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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported)
SEPTEMBER 5, 1995 (AUGUST 29, 1995)
AST RESEARCH, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-13941 95-3525565
(Commission File Number) (IRS Employer Identification No.)
16215 ALTON PARKWAY
IRVINE, CALIFORNIA 92718
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(714) 727-4141
NOT APPLICABLE
(Former name or former address, if changed since last report.)
- --------------------------------------------------------------------------------
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ITEM 5. OTHER EVENTS
- ---------------------
On August 29, 1995, the Company announced that preliminary approval has been
granted by the U.S. District Court for the Central District of California for a
settlement agreement in four class-action shareholder lawsuits. The settlement
calls for payment of $12.5 million into a fund that will be paid to certain
shareholders who purchased AST shares during portions of 1993 and 1994, and to
the lawyers representing the shareholders. The stipulation of settlement and a
copy of the press release are attached as Exhibits 10.137 and 99 to this Report,
and are incorporated herein by this reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
- ------------------------------------------
Exhibit
Number Description
- ------ -----------
10.137 Stipulation of settlement agreement, dated as of
August 16, 1995 by and between AST Research, Inc.
and class actions.
99 Press release issued by the Registrant on August 29,
1995, announcing preliminary approval for settlement
in four pending class-action shareholder
litigations.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AST Research, Inc.
_______________________________________
(Registrant)
By /s/ BRUCE C. EDWARDS
---------------------------------------
Bruce C. Edwards
Executive Vice President
and Chief Financial Officer
Date: September 5, 1995
-----------------
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KEVIN M. PRONGAY
EUGENE MIKOLAJCZYK
JON W. BORDERUD
PRONGAY & MIKOLAJCZYK
881 Alma Real Drive, Suite 211
Pacific Palisades, CA 90272
Telephone: (310) 573-3600
MARK C. RIFKIN
GREENFIELD & RIFKIN
344 W. Lancaster Avenue
Haverford, PA 19041
Telephone: (610) 649-3900
Co-Lead Counsel for Class Plaintiffs
[Names of Additional Counsel
Appear on Signature Page]
IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
In Re AST Research Securities ) MASTER FILE
Litigation ) NO. CV 94-1370 SVW (SHx)
)
___________________________________
) CLASS ACTION
------------
This Document Relates to: )
)
All Actions ) DATE: August 28, 1995
) TIME: 3:00 p.m.
) COURTROOM: Honorable
) Stephen V. Wilson
)
___________________________________
STIPULATION OF SETTLEMENT
-------------------------
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This Stipulation of Settlement (the "Stipulation"), dated as of August 16,
1995, is made and entered into by and among the following parties (as defined
further in Section (VI) hereof) to the above-entitled Litigation: (i) The
Representative Class Plaintiffs (on behalf of themselves and each of the
Settlement Class Members) as to the Class Claims, by and through their counsel
of record in the Litigation; (ii) the Representative Derivative Plaintiff on
behalf of AST Research, Inc. ("AST") as to the Derivative Claims by and through
his counsel of record in the Litigation; and (iii) the Defendants, by and
through their counsel of record in the Litigation. The Stipulation is intended
by the Settling Parties to fully, finally and forever resolve, discharge and
settle the Released Claims (as defined herein), upon and subject to the terms
and conditions hereof.
I. THE LITIGATION
--------------
A. The Class Actions
-----------------
On and after March 3, 1994, the following actions were filed in the United
States District Court for the Central District of California (the "Court") as
class actions on behalf of persons who purchased AST common stock during a
defined periods of time:
<TABLE>
<CAPTION>
Action Class Period
------ ------------
<S> <C>
Marschall v. Edwards, et al., 4/20/93 to 3/1/94
- ----------------------------
Case No.CV-94-1370 SVW (SHx)
Jones v. Edwards, et al., 4/20/93 to 3/1/94
- ------------------------
Case No. CV-94-1853 SVW (SHx)
Brenner v. Edwards, et al., 4/20/93 to 3/1/94
- --------------------------
Case No. CV-94-6718 SVW (SHx)
Kornfeld v. Forquer, et al., 6/20/94 to 8/31/94
- ---------------------------
Case No. CV-94-6572 SVW (SHx).
</TABLE>
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The Complaints filed in the above actions, asserted violations of Sections
10(b), 20(a) and 20A of the Securities Exchange Act of 1934 (the "Exchange Act")
and Rule 10b-5 promulgated thereunder, and (S)(S) 24500 and 25500 of the
California Corporations Code.
By Orders dated May 9, 1994, and September 29, 1994, the Court ordered the
consolidation of all of the above-listed actions and any related actions to be
consolidated and captioned In re AST Research Securities Litigation, Master File
----------------------------------------
No. CV-94-1370 SVW (SHx). The foregoing actions, along with any further
amendments to or consolidations involving such actions, are collectively
referred to as the "Class Actions".
By Orders filed November 10, 1994, and December 21, 1994, the Court granted
the motions for class certification and certified the Class Actions for purposes
of the following classes (the "Class"):
All persons who purchased or otherwise acquired the common stock of AST
Research, Inc. between April 20, 1993 and March 1, 1994, inclusive, with a
subclass, for purposes of Plaintiffs claims under Cal.Corp. Code (S)(S)
25400 and 25500, defined as all persons who purchased or otherwise acquired
the common stock of AST Research, Inc. in the State of California;
excluding from the class and subclass the defendants named in the action,
and any entity in which any defendant named in the action has a controlling
interest.
or
All persons who purchased or otherwise acquired the common stock of AST
Research, Inc. between June 20, 1994 and August 31, 1994, inclusive, with
the exception of the defendants named in the action, the members of the
immediate family of each defendant named in the action, and any entity in
which any defendant named in the action has a controlling interest.
The Court approved the form of notice to be sent to Class members. On or
about February 24, 1995, and pursuant to approval
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by the Court, counsel for Representative Plaintiffs in the Class Actions caused
to be sent to all Class members who could reasonably be identified a Notice of
Pendency of Class Action ("Pendency Notice") notifying Class members of, inter
-----
alia, the pendency of the Class Actions, the certification of the Class Actions
- ----
and the right of Class members to be excluded from the Class. Pursuant to such
Pendency Notice, persons who are members of the Class have had an opportunity to
request to be excluded from the Class.
B. The Derivative Claims
---------------------
On or about July 5, 1994, counsel for Clarence Cox, a holder of AST common
stock, mailed to AST's Board of Directors a so-called "demand" letter, demanding
that the Company commence legal proceedings against all responsible officers and
directors of AST arising out of alleged violations of the federal securities
laws and California state law relating to the allegations in the Class Actions.
In response thereto, on August 1, 1994, the AST Board of Directors established
an Independent committee of outside, non-officer AST directors. The Independent
Committee was made up of Messrs. Richard Goeglein, Del Yocam and Jack Peltason
(the "Independent Committee"). Mr. Goeglein was appointed as Chairman. The
Independent Committee then began meetings to consider the matters raised in the
July 5, 1994 letter, and in that regard interviewed and retained John Speigel,
Esq. of Minger, Tolles & Olson as counsel. The Independent Committee and its
counsel then actively monitored proceedings in the Class Action litigation
referrred to above. The claims related thereto are referred to as the
"Derivative Claims".
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The Class Claims and the Derivative Claims are referred to collectively as
the "Litigation".
II. PRETRIAL PROCEEDINGS AND DISCOVERY IN THE LITIGATION
----------------------------------------------------
Counsel for the Representative Plaintiffs have conducted extensive formal
and informal discovery and investigation during the prosecution of the
Litigation. This discovery and investigation has included, inter alia, (i)
----- ----
inspection of hundreds of thousands of pages of documents produced by
Defendants, and certain non-party witnesses; (ii) inspection of documents
produced by numerous non-party witnesses, including banking and market analyst
companies; (iii) consultation with experts; (iv) review of AST's public filings,
annual reports and other public statements; and (v) research of the applicable
law with respect to the claims asserted in the various Complaints and the
potential defenses thereto.
In addition, cross motions for summary judgment have been filed in the
Class Actions. In connection therewith, the Court granted summary judgment as
to certain defendants, and narrowed the issues for trial and against the
remaining defendants. The Court also separated for trial in one action the
claims asserted in the Marschall, Jones and Brenner actions, and ordered a
--------- ----- -------
separate trial of the claims asserted in the Kornfeld action.
--------
III. TRIAL OF THE CLASS ACTIONS
--------------------------
On August 8, 1995, trial commenced in the Marschall, Jones and Brenner
--------- ----- -------
actions. At the conclusion of proceedings on August 16, 1995 (and prior to the
completion of plaintiffs' case in chief), the parties reached an agreement in
principle for the settlement of the Litigation.
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Plaintiffs specifically represent that the claims asserted in the
Litigation were brought in good faith and were believed by the Representative
Plaintiffs, their counsel and their consultants and advisers to have a
reasonable basis in fact and in the law. Neither the fact of the settlement may
or can be used as evidence that the claims were not asserted in good faith or
did not have a reasonable basis in fact or in the law.
IV. DEFENDANTS' STATEMENT AND DENIALS OF WRONGDOING
AND LIABILITY
-----------------------------------------------
The Defendants have denied and continue to deny each and all of the claims
and contentions alleged by the Representative Plaintiffs in the Litigation. The
Defendants expressly have denied and continue to deny all charges of wrongdoing
or liability against them arising out of any of the conduct, statements, acts or
omissions alleged, or that could have been alleged, in the Litigation. The
Defendants also have denied and continue to deny, inter alia, the allegations
----- ----
that the Representative Plaintiffs, the Classes and/or AST have suffered damage,
that the prices of AST stock were artificially inflated by reasons of alleged
misrepresentations, nondisclosures or otherwise, or that the Representative
Plaintiffs or the Classes were harmed by the conduct alleged in the Litigation.
Nonetheless, the Defendants have concluded that the further conduct of the
Litigation would be protracted and expensive and that it is desirable that the
Litigation be fully and finally settled in the manner and upon the terms and
conditions set forth in this Stipulation in order to limit further exposure,
expense, inconvenience and distraction; to dispose of protracted litigation, and
to permit the operation of Defendants' business
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without further expensive litigation and the distraction and diversion of the
Defendants' executive personnel with respect to the matters in issue in the
Litigation. The Defendants also have taken into account the uncertainty and
risks inherent in any litigation, especially in complex cases like this
Litigation. The Defendants have, 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 this Stipulation.
V. CLAIMS OF THE PLAINTIFFS AND BENEFITS OF SETTLEMENT
---------------------------------------------------
The Plaintiffs believe that the claims asserted in the Litigation have
merit. Counsel for the Plaintiffs recognize and acknowledge the expense and
length of continued proceedings necessary to prosecute the Litigation against
the Defendants through trial and through appeals. Counsel for the Plaintiffs
also have taken into account the uncertain outcome and the risk of any
litigation, especially in complex actions such as this Litigation, as well as
the difficulties and delays inherent in such litigation. Counsel for the
Plaintiffs also are mindful of the inherent problems of proof under and possible
defenses to the federal securities law violations and pendent claims asserted in
the Litigation. Counsel for the Plaintiffs believe that the settlement set
forth in the Stipulation confers substantial benefits upon the Settlement Class,
each of the Settlement Class Members and upon AST in connection with the claims
asserted on its behalf derivatively. Based on their evaluation, counsel for the
Plaintiffs have determined that the settlement set forth in the Stipulation is
in the best interests of the Plaintiffs and
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the Settlement Class, each of the Settlement Class Members and the Company.
VI. TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT
------------------------------------------------
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among the Class
Plaintiffs (for themselves and the Settlement Class Members), by counsel for
Clarence Cox derivatively on behalf of AST for the Derivative Claims, and the
Defendants, by and through their respective attorneys of record, that, subject
to the approval of the Court, the Litigation and the Released Claims (defined
below) shall be finally and fully compromised and settled, and the Litigation
shall be dismissed on the merits and with prejudice, as to all Settling Parties,
upon and subject to the terms and conditions of the Stipulation, as follows:
1. Definitions
-----------
As used in the Stipulation the following terms have the meanings specified
below:
1.1 "AST" or "the Company" means AST Research, Inc. and all of its
predecessors, successors, parents, subsidiaries, divisions and related or
affiliated entities.
1.2 "AST stock" means each and all of the shares of common stock of AST
issued at any time.
1.3 "Authorized Claimant" means any Settlement Class Member whose claim
for recovery has been allowed pursuant to the terms of the Stipulation.
1.4 "Claimant" means any Settlement Class Member who files a Proof of
Claim in such form and manner, and within such time, as the Court shall
prescribe.
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1.5 "Settlement Class Period" means the separate periods between April 20,
1993, and including March 1, 1994, inclusive, or between June 20, 1994, and
August 31, 1994, inclusive.
1.6 "Defendants" means AST, Bruce C. Edwards, Wai S. Szeto, Safi U.
Qureshey, Richard P. Ottaviano, James T. Schraith, Carmelo J. Santoro and James
L. Forquer. Defendants Bruce C. Edwards, Wai S. Szeto, Safi U. Qureshey,
Richard P. Ottaviano, James T. Schraith, Carmelo J. Santoro and James L. Forquer
are referred to as the "Individual Defendants".
1.7 "Effective Date" means the first date by which all of the events and
conditions specified in (P) 8.1 of the Stipulation have been met and have
occurred.
1.8 "Escrow Agent" means Eugene Mikolajczyk and Mark C. Rifkin or their
successors.
1.9 "Final" means: (i) The date of final affirmance on an appeal, the
expiration of the time for a petition for a writ of certiorari and, if
certiorari be granted, the date of final affirmance following review pursuant to
that grant; or (ii) the date of final dismissal of any appeal or the final
dismissal of any proceeding on certiorari; or (iii) if no appeal is filed, the
expiration date of the time for the filing or noticing of any appeal from the
Court's judgment approving the Stipulation substantially in the form of Exhibit
"B" hereto, i.e., thirty (30) days after entry of the Judgment. An appeal or
----
petition for a writ of certiorari pertaining solely to any plan of allocation
and/or application for attorneys' fees, costs or expenses, shall not in any way
delay or preclude the Judgment from becoming Final.
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1.10 "Judgment" means the judgment to be rendered by the Court,
substantially in the form attached hereto as Exhibit "B."
1.11 "Person" means an individual, corporation, partnership, limited
partnership, association, joint stock company, estate, legal representative,
trust, unincorporated association, government or any political subdivision or
agency thereof, and any business or legal entity and their spouses, heirs,
predecessors, successors, representatives, or assignees.
1.12 "Plaintiffs' Lead Counsel" means the following counsel for
Representative Plaintiffs in the Class Action: Kevin M. Prongay, Esquire,
Prongay & Mikolajczyk, 881 Alma Real Drive, Suite 211, Pacific Palisades, CA
90272, Telephone: (310) 573-3600; and Mark C. Rifkin, Esquire, Greenfield &
Rifkin, 344 W. Lancaster Avenue, Haverford, PA 19041, Telephone: (610) 649-3900.
1.13 "Plan of Allocation" means a plan or formula of allocation of the
Settlement Fund which shall be described in the "Notice of Settlement of Class
Action" to be sent to Settlement Class Members in connection with the Settlement
whereby the Settlement Fund shall be distributed to Authorized Claimants after
payment of expenses of notice and administration of the Settlement, any taxes,
penalties or interest or tax preparation fees owed by the Settlement Fund, and
such attorneys' fees, costs, expenses and interest as may be awarded by the
Court. Any Plan of Allocation is not part of the Stipulation.
1.14 "Related Parties" means each of a Person's past or present directors,
officers, employees, partners, principals, agents, underwriters, controlling
shareholders, issuers, insurers, co-insurers, reinsurers, attorneys,
accountants,
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auditors, advisors, consultants, expert witnesses, personal representatives,
predecessors, successors, parents, subsidiaries, divisions, assigns, spouses,
heirs, associates, related or affiliated entities or any members of their
immediate families.
1.15 "Released Claims" means and includes any and all claims (including
"Unknown Claims" as defined in (P) 1.22 hereof), demands, rights, liabilities,
and causes of action of every nature and description whatsoever, known or
unknown, 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 any state or federal statutes, rules or regulations, by the Settlement Class
Members, any present AST shareholder, or any of them, against the Defendants or
any of their Related Parties based upon, related to, or in connection with the
purchase and/or ownership of AST stock by the Settlement Class Members during
the Settlement Class Period and/or present AST shareholders and based on the
facts, transactions, events, occurrences, acts, statements, omissions or
failures to act, which were or could have been alleged in the Litigation.
1.16 "Released Persons" means each and all of the Defendants and their
Related Parties.
1.17 "Representative Plaintiffs" means class representatives Frank E.
Marschall, Saul Jones, Lisa Brenner and Steven Kornfeld, and, in the case of the
Derivative Claims, Clarence Cox.
1.18 "Settlement Class" means the Class as previously certified by the
Court pursuant to Orders filed November 10, 1994, and December 21, 1994, as
follows:
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All persons who purchased or otherwise acquired the common stock of AST
Research, Inc. between April 20, 1993 and March 1, 1994, inclusive, with a
subclass, for purposes of Plaintiffs claims under Cal.Corp. Code (S)(S)
25400 and 25500, defined as all persons who purchased or otherwise acquired
the common stock of AST Research, Inc. in the State of California;
excluding from the class and subclass the defendants named in the action,
and any entity in which any defendant named in the action has a controlling
interest.
or
All persons who purchased or otherwise acquired the common stock of AST
Research, Inc. between June 20, 1994 and August 31, 1994, inclusive, with
the exception of the defendants named in the action, the members of the
immediate family of each defendant named in the action, and any entity in
which any defendant named in the action has a controlling interest.
and excluding therefrom all persons who have timely and validly requested
exclusion from the Class pursuant to the Pendency Notice sent pursuant to the
Court's approval.
1.19 "Settlement Class Member" or "Member of the Settlement Class" means a
Person who falls within the definition of the Settlement Class as set forth in
(P) 1.18 of the Stipulation.
1.20 "Settlement Fund" means: the total principal amount of Twelve
Million, Five Hundred Thousand Dollars ($12,500,000.00) plus any and all accrued
interest, in cash to be paid pursuant to (P) 2.1 of the Stipulation and
delivered by wire transfer to the Escrow Agent pursuant to the terms set forth
in (P) 2.1 of the Stipulation. In connection therewith, AST will be entitled to
receive from or on behalf of the Individual Defendants the sum of Two Million
Dollars ($2,000,000.00) in settlement of the Derivative Claims. AST, in turn,
will contribute all of the Two Million Dollars ($2,000,000.00) as part of the
total Settlement Fund in settlement of the Class Actions and for the benefit of
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the Settlement Class; provided that such contribution by AST shall be reduced by
any additional amount of attorneys fees or costs that AST is required by the
Court to pay directly to counsel for Representative Derivative Plaintiff
Clarence Cox in settlement of the Derivative Claims. Counsel for Clarence Cox
represents that it intends to file no petition or request for separate fees or
costs.
1.21 "Settling Parties" means, collectively, each of the Defendants and
the Representative Class Plaintiffs on behalf of themselves and the members of
the Settlement Class and Representative Derivative Plaintiff Clarence Cox
derivatively on behalf of AST.
1.22 "Unknown Claims" means any Released Claims which any Settlement Class
Member or present AST shareholder does not know or suspect to exist in his or
her favor at the time of the release of the Released Persons which, if known by
him or her, might have affected his or her settlement with and release of the
Released Persons, or might have affected his or her 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, each of the
Settlement Class Members and present AST shareholders shall be deemed to, and by
operation of the Judgment shall, waive and relinquish, to the fullest extent
permitted by law, the provisions, rights, and benefits of (S) 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.
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Each of the Settlement Class Members and present AST shareholders shall be
deemed to, and upon the Effective Date and by operation of the Judgment shall,
also waive 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 (S) 1542 of the California Civil Code.
Each of the Settlement Class Members and/or present AST shareholders may
hereafter discover facts in addition to or different from those which he or she
now knows or believes to be true with respect to the subject matter of the
Released Claims, but hereby stipulate and agree that each Settlement Class
Member and present AST shareholder does, upon the Effective Date, fully,
finally, and forever settle and release 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, 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.
1.23 "Settlement Administrator" means Rudolph, Palitz LLP, Certified
Public Accountants.
2. Transfer And Investment Of The Settlement Fund And Related
Matters
----------------------------------------------------------
2.1 Except as provided below, from August 21, 1995, until the Settlement
Fund is actually transferred to the Escrow Agent, the Settlement Fund shall
accrue interest at the rate of five percent (5%) per annum. The transfer of the
Settlement Fund to the Escrow Agent shall occur in two installments.
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A. On or before September 15, 1995, One Hundred Fifty Thousand
($150,000.00), plus any and all accrued interest thereon from August 21, 1995,
shall be transferred to the Escrow Agent for use as the Notice and
Administration Funds pursuant to (P) 3.1 below; and
B. On or before the date set by the Court for the Final Settlement
Hearing in the Order Preliminarily Approving Settlement in the form of Exhibit A
attached hereto, the remainder of the Settlement Fund in the amount of Twelve
Million Three Hundred Fifty Thousand Dollars ($12,350,000.00), plus any and all
accrued interest thereon from August 21, 1995, shall be transferred to the
Escrow Agent.
Both such transfers shall be made by wire-transfer to an account maintained
by the Escrow Agent at First Interstate Bank, Los Angeles, California. Should
Defendants fail to effect either of the required transfers of the Settlement
Fund (and any accrued interest) on the dates required for such transfer(s) the
portion(s) of the Settlement Fund not so transferred shall, from the date the
transfer(s) was (were) required, accrue interest at the rate of ten percent
(10%) per annum until the actual transfer to the Escrow Agent.
2.2 Defendants warrant that as to any such payment required by or on
behalf of them, at the time of such payment they were not insolvent nor did or
will the payment required to be made by or on behalf of them render them
insolvent within the meaning of and/or for the purposes of United States
Bankruptcy Code (S) 547. This warranty is made by each Defendant severally and
not by Defendants' counsel.
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2.3 If a case is commenced in respect to any Defendant who has contributed
to the Settlement Fund (or on whose behalf a contribution has been made) under
Title 11 of the United States Code (Bankruptcy), or a trustee, receiver or
conservator is appointed under any similar law, and in the event of the entry of
a final order of a court of competent jurisdiction determining the transfer of
the Settlement Fund, or any portion thereof, by or on behalf of such Defendant
to be a voidable transfer, fraudulent conveyance or similar transaction, then,
as to such Defendant only, the releases given and Judgment entered in favor of
such Defendant pursuant to this Stipulation shall be null and void.
2.4 The Escrow Agent shall invest the Settlement Fund deposited pursuant
to (P) 2.1 above in instruments backed by the full faith and credit of the
United States Government or fully insured by the United States Government or an
agency thereof, or certificates of deposit of an FDIC-insured bank with assets
of at least $5 billion as of June 30, 1995, and shall reinvest the proceeds of
these instruments as they mature in similar instruments at the current market
rates.
2.5 The Escrow Agent shall not disburse the Settlement Fund except as
provided in the Stipulation, or by an Order of the Court, or with the written
agreement of Lead Counsel for plaintiffs (and also counsel for the Defendants
but only until such time as the Judgment becomes Final).
2.6 Subject to further order and direction by the Court, the Escrow Agent
is authorized to execute such transactions on behalf of the Settlement Class
Members as are consistent with the
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terms of the Stipulation and utilize up to $150,000 to be applied to the initial
costs of notice and settlement administration. ("Notice and Administration
Funds").
2.7 All funds held by the Escrow Agent shall be deemed and considered to
be in custodia legis of the Court, and shall remain subject to the jurisdiction
-------- -----
of the Court, until such time as such funds shall be distributed pursuant to the
Stipulation and/or further order(s) of the Court.
2.8 (a) The Settling Parties and the Escrow Agent agree to treat the
Settlement Fund as being at all times as one or more "qualified settlement
funds" within the meaning of Treas. Reg. Section 1.468B-1. In addition, the
Escrow Agent and, as required, the Defendants contributing any settlement
consideration shall jointly and timely make such appropriate elections as may be
necessary or advisable to carry out the provisions of this paragraph 2.8,
including the "relation-back election" (as defined in Treas. Reg. Section
1.468B-1) back to the earliest permitted date. Such elections shall be made in
compliance with the procedures and requirements contained in such regulations.
It shall be the responsibility of the Plaintiffs' Lead Counsel to timely and
properly prepare, and deliver the necessary documentation for signature by all
necessary parties, and thereunder to cause the appropriate filing to occur.
(b) For the purposes of Treas. Reg. Section 1.468B, the "administrator"
shall be the Escrow Agent. The Plaintiffs' Lead Counsel or their designee shall
timely and properly file all informational and other tax returns necessary or
advisable with respect to the Settlement Fund (including without limitation the
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returns described in Treas. Reg. Section 1.468B-2(k)). Such returns (as well as
the election described in paragraph 2.8(a)) shall be consistent with this
paragraph 2.8 and in all events shall reflect that all taxes (including any
estimated taxes, interest or penalties) on the income earned by the Settlement
Fund shall be paid out of the Settlement Fund as provided in paragraph 2.8(c)
hereof.
(c) All (a) taxes (including any estimated taxes, interest or penalties)
arising with respect to the income earned by the Settlement Fund, including
taxes or tax detriments that may be imposed upon Defendants with respect to any
income earned by the Settlement Fund for any period during which the Settlement
Fund does not qualify as a "qualified settlement fund" for Federal or State
income tax purposes ("Taxes"), and (b) expenses and costs incurred in connection
with the operation and implementation of this paragraph 2.8 (including, without
limitation, expenses of tax attorneys and/or accountants and mailing and
distribution costs and expenses relating to filing (or failing to file) the
returns described in this paragraph 2.8) ("Tax Expenses"), shall be paid out of
the Settlement Fund; in all events the Defendants shall have no liability or
responsibility for the Taxes or the Tax Expenses. Further, Taxes and the Tax
Expenses shall be treated as, and considered to be, a cost of administration of
the Settlement and shall be timely paid by the Escrow Agent out of the
Settlement Fund without prior order from the Court and the Escrow Agent shall be
obligated (notwithstanding anything herein to the contrary) to withhold from
distribution to members of the Settlement Class any funds necessary to pay such
amounts (as well
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as any amounts that may be required to be withheld under Treas. Reg. Section
1.468B-2(1)(2)), and the Defendants are not responsible and shall have no
liability therefor. The parties agree to cooperate with the Plaintiffs' Lead
Counsel, and each other, and their tax attorneys and accountants to the extent
reasonably necessary to carry out the provisions of this paragraph 2.8.
(d) For the purpose of this paragraph 2.8, references to the Settlement
Fund shall include both the Settlement Fund and the Notice and Administration
Funds and shall also include any earnings thereon.
2.9 In the event that the Stipulation is not approved, or is terminated,
canceled, or fails to become effective for any reason, the Settlement Fund
(including accrued interest) and the remaining funds in the Notice and
Administration Funds, if any, (described in (P) 3.1 below), less expenses
actually incurred or due and owing in connection with the settlement provided
for herein, shall be refunded to Defendants in proportion to their contributions
set forth in (P) 2.1 above as described in (P) 8.5 below.
3. Notice And Administration Funds
-------------------------------
3.1 Upon the payment of the Settlement Fund or a portion thereof to the
Escrow Agent, the Escrow Agent shall, without further order of the Court,
release to Plaintiffs' Lead Counsel the "Notice and Administration Funds," in
the amount up to $150,000.00. The Notice and Administration Funds may be used
by Plaintiffs' Lead Counsel to pay costs and expenses incurred in connection
with providing notice to the Class, notice to current
18
<PAGE>
shareholders of AST common stock, locating members of the Settlement Class,
soliciting claims of Settlement Class Members, assisting with the filing of
claims, administering and distributing the Settlement Fund to the Members of the
Settlement Class, processing Proofs of Claim and Release and paying bank fees
and costs, if any. The Notice and Administration Funds may be maintained as
part of the Settlement Fund until needed to pay for the foregoing costs and
expenses, and may also be invested and earn interest as part of the Settlement
Fund as provided for in (P) 2.4 of this Stipulation.
3.2 On the Effective Date, any balance (including interest) then remaining
in the Notice and Administration Funds, less expenses incurred but not yet paid,
may be credited as part of the Settlement Fund to be applied as set forth in (P)
6.2 below. Thereafter, subject to the Court's right of review, Plaintiffs' Lead
Counsel shall have the right to use such portions of the Settlement Fund as are,
in their exercise of reasonable judgment, necessary to carry out the purposes
set forth in (P) 3.1.
4. Notice Order And Settlement Hearing
-----------------------------------
4.1 Promptly after execution of the Stipulation, the Settling Parties
shall submit the Stipulation together with its Exhibits to the Court and shall
jointly apply for entry of an order (the "Notice Order"), substantially in the
form of Exhibit "A" hereto, requesting the preliminary approval of the
Settlement set forth in the Stipulation, and approval for the mailing and
publication to the Class and to present AST shareholders notices which shall
include the general terms of the settlement set forth in the Stipulation, the
proposed Plan of Allocation of the Class
19
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Settlement Fund, the general terms of the Fee and Expense Application and the
date of the Settlement Hearing. Plaintiffs Lead Counsel shall be responsible
for providing notice to the Settlement Class, and, with respect to the
Derivative Claims, current shareholders of AST.
4.2 The Settling Parties shall request that, after notice is given, the
Court hold the Settlement Hearing and finally approve the settlement of the
Litigation as set forth herein. At or after the Settlement Hearing, Plaintiffs'
Lead Counsel also will request that the Court approve the proposed Plan of
Allocation of the Settlement Fund, the Fee and Expense Application and
Plaintiffs' Petition for Incentive Awards.
4.3 The Notice Order shall specifically include provisions that, among
other things, will:
(a) Preliminarily approve the Stipulation and the settlement set
forth herein as being fair, just, reasonable and adequate to the Settlement
Class, to AST and to its present shareholders;
(b) Approve the forms of Notice of Settlement of Class Action ("Class
Notice") (substantially in the form of Exhibit "A-1" hereto) for mailing to
members of the Settlement Class, the form of Summary Class Notice for
Publication ("Summary Class Notice") (substantially in the form of Exhibit "A-2"
hereto) and the Notice of Pendency and Settlement of Derivative Claims
("Derivative Notice") (substantially in the form of Exhibit "A-3" hereto) for
mailing to current shareholders of AST.
(c) Approve the form of Proof of Claim and Release ("Proof of Claim
and Release") (substantially in the form of
20
<PAGE>
Exhibit "A-4" hereto) for mailing to members of the Settlement Class;
(d) Approve the provisions of paragraph 2 hereof concerning the
Transfer and Investment of the Settlement Fund and Related Matters and order
that the Settlement Fund shall be held in custodia legis of the Court.
-------- -----
(e) Direct Plaintiffs' Lead Counsel to mail or cause to be mailed by
first class mail the Class Notice and the Proof of Claim and Release to those
Persons in the Settlement Class who can be identified through reasonable effort,
on or before the date to be specified in the Notice Order;
(f) Direct Plaintiffs' Lead Counsel to cause to be published once in
the national edition of The Wall Street Journal the Summary Class Notice;
-----------------------
(g) Direct Representative Plaintiffs' to mail or cause to be mailed
by first class mail the Derivative Notice to all current shareholders of AST who
can be identified through reasonable effort, on or before the date specified in
the Notice Order.
(h) Direct that nominees who purchased AST Stock during the
Settlement Class Period either (i) send the Class Notice and Proof of Claim and
Release form to all beneficial owners of such AST Stock within ten (10) days
after receipt of the Notice or (ii) send a list of the names and addresses of
such beneficial owners to the Settlement Administrator within ten (10) days of
receipt of the Class Notice and, in the event of the latter, direct the
Settlement Administrator to send the Class Notice and Proof of Claim and Release
Form to all beneficial
21
<PAGE>
owners identified by the nominee within ten (10) days after receipt of the list
from the nominee, and advise such nominees that they will be reimbursed from the
Notice and Administration Fund for reasonable costs of such notice;
(i) Direct that nominees who own AST stock on behalf of current
owners either (i) send the Derivative Notice to all beneficial current owners of
such AST stock within ten (10) days after receipt of the Derivative Notice or
(ii) send a list of the names and addresses of such beneficial owners to the
Settlement Administrator within ten (10) days of receipt of the Derivative
Notice and, in the event of the latter, direct the Settlement Administrator to
send the Derivative Notice to all beneficial current owners identified by the
nominee within ten (10) days after receipt of the list from the nominee, and
advise such nominees that they will be reimbursed for reasonable costs of such
notice;
(j) Provide that Settlement Class Members who wish to participate in
the settlement provided for in this Stipulation shall complete and file a Proof
of Claim and Release form pursuant to the instructions contained therein;
(k) Find that the notice given pursuant to subparagraphs (c), through
(j), above, constitutes the best notice practicable under the circumstances,
including individual notice to all Persons in the Settlement Class and to
present AST shareholders who can be identified upon reasonable effort, and
constitutes valid, due and sufficient notice to all Persons in the Settlement
Class and to present AST shareholders, complying fully with the requirements of
Rule 23 of the Federal Rules of
22
<PAGE>
Civil Procedure, the Constitution of the United States, and any other applicable
law;
(l) Schedule a hearing or hearings (the "Settlement Hearing") to be
held by the Court to consider and determine whether the proposed settlement of
the Litigation as contained in the Stipulation should be approved as fair,
reasonable and adequate and whether the Judgment approving the settlement should
be entered;
(m) Provide that at or after the Settlement Hearing, the Court shall
determine whether the proposed Plan of Allocation should be approved;
(n) Provide that at or after the Settlement Hearing, the Court shall
determine and enter an order regarding whether and in what amount attorneys'
fees (plus accrued interest) and reimbursement of expenses (plus accrued
interest) should be awarded to Plaintiffs' Lead Counsel;
(o) Provide that pending final determination of whether the
settlement contained in the Stipulation should be approved, neither the
Plaintiffs, nor any Settlement Class Member, and/or present shareholder of AST,
either directly, representatively, or in any other capacity shall commence or
prosecute any action or proceeding in any court or tribunal asserting any of the
Released Claims against the Defendants;
(p) Provide that any objections to (i) the proposed settlement
contained in the Stipulation; (ii) entry of the Judgment approving the
settlement; (iii) the proposed Plan of Allocation; or (iv) The Fee and Expense
Application and Petition for Incentive Awards to Plaintiffs shall be heard and
any papers
23
<PAGE>
submitted in support of said objections shall be received and considered by the
Court at the Settlement Hearing only if, on or before a date to be specified in
the Notice Order, Persons making objections shall file and serve on all parties
notice of their intention to appear (which shall set forth each objection and
the basis therefor) and copies of any papers in support of their position as set
forth in the Notice Order;
(q) Provide that, upon the occurrence of the Effective Date, all
Settlement Class Members whether or not they file a Proof of Claim and Release
within the time provided for and present AST shareholders shall be enjoined and
barred from asserting any Released Claims against any of the Defendants and any
such Settlement Class Member and/or present AST shareholder shall conclusively
be deemed to have released any and all such Released Claims as against all of
the Defendants; and
(r) Provide that the Settlement Hearing may, from time to time and
without further notice to the Class, be continued or adjourned by Order of the
Court.
5. Releases
--------
5.1 Upon the Effective Date, as defined in (P) 1.7, each of the Settlement
Class Members, present shareholders of AST and AST shall hereby be deemed to
have, and by operation of the Judgment shall have, fully, finally, and forever
released, relinquished and discharged all Released Claims against each and all
of the Defendants and each and all of their Related Parties and all claims
arising out of, relating to, or in connection with the defense or resolution of
the Litigation (including, without limitation, claims for defamation), including
the allocation of
24
<PAGE>
contribution to the Settlement among the Defendants, whether or not such
Settlement Class Member executes and delivers the Proof of Claim and Release.
5.2 Upon the Effective Date, as defined in (P) 1.7, each of the Released
Persons shall hereby be deemed to have, and by operation of the Judgment shall
have, fully, finally, and forever released, relinquished and discharged each and
all of the Representative Plaintiffs, Settlement Class Members, present
shareholders of AST, counsel to the Representative Plaintiffs and each of the
foregoing persons' Related Parties from all claims (including "Unknown Claims"
as defined in this paragraph), arising out of, relating to, or in connection
with the institution, prosecution, assertion or resolution of the Litigation or
the Released Claims (including, without limitation, claims for defamation). As
used in this paragraph, "Unknown Claims" means any claims which any Released
Person does not know or suspect to exist in his or her favor against the
Representative Plaintiffs, Settlement Class Members, present shareholders of
AST, counsel to the Representative Plaintiffs and each of the foregoing persons'
Related Parties at the time of the release which, if known by him, her or it,
might have affected his, her or its settlement with and release of the foregoing
Persons, or might have affected his, her or its decision to enter into this
settlement. With respect to any and all such claims, the Released Persons and
their Related Parties stipulate and agree that, upon the Effective Date, each of
the Released Persons shall be deemed to, and by operation of the Judgment shall,
waive and relinquish, to the fullest extent permitted by law, the
25
<PAGE>
provisions, rights, and benefits of (S) 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.
Each of the Released Persons shall be deemed to, and upon the Effective Date and
by operation of the Judgment shall, also waive 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 (S) 1542 of the California Civil Code. Each of the Released Persons may
hereafter discover facts in addition to or different from those which he or she
now knows or believes to be true with respect to the subject matter of the
released claims against the Representative Plaintiffs, Settlement Class Members,
present shareholders of AST, counsel to the Representative Plaintiffs and each
of the foregoing persons' Related Parties, but hereby stipulate and agree that
each Released Person does, upon the Effective Date, fully, finally, and forever
settle and release any and all such 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,
including, but not limited to, conduct which is negligent, intentional, with or
without malice, or a breach of any duty, law or rule, without regard to the
subsequent discovery or existence of such different or additional facts.
Plaintiffs and their counsel will not assist or cooperate
26
<PAGE>
in the prosecution of any Released Claims that may be asserted by any person or
entity in the future except as required by law.
5.3 Upon the Effective Date, as defined in paragraph 1.7, each of the
Defendants shall fully, finally and forever release, relinquish and discharge
each other, and any other Person by reason of any rights of subrogation, from
any claims arising out of the Released Claims.
5.4 Only those Settlement Class Members filing valid and timely Proofs of
Claim and Release shall be entitled to participate in the settlement and receive
any distributions from the Settlement Fund. The releases to be executed by the
Settlement Class Members shall release all Released Claims against the
Defendants, and any of their Related Parties and shall be substantially in the
form contained in Exhibit "A-4" hereto.
6. Administration And Calculation Of Claims, Final Awards And
Supervision And Distribution Of Settlement Fund
----------------------------------------------------------
6.1 Plaintiffs' Lead Counsel, or their authorized agents, acting on behalf
of the Settlement Class, and subject to the supervision, direction and approval
of the Court, shall administer and calculate the claims submitted by Settlement
Class Members and shall oversee distribution of that portion of the Settlement
Fund that is finally awarded by the Court to the Settlement Class Members.
6.2 On and after the Effective Date (except as provided in and subject to
the provisions of (P) 7.3), the Settlement Fund shall be applied as follows:
27
<PAGE>
(a) To pay counsel to Plaintiffs' Lead Counsel attorneys' fees,
expenses and costs, with interest thereon (the "Fee and Expense Award"), if and
to the extent allowed by the Court, to be divided among such counsel as they may
determine;
(b) To pay all unpaid costs and expenses reasonably and actually
incurred in connection with providing notice to the Settlement Class, locating
Settlement Class members, soliciting claims, assisting with the filing of
claims, administering and distributing the Settlement Fund to the Settlement
Class, processing Proofs of Claim and Release and paying bank fees and costs, if
any;
(c) To pay the reasonable costs incurred in the preparation of any
tax returns required to be filed on behalf of the Settlement Fund as well as the
taxes (and any interest and penalties determined to be due thereon) owed by
reason of the interest earned on the Settlement Fund; and
(d) To distribute the remaining portion to Authorized Claimants as
allowed by the Stipulation or the Court.
6.3 After the Effective Date and subject to such further approval and
further order(s) of the Court as may be required, the balance of the Settlement
Fund not previously allocated (the "Net Settlement Fund") shall be distributed
to Settlement Class Members who submit valid, timely filed Proofs of Claim and
Release ("Authorized Claimants"), subject to and in accordance with the
following:
(a) Within ninety (90) days after the mailing of the Notice or such
other time as may be set by the Court, each Person claiming to be an Authorized
Claimant shall be required to submit
28
<PAGE>
to the Settlement Administrator a separate completed Proof of Claim and Release
as attached to the Notice and substantially in the form of Exhibit "A-4" hereto,
signed under penalty of perjury and supported by such documents as specified in
the Proof of Claim and Release and as are reasonably available to the Authorized
Claimant.
(b) Except as otherwise ordered by the Court, all Settlement Class
Members who fail to timely submit a Proof of Claim and Release within such
period, or such other period as may be ordered by the Court, shall be forever
barred from receiving any payments pursuant to the Stipulation and the
settlement set forth herein, but will in all other respects be subject to and
bound by the provisions of the Stipulation, the settlement and releases
contained herein, and the Judgment.
(c) The Settlement Fund shall be distributed to the Authorized
Claimants in accordance with a Plan of Allocation to be described in the Notice
mailed to Class Members. The proposed Plan of Allocation shall not be a part of
the Stipulation.
6.4 Upon the transfer of the Settlement Fund (plus any accrued interest)
to the Escrow Agent pursuant to paragraph 2.1., Defendants are released from any
and all liability and claims arising from or with respect to the investment or
distribution of the Settlement Fund, except that Defendants have the right to
request copies (at their expense) of, and to challenge, any and all claims
submitted by any Settlement Class Member. Notwithstanding the foregoing, this
is not a claims made settlement, and neither Defendants nor any of their Related
Parties shall have any right to any return of any portion of the
29
<PAGE>
Settlement Fund (except under the conditions set forth in (P)(P) 8.5-8.8).
6.5 No Person shall have any claim against Plaintiffs' counsel, the
Settlement Administrator or any claims administrator, or other agent designated
by Plaintiffs' Lead Counsel, or the Released Persons and their Related Parties
based on the distributions made substantially in accordance with the Stipulation
and the settlement contained herein the Plan of Allocation or further orders of
the Court.
6.6 It is understood and agreed by the Settling Parties that any proposed
Plan of Allocation of the Net Settlement Fund is not a part of the Stipulation
and any order or proceedings relating to the Plan of Allocation shall not
operate to terminate or cancel the Stipulation or affect the finality of the
Court's Judgment approving the Stipulation and the settlement set forth herein,
or any other orders entered pursuant to the Stipulation.
7. Plaintiffs' Counsel's Attorneys' Fees And Reimbursement Of
Expenses
-----------------------------------------------------------
7.1 The Plaintiffs or their counsel may submit an application or
applications (the "Fee and Expense Application") for distributions to them from
the Settlement Fund for: (i) an award of attorneys' fees in an amount equal to
up to forty percent (40%) of the Settlement Fund; and (ii) reimbursement of all
expenses and costs, including the fees of any experts or consultants incurred in
connection with prosecuting the Litigation, plus interest on such attorneys'
fees, costs and expenses at the same rate and for the same periods as earned by
the Settlement Fund, as may be awarded by the Court. Plaintiffs'
30
<PAGE>
counsel reserve the right to make additional applications for fees and expenses
incurred.
7.2 Nothing in the Stipulation shall be construed to provide Defendants or
their insurers with standing to challenge or question any Fee and Expense
Application by Plaintiffs' counsel, or any Fee and Expense Award to Plaintiffs'
counsel, or any Incentive Award to Plaintiffs, or to their experts or
consultants or any award to the Plaintiffs, and Defendants agree not to
challenge, oppose or comment upon Plaintiffs' counsels' Fee and Expenses
Application in this Litigation consistent with the provisions of this
Stipulation or the Plaintiffs' petition for incentive awards. Further, neither
Defendants nor their insurers shall have any right to take a position in this
Litigation with respect to the ultimate disposition of funds which shall remain
in the Settlement Fund pursuant to the Plan of Allocation or otherwise, except
for the right to challenge claims submitted by Settlement Class Members as set
forth in (P) 6.4.
7.3 The attorneys' fees, expenses and costs (and accrued interest),
including the fees of experts and consultants, as awarded by the Court, shall be
transferred by wire-transfer to Plaintiffs' Lead Counsel from the Settlement
Fund, within three (3) business days after the Court enters the Final Judgment
in the form of Exhibit B attached hereto. Plaintiffs' Lead Counsel shall
distribute such attorneys' fees among Plaintiffs' counsel of record at their
discretion upon the agreement of Plaintiffs' Lead Counsel.
7.4 The procedure for and the allowance or disallowance by the Court of
any applications by any of the counsel to the
31
<PAGE>
Plaintiffs for attorneys' fees, costs and expenses (and accrued interest),
including the fees of experts and consultants, 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 or proceedings relating to the Fee and Expense
Application, or Petition for Incentive Awards, or any appeal from any order
relating thereto, shall not operate to terminate or cancel the Stipulation, or
affect or delay the finality of the Judgment approving the Stipulation and the
settlement of the Litigation set forth herein.
8. Conditions Of Settlement, Effect Of Disapproval, Cancellation Or
Termination
----------------------------------------------------------------
8.1 Subject to the provisions of (P)8.3 below, the Effective Date of the
Stipulation shall be conditioned on the occurrence of all of the following
events:
(a) The Defendants shall have timely transferred or caused to be
timely transferred the Settlement Fund to the Escrow Agent as required by (P)
2.1, above;
(b) The Court has entered the Notice Order, as required by (P)4.3,
above;
(c) The Court has entered the Judgment, or a judgment substantially
in the form of Exhibit "B"; and
(d) The Judgment has become Final, as defined in (P) 1.9, above.
8.2 Upon the occurrence of all of the events referenced in (P) 8.1 above,
any and all interest or right of the Defendants and
32
<PAGE>
their insurers to the Settlement Fund shall be absolutely and forever
extinguished.
8.3 Neither a modification nor reversal on appeal of any Plan of
Allocation or of any amount of attorneys' fees, costs, expenses and interest
awarded by the Court to any of the Plaintiffs' or their counsel shall constitute
grounds for cancellation and termination of the Stipulation.
8.4 If all of the conditions specified in (P) 8.1 are not met, then the
Stipulation shall be cancelled and terminated unless Plaintiffs' Lead Counsel
and counsel for Defendants mutually agree in writing to proceed with the
Stipulation.
8.5 Unless otherwise ordered by the Court, in the event the Stipulation
shall terminate, or be cancelled, or shall not become effective or the Effective
Date does not occur for any reason, within five (5) business days after written
notification of such event is sent by counsel for Defendants or Plaintiffs' Lead
Counsel to the Escrow Agent, the Settlement Fund (including accrued interest),
plus any amount then remaining as part of the Notice and Administration Funds
(less expenses and any costs which have either been disbursed pursuant to (P)
3.1 hereto, or are determined to be chargeable to the Notice and Administration
Funds), shall be refunded by the Escrow Agent pursuant to written instructions
from Defendants or their counsel.
8.6 In the event that the Stipulation is not approved by the Court or the
Settlement set forth in the Stipulation is terminated or fails to become
effective in accordance with its terms or for any reason the Effective Date does
not occur, the Settling Parties shall be restored to their respective positions
33
<PAGE>
in the Litigation as of August 16, 1995, to the extent feasible. In such event,
the terms and provisions of the Stipulation, with the exception of (P)(P) 8.4-
8.7 herein, shall have no further force and effect with respect to the Settling
Parties and shall not be used in this Litigation or in any other proceeding for
any purpose, except as provided for in (P)(P) 8.4-8.7; and any Judgment entered
by the Court in accordance with the terms of the Stipulation shall be treated as
vacated, nunc pro tunc. No order of the Court or modification or reversal on
---- --- ----
appeal of any order of the Court concerning the Plan of Allocation or the amount
of any attorneys' fees, costs, expenses and interest awarded by the Court to the
Plaintiffs or any of their counsel shall constitute grounds for cancellation or
termination of the Stipulation.
8.7 If the Effective Date does not occur, or if the Stipulation is
terminated pursuant to its terms, neither the Plaintiffs nor any of their
counsel shall have any obligation to repay any amounts actually and properly
disbursed from the Notice and Administration Funds. In addition, any expenses
already incurred and properly chargeable to the Notice and Administration Funds
pursuant to (P) 3.1 hereof at the time of such termination or cancellation but
which have not been paid, shall be paid by the Escrow Agent in accordance with
the terms of the Stipulation prior to the balance being refunded in accordance
with (P) 8.5 above.
9. Miscellaneous Provisions
------------------------
9.1 The Settling Parties (a) acknowledge that it is their intent to
consummate this agreement; and (b) agree to cooperate to the extent necessary to
effectuate and implement all terms and
34
<PAGE>
conditions of the Stipulation and to exercise their best efforts to accomplish
the foregoing terms and conditions of the Stipulation.
9.2 Neither the Stipulation nor the settlement, nor any act performed or
document executed pursuant to or in furtherance of the Stipulation or the
settlement: (i) is or may be deemed to be or may be used as an admission of, or
evidence of, any wrongdoing or liability of the Defendants; or (ii) is or may be
deemed to be or may be used as an admission of, or evidence of, any fault or
omission of any of the Defendants in any civil, criminal or administrative
proceeding in any court, administrative agency or other tribunal. However, the
Stipulation and Settlement may be used in such proceedings as may be necessary
to consummate or enforce the Stipulation, the settlement or the Judgment, and
Defendants may file the Stipulation and/or the Judgment in any action that may
be brought against them in order to support a defense or counterclaim based on
principles of res judicata, collateral estoppel, release, good faith settlement,
--- --------
judgment bar or reduction or any other theory of claim preclusion or issue
preclusion or similar defense or counterclaim. The Defendants have denied and
continue to deny each and all of the claims alleged in the Litigation.
9.3 The Plaintiffs, and each of them, and on behalf of all persons
engaged by them to assist them in the prosecution of the Litigation, including,
but not limited to, their counsel, attorneys, experts, advisers, consultants,
accountants, and agents, agree, to the extent permitted by law, that all
agreements made during the course of the Litigation relating to
35
<PAGE>
the confidentiality of documents and information shall survive this Settlement.
Upon the Effective Date of the Settlement, all documents produced in discovery
to plaintiffs may, at AST's option, be returned to it at its expense, or
disposed of by plaintiffs' counsel by commercial means as provided in the
Stipulation and Order Providing for the Protection of Confidential Information
filed June 8, 1994.
9.4 All of the Exhibits to the Stipulation are material and integral parts
hereof and are fully incorporated herein by this reference.
9.5 The Stipulation may be amended or modified only by a written
instrument signed by or on behalf of all Settling Parties or their successors-
in-interest.
9.6 The Stipulation and the Exhibits attached hereto constitute the entire
agreement among the parties hereto and no representations, warranties or
inducements have been made to any party concerning the Stipulation or its
Exhibits other than the representations, warranties and covenants contained and
memorialized in such documents. Except as otherwise provided herein, each party
shall bear its own costs.
9.7 Plaintiffs' Lead Counsel, on behalf of the Settlement Class, and
counsel for Clarence Cox who asserted the Derivative Claims are expressly
authorized to take all appropriate action required or permitted to be taken
pursuant to the Stipulation to effectuate its terms, and also are expressly
authorized to enter into any modifications or amendments to the Stipulation on
behalf of the Settlement Class and AST shareholders which they deem appropriate
but only as to the subject matter of this Litigation.
36
<PAGE>
9.8 Each counsel or other Person executing the Stipulation or any of its
Exhibits on behalf of any party hereto hereby warrants that such person has the
full authority to do so.
9.9 The Stipulation may be executed in one or more original or telecopied
counterparts. All executed counterparts and each of them shall be deemed to be
one and the same instrument. Counsel for the parties to the Stipulation shall
exchange among themselves original signed or telecopied counterparts and a
complete set of original or telecopied executed counterparts shall be filed with
the Court.
9.10 The Stipulation shall be binding upon, and inure to the benefit of,
the successors and assigns of the parties hereto.
9.11 The Court shall retain jurisdiction with respect to implementation
and enforcement of the terms of the Stipulation, and all parties hereto submit
to the jurisdiction of the Court for purposes of implementing and enforcing the
settlement embodied in the Stipulation.
9.12 The Stipulation and the Exhibits hereto shall be considered to have
been negotiated, executed and delivered, and to be wholly performed, in the
State of California, and the rights and obligations of the parties to the
Stipulation shall be construed and enforced in accordance with, and governed by,
the internal, substantive laws of the State of California without giving effect
to that State's choice of law principles.
///
///
///
///
37
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused the Stipulation to be
executed, by their duly authorized attorneys, as of August 16, 1995.
DATED: August 28, 1995 PRONGAY & MIKOLAJCZYK
KEVIN M. PRONGAY
EUGENE MIKOLAJCZYK
By: __________________________
Kevin M. Prongay
881 Alma Real Drive, Suite 211
Pacific Palisades, CA 90272
Telephone: (310) 573-3600
GREENFIELD & RIFKIN
MARK C. RIFKIN
By: ________________________
Mark C. Rifkin
344 W. Lancaster Avenue
Haverford, PA 19041
Telephone: (610) 649-3900
Co-Lead Counsel for Class
Plaintiffs
CAPPELLO & McCANN
A. BARRY CAPPELLO
J. PAUL GIGNAC
831 State Street
Santa Barbara, CA 93101
Telephone: (805) 564-2444
38
<PAGE>
LAW OFFICES OF ZACHARY ALAN STARR
ZACHARY ALAN STARR
275 Madison Avenue, 35th Floor
New York, NY 10016
Telephone: (212) 808-5535
Attorneys for Class Plaintiffs
BURT & PUCILLO
C. OLIVER BURT, III
MICHAEL PUCILLO
By: ________________________
Michael Pucillo
Esperante, Suite 960
222 Lakeview Avenue
West Palm Beach, Florida 33401
Telephone: (407) 835-9400
Attorneys for Derivative Plaintiff
Clarence cox
O'MELVENY & MYERS
ROBERT C. VANDERET
By: ________________________
Robert C. Vanderet
400 South Hope Street
Suite 1050
Los Angeles, California 90071
Telephone: (213) 669-6000
Attorneys for Defendants
AST Research, Inc., Bruce C.
Edwards, Wai S. Szeto, Safi U.
Qureshey, Richard P. Ottaviano,
James T. Schraith, Carmelo J.
Santoro and James L. Forquer.
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<PAGE>
FOR IMMEDIATE RELEASE
Media Contact: Emory Epperson
(7140 727-7958
Analyst Contact: Misty Ohmart
(714) 727-7728
AST ANNOUNCES PRELIMINARY APPROVAL FOR SETTLEMENT IN
FOUR PENDING CLASS-ACTION SHAREHOLDER LITIGATIONS
IRVINE, Calif., August 29, 1995 -- AST Research today announced that preliminary
approval has been granted by the U.S. District Court for the Central District of
California for a settlement agreement in four class-action shareholder lawsuits.
The settlement calls for payment of $12.5 million into a fund that will be
paid to certain shareholders who purchased AST shares during portions of 1993
and 1994, and to the lawyers representing the shareholders. The company expects
that a majority of the settlement will be covered by insurance. The settlement
is subject to final approval by the U.S. District Court, which is expected
during the fourth calendar quarter.
"We chose to end this time consuming and expensive litigation now in order
to focus the efforts of top AST executives in moving the business forward,
meeting customer needs and forging ahead in our newly-formed strategic
relationship with Samsung Electronics," said Safi Qureshey, AST chairman and
chief executive officer.
CORPORATE BACKGROUND
AST Research Inc., a member of the Fortune 500 list of America's largest
industrial and service companies, is one of the world's leading personal
computer manufacturers. The $2.468 billion company develops PC products ranging
from portable systems to superservers sold in more than 100 countries worldwide.
Corporate headquarters is located at 16215 Alton Parkway, P.O. Box 57005,
Irvine, Calif. 92619-7005. Telephone (714) 727-4141 or (800) 876-4278.
Fax: (714) 727-9355.
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