EXHIBIT 10.7
STIPULATION AND AGREEMENT OF SETTLEMENT
This stipulation and agreement of settlement dated as of August 12th, 2003
is made and entered into by and between lead Plaintiff, California State
Teachers' Retirement System ("CalSTRS" or "Lead Plaintiff"), on behalf of
itself and the Class (as defined below), and defendant Homestore, Inc.
("Homestore").
WHEREAS:
A. Commencing in December 2001, multiple class action complaints were filed
against Homestore and other individuals and entities on behalf of persons who
purchased shares of Homestore common stock during the period January 1, 2000
until December 21, 2001;
B. The United States District Court for the Central District of California
consolidated these actions in a proceeding entitled In re Xxxxxxxxx.xxx, Inc.
Securities Litigation, Case No. CV 01-11115 MJP ("the Action") and approved the
appointment of CalSTRS as Lead Plaintiff for the putative Class;
C. On November 15, 2002, Lead Plaintiff filed the operative First Amended
Consolidated Complaint in the Action ("the Complaint") that alleges, among other
things, that in a scheme to artificially inflate the value of Homestore common
stock, Homestore's financial statements were materially misstated during the
Class Period (as defined herein) and that Homestore and the other defendants
caused these material misstatements to be issued;
D. The Complaint further alleges that Lead Plaintiff and the other members
of the Class purchased or otherwise acquired Homestore common stock during the
Class Period at prices that were artificially inflated as a result of the
dissemination of Homestore's materially false and misleading financial
statements in violation of Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934, and Rule 10b-5 promulgated thereunder;
E. Homestore has filed an Answer in the Action denying liability on its
part with respect to the claims asserted in the Action against them by Lead
Plaintiff and the Class. Nevertheless, Homestore has determined that settlement
of those claims is in the best interest of the Company and its present
shareholders. By entering into this Stipulation and the Settlement, Homestore
does not intend to waive, and is not waiving, any defense available to it.
F. Lead Counsel for CalSTRS has conducted an investigation relating to the
claims and to the underlying events and transactions alleged in the Complaint
including consultation with experts and interviews of potential witnesses,
including anonymous cooperating witnesses. Lead Counsel has analyzed the claims
and has researched the applicable law with respect to the claims of CalSTRS and
the Class against Homestore. CalSTRS has also had discussions with
representatives of Homestore regarding corporate governance issues and
regarding Homestore's financial condition.
F. On June 16 and 17, 2003, pursuant to the District Court's direction,
representatives of CalSTRS and Homestore, along with their respective counsel,
participated in a Mediation conducted by the Xxx. Xxxxxx Xxxxxxxxx of JAMS,
with a view to settling the issues in dispute between them and achieving the
best relief possible consistent with the interests of the Class. During that
Mediation, Homestore presented further information relating to its financial
condition and its ability to fund a potential settlement with Lead Plaintiff
and the Class;
G. Based upon their investigation and analysis as set forth above, and as
a result of the arms-length negotiations that took place as part of the
Mediation, Lead Counsel and Lead Plaintiff have concluded that the terms and
conditions of this Stipulation are fair, reasonable and adequate to Lead
Plaintiff and the Class, and in their best interests, and have agreed to settle
the claims raised against Homestore in the Action pursuant to the terms and
provisions of this Stipulation, after considering (1) the substantial benefits
that the Class will receive from this settlement with Homestore, (2) the
attendant risks of litigation, and (3) Homestore's present financial condition
and the status of its Directors and Officers Liability Insurance claims.
H. The Complaint also asserts claims against PriceWaterhouseCoopers,
Xxxxxx Xxxxx and Xxxxx Xxxxxx, which are not being settled or compromised by
this settlement and which Lead Plaintiff will continue to prosecute on behalf
of the Class.
NOW THEREFORE, without any admission or concession on the part of Lead
Plaintiff or the Class of any lack of merit of the Action whatsoever, and
without any admission or concession of any liability or wrongdoing or lack of
merit in their defenses whatsoever by Homestore,
IT IS HEREBY STIPULATED AND AGREED by and among the parties to this
Stipulation, subject to approval by the Court pursuant to Rule 23(e) of the
Federal Rules of Civil Procedure, that in consideration of the benefits flowing
to the parties hereto, that all Settled Claims (as defined below) against
Homestore and other released parties as set forth in the Release below, shall
be compromised, settled, released and dismissed with prejudice, and without
costs, upon and subject to the Terms and Conditions set forth below:
DEFINITIONS
As used in this Stipulation, the following terms shall have the following
meanings:
a) "Action" means the consolidated proceedings pending in the United
States District Court for the Central District of California entitled In re
Xxxxxxxxx.xxx, Inc. Securities Litigation, Case No. CV 01-11115 MJP.
b) "Authorized Claimant" means a Class Member who submits a timely and
valid Proof of Claim form to the Class Administrator.
c) "Claims Administrator" means the firm to be retained by Lead Counsel,
subject to Court Approval, which shall process proofs of claim and administer
the Settlement payments to Authorized Claimants.
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d) "Class" or "Plaintiff Class" means the Class to be certified, defined as
all Persons (excluding Defendants, any members of their immediate families, any
person, firm, trust, corporation, present or former officer, director, or other
individual or entity in which any Defendant has a controlling interest or which
is affiliated with any of the Defendants, and any legal representatives, agents,
affiliates, heirs, successors-in-interest or assigns of any excluded party) who
purchased or otherwise acquired Xxxxxxxxx.xxx, Inc. stock from January 1, 2000
through December 21, 2001.
e) "Class Period" means the period commencing on January 1, 2000 through
and including December 21, 2001.
f) "Class Member" or "Member of the Class" means any Person who purchased
or otherwise acquired Homestore common stock during the period beginning January
1, 2000 through December 21, 2001, inclusive, and who is not excluded from the
Class by definition or who does not exclude themselves by filing a valid timely
request for exclusion in accordance with the requirements set forth in the
Notice.
g) "Costs of Notice" means all reasonable expenses incurred in connection
with the preparation, printing, and mailing of the Notice to the Class and
publication of the Publication Notice.
h) "Defendants" means Homestore, PriceWaterhouseCoopers, Xxxxxx Xxxxx and
Xxxxx Xxxxxx.
i) "Dismissed Defendants" means the following "Business Partner Defendants"
and "Third Party Vendors" named by Plaintiff as defendants in the First Amended
Consolidated Class Action Complaint in this Action, whose motions to dismiss
were granted by the Court in its March 7, 2003 Order Regarding Motions to
Dismiss: AOL Time Warner, Xxxx Xxxxxx, Xxxxx Xxxxxxx, Cendant Corporation, L90,
Akonix, CityRealty, Classmates Online, CornerHardware, Globe Explorer, Internet
Pictures, PromiseMark, RevBox, Dorado Corporation, Smart Home and WizShop.
j) "Effective Date" means the date upon which the Order and Final Judgment
has become Final as those terms are defined below.
k) "Escrow Account" means the interest bearing account to be maintained by
Lead Counsel into which the cash settlement payments made by Homestore pursuant
to this Stipulation shall be deposited.
l) "Final" means: (i) the date of final affirmance on an appeal of the
Judgment, the expiration of the time for a petition for or denial of a writ of
certiorari to review the Judgement and, if certiorari is granted, the date of
final affirmance of the Judgement following review pursuant to the grant; or
(ii) the date of final dismissal of any appeal from the Judgment or the final
dismissal of any proceeding on certiorari to review the Judgment; or (iii) if
no appeal is filed, the expiration date of the time for filing or noticing of
any appeal from the Court's Judgment approving the Stipulation substantially in
the form of Exhibit A hereto, i.e. thirty (30) days after entry of the Judgment.
Any proceeding or order, or any appeal or petition for a writ of certiorari
pertaining solely to any plan of allocation and/or application for attorneys'
fees, costs
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or expenses, shall not in any way delay or preclude the Judgment from becoming
final.
m) "Individual Defendants" means Xxxxxx Xxxxx and Xxxxx Xxxxxx.
n) "Lead Counsel" means Court-appointed lead counsel for Plaintiffs
and the Class in the Action, the law firm of Cotchett, Xxxxx, Xxxxx & XxXxxxxx.
o) "Lead Plaintiff" means the California State Teachers' Retirement
System (CalSTRS).
p) "Mediator" means the Xxx. Xxxxxx Xxxxxxxxx of JAMS, who presided
over mediation between Homestore and CalSTRS on June 16-17, 2003. If for any
reason former Judge Xxxxxxxxx is unable or unwilling to perform the functions
assigned to him under this stipulation, "Mediator" shall mean the person jointly
selected by Homestore and CalSTRS to replace him. In the event that the parties
are unable to agree to a replacement, either party may request that JAMS will
appoint the replacement.
q) "Notice" means the Notice of Pendency of Class Action, Hearing on
Proposed Partial Settlement and Attorneys' Fee Petition and Right to Share in
Settlement Fund, which if the Court approves is to be sent to members of the
Class substantially in the form attached hereto as Exhibit B.
r) "Order and Final Judgment" or "Judgment" means the proposed order
and judgment to be entered by the Court approving this Settlement substantially
in the form attached hereto as Exhibit A.
s) "Order for Notice and Hearing" or "Preliminary Approval" means the
proposed order preliminarily approving this Settlement and directing notice
thereof to the Class substantially in the form attached hereto as Exhibit C.
t) "Other Settling Defendants" means the following individuals with
whom plaintiffs have entered into separate settlement agreements: Xxxx
Xxxxxxxx, Xxxxxx Xxxx, Xxxxxx Xxxx, Xxxxx Xxxxxxxxxx, Xxxx XxXxxxxxx and Xxxx
Xxxxxx.
u) "Plaintiffs" means Lead Plaintiff and all other plaintiffs in this
consolidated action, collectively.
v) "Person" means an individual, corporation, partnership, limited
partnership, association, joint stock company, estate, legal representative,
trust, unincorporated organization, limited liability partnership, and any
other type of legal entity, and their heirs, predecessors, successors,
representatives and assigns.
w) "Proof of Claim" means the claim form substantially in the form
attached hereto as Exhibit D.
x) "Publication Notice" means the summary notice of proposed partial
settlement and hearing for publication substantially in the form attached as
Exhibit E.
y) "Released Homestore Parties" means Homestore, its present or former
assigns,
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affiliates, administrators, executors, successors, subsidiaries, attorneys,
accountants and auditors (except PriceWaterhouseCoopers), experts, parents,
predecessors, or related companies, and any of its or their present or former
officers and directors, shareholders, employees, agents, or representatives,
excluding the Individual Defendants, Other Settling Defendants and Dismissed
Defendants.
z) "Settled Claims" means any and all claims, rights, demands,
obligations, controversies, debts, damages, losses, causes of action and
liabilities of any kind or nature whatsoever in law or equity, including both
known and unknown claims, suspected or unsuspected, held at any point from the
beginning of time to the date of the execution of this Stipulation, arising out
of, connected with, or in any way relating to, the acquisition of Homestore
common stock or which have been or could have been asserted by any of the
Plaintiffs or Class Members in the Action against any of the Released Homestore
Parties.
aa) "Settlement" means resolution of the Action in accordance with the
terms and provisions of this Stipulation.
bb) "Settlement Fund" means the cash and common stock consideration paid
by Homestore pursuant to this Stipulation.
cc) "Settlement Hearing" means the hearing held by the Court to determine
whether this proposed Settlement is fair, reasonable and adequate and should be
approved.
TERMS AND CONDITIONS OF SETTLEMENT
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1. CONSIDERATION BY HOMESTORE. In consideration of the dismissal and release
of claims by the Plaintiff Class against Homestore and other undertakings by
CalSTRS and the Plaintiff Class provided for herein, and subject to Final
Approval by the Court, Homestore shall pay for the benefit of the Plaintiff
Class the following:
A. Thirteen Million Dollars ($13,000,000.00) in cash; and
B. Twenty Million shares of Homestore common stock, which are intended to
be unrestricted and freely tradable as described in Paragraph 2.C below
("the Settlement Shares").
2. TIMING OF DELIVERY OF CONSIDERATION INTO ESCROW.
A. No later than three business days after Preliminary Approval by the
Court, Homestore shall cause to be deposited into an Escrow Account set up
by counsel for Plaintiff for such purpose, the sum of ten million dollars
($10,000,000.00);
B. The remaining three million dollars ($3,000,000.00) in cash
consideration shall be deposited by Homestore into the Escrow Account
within three business days of Final Approval by the Court of this
Settlement.
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Homestore shall undertake reasonable best efforts to issue and deliver the
Settlement Shares into an Escrow set up for that purpose within ten days of
Final Approval by the Court of this Settlement. The issuance of the Shares
pursuant to this Stipulation shall be made pursuant to the exemption from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), provided by Section 3(a)(10) of the Securities Act, and thus
resale by recipients of the Shares in the Settlement, who are not affiliates (as
defined in Rule 144(a)(1) under the Securities Act) of Homestore, will not be
subject to the resale limitations of Rule 144 under the Securities Act, or
registered pursuant to Section 5 of the Securities Act if for any reason such
exemption is not available. If such exemption is determined not to be available,
by formal advice of counsel or by action or written notice from the Securities
and Exchange Commission to that effect, Homestore shall undertake to effect the
registration of the Shares pursuant to Section 5 of the Securities Act pursuant
to a registration statement filed within thirty (30) days of the determination
of the unavailability of the exemption.
3. RELEASE OF CLAIMS.
A. The obligations incurred pursuant to this Stipulation shall be in full
and final disposition of the Action with respect to Homestore and any and
all Settled Claims.
B. As of the Effective Date, Lead Plaintiff CalSTRS and each member of
the Class, on behalf of themselves, and each of their respective
predecessors, successors, parents, subsidiaries, affiliates, heirs,
executors, trustees, administrator and representatives, releases and
forever discharges each and every one of the Settled Claims against the
Released Homestore Parties, and shall forever be barred and enjoined from
commencing, instituting or maintaining any of the Settled Claims against
any of the Released Homestore Parties.
C. With respect to the Settled Claims, the parties stipulate and agree
that upon the Effective Date, CalSTRS and the members of the Class shall be
deemed to have, and by operation of the Order and Final Judgment shall have
expressly waived any and all provisions, rights and benefits conferred by
any law of any state or territory of the United States, or principle of
common law, which is similar, comparable or equivalent to the provisions of
Section 1542 of the California Civil Code, which provides:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the Debtor."
CalSTRS acknowledges, and has been advised by Lead Counsel, and other
members of the Class shall be deemed by operation of law to have
acknowledged, that this release constitutes a full and complete release of
claims known and unknown, in accordance with its terms, and that the
inclusion of unknown claims in the settlement and release was separately
bargained for and was a material condition of this settlement. CalSTRS and
other members of the class hereby waive the provisions of Section 1542 of
the California Civil Code and of any law of any state or territory of the
United States, or principle of common law, which is similar, comparable or
equivalent to such provisions with respect
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to all Settled Claims.
4. SETTLEMENT DISCHARGE AND BAR ORDER. At the time of or prior to Settlement
Hearing, the parties to this Stipulation shall submit for entry by the Court,
if the Court approves the settlement provided for herein, a Bar Order pursuant
to Section 201(a)(7) of the Private Securities Litigation Reform Act of 1995,
15 U.S.C. Section 78u-4(f)(7), providing for the maximum protection to which
Homestore is entitled under the law with respect to discharge and bar of all
future claims for contribution or indemnity by other persons, arising out of
or in any way related to the Action, whether under federal, state or common
law, or any other principle of law or equity. The Bar Order to be entered by
the Court as part of the Final Judgment shall be substantially in the
following form:
"1. All claims for contribution and indemnification, however denominated,
against Homestore arising under the federal securities laws, state law or
common law with respect to the events that are subject of the Action, in
favor of persons, including but not limited to the Individual Defendants,
Dismissed Defendants and Other Settling Defendants in this Action, who are
alleged to be joint tortfeasors with Homestore in the Released Claims and
based upon liability for, or arising out of or relating in any way to, the
Released Claims are extinguished, discharged, barred, satisfied and/or
otherwise unenforceable.
2. All Persons, including but not limited to the Individual Defendants,
Dismissed Defendants and Other Settling Defendants, are hereby barred and
permanently enjoined, to the fullest extent allowed by law, from asserting,
instituting or prosecuting in any capacity, before any court or
governmental agency, any action or proceeding against Homestore for
equitable, partial, comparative, or complete contribution, subrogation, or
indemnity, however denominated, based upon liability for, or arising out of
or relating in any way to the Released Claims, and the Court finds that all
such claims are extinguished, discharged, satisfied and made
unenforceable."
5. ALLOCATION OF FUTURE D&O INSURANCE PROCEEDS.
A. In the event that Homestore in the future receives any payments
(whether by way of settlement, judgment or otherwise) from its Directors &
Officers Liability Insurance Carriers as a result of Homestore's pending
claims arising from the Action, one half of the net recovery of such
payments from the Insurance Carriers to Homestore (after payment of any
unreimbursed past or future attorneys' fees and costs by Homestore arising
from efforts to recover such payments) shall be paid by Homestore into the
Escrow Account for the benefit of the Plaintiff Class.
B. Homestore shall make reasonable efforts to pursue its pending claims
against its Directors & Officers Liability Insurance Carriers arising from
the Action, and shall consult with counsel for CalSTRS with respect to
settlement of, or a decision to abandon, such claims. In the event that
CalSTRS disagrees with Homestore's decision with regard to settlement or
abandonment of such insurance claims, the matter will be submitted to the
Mediator, who will make final, binding and non-appealable determination
with
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respect to the settlement, abandonment or further pursuit of such claims.
The Mediator's authority with respect to disputes under this Agreement
relating to insurance claims and proceeds shall continue after the
Settlement Hearing.
6. CORPORATE GOVERNANCE. Homestore shall adopt the Principles Relating to
Corporate Governance, attached hereto as Exhibit F.
7. CONTINUING COOPERATION IN CONNECTION WITH PENDING LITIGATION.
Notwithstanding Final Approval of this Settlement, Homestore agrees that it will
reasonably cooperate with counsel for the Plaintiff Class in making Company
personnel who have relevant testimony with respect to the matters at issue in
the Action available for deposition and trial without the necessity of
subpoena. Nothing herein shall prevent either Homestore or such witnesses from
asserting legal objections to discovery otherwise available to them.
8. ORDER FOR NOTICE AND HEARING. Promptly after execution of the
Stipulation, Lead Counsel shall submit the Stipulation together with its
Exhibits to the Court and shall apply for entry of an Order for Notice and
Hearing, substantially in the form of Exhibit C hereto, requesting inter alia
certification of a Class for purposes of this settlement, the preliminary
approval of the Settlement set forth in this Stipulation, and approval of the
mailing of the Notice and Publication of the Publication Notice, substantially
in the form of Exhibits B and E hereto, and informing the Court, inter alia,
that the parties will rely on the registration exemption provided by Section
3(a)(10) of the Securities Act for the issuance of the Shares, based on the
Court's approval of the Settlement. Lead Counsel shall also request that the
Court schedule a Settlement Hearing to consider Final Approval of the
Settlement after notice has been given to Members of the Class.
9. COSTS OF NOTICE. Homestore shall pay the reasonable Costs of Notice to
the members of the Class following Preliminary Approval by the Court of this
Settlement.
10. ADMINISTRATION OF SETTLEMENT FUND.
A. RESPONSIBILITY. Lead Counsel shall be responsible for supervising the
administration of the Settlement and the Settlement Fund pursuant to the
terms of this Stipulation and under the supervision of the Court. Except
for its obligation to cooperate to the extent practicable in the production
of information with respect to the identification of Class Members from
Homestore's shareholder transfer records, as provided herein, and apart
from paying the Costs of Notice, neither Homestore nor its counsel shall
have any liability, obligation or responsibility for the administration of
the Settlement and Settlement Fund, the allocation of the Settlement
proceeds, or the review or challenging of claims of Members of the Class.
The allocation of Settlement proceeds among Class Members shall be subject
to a reasonable plan of allocation proposed by Lead Counsel and approved by
the Court. Such plan of allocation is a matter separate and apart from the
proposed Settlement between Plaintiffs and Homestore, and any decision by
the Court concerning the plan of allocation shall not affect the validity
of finality of the proposed Settlement.
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B. THE SETTLEMENT FUND.
The Settlement Fund deposited into the Escrow Account shall be
invested in instruments backed by full faith and credit to the United
States Government or fully insured by the United States Government or an
agency thereof and any proceeds shall be reinvested as they mature in
similar instruments at their then current rates. The Escrow Agent for the
Escrow Account shall bear all risk related to investment of the Settlement
Fund.
The Escrow Agent shall not disburse any part of the Settlement Fund
except as provided in this Stipulation, by an order of the Court, or with
the written agreement of counsel for Homestore and Lead Counsel.
(i) Prior to the Effective Date and without further order of the Court,
Lead Counsel may expend from the Settlement Fund up to $100,000 to pay
reasonable costs and expenses associated with the administration of the
Settlement. Such costs and expenses shall include, without limitation, the
administrative expenses incurred and fees charged by the Claims
Administrator in connection with processing the submitted claims, and the
fees, if any, of the Escrow Agent. Lead Counsel may apply to the Court for
additional administration funds as needed.
(ii) Except as otherwise provided in this Stipulation, the Settlement Fund
shall remain in escrow pending (1) Final Approval of the Settlement by the
Court; (2) the expiration of all rights of appeal of the Order and Final
Judgment, and (3) the final denial of any and all appeals or objections or
collateral attacks or challenges to the Settlement.
C. TAXES.
(i) The parties hereto agree that the Settlement Fund is intended to be
and shall be treated all times as a "qualified settlement fund" within the
meaning of Treasury Regulation Section 1.468B-1, and that Lead Counsel, as
administrator of the Settlement Fund within the meaning of Treasury
Regulation Section 1.46B-2(k)(3) shall be responsible for filing tax
returns for the Settlement Fund and paying from the Settlement Fund (a) any
taxes owed with respect to the Settlement Fund; and (b) expenses and costs
incurred in connection with taxation of the Settlement Fund (including
without limitation expenses of tax attorneys and/or accountants and
mailing, administration, and distribution costs and expenses related to the
filing or failure to file all necessary or advisable tax returns).
(ii) All taxes of the Settlement Fund and all expenses and costs incurred
in connection with taxation of the Settlement Fund shall be paid out of the
Settlement Fund, and may be paid without prior order of the Court. The
Settlement Fund shall indemnify and hold Homestore harmless for any taxes
and related expenses (including without limitation taxes payable by reason
of any such indemnification) if any, payable for any reason by Homestore by
reason of
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the income earned on the Settlement Fund. Homestore shall notify
Lead Counsel promptly if it receives any notice of any claim for
taxes relating to the Settlement Fund.
11. ATTORNEYS' FEES AND EXPENSES.
A. Lead Counsel, on behalf of all Plaintiffs' counsel in the Action, may
apply to the Court for an award from the Settlement Fund of attorneys'
fees and reimbursement of reasonable expenses. Upon the granting of Final
Approval of the Settlement by the Court, such attorneys' fees shall be
paid from the Settlement Fund to Lead Counsel within five (5) business
days of the award, notwithstanding the existence of any timely filed
objections thereto, or potential for appeal therefrom, or collateral
attack on the Settlement or any part thereof, subject to the obligation of
each such Plaintiffs' counsel to refund to the Settlement Fund, within ten
(10) days, the amount received by each plus accrued interest at the rate
paid on the Escrow Account by the financial institution holding it, if and
when, as a result of any appeal and/or further proceeding on remand, or
successful collateral attack, the fee or cost award is reduced or
reversed, if the award order does not become final, if the Settlement Fund
itself is voided by any party as provided herein, or if the Settlement is
later reversed or modified by any court.
B. The procedure for and the allowance or disallowance of any
applications by Plaintiffs' Counsel for attorneys' fees and expenses to be
paid out of the Settlement Fund are not part of the Settlement set forth
in the Stipulation, and are to be considered by the Court separately from
the Court's consideration of the fairness, reasonableness and adequacy of
the Settlement set forth in the Stipulation, and any order relating
thereto or reversal or modification thereof, shall not operate to
terminate or cancel the Stipulation, nor affect or delay the finality of
the Judgment approving the Stipulation and the Settlement set forth
therein.
C. Homestore shall have no responsibility for, and no liability
whatsoever with respect to, any payment to Plaintiffs' counsel from the
Settlement Fund. Homestore shall have no responsibility for, and no
liability whatsoever with respect to the allocation among Plaintiffs'
counsel, and/or any other Person who may assert some claim to, any
attorneys' fee and expense award that the Court may make in the Action.
12. DISTRIBUTION TO AUTHORIZED CLAIMANTS.
A. The Claims Administrator shall determine each Authorized Claimant's
pro rata share of the Settlement Fund based upon each Authorized
Claimant's Recognized Loss (as defined in the Plan of Allocation described
in the Notice annexed hereto as Exhibit B, or in such other Plan of
Allocation as the Court approves). Homestore will have no responsibility
for, or involvement in, reviewing or challenging claims.
B. The Plan of Allocation proposed in the Notice is not a necessary term
of this Stipulation, and it is not a condition of this Stipulation
that the Plan of Allocation be approved.
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C. Any member of the Class who fails to submit a valid Proof of Claim will not
be entitled to receive any of the proceeds from the Settlement Fund, but will be
otherwise bound by all 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 Homestore Parties with respect to the Settled
Claims.
D. 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:
(i) Each Class Member shall be required to submit a Proof of Claim (see
attached Exhibit D), signed under penalty of perjury and supported by such
documentation as described therein, including proof of the Claimant's loss,
or such other documents or proof as Lead Counsel, in its discretion, may
deem acceptable and subject to approval of the Court;
(ii) All Proofs of Claim must be submitted by the date specified in the
Notice unless such period is extended by Order of the Court. 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
first-class postage prepaid and addressed in accordance with the
instructions thereon. In all other cases, the Proof of Claim shall be
deemed to have been submitted when actually received by the Claims
Administrator;
(iii) 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
(v) below;
(iv) 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 order to afford the Claimant the
opportunity to remedy curable deficiencies in the Proof of Claim submitted.
The Claims Administrator, under 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
therefore, 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 (v) below;
(v) If any Claimant whose claim has been rejected in whole or in part
desires to contest such rejection, the Claimant must, within twenty (20)
days after the date of mailing of the notice required in subparagraph (iv)
above, serve upon the Claims Administrator a notice and statement of the
reasons indicating the Claimant's grounds for contesting the rejection
along with any supporting documentation, and requesting review thereof by
the Court. If a dispute
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concerning the claim cannot otherwise be resolved, Lead Counsel shall
thereafter present the request for review to the Court;
(vi) The administrative determinations of the Claims Administrator
accepting and rejecting claims shall be presented to the Court for
approval by the Court in the Class Distribution Order.
E. 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 the 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 the Settlement in connection with processing Proofs of Claim.
F. 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 Claims Administrator or the Court shall be barred from
participating in distributions from the Settlement Fund, but shall
otherwise be bound by all of the terms of this Stipulation and 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 Homestore Parties with respect
to the Settled Claims.
G. All proceedings with respect to the administration, processing and
determination of claims described in 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.
H. Any Member of the Class wishing to be excluded from the Class shall
mail a written request for exclusion, in the manner set forth in the Order
for Notice and Hearing attached hereto as Exhibit C.
I. The net proceeds of the 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 rejected or
disallowed claims have been resolved by the Court, and all appeals
therefrom have been resolved or the time therefore has expired; (iii) all
matters with respect to attorneys' fees, costs, and disbursements have
been resolved by the Court, all appeals therefrom have been resolved or
the time therefore has expired; and (iv) all costs of administration and
Taxes have been paid.
13. TERMINATION.
A. Lead Plaintiff CalSTRS or Homestore shall have the right to terminate
the Settlement and this Stipulation by providing written notice of their
election to do so to the other party within ten (10) days of any of the
following events:
12
(i) A decision by the Court declining to grant Preliminary
Approval to the settlement or to enter the Order for
Notice and hearing in any material respect;
(ii) A decision by the Court refusing to approve this
Stipulation or any material part thereof;
(iii) a decision by the Court declining to enter the Order
and Final Judgment in any material respect;
(iv) A decision by the Court of Appeals or the Supreme
Court of the United States reversing or modifying in
any material respect an Order and Final Judgment
approving the Settlement.
B. If prior to the Settlement Hearing, persons who otherwise would
be members of the Class have filed with the Court timely Requests for
Exclusion from the Class in accordance with the provisions of the
Notice Order and the notice given pursuant thereto, and the number of
shares purchased in the aggregate during the Class Period by such
persons filing timely Requests for Exclusion exceeds the sum specified
in an separate Supplemental Agreement between the parties, Homestore
shall have, in its sole and absolute discretion, the option to
terminate this Stipulation at any time prior to the Settlement Hearing
in accordance with the procedures set forth in the Supplemental
Agreement. The Supplemental Agreement will not be filed with the Court
unless and until a dispute among the parties concerning its
interpretation or application arises. Copies of all Requests for
Exclusion received, together with copies of all written revocations of
Requests for Exclusion shall be delivered to counsel for Homestore
within three (3) business days of receipt, but in no event later than
five (5) court days before the Settlement Hearing.
C. Except as otherwise provided herein, in the event the Settlement
is terminated or fails to become effective for any reason, then the
parties to this Stipulation shall be deemed to have reverted to their
respective legal status in the Action as of June 17, 2003, and the
parties in the Action shall proceed in all respects as if this
Stipulation and any related orders had not been entered; and any
portion of the consideration by Homestore previously paid or deposited
into escrow as provided for in Paragraphs 1, 2 and 5 of these Terms
and Conditions, together with any interest earned thereon, less any
taxes paid or due with respect to such income, less costs of notice
actually incurred and paid or payable from such funds (not to exceed
$100,000 without the prior approval of Homestore), and less the fees,
if any, of the Escrow agent, shall be returned to Homestore.
14. RESOLUTION OF DISPUTES UNDER THIS AGREEMENT AND MEDIATOR'S CONTINUING
JURISDICTION. The parties hereto agree that, prior to the Settlement Hearing,
the Mediator shall retain continuing involvement in the Settlement process, and
that any disputes between the parties to this Agreement with respect to
interpretation of the terms or provisions of this Agreement shall be submitted
to the Mediator for resolution, whose decision with respect to such dispute
shall be final, binding and non-appealable.
13
15. CONFIDENTIALITY. Except as required by law or otherwise agreed to
beforehand, the parties shall keep the fact of and terms of this Settlement
confidential until the filing with the Court of a request for Preliminary
Approval of the Settlement.
16. NO ADMISSION OF WRONGDOING. This Stipulation and Settlement, whether or
not consummated, and any negotiations, proceedings or agreements relating to
the Stipulation or the Settlement, and any matters arising in connection with
such settlement negotiations, proceedings or agreements:
(a) shall not be described as, construed as, offered or received
against Homestore or any of the Released Homestore Parties as evidence of
and/or construed as or deemed to be evidence of any presumption, concession
or admission by Homestore of the truth of any fact alleged by Plaintiffs in
the Action, of the validity of any claim that was or could have been
asserted in the Action or any other litigation, or of the deficiency of any
defense that was or could have been asserted in the Action or in any other
litigation, or of any liability, negligence, fault or wrongdoing on the
part of Homestore or any of the Released Homestore Parties, or against the
Lead Plaintiff or any members of the Class as evidence of any infirmity in
the claims asserted in the Action;
(b) shall not be described as, construed as, offered or received
against Homestore or any of the Released Homestore Parties as evidence of a
presumption, concession or admission of any liability, negligence, fault or
wrongdoing, or in any way referred to for any other reason against any of
the parties to this Stipulation, in any other civil, criminal or
administrative action or proceeding, provided however that (i) if it is
necessary to refer to this Stipulation to effectuate the provisions of the
Stipulation, it may be referred to in such proceedings; and (ii) if this
Stipulation is approved by the Court, Homestore or any of the Released
Homestore Parties may refer to it to effectuate the liability protection
granted them hereunder;
(c) shall not be described or construed against Homestore or Lead
Plaintiff or any member of the Class as an admission or concession that the
consideration to be given hereunder represents the amount that could be or
would have been awarded to Lead Plaintiff or the Class after trial;
(d) shall not be described as, construed as or received in evidence as
an admission, concession or presumption against Lead Plaintiff or any
member of the Class that any of their claims are without merit or that
damages recoverable under the Complaint would not have exceeded the
settlement amount.
17. MISCELLANEOUS PROVISIONS
A. All of the exhibits attached hereto are incorporated by reference and
a part of this Stipulation.
B. The parties to this Stipulation and Agreement of Settlement intend the
settlement to be a full, final and complete resolution of the Settled
Claims. Accordingly, the parties
14
to this Stipulation agree not to assert in any forum that the Action was brought
or defended 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 with respect to the maintenance, defense or settlement of the Action.
The parties further agree that the amounts paid and the other consideration and
terms of the settlement were negotiated at arms-length in good faith by the
parties, and reflect a settlement that was reached voluntarily and willingly
after consultation with experienced legal counsel.
C. 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
legal successors-in-interest.
D. The headings herein are used for the purpose of convenience only and are
not meant to have legal effect or meaning different than or beyond the terms of
the provisions they reference.
E. The administration and consummation of the Settlement contemplated 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 Plaintiffs' counsel and enforcing the terms of
this Stipulation.
F. 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.
G. This Stipulation and its exhibits constitute the entire agreement among the
parties hereto concerning the Settlement of the Action as against Homestore, and
no representation, warranties, or inducements have by made by any party hereto
concerning this Stipulation and its exhibits other than those contained and
memorialized in such documents.
H. 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.
I. This Stipulation shall be binding when signed, but the Settlement shall be
effective only on condition that the Effective Date occurs.
J. This Stipulation shall be finding upon, and inure to the benefit of, the
successors and assigns of the parties hereto.
K. 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 California without regard to conflicts of
laws, except to the extent that federal law requires that federal law governs.
L. 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
15
counsel for one of the parties; it being recognized and acknowledge that it is
the result of arms'-length negotiations between sophisticated parties
represented by experienced counsel, and that all parties have contributed
substantially and materially to the preparation of this Stipulation.
M. All persons executing this Stipulation and any of the Exhibits hereto, or
any related settlement documents, warrant 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.
N. The parties to this Stipulation, as well as Lead Counsel and Homestore's
counsel, agree to cooperate fully with one another in seeking Court approval of
the Order for Notice and Hearing, the Stipulation and the Settlement, and to
agree promptly upon and execute all such other documentation as may be
reasonably required to obtain Final Approval by the Court of the Settlement.
DATE: AUGUST 11, 0000 XXXXXXXXXX XXXXX TEACHERS RETIREMENT SYSTEM
BY /s/ XXXXXXXXXXX XXXXXXX
-----------------------------------------
ITS GENERAL COUNSEL
-----------------------------------------
DATE: AUGUST 12, 2003 HOMESTORE, INC.
BY /s/ XXXXXXX X. XXXXXXX
-----------------------------------------
ITS EXECUTIVE VICE PRESIDENT
& GENERAL COUNSEL
-----------------------------------------
16
EXHIBIT A
The Xxxxxxxxx Xxxxxx X. Xxxxxxx
XXXXXX X. XXXXXXXX (#36324)
XXXXX X. XXXXX (#96241)
XXXXX X. XXXXXXXXX (#152621)
XXXXX X. XXXXXX (#212596)
COTCHETT, XXXXX, XXXXX & XXXXXXXX
San Francisco Airport Office Center
000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000
Counsel for Lead Plaintiff CalSTRS
and the Class
UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
IN RE XXXXXXXXX.XXX, INC. ) Master File No. 01-CV-11115 MJP (CWx)
SECURITIES LITIGATION )
) CLASS ACTION
______________________________________ )
) [PROPOSED] FINAL JUDGMENT AND
) ORDER OF DISMISSAL WITH
This Document Relates To: ) PREJUDICE AS TO DEFENDANT
) HOMESTORE, INC.
)
)
ALL ACTIONS. )
)
______________________________________ )
This matter has come before the Court to determine whether there is any
cause why this Court should not approve the settlement set forth in the
Stipulation and Agreement of Settlement ("Stipulation") dated as of August 12,
2003 relating to the above-captioned litigation. The Court, after carefully
considering all papers filed and proceedings held herein and otherwise being
fully informed in the premises, has determined (1) that the Settlement should
be approved and (2) that there is no just reason for delay of the entry of this
final judgment approving this Stipulation. Accordingly, the Court directs
entry of Judgment which shall constitute final adjudication of this litigation
on the merits as to the parties to the Stipulation. Good cause appearing
therefore, it is:
ORDERED AND ADJUDGED AND DECREED THAT:
1. This Court has jurisdiction over the subject matter of this
litigation, and all parties within this litigation and over the parties to the
Stipulation, including all members of the Class and the Defendants.
2. The definitions and terms set forth in the Stipulation are
incorporated hereby as though fully set forth in this Judgment.
3. The Court hereby finally approves and confirms the settlement in
favor of Homestore, Inc. as set forth in the Stipulation and finds that said
settlement is, in all respects, fair, reasonable and adequate to the Class
pursuant to Rule 23 of the Federal Rules of Civil Procedure.
4. All persons and entities who are Individual Defendants, Dismissed
Defendants, Other Settling Defendants are hereby barred and enjoined from
commencing, prosecuting or continuing either directly or indirectly, against
the Released Homestore Parties, in this or any other jurisdiction, any and all
claims, causes of action or lawsuits, which they had, have or in the future may
have, arising out of or related to any of the Settled Claims as defined in the
Stipulation.
5. The Released Homestore Parties, are hereby and forever released and
discharged with respect to any and all claims or causes of action which the
Lead Plaintiff and Members of the Class had or have arising out of or related
to any of the Settled Claims as defined in the Stipulation.
1
6. The Court has considered and approved the proposed Bar Order
language described in section 4 of the Settlement Agreement. Pursuant to the
terms of the Bar Order:
(A) All claims for contribution and indemnification, however
denominated, against Homestore arising under the federal securities
law, state law or common law with respect to the events that are the
subject of the Action, in favor of any person, including but not
limited to the Individual Defendants, Dismissed Defendants and Other
settling Defendants in this Action, who are alleged to be joint
tortfeasors with Homestore in the Released Claims and based upon
liability for, or arising out of or relating in any way to, the
Released Claims are extinguished, discharged, barred, satisfied
and/or otherwise unenforceable.
(B) All Persons, including but not limited to the Individual Defendants,
Dismissed Defendants and Other Settling Defendants, are hereby
barred and permanently enjoined, to the fullest extent allowed by
law, from asserting, instituting or prosecuting in any capacity,
before any court or governmental agency, any action or proceeding
against Homestore for equitable, partial, comparative, or complete
contribution, subrogation, or indemnity, however, denominated, based
upon liability for, or arising out of or relating in any way to the
Released Claims, and the Court finds that all such claims are
extinguished, discharged, satisfied and made unenforceable.
7. The notice given to the Class of settlement set forth in the
Stipulation and the other matters set forth herein was the best notice
practicable under the circumstances, including individual notice to all members
of the Class who could be identified through reasonable efforts. Said notice
provided due and adequate notice of these proceedings and of the matters set
forth therein, including the proposed settlement set forth in the Stipulation,
to all persons entitled to such notice, and said notice fully satisfied the
requirements of Rules 23(c)(2) and 23(e) of the Federal Rules of Civil
Procedure and the requirements of due process.
8. Without affecting the finality of this Judgment in any way, this
Court hereby retains continuing jurisdiction over: (a) implementation of this
settlement and any distribution to Class Members pursuant to further orders of
this Court; (b) disposition of the Settlement Fund; (c) hearing and determining
applications by the Lead Plaintiff for attorneys' fees, costs, expenses,
including expert fees and costs, and interest; (d) the Class Actions until the
final judgments contemplated hereby have become effective and each and every
act agreed to by performed by the parties all have been performed pursuant to
the Stipulation; (e) hearing and ruling on any proposed plan of allocation of
settlement proceeds; and (f) all parties to the Class Actions and Released
Homestore Parties for the purpose of enforcing and administering the Stipulation
2
and Exhibits thereto and the mutual releases and other documents contemplated
by, or executed in connection with the Stipulation.
9. In the event that the settlement does not become effective in
accordance with the terms of the Stipulation, then the Judgment shall be
rendered null and void and shall be vacated and in such event, all orders
entered and releases delivered in connection herewith shall be null and void
and the parties shall be returned to their respective positions ex ante.
10. Without affecting the finality of this Judgement in any way, this
Court hereby retains continuing jurisdiction over: (a) implementation of this
settlement and any award or distribution of the Settlement Fund, including
interest earned thereon; (b) disposition of the Settlement Fund; (c) hearing
and determining applications for attorneys' fees, costs, interest and expenses
in the Litigation; and (d) all parties hereto for the purpose of construing,
enforcing and administering the Stipulation.
11. The Court finds, pursuant to Rule 54(a) and (b) of the Federal Rules
of Civil Procedure, that this Final Judgment should be entered and further finds
that there is no just reason for delay in the entry of this Judgment, as a Final
Judgment as to the parties to the Stipulation. Accordingly, the Clerk is hereby
directed to enter this Judgment forthwith.
IT IS SO ORDERED.
Dated this ____ day of _________, 2003
______________________________________
XXXXXX X. XXXXXXX
UNITED STATES DISTRICT JUDGE
Presented by:
_________________________________
Xxxxx X. Xxxxx (CA Bar #96241)
3
EXHIBIT B
The Xxxxxxxxx Xxxxxx X. Xxxxxxx
XXXXXX X. XXXXXXXX (#36324)
XXXXX X. XXXXX (#96241)
XXXXX X. XXXXXXXXX (#152621)
XXXXX X. XXXXXX (#212596)
COTCHETT, XXXXX, XXXXX & XxXXXXXX
San Francisco Airport Office Center
000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000
Counsel for Lead Plaintiff CalSTRS
and the Class
UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
IN RE XXXXXXXXX.XXX, INC. ) Master File No. 01-CV-11115 MJP (CWx)
SECURITIES LITIGATION )
) CLASS ACTION
-------------------------------------) ------------
)
) NOTICE OF PENDENCY AND
This Document Relates To: ) PROPOSED PARTIAL SETTLEMENT
) OF CLASS ACTION
)
)
ALL ACTIONS. )
)
-------------------------------------)
NOTICE OF PENDENCY OF CLASS ACTION AND SETTLEMENT AS TO
XXXXXXXXX.XXX, INC.
TO: ALL PERSONS OR ENTITIES WHO PURCHASED OR OTHERWISE
ACQUIRED THE COMMON STOCK OF XXXXXXXXX.XXX, INC
("HOMESTORE" OR "THE COMPANY") DURING THE PERIOD FROM
JANUARY 1, 2000 THROUGH DECEMBER 21, 2001 (THE "CLASS
PERIOD"):
PLEASE READ THIS ENTIRE NOTICE CAREFULLY. YOUR RIGHTS MAY BE AFFECTED BY
THE LAWSUIT NOW PENDING IN THIS COURT. YOU MAY BE ENTITLED TO SHARE IN THE
PROCEEDS OF THE SETTLEMENT DESCRIBED IN THIS NOTICE. TO CLAIM YOUR SHARE OF
THIS FUND, YOU MUST SUBMIT A VALID PROOF OF CLAIM POSTMARKED ON OR BEFORE
NOVEMBER 14, 2003.
SECURITIES BROKERS AND OTHER NOMINEES: PLEASE SEE INSTRUCTIONS SET FORTH
BELOW IN SECTION XV.
This Notice has been sent to you pursuant to Rule 23 of the Federal Rules
of Civil procedure and an Order of the United States District Court for the
Central District of California (the "Court"). The purpose of this Notice is to
inform you of the pendency and proposed partial settlement of this class action
litigation and of the hearing to be held by the Court to consider the fairness,
reasonableness, and adequacy of the settlement. This Notice is not intended to
be, and should not be construed as, an expression of any opinion by the Court
with respect to the truth of the allegations in the Litigation or the merits of
the claims or defenses asserted. This Notice describes the rights you may have
in connection with the settlement and what steps you may take in relation to
the settlement and this class action litigation.
The proposed settlement creates a fund in the amount of $13 million in
cash (the "Settlement Fund") and will include interest that accrues on the fund
prior to distribution. The Settlement Fund will also include 20 million shares
of Homestore common stock. Your recovery from this fund will depend on a number
of variables, including the number of shares of Homestore common stock you
purchased or acquired during the period January 1, 2000 to December 21, 2001,
and the timing of your purchases and any sales.
Lead Plaintiff and Homestore do not agree on the average amount of damages
per share that would be recoverable if the Lead Plaintiff were to have
prevailed on each claim alleged. The issues on which the parties disagree
include: (1) the appropriate economic model for determining the amount by which
Homestore common stock was allegedly artificially inflated (if at all) during
the Class Period; (2) the amount by which Homestore common stock was allegedly
artificially inflated (if at all) during the Class Period; (3) the effect of
various market forces influencing the trading price of Homestore common stock
at various times during the Class Period; (4) the extent to which external
factors, such as general market and industry conditions, influenced the trading
price of Homestore common stock at various times during the Class Period; (5)
the extent to which the various matters that Lead Plaintiff alleged were
materially false or misleading influenced (if at all) the trading price of
Homestore common stock at various times during the Class Period; (6) the extent
to which the various allegedly adverse material facts that Lead Plaintiff
alleged were omitted influenced (if at all) the trading price of Homestore
common stock at various times during the Class Period; and (7) whether the
statements made or facts allegedly omitted were material, false, misleading or
otherwise actionable under the securities laws.
The Lead Plaintiff believes that the proposed settlement is a good
recovery and is in the best interests of the Class. Because of the risks
associated with continuing to litigate and proceeding to trial, there was a
danger that Plaintiffs would not have prevailed on any of their claims, in
which case
1
the Class would receive nothing. The amount of damages recoverable by the Class
was and is challenged by Homestore. Recoverable damages in this case are
limited to losses caused by conduct actionable under applicable law and, had
the litigation gone to trial, Homestore would have asserted that all or most of
the losses of Class Members were caused by non-actionable market, industry or
general economic factors. Homestore would also assert that throughout the Class
Period the uncertainties and risks associated with the purchase of Homestore
common stock were fully and adequately disclosed.
Lead Plaintiff's Counsel has not received any payment for their services
in connection to this Litigation on behalf of the Lead Plaintiff and the
Members of the Class, nor have they been reimbursed for their substantial
out-of-pocket expenditures. If the settlement is approved by the Court, counsel
for the plaintiffs will apply to the Court for attorneys' fees not to exceed
10.5% of the Settlement Fund and reimbursement of out-of-pocket expenses not to
exceed $350,000 to be paid from the Settlement Fund pursuant to the fee
agreement with Lead Plaintiff herein as approved by the Court. All attorneys'
fees and will be paid in cash and stock in the same proportion as received by
Lead Plaintiff and members of the Class.
For further information regarding this settlement you may contact; Xxxxx
Xxxxxx, Cotchett, Xxxxx, Xxxxx & XxXxxxxx, 000 Xxxxxxx Xx., Xxxxx 000,
Xxxxxxxxxx, XX, 00000, Telephone: (000) 000-0000.
I. NOTICE OF HEARING ON PROPOSED SETTLEMENT
A settlement hearing will be held on , 2003 at .m.
before the Xxxxxxxxx Xxxxxx X. Xxxxxxx, United States District Judge, at the
United States Courthouse, Western District of Washington, 0000 Xxxxx Xxx.,
Xxxxxxx, Xxxxxxxxxx (the "Settlement Hearing"). The purpose of the Settlement
Hearing will be to determine: (1) whether the settlement consisting of $13
million in and 20 million shares of Homestore common stock should be approved
as fair, reasonable, and adequate for members of the Class; (2) whether the
proposed plan to distribute the settlement proceeds (the "Plan of Allocation")
is fair, reasonable, and adequate; (3) whether the application by Lead
Plaintiff's Counsel for an award of attorneys' fees and expenses should be
approved; and (4) whether the Litigation should be dismissed with prejudice as
to Homestore. The Court may adjourn or continue the Settlement Hearing without
further notice to the Settlement Class.
II. DEFINITIONS USED IN THIS NOTICE
1. "Class" means the Class to be certified, defined as all Persons
(excluding Defendants, any members of their immediate families, any person,
firm, trust, corporation, present or former officer, director, or other
individual or entity in which any Defendant has a controlling interest or which
is affiliated with any of the Defendants, and any legal representatives,
agents, affiliates, heirs, successors-in-interest or assigns of any excluded
party) who purchased or otherwise acquired Xxxxxxxxx.xxx, Inc. stock from
January 1, 2000 through December 21, 2001.
2. "Defendants" means Homestore, PricewaterhouseCoopers LLP, Xxxxxx
Xxxxx, Xxxxx Xxxxxx and Homestore.
3. "Dismissed Defendants" means: AOL Time Warner, Xxxx Xxxxxx, Xxxxx
Xxxxxxx, Cendant Corporation, L90, Akonix, City Realty, Classmates Online,
CornerHardware, GlobeXplorer, Internet Pictures, PromiseMark, RevBox, Dorado
Corporation, SmartHome and WizShop.
4. "Related Parties" means each of a Defendants' past or present
directors, officers, employees, partners, insurers, co-insurers, reinsurers,
controlling shareholders, attorneys, accountants or auditors, personal or legal
representatives, predecessors, successors, parents,
2
subsidiaries, divisions, joint ventures, assigns, spouses, heirs, related or
affiliated entities, any entity in which a Defendant has a controlling
interest, any members of any Defendants family, or any trust of which any
Defendant is the settlor or which is for the benefit of any Defendant's family,
In addition, with respect to defendant Homestore "Related Parties" includes,
without limitation, AOL Time Warner, Xxx Xxxxxx, Xxxxx Xxxxxxx, Cendant
Corporation, L90, Akonix, City Realty, Classmates Online, CornerHardware,
GlobeXplorer, Internet Pictures, PromiseMark, RevBox, Dorado Corporation,
SmartHome and WizShop.
5. "Released Claims" shall collectively mean all claims (including
"Unknown Claims" as defined below), demands, rights, liabilities and causes of
action of every nature and description whatsoever, known or unknown, whether or
not concealed or hidden, asserted or that might have been asserted, including,
without limitation, claims for negligence, gross negligence, breach of duty of
care and/or breach of duty of loyalty, fraud, breach of fiduciary duty, or
violations of state or federal statutes, rules or regulations, by Lead
Plaintiff or any Class Member against the Defendants and their Related Parties
arising out of, based upon or related to both the purchase of Homestore common
stock by Lead Plaintiff or any Class Member during the Class Period and the
facts, transactions, events, occurrences, acts, disclosures, statements,
omissions or failures to act which were or could have been alleged in the
Litigation. Released Claims also includes any and all claims arising out of,
relating to, or in connection with the settlement or resolution of the
Litigation.
6. "Released Homestore Parties" means Homestore, its present or former
assigns, affiliates, administrators, executors, successors, subsidiaries,
attorneys, accountants, and auditors (except PricewaterhouseCoopers), experts,
parents, predecessors, or related companies, and any of its or their present or
former officers and directors, shareholders, employees, agents, or
representatives, excluding Xxxxxx Xxxxx, Xxxxx Xxxxxx, Xxxx Xxxxxxxx, Xxxxxx
Xxxx, Xxxxxx Xxxx, Xxxxx Xxxxxxxxxx, Xxxx XxXxxxxx, Xxxx Xxxxxx and the
Dismissed Defendants.
7. "Settlement Fund" means Thirteen Million Dollars ($13 million) in
cash to be paid by wire transfer to the Escrow Agent pursuant to the
Stipulation, plus all interest earned thereon and Twenty (20) million shares of
Homestore common stock.
8. "Unknown Claims" means any Released Claims which Lead Plaintiff or any
Class Member does not know or suspect to exist in his, her or its favor at the
time of the release of the Released Homestore Parties which, if known by him,
her or it, might have affected his, her or its settlement with and release of
the Released Homestore Parties, or might have affected his, her or its decision
not to object to this settlement. With respect to any and all Released Claims,
the Settling Parties stipulate and agree that, upon the Effective Date, the Lead
Plaintiff shall expressly and each of the Class Members shall be deemed to have,
and by operation of the Judgment shall have, expressly waived the provisions,
rights and benefits of the California Civil Code Section 1542, which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
The Lead Plaintiff shall expressly and each of the Class Members shall be
deemed to have, and by operation of the Judgment shall have, expressly waived
any and all provisions, rights and benefits conferred by any law of any state
or territory of the United States, or principle of common law, which is
similar, comparable or equivalent to California Civil Code Section 1542. The
Lead Plaintiff and Class Members may hereafter discover facts in addition to or
different from those which he, she or it now knows or believes to be true with
respect to the subject matter of the Released Claims, but Lead Plaintiff shall
expressly and each Class Member, upon the Effective Date, shall be deemed to
have, and by operation of the Judgment shall have, fully, finally, and forever
settled and released any and all Released Claims, known or unknown,
3
suspected or unsuspected, contingent or non-contingent, whether or not concealed
or hidden, which now exist, or heretofore have existed upon any theory of law or
equity now existing or coming into existence in the future, including but not
limited to, conduct which is negligent, intentional, with or without malice, or
a breach of any duty, law or rule, without regard to the subsequent discovery or
existence of such different or additional facts. The Lead Plaintiff
acknowledges, and the Class Members shall be deemed by operation of the Judgment
to have acknowledged, that the foregoing waiver was separately bargained for and
a key element of the settlement of which this release is a part.
III. THE CLASS DEFINITION
The Class includes: All persons (excluding Defendants, any members of their
immediate families, any person, firm, trust, corporation, present or former
officer, director, or other individual or entity in which any Defendant has a
controlling interest or which is affiliated with any of the Defendants, and any
legal representatives, agents, affiliates, heirs, successors-in-interest or
assigns of any excluded party), who purchased Xxxxxxxxx.xxx, Inc. Stock from
January 1, 2000 through December 21, 2001.
This Notice is to advise you of the pendency and nature of this Class
Action and your rights in connection with it.
IV. THE LITIGATION
On and after December 27, 2001, the following actions were filed in the
United States District Court for the Central District of California as
securities class actions on behalf of purchasers or acquirers of Xxxxxxxxx.xxx,
Inc. ("Homestore") common stock during a defined period of time.
(i) Xxxxxxx v. Homestore, et al., Case No. 01-11115, Filed on December 27,
2001;
(ii) Xxxxxx v. Homestore, et al., Case No. 01-11190, Filed on December 28,
2001;
(iii) Xxxxxxx v. Homestore, et al., Case No. 01-11194, Filed on December 28,
2001;
(iv) Nesco v. Homestore, et al., Case No. 02-00078, Filed on January 4, 2002;
(v) Xxxx v. Homestore, et al., Case No. 02-00080, Filed on January 4, 2002;
(vi) Britton v. Homestore, et al., Case No. 02-00104, Filed on January 4,
2002;
(vii) Xxxxxx x. Xxxxxxxxx.xxx, et al., Case No. 02-00116, Filed on January 4,
2002;
(viii) Xxxxxxxxx, Xxxxxxxxxx v. Homestore, et al., Case No. 02-00136, Filed on
January 7, 2002;
(ix) Keeling, Greenblat v. Homestore, et al., Case No. 02-00137, Filed on
January 7, 2002;
(x) Xxxx x. Homestore, et al., Case No. 02-00216, Filed on January 8, 2002;
(xi) Xxxx v. Homestore, et al., Case No. 02-00221, Filed on January 9, 2002;
(xii) Xxxxxx v. Homestore, et al., Case No. 02-00544, Filed on January 18,
2002;
(xiii) Xxxxxxxxx v. Homestore, et al., Case No. 02-00917, Filed on January 30,
2002;
4
(xiv) Krim v. Homestore, et al., Case No. 02-01052, Filed on February 4,
2002;
(xv) Xxxxxx v. Homestore, et al., Case No. 02-01095, Filed on February 5,
2002;
(xvi) Xxxxxx v. Homestore, et al., Case No. 02-01100, Filed on February 5,
2002;
(xvii) Reitzfeld v. Homestore, et al., Case No. 02-01277, Filed on
February 11, 2002;
(xviii) Xxxxxxxxx v. Homestore, et al., Case No. 02-01337, Filed on
February 13, 2002;
(xix) Xxxxxx v. Homestore, et al., Case No. 02-01341, Filed on February
13, 2002;
These actions were consolidated for all purposes by an order entered on
February 22, 2002. The consolidated actions are referred to herein collectively
as the "Litigation."
Lead Plaintiff CalSTRS was appointed by Court Order dated March 25, 2002.
Their selection of Lead Counsel, Cotchett, Xxxxx, Xxxxx & XxXxxxxx, was
approved by Court Order on May 30, 2002.
The operative complaint in the Litigation is the First Amended
Consolidated Complaint for Violations of Federal Securities Laws (the "FACC"),
filed November 15, 2002. The FACC alleges violations of Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder on
behalf of a class of purchasers of Homestore common stock during the period
January 1, 2000 through December 21, 2001.
V. CLAIMS OF THE LEAD PLAINTIFF AND BENEFITS OF SETTLEMENT
Lead Plaintiff believes that the claims asserted in the Litigation have
merit and that the evidence developed to date supports the claims. However,
counsel for the Lead Plaintiff recognizes and acknowledges the expense and
length of continued proceedings necessary to prosecute the Litigation against
Homestore through trial and through appeals. Counsel for the Lead Plaintiff
also has taken into account the uncertain outcome and the risk of any
litigation, especially in complex actions such as the Litigation, as well as
the difficulties and delays inherent in such litigation. Counsel for the Lead
Plaintiff also is mindful of the inherent problems of proof under and possible
defenses to the securities law violations asserted in the Litigation, as well
as Homestore's current financial condition. Counsel for the Lead Plaintiff
believes that the settlement set forth in the Stipulation confers substantial
benefits upon the Class. Based on their evaluation, counsel for the Lead
Plaintiff has determined that the settlement set forth in the Stipulation is in
the best interests of the Lead Plaintiff and the Class.
VI. HOMESTORE'S STATEMENT AND DENIALS OF WRONGDOING AND LIABILITY
Homestore has denied and continues to deny each and all of the claims and
contentions alleged by the Lead Plaintiff in this Litigation. Homestore
expressly has denied and continues to deny all charges of wrongdoing or
liability against it arising out of any of the conduct, statements, acts or
omissions alleged, or that could have been alleged, in the Litigation.
Homestore also has denied and continues to deny, inter alia, the allegations
that the Lead Plaintiffs or the Class have suffered damage, that the price of
Homestore common stock was artificially inflated by reasons of alleged
misrepresentations non-disclosures or otherwise, or that the Lead Plaintiff or
the Class were harmed by the conduct alleged in the Complaint.
Nonetheless, Homestore has concluded that further conduct of the
Litigation would be protracted and expensive, and that it is desirable that the
Litigation be fully and finally settled in
5
the manner and upon the terms and conditions set forth in the Stipulation.
Homestore also has taken into account the uncertainty and risks inherent in any
litigation, especially in complex cases like the Litigation. Homestore has,
therefore, determined that it is desirable and beneficial to them that the
Litigation be settled in the manner and upon the terms and conditions set forth
in the Stipulation.
VII. TERMS OF THE PROPOSED SETTLEMENT
Homestore has paid or caused to be paid into an escrow account, pursuant to
the terms of the Stipulation and Agreement of Settlement dated as of August 12,
2003 (the "Stipulation"), cash in the amount of $10 million which has been
earning and will continue to earn interest for the benefit of the Class. Upon
final approval, Homestore will cause an additional $3 million in cash and 20
million shares of its common stock to the escrow agent for the benefit of the
Class.
A portion of the settlement proceeds will be used for certain
administrative expenses, including costs of printing and mailing this Notice,
the cost of publishing a newspaper notice, payment of any taxes assessed against
the Settlement Fund and costs associated with the processing of claims
submitted. In addition, as explained below, a portion of the Settlement Fund may
be awarded by the Court to counsel for Lead Plaintiff as attorneys' fees and for
reimbursement of out-of-pocket expenses. The balance of the Settlement Fund (the
"Net Settlement Fund") will be distributed according to the Plan of Allocation
described below to Class Members who submit valid and timely Proof of Claim
forms.
VIII. THE RIGHTS OF CLASS MEMBERS
If you are a Class Member, you may receive the benefit of and you will be
bound by the terms of the proposed settlement described in Section VII of this
Notice, upon approval of it by the Court.
If you are a Class member, you have the following options:
1. You may file a Proof of Claim as described below. If you choose this
option, you will remain a Class Member, you will share in the proceeds of the
proposed settlement if your claim is timely and valid and if the proposed
settlement is finally approved by the Court, and you will be bound by the
Judgment and release described below.
2. If you do not wish to be included in the Class and you do not wish to
participate in the proposed settlement described in this Notice, you may request
to be excluded. To do so, you must so state in writing no later than November
14, 2003. You must set forth: (a) your name, address and telephone number; (b)
the number of shares of Homestore common stock purchased or acquired and the
number of shares sold during the Class Period and the dates and prices of such
purchase(s), acquisition(s) and/or sale(s); and (c) that you wish to be excluded
from the Class. The exclusion request should be addressed as follows:
Claims Administrator
In Re Xxxxxxxxx.xxx, Inc. Securities Litigation
c/o Rust Consulting, Inc.
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
NO REQUEST FOR EXCLUSION WILL BE CONSIDERED VALID UNLESS ALL OF THE INFORMATION
DESCRIBED ABOVE IS INCLUDED IN ANY SUCH REQUEST.
If you validly request exclusion from the Class, (a) you will be excluded
from the Class, (b) you will not share in the proceeds of the settlement
described herein, (c) you will not be
6
bound by any judgment entered in the Litigation, and (d) you will not be
precluded, by reason of your decision to request exclusion from the Class, from
otherwise prosecuting an individual claim, if timely against Homestore based on
the matters complained of in the Litigation.
3. If you do not request in writing to be excluded from the Class as set
forth in paragraph 2 above, you will be bound by any and all determination or
judgments in the Litigation in connection with the settlement entered into or
approved by the Court, whether favorable or unfavorable to the Class, and you
shall be deemed to have, and by operation of the Judgment shall have fully
released all of the Released Claims against the Released Homestore Parties,
whether or not you submit a valid Proof of Claim.
4. You may object to the settlement and/or the application of Lead
Plaintiffs' counsel for an award of attorneys' fees and reimbursement of
expenses in the manner set forth below. The filing of a Proof of Claim by a
Class Member does not preclude a Class Member from objecting to the settlement.
However, if your objection is rejected you will be bound by the settlement and
the Judgment just as if you had not objected.
5. You may do nothing at all. If you choose this option, you will not
share in the proceeds of the settlement, but you will be bound by any judgment
entered by the Court, and you shall be deemed to have, and by operation of the
Judgment shall have fully released all of the Released Claims against the
Released Homestore Parties.
If you are a Class Member, you may, but you are not required to, enter an
appearance through counsel of your own choosing at your own expense. If you do
not do so, you will be represented by Lead Plaintiff's Counsel: Cotchett, Xxxxx,
Xxxxx & XxXxxxxx, 000 Xxxxxxx Xx., Xxxxx 000, Xxxxxxxxxx, XX 00000.
IX. PLAN OF ALLOCATION
The Net Settlement Fund will be distributed to Class Members who submit
valid, timely Proof of Claim Forms ("Authorized Claimants") under the Plan of
Allocation described below. The Plan of Allocation provides that you will be
eligible to participate in the distribution of the Settlement Fund only if you
have a net loss on all transactions in Homestore common stock during the Class
Period.
For purposes of determining the amount an Authorized Claimant may recover
under the Plan of Allocation, Lead Plaintiff's Counsel have consulted with
their damage consultants and the Plan of Allocation reflects an assessment of
the damages that they believe could have been recovered had plaintiffs
prevailed at trial.
To the extent there are sufficient funds in the Net Settlement Fund, each
Authorized Claimant will receive an amount equal to the Authorized Claimants's
claim, as defined below. If, however, the amount in the Net Settlement Fund is
not sufficient to permit payment of the total claim of each Authorized Claimant,
then each Authorized Claimant shall be paid the percentage of the Net Settlement
Fund that each Authorized Claimant's claim bears to the total of the claims of
all Authorized Claimants. Payment in this manner shall be deemed conclusive
against all Authorized Claimants.
A claim will be calculated as follows:
1. For shares of Homestore common stock that were purchased or acquired
from January 1, 2000 through December 21, 2001;
a. Price inflation per share of common stock during the Class
Period would be based on market and industry-adjusted percentage
declines in the price
7
of Homestore common stock on November 2, 2001, and January 2, 2002.
The inflation per share would be further adjusted on a pro-rated basis
according to the amounts Homestore's financial statement were
restated. Changes in price inflation occurred on the following dates:
October 20, 2000, January 26, 2001, April 26, 2001, July 26, 2001 and
October 3, 2001. (These dates correspond to the days Homestore's
earnings reports or changes in guidance were originally released, or
in the case of aftermarket announcements, the next trading day.)
b. Inflation as a percentage of share price during the Class Period is
calculated as follows:
- From January 2, 2000 through October 19, 2000: 3.6%
- From October 20, 2000 through January 25, 2001: 7.1%
- From January 26, 2001 through April 25, 2001: 17.8%
- From April 26, 2001 through July 25, 2001: 35.7%
- From July 26, 2001 through October 2, 2001: 57.1%
- From October 3, 2001 through November 1, 2001: 71.3%
- From November 2, 2001 through December 21, 2001: 36.7%
c. Net dollar proceeds per share would be allocated as follows:
i) Multiply the above percentage inflation applicable to the share
purchase date by the share purchase price paid;
ii) If the share was retained (not sold) after December 21, 2001,
the net dollar proceeds are the amount calculated per i) above;
iii) If the share was sold on or before December 21, 2001, multiply
the above percentage inflation applicable to the share sale date
by the sale price, and subtract that amount from the dollar
value calculated per i) above. The resulting amount is the net
dollar proceeds;
iv) If the total amount calculated for all of one Class Member's
transactions is negative, the net dollar proceeds equal zero.
The Court has reserved jurisdiction to allow, disallow or adjust the claim
of any Class Member on equitable grounds. Adjustments to the amount recovered
by a claimant could occur based on the amount of claims made.
Payment Pursuant to the Plan of Allocation set forth above shall be
conclusive against all Authorized Claimants. No Authorized Claimant shall have
any claim against Lead Plaintiff's Counsel or any claims administrator or
Homestore or other agent designated by Lead Plaintiff's Counsel or Homestore or
Homestore's counsel based on distributions made substantially in accordance
with the Stipulation and the settlement contained therein, the Plan of
Allocation, or further orders of the Court. All Class Members who fail to
complete and file a valid and timely Proof of Claim and Release shall be barred
from participating in distributions from the Settlement Fund (unless otherwise
ordered by the Court), but otherwise shall be bound by all of the terms of the
Stipulation, including the terms of any judgment entered and the releases given.
X. PARTICIPATION IN THE SETTLEMENT
If you fall within the definition of the Class, you will be bound by any
judgment entered with respect to the settlement in the Litigation whether or
not you file a Proof of Claim. If you choose, you may enter an appearance
individually or through your own counsel at your own expense.
8
TO PARTICIPATE IN THE DISTRIBUTION OF THE NET SETTLEMENT FUND, YOU MUST
TIMELY COMPLETE AND RETURN THE PROOF OF CLAIM AND RELEASE FORM THAT ACCOMPANIES
THIS NOTICE. The Proof of Claim and Release must be postmarked on or before
November 14, 2003, and delivered to the Claims Administrator at the address
below. Unless the Court orders otherwise, if you do not timely submit a valid
Proof of Claim, you will be barred from receiving any payments from the Net
Settlement Fund, but will in all other respects be bound by the provisions of
the Stipulation and the Judgment.
XI. DISMISSAL AND RELEASES
If the proposed settlement is approved, the Court will enter a Final
Judgment and Order of Dismissal with Prejudice with regard to Homestore
("Judgment"). The Judgment will dismiss the Released Claims with prejudice as
to the Released Homestore Parties. The Judgment will provide that all Class
Members shall be deemed to have released and forever discharged all Released
Claims (to the extent Members of the Class have such claims) against all
Released Homestore Parties and that the Released Homestore Parties shall be
deemed to have released and discharged all Class Members and counsel to the
Lead Plaintiffs from all claims arising out of the prosecution and settlement
of the Litigation or the Released Claims.
XII. APPLICATION FOR FEES AND EXPENSES
At the Settlement Hearing, counsel for Lead Plaintiff will request the
Court to award attorneys' fees not to exceed 10.5% of the Settlement Fund, plus
reimbursement of the expenses, not to exceed $350,000 which were advanced in
connection with the Litigation, plus interest thereon. Such sums as may be
approved by the Court will be paid from the Settlement Fund and will be
comprised of cash and common stock pursuant to the fee agreement entered into
between Lead Plaintiff and Lead Counsel. Class Members are not personally
liable for any such fees or expenses.
To date, Lead Plaintiffs' Counsel have not received any payment for their
services in conducting this Litigation on behalf of the Lead Plaintiff and
Members of the Class, nor have counsel been reimbursed for their substantial
out-of-pocket expenses. The fee requested by Lead Plaintiff's Counsel will
compensate counsel for their efforts in achieving the Settlement Fund for the
benefit of the Class, and for their risk in undertaking this representation on
a wholly contingent basis. The fee requested is well within the range of fees
awarded to plaintiffs' counsel under similar circumstances in other litigation
of this type.
XIII. CONDITIONS FOR SETTLEMENT
The settlement is conditioned upon the occurrence of certain events
described in the Stipulation. Those events include, among other things: (1)
entry of the Judgment by the Court, as provided for in the Stipulation; and (2)
expiration of the time to appeal from or alter or amend the Judgment. If, for
any reason, any one of the conditions described in the Stipulation is not met,
the Stipulation might be terminated and, if terminated, will become null and
void, and the parties to the Stipulation will be restored to their respective
positions as of June 17, 2003.
XIV. THE RIGHT TO BE HEARD AT THE HEARING
Any Class Member who objects to any aspect of the settlement, the Plan of
Allocation, or the application for attorney's fees and expenses, may appear and
be heard at the Settlement Hearing. Any such Person must submit a written
notice of objection, received on or before November 14, 2003, to each of the
following:
9
CLERK OF THE COURT Lead Counsel for Plaintiffs Counsel for Homestore
UNITED STATES COTCHETT, PITRE, O'MELVENY & XXXXX
DISTRICT COURT SIMON & XXXXXXXX LLP
CENTRAL DISTRICT OF Xxxxx X. Xxxxxx Xxxxxx X. Xxxxxxxx
CALIFORNIA 000 Xxxxxxx Xx., Xxxxx 000 000 Xxxxx Xxxx Xxxxxx
000 Xxxxxx Xx., Xx X-0 Xxxxxxxxxx, XX 00000 Xxx Xxxxxxx, XX 00000
Xxx Xxxxxxx, XX 00000
The notice of objection must demonstrate the objecting Persons'
membership in the Class, including the number of Homestore shares purchased,
acquired and sold during the Class Period, and contain a statement of reasons
for objection. Only Members of the Class who have submitted written notices in
this manner will be entitled to be heard at the Settlement Hearing, unless the
Court orders otherwise.
XV. SPECIAL NOTICE TO BANKS, BROKERS AND OTHER NOMINEES
If you were a nominee for any beneficial owner of Homestore common stock
(securities) during the Class Period, then, within ten (10) days after you
receive this Notice, you must either: (a) provide the Claims Administrator with
the names and addresses of such beneficial owners, PREFERABLY ON
COMPUTER-GENERATED MAILING LABELS OR, IF THERE ARE MORE THAN 2,000, ON A 3 1/2"
DISKETTE, CD-ROM OR ZIP/JAZ MEDIA, or, in the alternative, (b) send a copy of
the Notice to all beneficial owners by first-class mail and provide the Claims
Administrator with written confirmation of having done so. Additional copies of
the Notice may be requested in writing from the Claims Administrator. All
correspondence should be addressed as follows:
Claims Administrator
In Re Xxxxxxxxx.xxx, Inc. Securities Litigation
c/o Rust Consulting, Inc.
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
You are entitled to reimbursement of any reasonable expenses actually
incurred in connection with the foregoing, upon submission of a request and the
appropriate supporting documentation to the Claims Administrator.
VI. EXAMINATION OF PAPERS
This Notice contains only a summary of the nature and history of the
Class Action. For more detailed information, reference is made to the pleadings
and orders of the Court. Pleadings, papers filed in this action, and orders of
the Court are available for inspection during normal business hours at the
Clerk's Office of the United States District Court for the Central District of
California, Los Angeles Division, 000 X. Xxxxxx Xxxxxx, Xxx Xxxxxxx, XX 00000.
If you have any questions about the settlement of the Litigation, you may
contact Lead Plaintiff's Counsel by writing
Xxxxx X. Xxxxx/Xxxxx X. Xxxxxx
COTCHETT, XXXXX, XXXXX &
XXXXXXXX
San Francisco Airport Office Center
000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
10
PLEASE DO NOT TELEPHONE OR MAIL ANY INQUIRIES TO THE COURT.
BY ORDER OF THE COURT:
Dated____________, 2003 ____________________________________
XXXXXX X. XXXXXXX
UNITED STATES DISTRICT JUDGE
Presented by:
______________________________
Xxxxx X. Xxxxx (CA Bar #96241)
11
EXHIBIT C
The Xxxxxxxxx Xxxxxx X. Xxxxxxx
XXXXXX X. XXXXXXXX (#36324)
XXXXX X. XXXXX (#96241)
XXXXX X. XXXXXXXXX (#152621)
XXXXX X. XXXXXX (#212596)
COTCHETT, XXXXX, XXXXX & XxXXXXXX
San Francisco Airport Office Center
000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
(000)000-0000
Counsel for Lead Plaintiff CalSTRS
and the Class
UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
In re XXXXXXXXX.XXX, INC. ) Master File No. 01-CV-11115 MJP (CWx)
SECURITIES LITIGATION )
) CLASS ACTION
_______________________________________)
) [PROPOSED] ORDER
) PRELIMINARILY APPROVING
This Document Relates To: ) SETTLEMENT AND PROVIDING FOR
) NOTICE
)
)
ALL ACTIONS. )
)
_______________________________________)
WHEREAS, a class action is pending before the Court, entitle In re
Xxxxxxxxx.xxx, Inc., Securities Litigation, Master File 01-11115-MJP (Cwx) (the
"Litigation");
WHEREAS, the Court has received the Stipulation of Settlement and
Settlement Agreement with Xxxxxxxxx.xxx, Inc. ("Homestore") dated August 12,
2003 (the "Stipulation"), that has been entered into by the Lead Plaintiff and
Homestore, and the Court has reviewed the Stipulation and its attached Exhibits
A-D;
WHEREAS, the parties having made application, pursuant to Federal Rule of
Civil Procedure 23(e), for an order preliminarily approving the settlement of
this Litigation, in accordance with the Stipulation which, together with the
Exhibits annexed thereto sets forth the terms and conditions for a proposed
settlement of the Litigation and for dismissal of the Litigation with prejudice
upon the terms and conditions set forth therein; and the Court having read and
considered the Stipulation and the Exhibits annexed thereto; and
WHEREAS, all defined terms contained herein shall have the same meanings
as set forth in the Stipulation;
NOW, THEREFORE, IT IS HEREBY ORDERED:
1. The Court does hereby preliminarily approve the Stipulation and the
Settlement set forth therein, subject to further consideration at the hearing
on final approval of the Stipulation ("Final Approval Hearing") described below.
2. The Final Approval Hearing shall be held before this Court on ,
2003 at : .m. (or at any adjourned time or times as the District Court
may direct without further notice to Class Members) before the Xxxxxxxxx Xxxxxx
X. Xxxxxxx in the United States District Courthouse, 0000 Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxxx, for the purpose of determining (a) whether the proposed
settlement of the Class Actions on the terms and conditions provided for in the
Stipulation is fair, reasonable and adequate to the Lead Plaintiff and the
Class and should be approved by the Court and therefore whether the Class
Actions should be dismissed with prejudice as set forth in the Stipulation; (b)
whether the proposed Plan of Allocation should be approved; and (c) whether the
application of the Lead Plaintiff's counsel for payment of attorneys' fees,
reimbursement of expenses and interest should be approved in the amount
1
requested.
3. The Court approves, as to form and content, the Notice of Pendency and
Proposed Partial Settlement of Class Actions (the "Notice"), the Proof of Claim
and Release form (the "Proof of Claim"), and the Summary Notice annexed as
Exhibits 1, 2 and 3 hereto and finds that mailing and distribution of the Notice
and the Proof of Claim and the publishing of the Summary Notice substantially in
the manner and form set forth in this Order meets the requirements of Federal
Rule of Civil procedure 23 and due process, and is the best notice practicable
under the circumstances and shall constitute due and sufficient notice to all
Person entitled thereto.
4. Lead Plaintiff's Counsel are hereby authorized to retain the firm of
Rust Consulting, Inc. ("Claims Administrator") to supervise and administer the
notice procedures as well as the processing of claims as more fully set forth
below:
a. Not later than , 2003 (the "Notice Date"), Lead
Plaintiff's Counsel shall cause a copy of the Notice and the Proof of Claim,
substantially in the form annexed as Exhibits 1 and 2, to be mailed by first
class mail to all Class Members who can be identified with reasonable effort.
b. Not later than , 2003, Lead Plaintiff's Counsel shall
cause the Summary Notice to be published once in the national edition of the
Wall Street Journal; and
c. At least seven (7) days prior to the Final Approval Hearing,
Lead Plaintiff's Counsel shall serve on Defendants' counsel and file with the
Court proof, by affidavit or declaration, of such mailing and publication.
5. All members of the Class and Released Homestore Parties shall be bound
by all determination and judgments in the Class Actions concerning the
settlement whether favorable or unfavorable to the Class or to the Released
Homestore Parties.
6. Class Members who wish to participate in the settlement shall
complete and submit Proof of Claim forms in accordance with the instructions
contained therein. Unless the Court orders otherwise, all Proof of Claim forms
must be postmarked no later than the date specifically set forth in the Notice
and Proof of Claim attached hereto. Any Class Member who does not timely submit
a Proof of Claim shall be barred from sharing in the distribution of the
2
Settlement Fund, unless otherwise ordered by the Court.
7. Nominees who purchased the common stock of Homestore during the
period beginning January 1, 2000 through December 21, 2001, shall send the
Notice and the Proof of Claim to all beneficial owners of Homestore securities
within ten (10) days after receipts 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 of Proof of Claim to such beneficial owners. Lead Plaintiff's
Counsel shall, if requested, reimburse banks, brokerage houses or other
nominees solely for their reasonable out-of-pocket expenses incurred in
providing notice to beneficial owners who are Class Members out of the
Settlement Fund, which expenses would not have been incurred except for the
sending of such Notice, subject to further order of this Court with respect to
any dispute concerning such compensation.
8. Any member of the Class may enter an appearance in the Class Actions,
at his, her or its own expense, individually or through counsel of their own
choice. Class Members who do not enter an individual appearance will be
represented by Lead Plaintiff's Counsel.
9. Pending final determination of whether the settlement should be
approved, neither the Lead Plaintiff nor any other Class member or their
respective predecessors, successors or assigns, either directly or indirectly,
shall commence or prosecute against any of the Defendants, any action or
proceeding in any court or tribunal asserting any of the Settled Claims.
10. Any member of the Class may appear and show cause, if he, she or it
has any reason (a) why the proposed settlement of the Class Actions should or
should not be approved as fair, reasonable and adequate, or why a judgment
should or should not be entered thereon, (b) why the Plan of Allocation should
or should not be approved, or (c) why attorneys' fees and expenses should or
should not be awarded to counsel for the Lead Plaintiff; provided however, that
no Class Member or any other Person shall be heard or entitled to contest the
approval of the terms and conditions of the proposed Settlement, or, if
approved, the Judgment to be entered thereon approving the same, or the order
approving the Plan of Allocation, or the attorney's fees and expenses awarded to
counsel for the Lead Plaintiff unless that Person has delivered by hand
3
or sent by first class mail written objections together with proof of that
Person's membership in the Class, and copies of any papers and briefs such that
they are received by Xxxxx X. Xxxxxx, Cotchett, Xxxxx, Xxxxx & XxXxxxxx, San
Francisco Airport Office Center, 000 Xxxxxxx Xx., Xxxxx 000, Xxxxxxxxxx,
Xxxxxxxxxx 00000 on or before November 14, 2003 and filed said objections,
papers and briefs with the Clerk of the Court of the United States District
Court for the Central District of California on or before November 14, 2003.
Any member of the Class who does not make his, her or its objection in the
manner provided herein shall be deemed to have waived such objection and shall
forever be foreclosed from making any objection to the fairness or adequacy of
the proposed resolution reflected in the Settlement Agreement, to the fairness
of the Plan of Allocation, or to the reasonableness of the application for
attorneys' fees and expenses to counsel for the Lead Plaintiff, unless
otherwise ordered by the Court.
11. No Person who is not a Class Member or counsel to the Lead Plaintiff
shall have any right to any portion of, or in the distribution of, the
Settlement Fund unless otherwise ordered by the Court or otherwise provided in
the Stipulation. The Court has been advised that if the terms and conditions of
the settlement are approved, registration of the securities will not be
required under Section 3(a)(10) of the Securities Act of 1933, as amended, by
virtue of the Court's approval.
12. All papers in support of the Stipulation, the Plan of Allocation, and
any application by counsel of the Lead Plaintiff for attorneys' fees,
reimbursement of expenses and interest, shall be filed with the Court and
served no later than seven (7) days prior to the Final Approval Hearing.
13. At or after the Final Approval Hearing, the Court shall determine
whether the Plan of Allocation proposed by counsel for the Lead Plaintiff and
any application for attorneys' fees, reimbursement of expenses and interest
shall be approved.
14. All reasonable expenses incurred in identifying and notifying Class
Members, as well as administering the Settlement Fund, shall be paid out of the
Settlement Fund pursuant to the terms set forth in the Stipulation. In the
event the Stipulation is not approved by the Court, or otherwise fails to
become effective, neither the Lead Plaintiff nor its counsel shall have any
4
obligation to repay any amounts actually and properly disbursed from or
incurred for the cost of administration, notice Taxes or Tax Expenses in
accordance with the Stipulation.
15. As provided in the Stipulation, neither the Stipulation nor any of
its terms or provisions, nor any of the negotiations or proceedings connected
with it, shall be construed as evidence of or an admission or concession by
Defendants of the truth of any of the allegations in the Class Actions, or of
any liability, fault or wrongdoing of any kind.
15. The Court reserves the right to adjourn the date of the Final
Approval Hearing without further notice to the members of the Class, and
retains jurisdiction to consider all further applications arising out of or
connected with the proposed settlement. The Court may approve the settlement,
with such modification as may be agreed to by the Parties, if appropriate,
without further notice to the Class.
IT IS SO ORDERED.
Dated this ____ day of ______________, 2003
___________________________________________
XXXXXX X. XXXXXXX
UNITED STATES DISTRICT JUDGE
Presented by:
_______________________________
Xxxxx X. Xxxxx (CA Bar #96241)
5
EXHIBIT D
The Xxxxxxxxx Xxxxxx X. Xxxxxxx
XXXXXX X. XXXXXXXX (#36324)
XXXXX X. XXXXX (#96241)
XXXXX X. XXXXXXXXX (#152621)
XXXXX X. XXXXXX (#212596)
COTCHETT, XXXXX, XXXXX & XXXXXXXX
San Francisco Airport Office Center
000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000
Counsel for Lead Plaintiff CalSTRS
and the Class
UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
IN RE XXXXXXXXX.XXX, INC. ) Master File No. 01-CV-11115 MJP (CWx)
SECURITIES LITIGATION )
) CLASS ACTION
___________________________________)
) PROOF OF CLAIM AND RELEASE
)
This Document Relates To: )
)
)
)
ALL ACTIONS. )
)
___________________________________)
I. GENERAL INSTRUCTIONS
1. To recover as a member of the Class based on your claims in the
actions entitled In re Xxxxxxxxx.xxx, Inc., Securities Litigation,
Master File 01-CV-11115-MJP (Cwx) (the "Litigation"), you must
complete and, on page 10, hereof, sign this Proof of Claim and
Release. If you fail to file a properly addressed (as set forth in
paragraph 3 below) Proof of Claim and Release, your claim may be
rejected and you may be precluded from any recovery from the
Settlement Fund created in connection with the proposed settlement of
the Litigation.
2. Submission of this Proof of Claim and Release, however, does not
assure that you will share in the proceeds of settlement in the
Litigation.
3. YOU MUST MAIL YOUR COMPLETED AND SIGNED PROOF OF CLAIM AND RELEASE
POSTMARKED ON OR BEFORE NOVEMBER 14, 2003, ADDRESSED AS FOLLOWS:
Claims Administrator
In Re Xxxxxxxxx.xxx, Inc. Securities Litigation
c/o Rust Consulting, Inc.
XX Xxx 0000
Xxxxxxxxx, XX 00000-0000
If you are NOT a Member of the Settlement Class (as defined in the "Notice
of Pendency and Proposed Partial Settlement of Class Action") DO NOT submit a
Proof of Claim and Release form.
4. If you are a Member of the Class, and you do not timely request
exclusion, you are bound by the terms of any judgment entered in the
Litigation, WHETHER OR NOT YOU SUBMIT A PROOF OF CLAIM AND RELEASE.
II. DEFINITIONS
1. "Defendants" means Xxxxxxxxx.xxx, Inc.
2. "Released Homestore Persons" means Xxxxxxxxx.xxx, Inc., its present or
former assigns, affiliates, administrators, executors, successors,
subsidiaries, attorneys, accountants and auditors (except
PricewaterhouseCoopers LLP), experts, parents,
1
predecessors, or related companies, and any of its or their present or
former officers and directors, shareholders, employees, agents, or
representatives, excluding the Individual Defendants.
III. CLAIMANT IDENTIFICATION
1. If you purchased Homestore common stock and held the certificate(s) in
your name, you are the beneficial purchaser as well as the record
purchaser. If, however, the certificate(s) were registered in the name
of a third party, such as a nominee or brokerage firm, you are the
beneficial purchaser and the third party is the record purchaser.
2. Use Part I of this form entitled, "Claimant Identification" to
identify each purchaser of record ("nominee"), if different from the
beneficial purchaser of Homestore securities which forms the basis of
this claim. THIS CLAIM MUST BE FILED BY THE ACTUAL BENEFICIAL
PURCHASER OR PURCHASERS, OR THE LEGAL REPRESENTATIVE OF SUCH PURCHASER
OR PURCHASERS, OF THE HOMESTORE SECURITIES UPON WHICH THIS CLAIM IS
BASED.
3. All joint purchasers must sign this claim. Executors, administrators,
guardians, conservators and trustees must complete and sign this claim
on behalf of Persons represented by them and their authority must
accompany this claim and their titles or capacities must be stated.
The Social Security (or taxpayer identification) number and telephone
number of the beneficial owner may be used in verifying the claim.
Failure to provide the foregoing information could delay verification
of your claim or result in rejection of the claim.
IV. CLAIM FORM
1. Use Part II of this form entitled "Schedule of Transactions in
Homestore Common Stock" to supply all required details of your
transaction(s) in Homestore common stock. If you need more space or
additional schedules, attach separate sheets giving all of the
required information in substantially the same form. Sign and
2
print or type your name on each additional sheet.
2. On schedules, provide all of the requested information with respect to
all of your purchases and acquisitions and all of your sales of
Homestore common stock which took place at any time beginning January
1, 2000 through December 21, 2001, inclusive (the "Class Period"),
whether such transactions resulted in a profit or a loss. Failure to
report all such transactions may result in the rejection of your
claim.
3. List each transaction in the Class Period separately and in
chronological order, by trade date, beginning with the earliest. You
must accurately provide the month, day and year of each transaction
you list.
4. The date of covering a "short sale" is deemed to be the date of
purchase of Homestore common stock. The date of a "short sale" is
deemed to be the date of sale of Homestore common stock.
5. Broker confirmations or other documentation of your transactions in
Homestore common stock should be attached to your claim. Failure to
provide this documentation could delay verification of your claim or
result in rejection of your claim.
0
XXXXXX XXXXXX XXXXXXXX XXXXX
XXXXXXX XXXXXXXX XX XXXXXXXXXX
In re Xxxxxxxxx.xxx, Inc. Sec. Litig.
Master File No. 01-CV-11115-MJP(CWx)
Must be Postmarked No Later Than:
_____________________, 2003
Please Type or Print
PART I: CLAIMANT IDENTIFICATION
___________________________________________________
Beneficial Owner's Name (First, Middle, Last)
___________________________________________________
Xxxxxx Xxxxxxx
____________________ __________________________
City State Zip Code
____________________ __________________________
Foreign Province Foreign Country
____________________ ___________________Individual
Social Security Number No.
Taxpayer Identification Number ___________________Corporation/Other
_________ _________________ (work)
Area Code Telephone Number
_________ _________________ (home)
Area Code Telephone Number
_______________________________________________________________________________
Record Owner's Name (if different from beneficial owner listed above)
PART II: SCHEDULE OF TRANSACTIONS IN HOMESTORE COMMON STOCK
A. Number of shares held at the beginning of trading
on January 1, 2000: _____________________________
B. Purchases and Acquisitions (January 1, 2000 - December 21, 2001,
inclusive) of Homestore common stock:
Trade Date Number of Total
Mo. Day. Year Shares Purchased Purchase Shares
1. ____________________ 1. ____________________ 1. ____________________
2. ____________________ 2. ____________________ 2. ____________________
3. ____________________ 3. ____________________ 3. ____________________
4. ____________________ 4. ____________________ 4. ____________________
4
IMPORTANT: Identify by number listed above all purchases in which you covered a
"short sale": __________________________________________________________________
C. Sales (January 1, 2000 - December 21, 2001, inclusive) of Homestore common
stock:
Trade Date Number of Total
Mo. Day. Year Shares Purchased Purchase Shares
___ ____ ___ ________________
1. __________________ 1. __________________ 1. ___________________
2. __________________ 2. __________________ 2. ___________________
3. __________________ 3. __________________ 3. ___________________
4. __________________ 4. __________________ 4. ___________________
D. Number of shares of Homestore common stock held at close of trading on
December 21, 2001: ______________________________________
If you require additional space, attach extra schedules in the same format as
above. Sign and print your name on each additional page.
YOU MUST READ AND SIGN THE RELEASE ON PAGE TEN(10). FAILURE TO SIGN THE RELEASE
MAY RESULT IN A DELAY IN PROCESSING OR REJECTION OF YOUR CLAIM.
5
V. SUBMISSION TO JURISDICTION OF COURT AND ACKNOWLEDGMENTS
I submit this Proof of Claim and Release under the terms of the
Stipulation of Settlement described in the Notice. I also submit to the
jurisdiction of the United States District Court for the Central District of
California, with respect to my claims as a Class Member and for purposes of
enforcing the release set forth herein. I further acknowledge that I am bound
by and subject to the terms of any Judgment that may be entered in the
Litigation. I agree to furnish additional information such as transactions in
other Homestore securities (including options) to the Claims Administrator to
support this claim if required to do so. I have not submitted any other claim
covering the same purchases, acquisitions or sales of Homestore common stock
during the Class Period and know of no other Person having done so on my
behalf.
VI. RELEASE
1. I hereby acknowledge full and complete satisfaction of, and do hereby
fully, finally and forever settle, release and discharge from the
Released Claims Xxxxxxxxx.xxx, Inc. and each and all of the "Released
Homestore Parties," defined as Homestore, its present or former
assigns, affiliates, administrators, executors, successors,
subsidiaries, attorneys, accountants and auditors (except
PricewaterhouseCoopers LLP), experts, parents, predecessors, or
related companies, and any of its or their present or former officers
and directors, shareholders, employees, agents, or representatives,
excluding the Individual Defendants.
2. "Released Claims" shall collectively mean all claims (including
"Unknown Claims" as defined below), demands, rights, liabilities and
causes of action of every nature and description whatsoever, known or
unknown, whether or not concealed or hidden, asserted or that might
have been asserted, including without limitation, claims for
negligence, gross negligence, breach of duty of care and/or breach of
duty of loyalty, fraud, breach of fiduciary duty, or violation of any
state or federal statutes, rules or regulations, by any Lead Plaintiff
or any Class Member during the Class Period and the facts,
transactions, events, occurrences, acts,
6
disclosures, statements, omissions or failures to act which were or
could have been alleged in the Litigation. Released Claims also
includes any and all claims arising out of, relating to, or in
connection with the settlement or resolution of the Litigation.
3. "Unknown Claims" means any Released Claims which any Lead Plaintiff or
Class Member does not know or suspect to exist in his, her or its
favor at the time of the release of the Released Homestore Parties
which, if known by him, her or it, might have affected his, her or its
settlement with and release of the Released Homestore Parties, or
might have affected his, her or its decision not to object to this
settlement. With respect to any and all Released Claims, the Settling
Parties stipulate and agree that, upon the Effective Date, the Lead
Plaintiff shall expressly and each of the Class Members shall be
deemed to have, and by operation of the Judgment shall have, expressly
waived the provisions, rights and benefits of California Civil Code
Section 1542, which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
The Lead Plaintiff shall expressly and each of the Class Members shall be
deemed to have, and by operation of the Judgment shall have, expressly waived
any and all provisions, rights and benefits conferred by any law or any state or
territory of the United States, or principle of common law, which is similar,
comparable or equivalent to California Civil Code Section 1542. The Lead
Plaintiff and Class Members may hereafter discover facts in addition to or
different from those which he, she or it now knows or believes to be true with
respect to the subject matter of the Released Claims, but Lead Plaintiff shall
expressly and each Class Member, upon the Effective Date, shall be deemed to
have, and by operation of the Judgment shall have, fully finally, and forever
settled and released any and all Released Claims, known or unknown, suspected or
unsuspected, contingent or non-contingent, whether or not concealed or hidden,
which now exist, or heretofore have existed, upon any theory of law or equity
now existing or coming into existence in the future, including but not limited
to, conduct which is negligent,
7
intentional, with or without malice, or a breach of any duty, law or rule,
without regard to the subsequent discovery or existence of such different or
additional facts. The Lead Plaintiff acknowledges, and the Class Members shall
be deemed by operation of the Judgment to have acknowledged, that the foregoing
waiver was separately bargained for and a key element of the settlement of which
this release is a part.
4. This release shall be of no force or effect unless and until the Court
approves the Stipulation of Settlement and Settlement Agreement and
the Stipulation becomes effective on the Effective Date (as defined in
the Stipulation).
5. I (we) hereby warrant and represent that I (we) have not assigned or
transferred or purported to assign or transfer, voluntarily or
involuntarily, any matter released pursuant to this release or any
other part or portion thereof.
6. I (we) hereby warrant and represent that I (we) have included
information about all of my (our) transactions in Homestore common
stock which occurred during the Class Period as well as the number of
shares of Homestore common stock held by me (us) at the opening of
trading on January 1, 2000, and at the close of trading on December
21, 2001.
8
SUBSTITUTE FORM W-9
Request for Taxpayer Identification Number ("TIN") and Certification
PART I
Name: __________________________________________________________________________
Check appropriate box:
____ Individual/Sole Proprietor ____ Pension Plan
____ Corporation ____ Partnership ____ Trust
____ XXX ____ Other
Enter TIN on appropriate line.
For individuals, this is your social security number ("SSN").
For sole proprietors, you must show your individual name, but you may also enter
your business or "doing business as" name. You may enter either your SSN or
your Employer Identification Number ("EIN").
For other entities, it is your EIN.
____ - ___ - _____ or ____ - ___ - _____
Social Security Number Employer Identification Number
PART II
For Payees Exempt From Backup Withholding
If you are exempt from backup withholding, enter your correct TIN in Part I and
write "exempt" on the following line: _________________________________________
PART III
Certification
UNDER PENALTY OF PERJURY, I (WE) CERTIFY THAT:
1. The number shown on this form is my correct TIN; and
2. I (we) certify that I am (we are) NOT subject to backup withholding
under the provisions of Section 3406(a)(1)(C) of the Internal Revenue
Code because (a) I am (we are) exempt from backup withholding; or (b)
I (we) have not been notified by the Internal Revenue Service that I
am (we are) subject to backup withholding as a result of a failure to
report all interest or dividends; or (c) the Internal Revenue Service
has notified me (us) that I am (we are) no longer subject to backup
withholding.
NOTE: If you have been notified by the Internal Revenue Service that you are
subject to backup withholding, you must cross out item 2 above.
9
SEE ENCLOSED FORM W-9 INSTRUCTIONS
The Internal Revenue Service does not require your consent to any provision of
this document other than the certification required to avoid backup withholding.
I declare under penalty of perjury under the laws of the United States of
America that the foregoing information supplied by the undersigned is true and
correct.
Executed this ______ day of ______________,
(Month/Year)
in _____________________________, ________________________________.
(City) (State/Country)
________________________________
(Sign your name here)
________________________________
(Type or print your name here)
________________________________
(Capacity of person(s) signing
e.g. Beneficial Purchaser, Executor
or Administrator)
ACCURATE CLAIMS PROCESSING TAKES A
SIGNIFICANT AMOUNT OF TIME.
THANK YOU FOR YOUR PATIENCE.
Reminder checklist:
1. Please sign the above release and declaration.
2. Remember to attach supporting documentation, if available.
3. Do not send original or copies of stock certificates.
4. Keep a copy of your claim form for your records.
5. If you desire an acknowledgment of receipt of your claim form, please
send it Certified Mail, Return Receipt Requested.
6. If you move, please send us your new address.
10
EXHIBIT E
The Xxxxxxxxx Xxxxxx X. Xxxxxxx
XXXXXX X. XXXXXXXX (#36324)
XXXXX X. XXXXX (#96241)
XXXXX X. XXXXXXXXX (#152621)
XXXXX X. XXXXXX (#212596)
COTCHETT, XXXXX, XXXXX & XxXXXXXX
San Francisco Airport Office Center
000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000
Counsel for Lead Plaintiff CalSTRS
and the Class
UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
IN RE XXXXXXXXX.XXX, INC. ) Master File No. 01-CV-11115 MJP (CWx)
SECURITIES LITIGATION )
) CLASS ACTION
__________________________________)
) SUMMARY NOTICE FOR
) PUBLICATION
This Document Relates To: )
)
)
)
ALL ACTIONS. )
)
__________________________________)
TO: ALL PERSONS OR ENTITIES WHO PURCHASED OR OTHERWISE ACQUIRED THE COMMON
STOCK OF XXXXXXXXX.XXX, INC. ("HOMESTORE" OR "THE COMPANY") DURING THE
PERIOD FROM JANUARY 1, 2000 THROUGH DECEMBER 21, 2000 (THE "CLASS
PERIOD"):
YOU ARE HEREBY NOTIFIED, pursuant to an Order of the United States District
Court for the Central District of California, that a hearing will be held on
, 2003 at .m., before the Xxxxxxxxx Xxxxxx X. Xxxxxxx, at the Xxxxxxx
Xxxxx Xxxxxxxx United States Courthouse, 0000 Xxxxx Xxxxxx, Xxxxxxx, XX 00000,
for the purpose of determining (1) whether the proposed settlement of the claims
in the Litigation for the sum of $13 million in cash and 20 million shares of
Homestore common stock should be approved by the Court as fair, just, reasonable
and adequate; (2) whether thereafter, this Litigation should be dismissed with
prejudice as to the Released Homestore Parties, as set forth in the Stipulations
of Settlement and Settlement Agreement dated August 12 2003; (3) whether the
Plan of Allocation is fair, reasonable and adequate and therefore should be
approved; and (4) whether the application of Lead Plaintiff's Counsel for the
payment of attorneys' fees and reimbursement of expenses incurred in connection
with this Litigation should be approved.
If you purchased or acquired Homestore common stock during the period
beginning January 1, 2000 through December 21, 2001, inclusive, your rights may
be affected by the settlement of this Litigation. If you have not received a
detailed Notice of Pendency and Proposed Partial Settlement of Class Action
("Notice") and a copy of the Proof of Claim and Release, you may obtain copies
by writing to Claims Administrator, In Re Xxxxxxxxx.xxx, Inc. Securities
Litigation c/o Rust Consulting, Inc. XX Xxx 0000 Xxxxxxxxx, XX 00000-0000. If
you are a Class Member, in order to share in the distribution of the Net
Settlement Fund, YOU MUST SUBMIT A PROOF OF CLAIM AND RELEASE no later than
November 14, 2003, establishing that you are entitled to recovery.
If you desire to be EXCLUDED from the Class, you must file a Request for
Exclusion by November 14, 2003, in the manner and form explained in the
detailed Notice referred to above. All Members of the Class who have not
requested exclusion from the Class will be bound by any judgment entered in the
Litigation pursuant to the Stipulation of Settlement.
1
Any objection to the settlement must be mailed or delivered such that it
is received by each of the following no later than November 14, 2003:
CLERK OF XXX XXXXX
XXXXXX XXXXXX XXXXXXXX XXXXX
XXXXXXX DISTRICT OF CALIFORNIA
000 X. Xxxxxx Xx., Xx X-0
Xxx Xxxxxxx, XX 00000
Lead Counsel for Plaintiffs:
COTCHETT, XXXXX, XXXXX & XXXXXXXX
XXXXX X. XXXXXX
000 Xxxxxxx Xx., Xxxxx 000
Xxxxxxxxxx, XX 00000
Counsel for Homestore:
O'MELVENY & XXXXX LLP
Xxxxxx X. Xxxxxxxx
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE REGARDING THIS NOTICE. If
you have any questions about the settlement, you may contact plaintiffs'
counsel at the address listed above.
IT IS SO ORDERED.
Dated this day of , 2003
-- ----------
-------------------------------------
UNITED STATES DISTRICT JUDGE
Presented by:
------------------------------
Xxxxx X. Xxxxx (CA Bar #96241)
2
EXHIBIT F
EXHIBIT F
HOMESTORE CORPORATE GOVERNANCE CHANGES
The corporate governance policies set forth below shall be adopted within
30 days of the approval of the settlement by passing resolutions, and/or
amendments to the By-Laws or Articles of Incorporation of Homestore, as
described below, assuring that the policies are followed. These policies shall
remain in place for at least five years from adoption thereof.
No provision of these policies is intended to conflict with federal or
state laws or regulations that impose stricter requirements than these policies.
If during the five-year period of these policies, any policy shall come into
conflict with a federal, state or other governing body's stricter laws or
regulations, the applicable stricter law or regulation shall supercede the
policies below.
Structure and Composition of the Board
1. The size of the Board of Directors not be increased above 11 directors nor
decreased below 7 directors without shareholder approval.
2. Following the expiration of the current terms of the existing Board of
Directors, the Board shall be a nonclassified Board and each Director who
stands for election in the future shall stand for a two year term with no
limit on the number of times a director may stand for reelection. To
accomplish this, Board members up for election in 2005 may be elected to
one further three year term; with subsequent terms to be the ordinary two
year terms. This provision is subject to shareholder approval; Homestore
shall submit this provision for shareholder approval as part of the next
annual proxy statement following the effective date of the settlement.
3. The CEO, or any other member of senior management, shall not serve as the
Chair of the Board of Directors; provided, however, the CEO may serve as
the Chair of the Board of Directors on an interim basis not to exceed six
months.
4. A majority of the Board of Directors shall consist of Independent Directors
as set forth in the Xxxxxxxx-Xxxxx Act of 2002 ("Xxxxxxxx-Xxxxx") at
Section 301, and further, that (I) the majority of directors, their
families, and
1
affiliated entities shall not serve as consultants, service providers, or
be involved in any related party transaction with Homestore, its
subsidiaries and affiliates; (ii) the majority of directors shall not be an
officer of Homestore, its subsidiaries, and/or affiliates; (iii) the
majority of directors shall not be affiliated with a not-for-profit entity
which receives significant contributions from Homestore, its subsidiaries
and/or affiliates; (iv) the majority of directors shall not receive, other
than compensation for board service, payments arising solely from
investments in the company's securities; compensation paid to a Family
Member who is an employee of the company or a parent or subsidiary of the
company (but not if such person is an executive officer of the company or
any parent or subsidiary of the company), benefits under a tax-qualified
retirement plan, or non-discretionary compensation, and reimbursement of
ordinary and reasonable expenses related to Board service, remuneration in
excess of $60,000 either directly, or indirectly, from Homestore, its
subsidiaries and/or its affiliates; and (v) the majority of the Board
members must be independent such that they have no relationship that, in
the Board's opinion, would interfere with the exercise of independent
judgment in fulfilling his or her responsibilities as a Board member. Each
Board member's status as an Independent Director shall be reviewed at least
annually by the Independent Directors.
5. All special committees of the Company's Board of Directors shall be
composed entirely of Independent Directors as described above.
6. Corporate governance procedures shall be reviewed and re-evaluated on a
regular basis, and in no case, less than bi-annually. Further, this review
and re-evaluation process will be supervised by the Lead Independent
Director, documented, and a report regarding the same will be prepared for
presentation to the whole Board. This review and re-evalution process may
be used by the Independent Directors to implement corporate governance
changes that become necessary and are approved by the Board. During the
five year period of these policies, any changes in the governance
procedures set forth herein must be consented to by CalSTRS, such consent
not to be withheld if the proposed changes are consistent with reasonable
contemporaneous governance standards at the time of the proposed change.
Any disputes over implementation of governance changes will be submitted to
Judge Xxxxxxxxx for final resolution under the dispute resolution
provisions of the Settlement Agreement.
2
Independent Directors' Group
1. The Independent Directors of Homestore as described above will meet as a
group (the "Independent Directors' Group"), without senior management and
without any non-Independent Directors, at least once each fiscal quarter.
2. The Independent Directors' Group will be entitled, by a majority vote, to
retain legal counsel, accountants, or other independent experts, at
Homestore's expense, to advise the Independent Directors' Group concerning
issues that arise in the exercise of its functions, responsibilities, and
powers.
3. A Lead Independent Director shall be appointed, who shall be responsible
for overseeing and supervising the corporate governance of Homestore, and
assuring that all the corporate governance resolutions adopted hereunder
are actually and effectively implemented. The Lead Independent Director
will serve for a one year term, subject to reappointment by a majority
vote taken of all Independent Directors each year thereafter. The Lead
Independent Director may be any director, including the Chair, qualified
as an Independent Director as described above. In addition to all other
duties set forth above, the Lead Independent Director will:
a. Coordinate, develop the agenda for, and moderate sessions of the
Independent Director Group;
b. Advise the Chair of the Board of Directors of Homestore as to an
appropriate schedule of Board meetings in order to ensure that the
Independent Directors will be able to perform their duties
responsibly while not interfering with the flow of Homestore's
operations. When scheduling Board meetings, efforts will be taken to
maximize the personal attendance of directors;
c. Provide the Chair with input as to the agenda for Board meetings and
Committee meetings, including the items for discussion;
d. Advise the Chair as to the quality, quantity, and timeliness of the
flow of information from Homestore's senior management that is
requested, necessary and/or appropriate for the Independent Directors
to effectively and responsibly perform their duties. Homestore's
senior
3
management will be responsible for preparing materials for the Board,
however, the Lead Independent Director may request the inclusion of
additional material;
e. Consult with the Chair concerning the retention of consultants who
report directly to the Board of Directors of Homestore; and
f. Act as principal liaison between the Independent Directors and the Chair
on sensitive issues.
Nominating Committee
1. A Nominating Committee for the Board with distinct responsibilities shall be
established and said committee shall be comprised entirely of Independent
Directors as described above.
2. There shall be no requirement that the independent Nominating Committee
consult with the CEO regarding the nomination and selection of Board
members. The CEO will have no influence over the Committee in the nomination
and selection process; however (1) the CEO may meet with a potential
director; and (2) if the CEO has prior knowledge of a candidate, the CEO may
provide information to the Committee in writing.
3. The independent Nominating Committee shall adhere to objective and
independently verifiable criteria for the selection of Directors, which
should take into account a diverse mix of competencies of the candidates
including but not limited to:
- Accounting or finance background
- Business or management experience
- Internet and real estate industry knowledge
- Leadership and strategic planning experience
- Crisis response experience
- Existence of independence
4
4. A prescribed procedure for nominating Directors shall be established by
Homestore including nomination information packages which address the
qualifications of nominees in a standard format intended to allow easy
comparison of the nominees on their competencies and independence.
5. In order to be re-nominated, Directors shall be subjected to the same
evaluation process and criteria as newly nominated directors. In addition,
re-nominated Directors must satisfactorily perform their duties as
directors, and that Homestore adopt additional criteria to be applied by
the Nominating Committee pertaining to matters such as attendance at
meetings, preparedness, participation, candor and contributions to the
strategic planning for the company.
6. Re-nomination on any other basis other than as described above should
neither be expected nor guaranteed.
Compensation/Compensation Committee
1. The Management Development and Compensation Committee shall be comprised of
Independent Directors as described above.
2. Homestore shall establish performance criteria and compensation incentives
for senior management including but not limited to the CEO and CFO, and
regularly review performance against those criteria and, further, that the
Management Development and Compensation Committee have access to advisors
on this subject who are independent of management. At a minimum, the
criteria must ensure that the interests of senior management are consistent
with the long-term interests of shareholders, that senior management is
evaluated against peer groups, and that a significant portion of the total
compensation of senior management is performance based.
3. These established objective and enforceable criteria for evaluating the
performance of senior management at Homestore should be documented and
contained within a performance evaluation report, which can be presented on
a regular basis to the Committee.
4. A majority of the Board, and any of their affiliated entities in which they
have and ownership interest, are prohibited from receiving, other than
5
compensation for board service, payments arising solely from investments in
the company's securities, compensation paid to a Family Member who is an
employee of the company or a parent or subsidiary of the company (but not
if such person is an executive officer of the company or any parent or
subsidiary of the company), benefits under a tax-qualified retirement plan,
or non-discretionary compensation, and reimbursement of ordinary and
reasonable expenses related to Board service, remuneration in excess of
$60,000 in any calendar year.
5. Payment to Directors in stock options shall be prohibited.
6. The Company shall not enter into any related party transactions with
Directors, or members of management, except to the extent that any such
transaction is approved by the Audit Committee, is a transaction which is
the subject of arms length negotiations, and has terms that would no worse
than those that could be obtained by negotiating with an outside party. The
policy will disfavor related party transactions with Directors, and members
of management, and establish a presumption that such transactions are not
favored; provided however that this provision shall not be construed as
applying to transactions with the NAR and NAHB. In addressing such proposed
transactions, the Committee shall look to the economic substance of the
transactions and make such inquiries that challenge the form of the
transactions as well as the reasons why the proposed transaction needs to
be with a related party. Any related party transactions with NAR and NAHB
with a value in excess of one million dollars shall be reviewed by the
Audit Committee.
7. Any repricing of options shall be done with shareholder approval.
8. The Company will comply with Xxxxxxxx-Xxxxx regarding its agreements with
Directors and management, and that no loans will be made to Directors or
management nor any forgiveness of loans be provided to Directors or
management by the Company, its subsidiaries or affiliates.
9. The Management Development and Compensation Committee shall examine
existing compensation arrangements with current Directors, and to the
extent that any remuneration to a Director, other than compensation for
board service, payments arising solely from investments in the company's
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securities, compensation paid to a Family Member who is an employee of the
company or a parent or subsidiary of the company (but not if such person is
an executive officer of the company or any parent or subsidiary of the
company), benefits under a tax-qualified retirement plan, or
non-discretionary compensation, and reimbursement of ordinary and
reasonable expenses related to Board service, exceeds $60,000 in a calendar
year, objective and economically sound reasons for such compensation shall
be given to and approved by the Committee; otherwise any such extraordinary
arrangements will be terminated. All future employment agreements that
contain terms relating to reimbursement for corporate travel by private jet
shall be reviewed by the Compensation Committee.
Internal Controls/Internal Audit Function
1. A written charter for the internal audit function shall be created. The
charter shall include (1) adoption of a documented hierarchical structure
of authority and responsibility within the business and
accounting/financial function, (2) adoption of procedures for testing and
investigating the integrity and reliability of its accounting and internal
control systems, including periodic independent verification, (3)
requirement that transactions between Homestore and related parties (e.g.,
management, owners, immediate families of management and owners, and other
persons or entities that can significantly influence the management or
policies of the business) receive appropriate authorization and are
conducted at arm's length similar to transactions between Homestore and
unrelated parties, and (4) a requirement that accounting or sales
estimates, contingencies, allowances, expense deferrals and revenue
accruals in unusual situations are evaluated and approved by designated,
competent, and knowledgeable personnel as well as the CEO and CFO of the
Company.
2. The Company's internal audit department, or persons responsible for the
internal audit function, shall have sufficient authority to perform its
function, and report independently to both senior management and the Audit
Committee of the Board of Directors, on a periodic basis (at least
quarterly), to discuss internal controls and other issues related to the
integrity of the Company's financial statements.
3. The Company shall either engage independent auditors to give a report to
the Board of Directors evaluating internal controls on an annual basis as
part of
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the audit of financial statements, or specifically engage the auditor to
perform a review or audit of internal control, on an annual basis, with
proposals for any improvements and minimizing the risk of misstatement of
the Company's financial reports.
Audit Committee
1. The Audit Committee of the Board shall consist of entirely independent
Directors as described above.
2. The audit partner on the Homestore engagement shall be rotated every five
years.
3. The Company shall be prohibited from obtaining services set forth in
Section 201 of Xxxxxxxx-Xxxxx from its independent auditing firm,
including but not limited to consulting services. The Company shall not be
prohibited from retaining the audit firm to assist in tax matters.
4. The Company shall be prohibited from hiring of any partner or employee of
Homestore's independent auditing firm, or former partner or former employee
of said firm for a period of three years after that person leaves the firm,
to serve as a member of management in the finance and accounting department
of Homestore.
5. The Company shall be prohibited from retaining an independent auditing firm
if any member of Homestore's senior management was a partner or employee of
that firm within the prior two years. The Board of Directors may approve
waiver of this provision if (i) the Company acquires a member of senior
management who was a partner or employee of a retained independent auditing
firm as a result of a future acquisition or (ii) if necessary to permit
competition for retention by at least two national independent auditing
firms.
6. The appointment, compensation and oversight of the independent auditing
firm shall be performed by the Audit Committee of the Board, and not by
company management.
7. The Audit Committee shall disclose the Company's arrangements with its
independent auditing firm to the shareholders of Homestore in compliance
with applicable legal requirements, at least annually.
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8. The charter for the Audit Committee shall be revised to include the
requirement that it regularly apprise the entire Board of its activities
and any findings made in connection therewith. The Audit Committee shall
also be required to prepare a quarterly written report to the Board
summarizing its activities, conclusions, and recommendations, which said
reports shall include, but not be limited to, the information required by
Regulation S-K, Regulation 14A and Xxxxxxxx-Xxxxx Section 407.
9. The charter for the Audit Committee shall be revised to include a provision
that the Audit Committee shall have direct access to the Company's
financial and legal advisors, that the Audit Committee shall have the right
to hire independent advisors including counsel, CPAs, and other financial
advisors to investigate any circumstances that come to the attention of the
Committee related to the risk of financial misstatements or fraud, and that
to the extent the Audit Committee chooses to investigate the same, it shall
do so through completely independent persons.
Xxxxxxx Xxxxxxx Policy
1. The Company shall review its policy on avoidance of xxxxxxx xxxxxxx. To
ensure compliance, the Board shall appoint a senior officer as the
Compliance Officer. No senior management or director may trade without
pre-clearance from the compliance officer. Every member of senior
management and director will be subject to the policy, and required to
learn its contents. The Compliance Officer shall put in place a program to
ensure such senior management and directors are properly informed. The
Board shall be responsible for overseeing the Compliance Officer, and the
Independent Directors shall have unfettered access to the Compliance
Officer as well as any information reviewed by him or her.
2. Pursuant to the Company's xxxxxxx xxxxxxx policy, if an officer or director
intends to sell Company shares during a quarter and the shares represent a
material percentage of his or her total stock and vested options, he or she
must first consult with legal counsel of the Company before selling, and so
certify to the Company's compliance officer no earlier than two business
days prior to the first trade. With respect to any future option grants by
the Company, the xxxxxxx xxxxxxx policies shall also prohibit the sale of
stock by
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an insider during the time of any Company-sponsored open market buy-back
program, shall require any member of senior management who exercises
options after the date of approval of the settlement to retain 15 percent
of the shares so acquired for at least six months and the term sale shall
be broadly construed to include any loans, swaps and/or other contracts
using shares of the Company.
3. Homestore shall ensure that all Director and members of senior management
file all necessary reports required by the SEC, and that the program of
compliance regarding xxxxxxx xxxxxxx be construed to be at least as
restrictive as the rules of the NASDAQ and applicable federal securities
laws and regulations.
Shareholder Nominated Director
1. Shareholders can nominate one Independent Director pursuant to the
following procedure:
a. CalSTRS's designee, in coordination with the Chairman of the Board
of Homestore, shall work cooperatively to identify potential
qualified independent directors. As part of this process,
CalSTRS's designee and the Chairman of the Board of Homestore
shall contact a representative sample of shareholders owning more
than 1% but less than 10% of Homestore's common stock in order to
request that such shareholders be given an opportunity to provide
names of potential candidates for Homestore's Board of Directors.
CalSTRS's designee and the Chairman of the Board of Homestore
shall perform a review of all identified candidates, including
interviews of the potential candidates, if deemed appropriate, and
submit the names of those individuals who are jointly determined
to be qualified to the Nominating Committee for review. In the
event CalSTRS is unable to submit a list of at least two qualified
potential independent directors to the Nominating Committee for
review, the size of the Homestore Board shall not be expanded. In
the event that CalSTRS sells more than 50 percent of its shares in
the Company measured as of the date it receives its additional
shares under the Settlement Agreement, Homestore and CalSTRS shall
confer in good faith about a new
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designee who shall fulfill the responsibilities of the CalSTRS's designee.
b. Homestore's Nominating Committee shall review the potential qualified
candidates submitted to them as described above, and select from them the
two determined to be qualified and the most appropriate to be added to
Homestore's Board. In the event that fewer than two potential candidates
are deemed qualified and appropriate by the Committee, CalSTRS's designee
shall be advised of this decision and the reasons therefore, and shall then
be given an opportunity to select additional candidates under the process
described above. Once two candidates are identified by the Nominating
Committee as being qualified and most appropriate from the list of
candidates, the Committee shall recommend to the Board, and the Board,
subject to its fiduciary duties, shall nominate at least one of the
candidates so selected.
c. If the director selected pursuant to the above process ceases to be on the
Board for any reason, CalSTRS's designee shall have the right to
participate in the selection of a replacement director following that
procedure.
d. After the initial election to the Board, the shareholder nominated Director
shall be nominated by the Board at the next annual election to serve for an
additional two year term; provided, however, that if such Director is
unable to serve for any reason, or if the Board determines in good faith
and reasonably that said Director should not be nominated, CalSTRS's
designee shall have the right to participate in the selection of a
replacement Director following the procedure set forth above.
e. In the event that the shareholder nominated Director dies, resigns, or is
unable to serve for any reason, or if the Board determines in good faith
and reasonably that the Director should not be nominated, CalSTRS's
designee shall have the right to participate in the selection of a
replacement Director following the procedure set forth above. It is the
intent of this corporate governance policy that one shareholder nominated
Director be on the Board.
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Compliance
1. The CEO, CFO, and Audit Committee of the Board shall be jointly and
severally responsible for the implementation and enforcement of a revenue
recognition policy at Homestore which conforms with all relevant accounting
standards, including GAAP, and is designed to prevent the types of
transactions that led to the bringing of the action that is being settled
hereby. Said revenue recognition policies shall be amended by the Board,
with the assistance and input of the CEO, CFO, and Audit Committee so that
the risk of misstatement of Homestore's financial reports is low, and that
all employees of the Company involved in revenue recognition are fully
apprised of the policies and the intent thereof.
2. CalSTRS shall be provided with reasonable information requested to assure
itself that these corporate governance items are implemented and effective.
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