employees Retirement same 3:05-CV-565-17Association
12. PIMCO Variable Insurance Trust — High same 3:05-CV-597-17Yield Portfolio
13. PIMCO Funds: Global Investors Series PLC same 3:05-CV-600-17— High Yield Fund
14. UPS Retirement Plan same 3:05-CV-601-17 15. Bedford CDO, Ltd. same 3:05-CV-602-17 16. PIMCO Funds: Pacific Investment same 3:05-CV-603-17
Management Series, - PIMCO High YieldFund
17. Equity Trustees Limited as Responsible same 3:05-CV-604-17Entity for PIMCO Extended Markets Fund
18. Florida State Board of Administration same 3:05-CV-605-1719. OCM High Yield Trust, OCM High Yield same 3:05-CV-606-17
Limited Partnership, OCM High Yield FundII, L.P., Iowa Public Employees' RetirementSystem, Delta Airlines Master Trust — HighYield, Richard King Mellon Foundation, TheUniversity of Virginia, Chrysler CorporationMaster Retirement Trust, Automobile Clubof Southern California, Interinsurance
1
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 94 of 99
.. :::. O::>:...:::>::> »:. :.::.;::.; :.:::.:::..:::.::.::.::::::::::::.:::..:.:::.::.::<::<;,>::::.:::.;:.;::««:.>:.;:.;:.;:<:>::.;>:.::.;:.;:.:»:. fey:::.:.. .... :.....:::::::.::::::.:::::::::::::..*...::.:...:::::.:::::::::::::: :::::::...... .......................................,.........
Exchange of the Automobile Club, ClubPension Plan, Canada Life Insurance Co. ofAmerica, Canada Life Assurance Co. — USADivision and Canada Life Assurance Co. —Canada Division, and all others with accountsor funds managed by Oaktree CapitalManagement, LLC which acquired Bondsduring the Class Period
20. Oak Hill Securities Fund, LP same 3:05-CV-622-1721. Oak Hill Securities Fund 11, LP same 3:05-CV-623-1722. AGE High Income Fund, A Series of same 3:05-CV-624-17
Franklin High Income Trust23. Legg Mason Income Trust, Inc. same 3:05-CV-625-1724. P&PK Family Limited Partnership same 3:05-CV-627-1725. Lerner Enterprises, LP same 3:05-CV-628-1726. Connecticut Retirement Plans and Trust same 3:05-CV-632-17
Funds27. U.S. High Yield Investments B.V. same 3:05-CV-714-1728. Lafayette Life Insurance Company same 3:05-CV-768-1729. Chrysler Corporation Master Retirement same 3:05-CV-769-17
Trust30. Capital Guardian U.S.Fixed-Income Master same 3:05-CV-1109-
Fund, Capital Guardian Global Fixed-Income 17Fund, and Children's Hospital Of LosAngeles Investment Fund
31. Sankaty High Yield Asset Partners, L.P. N/A N/A (subject totolling
agreement)32. Great Point CLO 1999-1, Ltd. N/A N/A (subject to
tollingagreement)
33. Great Point CBO 1998-1, Ltd. N/A N/A (subject totolling
agreement)
2
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 95 of 99
3
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 96 of 99
EXHIBITF
14
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 97 of 99
EXHIBIT FINDIVIDUAL PLAINTIFFS
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................ .:hi:i•i': v:3i:::::: viiiy i:; ]Y,.T .. ......................:iIM1;:T...:.:.: : ii iiiii::iiiiiiii}ii::<viiiiiiiii:v:::::: :.:: :v::: :• : .
1. American Funds Insurance Series: High PricewaterhouseCoopers 3:05-CV-554-17
Income Bond Fund and American Funds LLP, James R. Bullock,Insurance Series: Bond Fund Leslie W. Haworth, Henry
B. Tippie, James L.Wareham, Paul R.Humphreys, Kenneth W.Winger, Michael J.Bragagnolo, and TDSecurities (USA) Inc.
2. The Income Fund of America, Inc. same 3:05-CV-555-17
3. Western Asset Funds, Inc. same 3:05-CV-556-17
4. Pacific American Income Shares, Inc. same 3:05-CV-558-17
5. TCW Galileo Funds, Inc. same 3:05-CV-559-17
6. TCW High Yield Fund same 3:05-CV-560-17
7. TCW High Yield Limited Partnership same 3:05-CV-561-17
8. TCW Leveraged Income Trust, L.P. same 3:05-CV-562-17
9. TCW Leveraged Income Trust 11, L.P. same 3:05-CV-563-17
10. San Francisco City and County Employees' same 3:05-CV-564-17
Retirement System 11. Los Angeles County Employees Retirement same 3:05-CV-565-17Association
12. PIMCO Variable Insurance Trust — High same 3:05-CV-597-17Yield Portfolio
13. PIMCO Funds: Global Investors Series PLC same 3:05-CV-600-17— High Yield Fund
14. UPS Retirement Plan same 3:05-CV-601-17 15. Bedford CDO, Ltd. same 3:05-CV-602-17 16. PIMCO Funds: Pacific Investment same 3:05-CV-603-17
Management Series, - PIMCO High YieldFund
17. Equity Trustees Limited as Responsible same 3:05-CV-604-17Entity for PIMCO Extended Markets Fund
18. Florida State Board of Administration same 3:05-CV-605-1719. OCM High Yield Trust, OCM High Yield same 3:05-CV-606-17
Limited Partnership, OCM High Yield Fund11, L.P., Iowa Public Employees' RetirementSystem, Delta Airlines Master Trust — HighYield, Richard King Mellon Foundation, TheUniversity of Virginia, Chrysler CorporationMaster Retirement Trust, Automobile Clubof Southern California, Interinsurance
15
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 98 of 99
.:....:. ..;:.. ..:.;:::.....4::::::.::............::::::::::::. •.. v::: +4 ...::::: •:::::::: :•......::::::::::::::......::::::::::::::.......:: ...................... .. .. : ' ::!:i:i:: ii}i::•:i:i:::i:{:i::i :iiii::•:i:L:::i:L:i::i:L:i :.i:•..;^,lei!^^1^[:^^ .:::::::::::.:.................. ......
Exchange of the Automobile Club, ClubPension Plan, Canada Life Insurance Co. ofAmerica, Canada Life Assurance Co. — USADivision and Canada Life Assurance Co. —Canada Division, and all others with accountsor funds managed by Oaktree CapitalManagement, LLC which acquired Bondsduring the Class Period
20. Oak Hill Securities Fund, LP same 3:05-CV-622-17
21. Oak Hill Securities Fund II, LP same 3:05-CV-623-17
22. AGE High Income Fund, A Series of same 3:05-CV-624-17
Franklin High Income Trust 23. Legg Mason Income Trust, Inc. same 3:05-CV-625-17
24. P&PK Family Limited Partnership same 3:05-CV-627-17
25. Lerner Enterprises, LP same 3:05-CV-628-17
26. Connecticut Retirement Plans and Trust same 3:05-CV-632-17
Funds
27. U.S. High Yield Investments B.V. same 3:05-CV-714-17
28. Lafayette Life Insurance Company same 3:05-CV-768-17
29. Chrysler Corporation Master Retirement same 3:05-CV-769-17
Trust 30. Capital Guardian U.S.Fixed-Income Master same 3:05-CV-1109-
Fund, Capital Guardian Global Fixed-Income 17Fund, and Children's Hospital Of LosAngeles Investment Fund
31. Sankaty High Yield Asset Partners, L.P. N/A N/A (subject totolling
agreement)
32. Great Point CLO 1999-1, Ltd. N/A N/A (subject totolling
agreement)
33. Great Point CBO 1998-1, Ltd. N/A N/A (subject totolling
agreement)
16
3:00-cv-01145-JFA Date Filed 04/25/2005 Entry Number 898 Page 99 of 99
EXHIBIT GINSURERS' ALLOCABLE SHARE
As agreed to severally amongst the Insurers, the following is the agreed allocation by and
amongst the Insurers of the Gross Settlement Amount:
American Home Assurance Company: $4,257,643.70
Reliance Insurance Company: $15,000,000.00
National Union Fire Insurance Company $16,742,356.30
Pittsburgh, Pa.:
Total: $36,000,000.00
17
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