EXHIBIT 10.9
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UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
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BILL BERKE, et al. ) Case No. 96-347-M
) (Multidistrict Litigation
) Docket No. 1140)
v. )
)
PRESSTEK, INC., et al. ) CLASS ACTION
) ------------
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STIPULATION OF SETTLEMENT
This Stipulation of Settlement (the "Stipulation" or the "Settlement"),
dated as of March ___, 2000, is made and entered into by and among the following
Settling Parties (as defined further in Section IV hereof): (i) The
Representative Plaintiffs (on behalf of themselves and each of the Class
members), by and through their counsel of record; and (ii) the Defendants
identified below, by and through their counsel of record. The Stipulation is
intended by the Settling Parties to fully, finally and forever resolve,
discharge and settle the Released Claims (as defined in P. 1.16), upon and
subject to the terms and conditions hereof.
I. THE LITIGATION
On and after June 28, 1996, lawsuits were filed in the United States
District Court for the district of New Hampshire (the "Court") and the United
States District Court for the Southern District of New York as securities class
actions on behalf of persons who purchased the common stock and/or options to
purchase the common stock of Presstek, Inc. ("Presstek") or who sold Presstek
put options.
Pursuant to an Order of the Judicial Panel on Multidistrict Litigation
dated December 9, 1996, and by orders of the Court dated February 11, 1997, July
9, 1997, and September 10, 1999, these actions were consolidated under the
caption Bill Berke, et al.
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V. Presstek, Inc., et al., Civil No. 96-347-M (Multidistrict Litigation Docket
no. 1140) (the "Litigation"). The operative complaint is the Second Consolidated
Amended Class Action Complaint (the "Complaint"). The complaint alleges
violations of ss.ss.10(b) and 20(a) of the Securities Exchange Act of 1934 and
Rule 10b-5 promulgated thereunder, and state law. In April 1997 and again in
April 1998, Defendants moved to dismiss and for summary judgment with respect to
certain allegations of the Complaint. In two separate orders dated march 30,
1999, the Court dismissed the majority of plaintiffs' claims, while certain
other claims either survived Defendants' dispositive motions, or were not
addressed in those motions. On July 14, 1999, the Court certified a class
consisting of all persons who purchased the common stock of Presstek and/or
options to purchase Presstek common stock and/or sold Presstek put options
between November 7, 1995 and June 10, 1996. Plaintiffs' Co-Lead Counsel (as
defined below) have had the opportunity to review tens of thousands of documents
produced by Defendants, to depose certain of the individual Defendants, and to
conduct other formal and informal discovery. In addition, the parties have
utilized the services of a mediator, a retired United States District Court
Judge, to assist in attempting to resolve the Litigation.
II. DEFENDANTS' DENIALS OF WRONGDOING AND LIABILITY
The Defendants have denied and continue to deny each and all of the
claims and contentions alleged by the Lead 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.
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Nonetheless, the Defendants have 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 the manner and upon the terms and
conditions set forth in this Stipulation. The Defendants also have taken into
account the uncertainty and risks inherent in complex cases such as the
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.
III. CLAIMS OF THE LEAD PLAINTIFFS AND BENEFITS OF SETTLEMENT
The Lead Plaintiffs believe that the claims asserted in the Litigation
have merit. However, Plaintiffs' Co-Lead Counsel recognize and acknowledge the
expense an length of continued proceedings necessary to prosecute the Litigation
against the Defendants through trial and through appeals. Plaintiffs' Co-Lead
Counsel also have taken into account the uncertain outcome and the risk of the
Litigation, as well as the difficulties and delays inherent therein. Plaintiffs'
Co-Lead Counsel also are mindful of the problems of proof under, and possible
defenses to, the claims asserted in the Litigation. Further,Plaintiffs' Co-Lead
Counsel considered the fact that Presstek had no directors' and officers'
liability or other insurance available to pay any recovery for the Class, as
well as the Company's cash position at the time of settlement. Plaintiffs'
Co-Lead Counsel believe that the settlement set forth in this Stipulation
confers substantial benefits upon the Class. Based on their evaluation,
Plaintiffs' Co-Lead Counsel believe that the settlement set forth in the
Stipulation is in the best interests of the Lead Plaintiffs and the Class.
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III. TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among the
Lead Plaintiffs (for themselves and the Class Members) and the Defendants, by
and through their respective counsel or attorneys of record, that, subject to
the approval of the Court, the Litigation and the Released Claims shall be
finally and fully compromised, settled and released, and the Litigation shall be
dismissed with prejudice, as to all Settling Parties, upon and subject to the
terms and conditions of the Stipulation, as follows:
(a) DEFINITIONS
As used in this Stipulation the following terms have the meanings
specified below:
1.1 "Authorized Claimant" means any Class member whose claim
for recovery has been allowed in whole or in part pursuant to the terms of the
Stipulation.
1.2 "Claimant" means any Class Member who files a Proof of Claim in
such form and manner, and within such time, as the Court shall prescribe.
1.3 "Claims Administrator" means the firm of ACS Financial & Securities
Services.
1.4 "Class" means a class consisting of all Persons (other than those
Persons who timely and validly request exclusion from the Class) who purchased
Presstek common stock and/or options to purchase Presstek common stock or who
sold Presstek put options between November 7, 1995 and June 10, 1996. Excluded
from the Class are Defendants, members of their immediate families, and their
legal representatives, heirs,
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successors, or assigns, and any entity in which Defendants have or had a
controlling interest.
1.5 "Class Period" means the period commencing on November 7, 1995
through and including June 10, 1996.
1.6 "Class Member" or "Member of the Class" means a Person who falls
within the definition of the Class as set forth in P. 1.4 of the Stipulation.
1.7 "Defendants" means Presstek, and any of its subsidiaries, Robert
Howard, Lawrence Howard, Richard W. Williams, Robert E. Verrando, Frank G.
Pensavecchia, Glenn J. DiBenedetto, Bert Depamphilis, and Harold Sparks.
1.8 "Effective Date" means the first date by which all of the events
and conditions specified inP. 7.1 of the Stipulation have been met and have
occurred.
1.9 "Escrow Agent" means the law firm of Shapiro Haber & Urmy LLP or
its successor(s).
1.10 "Final" when describing an order or judgment, means the later of
(i) the first business day after the date on which the time for appeal or appeal
or review of such order or judgment has expired and no appeal has been filed,
which for purposes of this Stipulation shall be thirty (30) days after the entry
of such order or judgment, or (ii) if any appeal is filed and not dismissed, the
date one business day after such order or judgment is upheld on appeal in all
material respects and is no longer subject to review upon appeal or by review by
writ of certiorari.
1.11 "Issuance Price" means the average price at which Presstek common
stock trades for all trading days in a given month, adjusted for the size of
each trade. It is calculated by multiplying the size of every trade by the
price, taking the sum of these
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values, and then dividing by the total trade volume. On the Bloomberg system it
is shown as the Volume Weighted Average Price (VWAP).
1.12 "Judgment" means the judgment to be rendered by the Court,
substantially in the form attached hereto as Exhibit B.
1.13 "Lead Plaintiffs" means Joseph C. Barton, Frederick Feit, Sidney
Gellman, Jerald Hamerski, Kevin McCarragher, William O'Toole, John Rolfe, Keith
E. Rosenblum, Meredith A. Rosenblum and Dr. Lee Sperling.
1.14 "Person" means an individual, corporation, limited liability
corporation, professional corporation, limited liability partnership,
partnership, limited partnership, associations, 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.
1.15 "Plaintiffs' Co-lead Counsel" means: Shapiro Haber & Urmy LLP,
Edward F. Haber, 75 State Street, Boston, Massachusetts 02109, Telephone: (617)
439-3939, Gold Bennett Cera & Sidener LLP, Solomon B. Cera, 595 Market Street,
Suite 2300, San Francisco, California 94105-2835, Telephone: (415) 777-2230;
Milberg Weiss Bershad Hynes & Lerach LLP, David J. Bershad, One Pennsylvania
Plaza, New York, New York 10119, Telephone: (212) 594-5300, Wolf Popper LLP,
Robert M. Kornreich, 845 Third Avenue, New York, New York 10022, Telephone:
(212) 759-4600.
1.16 "Plaintiffs' Counsel" means counsel who have appeared for any of
the Plaintiffs in the Litigation.
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1.17 "Plan of Allocation" means a plan or formula for allocation of the
Settlement Consideration whereby the Settlement Consideration shall be
distributed to Authorized Claimants.
1.18 "Released Claims" shall collectively mean all claims (including
"Unknown Claims" as defined in P. 1.22 hereof), demands rights, liabilities and
causes of action, known or unknown, asserted or that might have been asserted,
by any Lead Plaintiff or Class Member against the Released Persons arising out
of, based upon or related to the purchase during the Class Period by any Class
member of Presstek common stock, and/or options to purchase Presstek common
stock, or the sale during the Class Period by any Class Member of Presstek put
options, and the facts, transactions, events, occurrences, acts, disclosures,
statements, omissions or failures to act which were or could have been alleged
in the Litigation based upon or arising out of the facts which have been
asserted.
1.19 "Released Persons" means each and all of the Defendants, and each
of a Defendant's past or present directors, officers, managers, employees,
partners, members, principals, agents, underwriters, insurers, co-insurers,
reinsurers, controlling shareholders, attorneys, accountants or auditors, banks
or investment banks, associates, personal or legal representatives,
predecessors, successors, parents, subsidiaries, divisions, joint ventures,
assigns, spouses, executors, administrators, heirs, related or affiliated
entities, any entity in which a Defendant has a controlling interest, any
members of their immediate families, or any trust of which any Defendant is the
settlor or which is for the benefit of any Defendant and/or member(s) of his or
her family.
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1.20 "Settlement Consideration" means shares of Presstek common stock
or cash as further described in P. 2.1 below.
1.21 "Settling Parties" means, collectively, each of the Defendants,
and the Lead Plaintiffs on behalf of themselves and the Members of the Class.
1.22 "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 Persons which, if known by him,
her or it, might have affected his, her or its settlement with and release of
the Released persons, or might have affected his, her or its decision not to
object to this settlement or not to exclude himself, herself, or itself from the
Class. With respect to any and all Released Claims, the Settling Parties
stipulate and agree that, upon the Effective Date, the Lead Plaintiffs 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 ss.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 Plaintiffs 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 and equivalent to California Civil Code ss.1542. The Lead Plaintiffs
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 each
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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, 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.
(b) THE SETTLEMENT
A. THE SETTLEMENT CONSIDERATION
2.1 The Settlement Consideration shall consist of freely tradable
common stock, $0.01 par value ("common stock" or "common shares"), of Presstek
(the "Settlement Shares"), or cash, to be calculated and provided as follows:
(a) Presstek shall issue to, or for the benefit of the Class
both (i) that number of shares of Presstek common stock which results from
dividing $11,000,000 by the Issuance Price for the month of April 2000, subject
to any required adjustment as provided in subsection (c), below, plus (ii) the
number of shares of Presstek common stock which results from dividing
$11,000,000 by the Issuance Price for the month of October 2000, subject to any
required adjustment as provided in subsection (c) below.
(b) Presstek shall deliver the Settlement Shares for the
benefit of the Class consistent with the provisions of Paragraph 5.2(c) hereof.
Presstek shall either register the shares of common stock to be delivered for
the benefit of the Class or shall
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provide its counsel's certification that the shares are exempt from registration
and are therefore freely tradable. The Settlement Shares shall also be
appropriately adjusted to account for any stock splits, stock dividends, or the
issuance of shares of Presstek that have not been authorized as of the date
hereof. As of the date hereof and until the Settlement Shares are actually
distributed, the Settlement Shares shall be treated the same as all other issued
and outstanding shares of Presstek common stock as of the date hereof, including
in the event of any merger or sale of Presstek, or sale or distribution of all
or substantially all of Presstek's assets, or other extraordinary event
affecting the capital structure of Presstek.1
(c) Notwithstanding the foregoing, within three (3) days after
the Effective Date, Presstek may elect to pay cash in lieu of Settlement Shares
and in such event, within three (3) business days of the entry of an order
authorizing distribution of the Settlement Consideration, Presstek shall cause
to be wired to an escrow account designated by Plaintiffs' Co-Lead Counsel funds
equal to the aggregate market value of the total number of common shares to be
distributed to the Class, based upon the market price of Presstek's common
shares at the close of trading on the prior trading day. Such election to pay
cash shall be made in writing to Plaintiffs' Co-Lead Counsel. There shall be no
reversion to Defendants of the Settlement Consideration once the Effective Date
occurs.
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1 If such a merger or sale or other extraordinary event occurs prior to November
2000, the calculation of the number of shares to be issued as provided in
Section 2.1(a) (ii) above shall be based on the issuance Price for the month
prior to the month in which the extraordinary event occurs. If such a merger or
sale or other extraordinary event occurs prior to May 2000, the calculation of
the number of shares to be issued as provided in Section 2.1(a) (i) and (ii)
above shall be based on the Issuance Price for the month prior to the month in
which the extraordinary event occurs.
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(d) All costs, including those of Presstek's transfer agent,
incurred in issuing and distributing the Settlement Shares shall be borne by
Presstek.
(e) In the event that there is any non-delivery by Presstek of
any of the Settlement Shares required to be delivered hereunder within ten (10)
trading days after the date provided herein for such distribution, and such
non-delivery is not cured within ten (10) trading days, then Lead Plaintiffs
shall have the option to either (i) terminate this Settlement; (ii) enter a
consent judgment for specific performance and assert a claim against Presstek
for any damages resulting from the delayed payment; or (iii) pursue a claim
against Presstek for breach of this contract, and for any other legal or
equitable remedy they have against Presstek resulting from such non performance.
B. PAYMENT OF COSTS OF NOTICE AND ADMINISTRATION
2.2 Within 10 days after preliminary approval of this Stipulation by
the district court, the Escrow Agent will establish a "Notice and Administration
Fund," and Presstek shall then make an initial deposit of $100,000 to said fund.
The Notice and Administration Fund may be used by Plaintiffs' Co-Lead Counsel to
pay costs and expenses reasonably and actually incurred in connection with
providing Notice to the Class, locating Class Members, soliciting class claims,
assisting with the filing of claims, administering and distributing the
Settlement Consideration to Authorized Claimants, and processing Proof of Claim
and Release forms. The notice and Administration Fund may be invested in an
interest bearing account and any interest earned shall be considered part of the
Notice and Administration Fund. Presstek shall be responsible for up to a total
of $250,000 in notice and administration costs and shall pay funds of up to that
amount to the Escrow Agent as said costs are incurred, and no later than seven
(7) calendar days
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after presentation of invoices therefore. To the extent the costs of Notice and
Administration exceed $250,000, such costs shall be payable out of the
Settlement Consideration as provided in P. 5.1(b), infra. The parties hereto
agree that the Settlement Consideration, if paid in cash, together with the
Notice and Administration Fund are collectively intended to be a single
Qualified Settlement Fund within the meaning of Treasury Regulation ss.1.468B-1
and that the Escrow Agent, as administrator of the Settlement Consideration and
Notice and Administration Fund within the meaning of Treasury Regulation
ss.1.468B-2(k)(3), shall be responsible for filing tax returns for the
Settlement Consideration and Notice and Administration Fund, and paying from the
Notice and Administration Fund and the Settlement Consideration, respectively,
any taxes owed with respect to income earned on the Settlement Consideration and
Notice and Administration Fund. Counsel for Defendants agree to provide promptly
to the Escrow Agent the statement described in Treasury Regulation
ss.1.468B3(e).
2.3 The Escrow Agent is authorized to execute such transactions on
behalf of the Class Members as are consistent with the terms of the Stipulation.
C. TERMINATION OF SETTLEMENT
2.4 In the event that the Stipulation is not approved, or is
terminated, canceled, or fails to become effective for any reason, the Notice
and Administration Fund, less expenses and taxes (and any expenses related to
such taxes, including but not limited to accountants' fees) actually paid or due
and owing in connection with the settlement provided for herein, shall be
refunded to Defendants as described in P. 7.4 below.
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3. NOTICE ORDER AND FINAL APPROVAL HEARING
3.1 Promptly after execution of the Stipulation, Plaintiffs' Co-Lead
Counsel shall submit the Stipulation together with its Exhibits to the Court and
shall apply for entry of an order (the "Notice Order"), substantially in the
form of Exhibit A hereto, requesting, inter alia, the preliminary approval of
the settlement set forth in the Stipulation, and approval for the mailing and
publication of a settlement notice (the "Notice"), substantially in the form of
Exhibits A-1 and A-3 hereto, which shall include the general terms of the
settlement set forth in the Stipulation, a summary of the proposed Plan of
Allocation, the general terms of the Fee and Expense Application as defined in
P. 6.1 below and the date of the Final Approval Hearing as defined below.
3.2 Plaintiffs' Co-Lead Counsel shall request that after Notice is
given, the court hold a hearing (the "Final Approval Hearing") and approve the
settlement of the Litigation as set forth herein. At or after the Final Approval
Hearing, Plaintiffs' Co-Lead Counsel also will request that the Court approve
the proposed Plan of Allocation and the Fee and Expense Application.
4. RELEASES
4.1 Upon the Effective Date, as defined in P. 1.8 and P. 7.1, the Lead
Plaintiffs and each of the Class Members shall be deemed to have, and by
operation of the Judgment shall have, fully, finally and forever released,
relinquished and discharged all Released Claims and any and all claims arising
out of, relating to, or in connection with the Settlement or resolution of the
actions against the Released Persons, whether or not such Class Member executes
and delivers the Proof of Claim and Release.
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4.2 The Proof of Claim and Release to be executed by Class Members
shall release all Released Claims against the Released Persons and shall be
substantially in the form contained in Exhibit A-2 hereto.
4.3 Upon the effective date, as defined in P. 1.8 and P. 7.1, each of
the Released Persons shall 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 Class Members and Plaintiffs' Counsel from all claims
(including "Unknown Claims"), arising out of, relating to, or in connection with
the institution, prosecution, assertion, settlement or resolution of the
Litigation or the Released Claims.
5. ADMINISTRATION AND CALCULATIONS OF CLAIMS, FINAL AWARDS AND
SUPERVISION AND DISTRIBUTION OF SETTLEMENT CONSIDERATION
5.1 Plaintiffs' Co-Lead Counsel, or their authorized agents, acting on
behalf of the Class, and subject to such supervision and direction of the Court
as may be necessary or as circumstances may require, shall administer and
calculate the claims submitted by Class Members and shall oversee distribution
of the Net Settlement Consideration (defined below) to Authorized Claimants. The
Settlement Consideration shall be applied as follows:
(a) To pay to Plaintiffs' Counsel attorneys' fees, expenses
and costs (the "Fee and Expense Award"), if and to the extent allowed by the
Court; and
(b) To pay any costs of notice and administration of the
Settlement in excess of $250,000; and
(c) To distribute the balance of the Settlement Consideration
(the "Net Settlement Consideration") to Authorized Claimants as allowed by the
Stipulation, the Plan of Allocation, or the Court; and
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(d) If there is a balance left in the Settlement Consideration
after the Claims Administrator has made reasonable and diligent efforts to
distribute the Settlement Consideration to Authorized Claimants, such balance
shall be contributed to non-sectarian, not-for-profit organizations designated
by Plaintiffs' Co-Lead Counsel which are not affiliated with Plaintiffs' Co-Lead
Counsel.
5.2 After the Effective Date, and in accordance with the terms of the
Stipulation, the Plan of Allocation approved by the Court, or such further
approval and further order(s) of the Court as may be necessary or as
circumstances may require, the Net Settlement Consideration shall be distributed
to 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 to the Claims Administrator a
completed Proof of Claim and Release, substantially in the form of Exhibit A-2
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 Claimants.
(b) Except as otherwise ordered by the Court, all 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, or otherwise
allowed, shall be forever barred from receiving any Settlement Consideration 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
releases contained herein, and the Judgment.
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(c) Following the Effective Date and the entry of an order by
the Court authorizing distribution of the Settlement Consideration to Authorized
Claimants, the Settlement Consideration shall be distributed to the Class. If
the Settlement Consideration is in the form of Settlement Shares, the Claims
Administrator shall provide Presstek's transfer agent with a list identifying
each Class Member who is entitled to receive Settlement Shares and the number of
shares to be issued to each such person, such list to include the name, address
and taxpayer identification number for each recipient. Presstek shall direct its
stock transfer agent to issue and distribute the Settlement Shares within ten
(10) business days of receipt of the list of the persons and in the amount shown
on said list. To the extent any fractional shares are required to be issued and
distributed, fractional shares of .5 or greater shall be deemed to represent
entitlement to 1 share, and fractional shares of less than .5 shall not be
entitled to any shares.
5.3 The Defendants shall have no responsibility for, interest in, or
liability whatsoever with respect to the determination, administration or
calculation of claims, except as specified in paragraph 5.2(c) above.
5.4 No Person shall have any claim against Plaintiffs' Co-Lead Counsel
or any claims administrator, or other agent designated by Plaintiffs' Co-Lead
Counsel, or Defendants or their counsel based on the distributions made
substantially in accordance with the Stipulation and the Settlement Contained
herein, the Plan of Allocation approved by the Court, or further orders of the
Court.
5.5 It is understood and agreed by the Settling Parties that any
proposed Plan of Allocation of the Settlement Consideration including, but not
limited to, any
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adjustments to an Authorized Claimants' claim set forth therein, is not a part
of the Stipulation and is 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 Plaintiff 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. The Defendants shall have no responsibility or
liability with respect to any Plan of Allocation ultimately approved by the
Court.
6. PLAINTIFFS' COUNSEL'S ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES
6.1 Plaintiffs' Co-Lead Counsel, on behalf of Plaintiffs' Counsel, may
submit an application or applications (the "Fee and Expense Application") for:
(a) an award of attorneys' fees of up to one-third of the Settlement
Consideration, to be paid in Settlement Shares, or cash of the Defendants elect
to pay the Settlement Consideration in cash, plus (b) Settlement Shares, or cash
if Defendants elect to pay the Settlement Consideration in cash, equivalent in
value to the expenses and costs incurred in connection with prosecuting the
Litigation. Defendants agree not to object to, or otherwise oppose, any such Fee
and Expense Application submitted by Plaintiffs' Co-Lead Counsel. Plaintiffs'
Co-Lead Counsel reserve the right to make additional applications for fees and
expenses incurred.
6.2 The attorneys' fees, expenses and costs, including the fees of
experts and consultants, as awarded by the Court, shall be paid to Plaintiffs'
Co-Lead Counsel from the Settlement Shares, or in cash if Defendants elect to
pay the Settlement Consideration in cash upon entry of an order by the Court
authorizing distribution of the Settlement
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Consideration to Authorized Claimants. Plaintiffs' Co-Lead Counsel shall have
responsibility for advising Presstek's transfer agent of the names, addresses
and taxpayer identification numbers and amounts of Settlement Shares or cash, as
the case may be, to be paid to Plaintiffs' Counsel. Plaintiffs' Co-Lead Counsel
shall have sole responsibility for allocating the attorneys' fees amongst
Plaintiffs' Counsel.
6.3 The procedure for and the allowance or disallowance by the Court of
any applications by Plaintiffs' Counsel for attorneys' fees, costs and expenses
to be paid out of the Settlement Consideration, 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 any appeal from any order
relating thereto or reversal or modification thereof, shall not operate to
terminate or cancel the Stipulation, or affect or delay the finality of the
Judgment approving the Stipulation and Settlement of the Litigation set forth
herein.
6.4 The Released Persons shall have no responsibility for, and no
liability whatsoever with respect to, any payment made to Plaintiffs' Counsel
from the Settlement Consideration.
6.5 The Released Persons shall have no responsibility for, no interest
in, and no liability whatsoever with respect to the allocation among Plaintiffs'
Counsel, and/or any other Person who may assert some claim thereto, of any Fee
and Expense Award that the Court may make in the Litigation.
6.6 Plaintiffs' Co-Lead Counsel may apply to the Court for an incentive
award payable in Settlement Shares, or in cash if Defendants elect to pay the
Settlement
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Consideration in cash, to the Lead Plaintiffs, as permitted by 15
U.S.C.ss.78u-4(a)(4).
Defendants agree not to oppose any such application.
7. Conditions Of Settlement, Effect Of Disapproval, Cancellation Or
Termination
7.1 The Effective Date of the Stipulation shall be conditioned on the
occurrence of all of the following events:
(a) The Court has entered the Notice Order, as required by P.
3, above.;
(b) The Court has entered the Judgment substantially in the
form of Exhibit B; and
(c) The Judgment has become Final, as defined in P. 1.10,
above. 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 or expenses, shall not in any way delay or preclude the
Judgment from becoming Final.
7.2 Upon the occurrence of all of the events referenced in P. 7.1
above, any and all remaining interest or right of Defendants in or to the
Settlement Consideration, if any, shall be absolutely and forever extinguished.
7.3 If all of the conditions specified in P. 7.1 are not met, then the
Stipulation shall be canceled and terminated subject to P. 7.5 unless
Plaintiffs' Co-Lead Counsel and counsel for Defendants mutually agree in writing
to proceed with the Stipulation.
7.4 Unless otherwise ordered by the Court, in the event the Stipulation
shall terminate, or be canceled, or shall not become effective for any reason,
within five (5) business days after written notification of such event is
provided by counsel for Defendants or Plaintiffs' Co-Lead Counsel, the Notice
and Administration Fund
<PAGE>
(including accrued interest), less expenses, taxes (and any expenses related to
such taxes, including but not limited to accountants' fees), and any costs which
have been paid or incurred pursuant to P. P. 2.2 or 2.4 hereto, shall be
refunded by the Escrow Agent pursuant to written instructions from counsel for
Presstek.
7.5 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, the Settling Parties shall be restored
to their respective positions in the Litigation as of January 14, 2000. In such
event, the terms and provisions of the Stipulation, shall have no further force
and effect with respect to the Settling Parties and shall not be used in the
Litigation or in any other proceeding for any purpose, and any Judgment or order
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 Lead Plaintiffs or any of their counsel shall constitute
grounds for cancellation or termination of the Stipulation.
7.6 If the Effective Date does not occur, or if the Stipulation is
terminated pursuant to its terms, neither the Lead Plaintiffs nor any of their
counsel shall have any obligation to repay any amounts actually and properly
disbursed from the Notice and Administration Fund. In addition, any expenses
already incurred and properly chargeable to the Notice and Administration fund
pursuant to P. 2.2 hereof at the time of such termination or cancellation but
which have not been paid, shall be paid by the Escrow
<PAGE>
Agent in accordance with the terms of the Stipulation prior to the balance being
refunded in accordance with P. 7.4 above.
7.7 Each Defendant warrants as to himself, herself or itself that, as
to the payments made by or on behalf of him, her or it, at the time of such
payment that the Defendant made or caused to be made pursuant to Section 2
above, he, she or it was not insolvent nor did nor will the payment required to
be made by or on behalf of him, her or it render such Defendant insolvent within
the meaning of and/or for the purposes of the United States Bankruptcy Code,
including ss.ss.101 and 547 thereof. This warranty is made by each such
Defendant and not by such Defendant's counsel.
7.8 If a case is commenced in respect of any Defendant 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 entry of a final order of a
court of competent jurisdiction determining the transfer of the Settlement
Consideration to or for the benefit of the Class, or the transfer of money to
the Escrow Agent or any portion thereof by or on behalf of such Defendant to be
a preference, voidable transfer, fraudulent transfer or similar transaction and
any portion thereof is required to be returned, and such amount in Settlement
Shares and/or cash is not promptly deposited with the Escrow Agent by other
Settling Defendants, then, at the election of Plaintiffs' Co-Lead Counsel, the
parties shall jointly move the court to vacate and set aside the releases given
and Judgment entered in favor of the Settling Defendants pursuant to this
Settlement Agreement, which releases and Judgment shall be null and void, and
the Parties shall be restored to their respective positions in the litigation as
of the date a day prior to the date of this Stipulation and any
<PAGE>
cash amounts in the Notice and Administration Fund shall be returned as provided
in paragraph 7.4.
8. MISCELLANEOUS PROVISIONS
8.1 The Settling Parties (a) acknowledge that it is their intent to
consummate this agreement; and (b) agree to cooperate to the extent reasonably
necessary to effectuate and implement all terms and conditions of the
Stipulation and to exercise their best efforts to accomplish the foregoing terms
and conditions of the Stipulation.
8.2 The parties intend this Stipulation to be a final and complete
resolution of all disputes between them with respect to the Litigation. The
Settlement compromises claims which are contested and shall not be deemed an
admission by any Settling Party as to the merits of any claim or defense. While
retaining their right to deny that the claims advanced in the Litigation were
meritorious, Defendants in any statement made to any media representative
(whether or not for attribution) will not deny that the Litigation was filed in
good faith and is being settled voluntarily after consultation with competent
legal counsel. The final judgment will contain a statement that during the
course of the Litigation, the parties and their respective counsel at all times
complied with the requirements of Fed. R. Civ. P. 11. The Settling Parties agree
that the amounts to be paid as Settlement Consideration and the other terms of
the Settlement were negotiated in good faith by the Settling Parties, and
reflect a settlement that was reached voluntarily after consultation with
competent legal counsel and the assistance of a retired Federal District Court
Judge acting as a mediator. The Settling Parties reserve their right to rebut,
in a manner that such party determines to be appropriate, any contention made in
any
<PAGE>
public forum that the Litigation was brought or defended in bad faith or
without a reasonable basis.
8.3 This Stipulation, whether or not consummated, and any proceedings
taken pursuant to it:
(a) Shall not be offered or received against the Defendants as
evidence of or construed or deemed to be evidence of any presumption,
concession, or admission by any of the Defendants of the truth of any fact
alleged by Lead Plaintiffs or the validity of any claim that had been or could
have been asserted in the Litigation, or the deficiency of any defense that has
been or could have been asserted in the Litigation, or of any liability,
negligence, fault, or wrongdoing of Defendants.
(b) shall not be offered or received against the Defendants as
evidence of a presumption, concession or admission of any fault,
misrepresentation or omission with respect to any statement or written document
approved or made by any Defendant, or against the Lead Plaintiffs and the Class
as evidence of any infirmity in the claims of Lead Plaintiffs and the Class;
(c) shall not be offered or received against the Defendants 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 as against
any of the parties to this Stipulation, in any other civil, criminal or
administrative action or proceeding, other than such proceedings as may be
necessary to effectuate the provisions of this Stipulation; provided, however,
that if this Stipulation is approved by the Court, Defendants may refer to it to
effectuate the liability protection granted them hereunder;
<PAGE>
(d) shall not be construed against the Defendants or the Lead
Plaintiffs and the Class as an admission or concession that the consideration to
be given hereunder represents the amount which could be or would have been
recovered after trial;
(e) shall not be construed as or received in evidence as an
admission, concession or presumption against Lead Plaintiffs or the Class or any
of them that any of their claims are without merit or that damages recoverable
under the Complaint would not have exceeded the value of the Settlement
Consideration.
8.4 All agreements made and orders entered during the course of the
Litigation relating to the confidentiality of information shall survive this
Stipulation.
8.5 All of the Exhibits to the Stipulation are material and integral
parts hereof and are fully incorporated herein by this reference.
8.6 The Stipulation may be amended or modified only by a written
instrument signed by or on behalf of all Settling Parties or their respective
successors-in-interest.
8.7 The Stipulation and the Exhibits attached hereto constitute the
entire agreement between Lead Plaintiffs and Defendants 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.
8.8 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.
8.9 The 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
<PAGE>
instrument. A complete set of original executed counterparts shall be filed with
the Court.
8.10 The Stipulation shall be binding upon, and inure to the benefit
of, the successors and assigns of the parties hereto.
8.11 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 the purposes of implementing and enforcing
the settlement embodied in the Stipulation.
8.12 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 New York, 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 New York without giving effect to
that State's choice of law principles.
8.13 This Stipulation shall not be construed more strictly against one
party than another merely by virtue of the fact that it, or any part of it, may
have been prepared by counsel for one of the parties, it being recognized that
it is the result of arm's-length negotiations between the parties and all
parties have contributed substantially and materially to the preparation of this
Stipulation.
<PAGE>
Dated: March 27, 2000 SHAPIRO HABER & URMY LLP
By: /s/ Edward F. Haber
----------------------------------------
Edward F. Haber
75 State Street
Boston, MA 02109
Telephone: (617) 439-3939
Dated: March 23, 2000 GOLD BENNETT CERA & SIDENER LLP
By: /s/ Solomon B. Cera
----------------------------------------
Solomon B. Cera
595 Market Street, Suite 2300
San Francisco, CA 94105-2835
Telephone: (415) 777-2230
Dated: March 27, 2000 MILBERG WEISS BERSHAD HYNES & LERACH LLP
By: /s/ David J. Bershad
----------------------------------------
David J. Bershad
One Pennsylvania Plaza
New York, NY 10019
Telephone: (212) 594-5300
Dated: March 24, 2000 WOLF POPPER LLP
By: /s/ Robert M. Kornreich
----------------------------------------
Robert M. Kornreich
845 Third Avenue
New York, NY 10022
Telephone: (212) 759-4600
Plaintiffs' Co-Lead Counsel
<PAGE>
Dated: March 24, 2000 DEVINE, MILLIMET & BRANCH
By: /s/ George R. Moore
----------------------------------------
George R. Moore
111 Amherst Street
P.O. Box 719
Manchester, NH 03105
Telephone: (603) 669-1000
Attorneys for Defendants
