SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Sapiens International Corporation N.V.
(Name of issuer)
Common Stock par value 1.00 Dutch Guilder
(title of class of securities)
N7716A 10 2
(CUSIP number)
Steven B. King, Esquire
Mesirov Gelman Jaffe Cramer & Jamieson
1735 Market Street
Philadelphia, PA 19103
215-994-1037
(Name, address and telephone number of persons authorized
to receive notices and communications)
February 7, 1997
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box
[ ].
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
- ----------------------------
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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SCHEDULE 13D
CUSIP NO. N7716A 10 2 13D
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Sapiens Securities Litigation Settlement Fund
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS
SC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
[ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
7 SOLE VOTING POWER
1,280,765
NUMBER OF SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING 0
PERSON WITH
9 SOLE DISPOSITIVE POWER
1,280,765
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,280,765
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.3%
14 TYPE OF REPORTING PERSON 00
(2)
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Item 1. Security and Issuer
This statement on Schedule 13D relates to the Common Stock, par value 1.00
Dutch Guilder (the "Shares") of Sapiens International Corporation N.V., a
Netherlands Antilles corporation, De Ruyterkade 58A, Curacao, Netherlands
Antilles.
Item 2. Identity and Background
(a) The person filing this statement is the Sapiens Securities Litigation
Settlement Fund (the "Settlement Fund"), which is a fund created in connection
with the partial settlement of In Re: Sapiens Securities Litigation, Master File
No. 94 Civ. 3315 (RPP) (the "Litigation"). The Settlement Fund is for the
benefit of a class of persons consisting of purchasers of the Shares during the
class period of March 5, 1993 - January 5, 1995.
(b) The principal business address of the Settlement Fund is c/o Todd
Collins, Esquire, Berger & Montague, P.C., 1622 Locust St., Philadelphia, PA
19103-6365.
(c) Not Applicable
(d) The Settlement Fund has not, during the last five years, been convicted
in a criminal proceeding (excluding traffic violations and similar
misdemeanors).
(e) The Settlement Fund has not, during the last five years, been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which the Settlement Fund was subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, Federal or state securities laws or finding any
violation with respect to such laws.
(f) Not Applicable
Item 3. Source and Amount of Funds or Other Consideration
The Issuer issued to the Settlement Fund, in connection with the partial
settlement of the Litigation, 554,017 Shares as of December 26, 1996. In
addition, in connection with such partial settlement, the Issuer is obligated to
issue to the Shareholder an additional 134,155 such Shares. In addition, in
connection with such partial settlement, the Issuer issued to the Shareholder as
of December 26, 1996, 350,000 shares of Series B Convertible Preferred Stock of
the Issuer, which may be converted, at the option of the Settlement Fund, into
592,593 Shares. The Settlement Fund received such Convertible Preferred Stock on
February 7, 1996.
(3)
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Item 4. Purpose of Transaction
The purpose of the transaction was to effectuate the partial settlement of
the Litigation. The Settlement Fund may, but is not required to, sell any or all
of the Shares prior to disbursement of the Shares (or proceeds from their sale).
Other than as set forth above, the Shareholder currently has no plans or
proposals which relate to or would result in: (a) the acquisition by any person
of additional securities of the Issuer, or the disposition of securities of the
Issuer; (b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its subsidiaries;
(c) a sale or transfer of a material amount of assets of the Issuer or any of
its subsidiaries; (d) any change in the present board of directors or management
of the Issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the Board; (e) any material
change in the present capitalization or dividend policy of the Issuer; (f) any
other material change in the Issuer's business or corporate structure; (g) any
changes in the Issuer's charter, bylaws or instruments corresponding thereto or
other actions which may impede the acquisition of control of the Issuer by any
person; (h) a class of securities of the Issuer to be delisted from a national
securities exchange or to cease to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities association; (i) a class of
equity securities of the Issuer becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Act; or (j) any action similar
to those enumerated above.
Item 5. Interest in Securities of the Issuer
(a) The Settlement Fund is the beneficial owner of the following Shares:
Number of Shares Percent of Class* Description
554,017 4.0% Shares as of
December 26, 1996
134,155 1.0% Additional Shares
592,593 4.3% Obtainable on Conversion
------- --- of Preferred Stock at
any time at option of
Shareholder
1,280,765 9.3%
========= ====
*Calculated pursuant to Rule 13d-3(d) under the Securities Exchange Act of 1934,
as amended.
(4)
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(b) The Settlement Fund has the sole power to vote,
direct the vote of, dispose of, and direct the disposition of the
Shares.
(c) No transactions in the Shares were effected by the
Shareholder during the past 60 days except as set forth in this Statement on
Schedule 13D.
(d) Not Applicable
Item 6. Contracts, Agreements, Understandings or Relationships with Respect to
Securities of the Issuer
None
Item 7. Material to be Filed as Exhibits
1. Settlement Agreement
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
SAPIENS SECURITIES LITIGATION
SETTLEMENT FUND
Dated: March 19, 1997 By:/s/ Todd S.Collins
Todd S. Collins, Esquire, Counsel
(5)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
- ------------------------------------X
IN RE SAPIENS SECURITIES :
LITIGATION : Master File No.
- ------------------------------------: 94 Civ. 3315 (RPP)
THIS DOCUMENT RELATES TO: :
ALL ACTIONS :
- ------------------------------------x
STIPULATION OF SETTLEMENT
This Stipulation of Settlement (the "Stipulation"), dated as
of June 26, 1996, is made and entered into between the following parties to the
above-captioned actions (the "Litigation"): (i) plaintiffs (on behalf of
themselves and each of the Settlement Class Members), and (ii) defendant Sapiens
International Corporation, N.V. ("Sapiens" or the "Company") and defendants Ron
Zuckerman ("Zuckerman") and Shaul Shani ("Shani") (collectively, the "Settling
Parties"). (Collectively, defendants Sapiens, Zuckerman and Shani are sometimes
referred to as the "Settling Defendants".) The Stipulation is intended by the
Settling Parties to resolve, discharge and settle the Released Claims (as
defined herein) fully, finally and forever as to the Settling Defendants, upon
and subject to the terms and conditions hereof (the "Settlement"), including the
Settling Defendants' payment of eight million five hundred thousand dollars
($8,500,000) in cash and securities.
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WHEREAS, in 1994, the following actions were filed in the
United States District Court for the Southern District of New York (the "Court")
as class actions on behalf of persons who purchased common stock of Sapiens:
1. Radetich v. Sapiens, et al., 94-CV-3315 (RPP).
2. Adler v. Sapiens, et al., 94-CV-3972 (SS).
3. Hoane v. Sapiens, et al., 94-CV-4060 (RPP).
4. Sulzer v. Sapiens, et al., 94-CV-4072 (RPP);
WHEREAS, on August 15, 1994, the Court ordered consolidation
of the actions listed above and any other related actions. (The consolidated
actions are referred to herein as the "Litigation.");
WHEREAS, plaintiffs filed an Amended Complaint in early 1995
(the "Complaint"). The Complaint asserts that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule
10b-5 promulgated thereunder. As a result of defendants' purported violations,
the purchasers of Sapiens common stock during the class period (the "Class
Period") of March 5, 1993 through January 5, 1995 (the "Class") allegedly
suffered damages. The Complaint names, as defendants, Sapiens; Zuckerman and
Shani, two of Sapiens' founders and, during the Class Period, two of Sapiens'
directors, principal officers, and principal stockholders; R. David Bursiek
("Bursiek"), President of Sapiens' American subsidiary during the Class Period
and Sapiens' Chief Executive Officer from April 1994; and John R.C. Porter
("Porter"), a director and substantial stockholder of Sapiens
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during a portion of the Class Period and the alleged controlling person of
several companies with which Sapiens entered into allegedly "sham" transactions
during the Class Period. In a separate complaint (the "Deloitte Complaint"),
plaintiffs sued Deloitte & Touche, LLP ("Deloitte"), Sapiens' independent
auditor during the Class Period;
WHEREAS, the Complaint and the Deloitte Complaint allege that
the Settling Defendants, Bursiek and Porter issued, and Deloitte certified,
false financial statements for 1992 and 1993 and that the Settling Defendants,
Bursiek and Porter also issued false financial statements for the first two
quarters of 1994. In their answer to the Complaint, the Settling Defendants
denied material allegations in the Complaint and asserted various affirmative
defenses;
WHEREAS, by stipulation, plaintiffs dismissed without
prejudice their claims against Bursiek and Deloitte. The Litigation continues
between plaintiffs and Porter; and
WHEREAS, plaintiffs' counsel have conducted extensive
discovery and investigation during the prosecution of the Litigation. This
discovery and investigation has included, inter alia: (i) interviews with third
parties and depositions of key personnel at Sapiens and Deloitte; (ii)
propounding of discovery requests and analysis of thousands of documents
produced by Sapiens, Deloitte and third parties; (iii) consultation with experts
in accounting and damages; (iv) review of Sapiens' public filings, annual
reports and other public statements; (v) research
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of the applicable law with respect to the claims asserted in the Complaint and
defendants' potential defenses; and (vi) engaging in motion practice, including
a motion to dismiss an earlier complaint and motions related to discovery and
class certification;
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED between
plaintiffs (for themselves and the Settlement Class Members) and the Settling
Defendants that, subject to the approval of the Court, the Litigation and all
claims that have been or could have been asserted in the Litigation against the
Settling Defendants shall be finally and fully compromised and settled, and the
Litigation shall be dismissed on the merits and with prejudice, as to all
Settling Defendants, 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 "Adjustment Date" means the later of December 1, 1996 or
the thirtieth (30th) calendar day after the Effective Date.
1.2 "Adjustment Price" means the average closing price of
Sapiens Common Stock on the NASDAQ National Market System for the 20 consecutive
trading days immediately prior to and not including the Adjustment Date.
1.3 "Adjustment Value" means the sum of (a) the proceeds of
sales of Settlement Common Shares at or more than $2.71 per share; (b) the
product of the Adjustment Price times the number of Settlement Common Shares
unsold as of the Adjustment Date; and (c)
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the product of $2.71 times the number of Settlement Common Shares sold at a
price less than $2.71 per share.
1.4 "Authorized Claimant" means any Settlement Class Member
whose claim for recovery is allowed pursuant to the terms of the Stipulation.
1.5 "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.
1.6 "Claims Administrator" means an agent or agents of
Plaintiffs' Settlement Counsel who, at the direction of such counsel, may
perform any and all responsibilities of Plaintiffs' Settlement Counsel relating
to notice and/or settlement administration under this Stipulation.
1.7 "Class Period" means the period from March 5, 1993 through
and including January 5, 1995.
1.8 "Effective Date" means the first date by which all of the
events and conditions specified in P. 10.1 of the Stipulation have been met and
have occurred.
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
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substantially in the form of Exhibit B attached hereto, i.e., thirty (30) days
after entry of the Judgment. An appeal or petition for a writ of certiorari
pertaining solely to any application for attorney's fees, costs or expenses,
pertaining solely to the Plan of Allocation, or pertaining solely to any
application for incentive awards to plaintiffs, shall not in any way delay or
preclude the Judgment from becoming Final.
1.10 "Judgment" means the Judgment to be rendered by the
Court, substantially in the form attached as Exhibit B.
1.11 "Issue Price" means $3.61 per share of Settlement Common
Shares, which represents the average closing price of Sapiens Common Stock on
the NASDAQ National Market System for the 20 consecutive trading days
immediately prior to and not including May 15, 1996.
1.12 "Non-Settling Persons" means Porter and any other Person,
apart from the Released Persons, who may be liable in whole or in part for the
damages alleged in the Litigation by plaintiffs and the Class.
1.13 "Notice and Administration Fund" means the sum of
one hundred thousand dollars ($100,000), part of the Settlement
Cash Component, as described in P. 4.
1.14 "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,
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successors, representatives, or assignees.
1.15 "Plaintiffs" means A. Joseph Hoane, Jack Adler,
Stephen L. Sulzer, Donald A. Dominic, Thomas Colacino, Lawrence
Fund L.P., and their legal representatives, heirs, successors and
assigns.
1.16 "Plaintiffs' Settlement Counsel" means Berger & Montague,
P.C., lead counsel for plaintiffs in the Litigation.
1.17 "Plan of Allocation" means a plan or formula of
allocation of the Settlement Fund, which plan or formula is set forth in the
Notice of Pendency and Partial Settlement of Class Actions (attached hereto as
Exhibit A-1), whereby the Settlement Fund shall be distributed to Authorized
Claimants after payment of expenses of notice and administration of the
Settlement, after payment of such attorney's fees, costs, expenses and interest
as may be approved by the Court, and after payment of such plaintiffs' incentive
awards as may be approved by the Court.
1.18 "Preliminary Order" means the Order described in P.
5 and substantially in the form of Exhibit A.
1.19 "Released Claims" means and includes any and all claims
or causes of any nature or description that have been asserted by plaintiffs or
the Settlement Class Members, or any of them, against the Released Persons, as
defined below (expressly excluding Porter), in the Litigation, based upon or
related to the purchase of Sapiens Common Stock by plaintiffs or Settlement
Class Members during the Class Period and the facts, transactions, events,
occurrences, acts or omissions that were or could have been
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alleged in the Litigation.
1.20 "Released Persons" means the Settling Defendants, their
current and former officers, directors (excluding Porter), employees, attorneys,
auditors, independent accountants, insurers, predecessors, successors, parent
corporations, subsidiaries and related or affiliated entities, parents, spouses,
heirs, assigns, and personal or legal representatives past or present (expressly
excluding Porter).
1.21 "Settlement Cash Component" means the sum of three
million dollars ($3,000,000), plus interest on two million nine hundred thousand
dollars ($2,900,000) of said amount. Such interest shall accrue at the rate of
4.98% per annum, beginning as of the date of entry of the Preliminary Order.
1.22 "Settlement Common Shares" means five hundred fifty- four
thousand seventeen (554,017) shares of Sapiens Common Stock, plus such
additional shares as may be issued on the Adjustment Date, having a value in the
aggregate of $2,000,000.
1.23 "Settlement Preferred Shares" means three hundred fifty
thousand (350,000) shares of a new class of Sapiens preferred stock, having a
principal value of $10 per share or $3,500,000 in the aggregate, and having the
following terms:
a) Cumulative Dividend: Payable semi-annually at
an annual rate of 10%; payable in cash or Sapiens Common Stock, at the option of
the Company. If the dividend is paid in Sapiens Common Stock, such common stock
will be valued at the average closing price of Sapiens Common Stock on the
NASDAQ National Market
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System for the twenty (20) consecutive trading days immediately preceding and
not including the Dividend Date.
b) Redemption: The Settlement Preferred Shares
will be redeemed for $3,500,000 in the aggregate on the second anniversary of
the Effective Date (the "Redemption Date"), unless Conversion or Forced
Conversion, as described below, occurs prior to the Redemption Date. The
Settlement Preferred Shares may be redeemed in cash or Sapiens Common Stock, at
the option of the Company. If the Settlement Preferred Shares are redeemed in
Sapiens Common Stock, such common stock will be valued at the average closing
price for Sapiens Common Stock on the NASDAQ National Market System for the
twenty (20) consecutive trading days immediately preceding and not including the
Redemption Date.
c) Conversion: The holders of the Settlement
Preferred Shares will have the right to convert their holdings into Sapiens
Common Stock. The number of shares of Sapiens Common Stock to be issued upon
conversion will be equal to the principal amount of Settlement Preferred Shares
to be converted divided by $6.50 (the "Conversion Ratio").
d) Conversion Adjustment: In the event the
Adjustment Price is less than $3.50 per share, then on the Adjustment Date the
conversion price shall be reduced to the sum of the Adjustment Price plus $3.00.
e) Forced Conversion: If at any time the price of
Sapiens Common Stock trades on the NASDAQ National Market System at or above
$9.00 for 20 consecutive trading days, the Company shall
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have the right to force the holders of the Settlement Preferred Shares to
convert their holdings into Sapiens Common Stock, using the Conversion Ratio.
f) Liquidation Value of Preferred Stock: The
Settlement Preferred Shares will have a liquidation value equal to the Principal
Amount. In the event of any liquidation, dissolution or winding up of the
Company, the holders of the Settlement Preferred Shares shall be entitled to
receive an amount in cash equal to the aggregate liquidation value of their
Settlement Preferred Shares plus all accrued and unpaid dividends thereon.
g) Ranking: The Settlement Preferred Shares will
be junior, with respect to any payments, dividends, distributions, or
preferences, to the Company's Senior Notes due December 31, 1999; the Company's
Subordinated Notes due September 20, 2003; the Company's Cumulative Convertible
Preferred Stock redeemable September 20, 2002; and other outstanding
indebtedness as set forth in Exhibit C. The Company shall not issue preferred
stock ranking senior to or pari passu with the Settlement Preferred Shares
without the approval of the holders of at least two-thirds of the issued and
outstanding Settlement Preferred Shares, voting separately as a class. The
Settlement Preferred Shares will be senior to Sapiens Common Stock with respect
to any payments, dividends, distributions or preferences.
h) Anti-dilution Provisions: The terms of the
Settlement Preferred Shares will contain customary anti-dilution
provisions. Appropriate adjustments will be made to the Conversion
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Ratio to account for stock splits, stock dividends or reclassification.
i) Registration: The Settlement Preferred Shares
shall be exempt from registration pursuant to Section 3(a)(10) of the Securities
Act of 1933. All Sapiens Common Stock issued with respect to the Settlement
Preferred Shares (such as for dividends, conversion, forced conversion, and/or
redemption) shall be exempt from registration and fully tradeable under federal
and all state laws.
1.24 "Settlement Class" means all persons (except defendants;
directors and officers of the Company during the Class Period ["Directors" and
"Officers"]; members of the immediate family of each individual defendant, each
Director, and each Officer; any entity in which any defendant, Director or
Officer has a controlling interest, and the legal representatives, heirs,
successors and assigns of any of them) who purchased Sapiens common stock during
the Class Period, excluding those persons who timely and validly request
exclusion from the Class pursuant to the "Notice of Pendency and Partial
Settlement of Class Action" in substantially the form of Exhibit A-1 attached
hereto.
1.25 "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. 1.24.
1.26 "Settlement Fund" means the Settlement Cash
Consideration, the Settlement Common Shares, and the Settlement
Preferred Shares.
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1.27 "Sapiens Common Stock" means each and all of the
shares of common stock of Sapiens issued at any time.
2. The Settlement
2.1 After submitting this Stipulation to the Court, the
Settling Parties shall each request: (a) that the Court enter the Preliminary
Order as described in P. 5 and attached hereto as Exhibit A; and (b) that the
Court approve the Settlement and enter the Final Judgment, substantially in the
form attached hereto as Exhibit B.
2.2 On the Effective Date, the Settling Defendants will wire
the Settlement Cash Component (less the Notice and Administration Fund), and
will deliver the Settlement Common Shares and the Settlement Preferred Shares,
to the Claims Administrator. In no event shall the total amount to be paid by
the Settling Defendants under this Settlement exceed $8.5 million, plus interest
on $2.9 million as provided in paragraph 1.21 of this Stipulation.
2.3 In the event that, as of the Adjustment Date, the
Adjustment Value of the Settlement Common Shares is less than two million
dollars ($2,000,000), then on the Adjustment Date defendants shall issue for the
benefit of the Class additional shares of Sapiens Common Stock pursuant to the
following formula:
Number of Additional
Settlement Common Shares = $2,000,000 - Adjustment Value
Adjustment Price
2.4 All Settlement Common Shares, including additional
Settlement Common Shares, shall be exempt from registration and fully tradeable
under federal and all state laws.
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2.5 The following trading restrictions and reporting
requirements shall apply to sales of Settlement Common Shares through and
including the Adjustment Date:
a) 7,500 Common Shares actually sold in the
aggregate, per trading day, for sales at or below the Issue Price.
b) 50,000 Common Shares actually sold in the
aggregate, per trading day, for sales above the Issue Price.
c) These volume limitations, in (a) and (b) above,
shall apply to privately-negotiated sales as well as to open market sales,
provided that the Settling Defendants may consent to a request by Plaintiffs'
Settlement Counsel for a privately- negotiated sale or sales involving shares in
excess of these volume limitations, which consent shall not be unreasonably
withheld.
d) Prior to the Adjustment Date, there shall be no
orders placed for the sale of Common Shares at a price below the market bid
price of Sapiens common stock.
e) There shall be no sales of Settlement Common
Shares during the twenty (20) consecutive trading days immediately prior to and
not including the Adjustment Date.
f) Counsel for plaintiffs shall provide bi-monthly
trading reports (the "Bi-Monthly Reports") to counsel for Sapiens itemizing the
daily volume and sale prices of Common Shares sold during each bi-monthly
reporting period. Counsel for plaintiffs shall not be required to prepare a
Bi-Monthly Report for any reporting period in which the aggregate number of
Common Shares sold at or below the Issue Price is 37,500 or fewer shares, and in
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which the aggregate number of Common Shares sold above the Issue Price is
250,000 or fewer shares.
2.6 Each Person making a contribution to the Settlement Fund
warrants that, at the time of its payment(s), it was not insolvent nor did or
will the payment(s) required to be made by or on behalf of it render it
insolvent within the meaning of and/or for the purposes of Bankruptcy Code
ss.547. This warranty is made by each such Person and not by such Person's
counsel.
2.7 Plaintiffs' Settlement Counsel shall cause the Settlement
Cash Component (less the Class Notice and Administration Fund) to be invested
and reinvested 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.
2.8 Subject to further order and direction by the Court,
Plaintiffs' Settlement Counsel are authorized to execute such transactions on
behalf of the Settlement Class Members as are consistent with the terms of the
Stipulation.
2.9 The Settlement Fund 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 the Settlement Fund shall be paid or distributed
pursuant to the Stipulation and/or Order(s) of the Court.
2.10 The Settling Defendants agree that they will make an
election under Internal Revenue Code Section 468B to treat the settlement
payments made by them or on their behalf as a Designated Settlement Fund.
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2.11 The Claims Administrator shall file all tax returns
necessary to report any income earned on the Settlement Fund. All taxes due, if
any, on interest or income earned until distribution shall be paid from the
Settlement Fund, and none of the Settling Parties or the Released Persons shall
be liable for any such taxes. The Settling Parties hereto each agree to
cooperate with each other and their tax attorneys or accountants to the extent
reasonably necessary to enable such tax returns to be filed as may be necessary.
2.12 In the event that the Stipulation is not approved, or is
terminated, canceled, or fails to become effective for any reason, the
Settlement Fund and the funds in the Notice and Administration Fund (described
in P. 4 below), less expenses reasonably incurred from and after the date of the
Stipulation, shall be refunded as described in P. 10.7 below, and, in addition,
the Class shall be decertified without prejudice to plaintiffs' motion for class
certification.
3. Requests for Exclusion
3.1 Any member of the Class who chooses not to be a Class
member and not to be bound by this Stipulation must serve and file a written
request for exclusion in accordance with the procedures established by the Court
which procedures shall be substantially the same as set forth in the proposed
Preliminary Order. Such excluded class member shall have no rights with respect
to this Settlement.
3.2 The Claims Administrator shall prepare and send to
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counsel for defendants in accordance with paragraph 11.1 below a written report
identifying to the extent practicable (a) the Class members who have validly
elected to exclude themselves from the Class within the deadline specified by
the Court in the Preliminary Order, (b) the number of Sapiens shares purchased
by or on behalf of each such Class member during the Class Period, and (c) the
date(s) and price(s) of such Share purchases (the "Exclusion Notice"). The
Exclusion Notice shall be prepared as of the deadline set by the Court for the
receipt of exclusion requests by the Claims Administrator (the "Exclusion
Deadline"), and shall be given by the Claims Administrator to counsel for the
Settling Defendants no later than five (5) days following the Exclusion
Deadline.
3.3 If the number of Sapiens shares for which exclusion is
requested exceeds the number set forth in the separate letter agreement between
counsel to the Settling Parties dated June 26, 1996 (which agreement is
incorporated herein by reference), the Settling Defendants shall have the right,
exercisable in their sole discretion, to terminate this Settlement. To be
effective, the Settling Defendants' right to terminate the Settlement pursuant
to this paragraph must be exercised by giving written notice to Plaintiffs'
Settlement Counsel in accordance with paragraph 11.1 below within ten (10)
business days following the date counsel for the Settling Defendants receives
the Exclusion Notice from the Claims Administrator.
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4. Notice And Administration Fund
4.1 Within five (5) business days after receipt by
counsel for the Settling Defendants of the signed Preliminary Order (or an Order
substantially in the form of the Preliminary Order), the Settling Defendants
shall make a wire advance to Plaintiffs' Settlement Counsel, in immediately
available funds, in the amount of one hundred thousand dollars ($100,000) for
purposes of establishing and as necessary drawing upon an interest-bearing
Notice and Administration Fund. Such $100,000 advance shall be part of, and paid
from, the Settlement Cash Component. The Notice and Administration Fund may be
used by Plaintiffs' Settlement Counsel without further Order of the Court to pay
costs and expenses reasonably incurred in connection with providing notice to
the Class, locating Class Members, making a preliminary tabulation of claims
submitted, and related matters. Subsequent to the Effective Date, Plaintiffs'
Settlement Counsel may use the Notice and Administration Fund, subject to
paragraph 4.2 below, for the purposes described above and also for the purposes
of soliciting Settlement Class claims, assisting with the filing of claims,
administering and distributing the Settlement Fund to Authorized Claimants,
processing Proofs of Claim, and related matters.
4.2 At such time as all notice and administration costs have
been paid, the balance of the Notice and Administration Fund, including any
accrued interest but less any expenses or taxes (and any interest and/or
penalties thereon) incurred but not yet paid, shall be distributed or paid
pursuant to Court Order as part of the
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Settlement Cash Component.
4.3 Apart from paying and creating the Settlement Fund,
neither the Settling Defendants nor the Settling Defendants' counsel shall have
any obligation or responsibility for the administration of the Settlement,
including but not limited to the processing of claims, determination of the
Claimants entitled to participate in the distribution of the Settlement Fund,
making any payments to the Claims Administrator, or determination as to the
amounts or securities to be distributed to Authorized Claimants.
5. Preliminary Order and Settlement Hearing
5.1 The Settling Parties shall submit the Stipulation together
with its Exhibits to the Court and shall jointly apply for entry of an order
(the "Preliminary Order"), substantially in the form of Exhibit A hereto.
5.2 The Preliminary Order shall specifically include
provisions that, among other things:
(a) certify the Class as to the Settling Defendants
for purposes of the Settlement only, and provide Class members an opportunity to
opt out of the Class;
(b) preliminarily approve the Stipulation and the
Settlement as fair, just, reasonable and adequate to the Class;
(c) approve the form of Notice of Pendency and
Partial Settlement of Class Actions (substantially in the form of Exhibit A-1
hereto) for mailing to Class Members and the form of Summary Notice
(substantially in the form of Exhibit A-2 hereto) for publication;
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(d) approve the form of Proof of Claim and Release
(substantially in the form of Exhibit A-3 hereto) for mailing to Class Members;
(e) direct Plaintiffs' Settlement Counsel to mail or
cause to be mailed the Notice of Pendency and Partial Settlement of Class
Actions and the Proof of Claim and Release to those Persons in the Class who can
be identified through reasonable effort, on or before dates to be specified in
the Notice Order;
(f) direct Plaintiffs' Settlement Counsel to cause
the Summary Notice to be published once in the national edition of The Wall
Street Journal;
(g) direct nominees who purchased Sapiens Common
Stock during the Class Period to send the Notice of Pendency and Partial
Settlement of Class Actions and Proof of Claim and Release form to all
beneficial owners of such Sapiens Common Stock within ten (10) days after
receipt of the Notice of Pendency and Partial Settlement of Class Actions, or to
send a list of the names and addresses of such beneficial owners to the Claims
Administrator within ten (10) days of receipt of the Notice of Pendency and
Partial Settlement of Class Actions;
(h) provide that Settlement Class Members who wish to
participate in the Settlement Fund shall complete and file a Proof of Claim and
Release pursuant to the instructions contained therein;
(i) find that the Notice given pursuant to
subparagraphs (c), (e), (f) and (g), above, constitutes the best
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notice practicable under the circumstances, including individual notice to all
persons in the Class who can be identified upon reasonable effort, and
constitutes valid, due and sufficient notice to all persons in the Class,
complying fully with the requirements of Rule 23 of the Federal Rules of Civil
Procedure, the Constitution of the United States, and any other applicable law;
(j) 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 the Judgment approving the Settlement, as
well as the Plan of Allocation described therein, should be entered;
(k) provide that at or after the Settlement Hearing,
the Court shall determine and enter an Order regarding whether and in what
amount attorneys' fees and expenses should be awarded and whether and in what
amount plaintiffs' incentive awards should be paid;
(l) provide that any objections to (i) the proposed
Settlement, including the proposed Plan of Allocation; (ii) entry of the
Judgment approving the Settlement; (iii) plaintiffs' counsels' fee and expense
application; or (iv) any request for plaintiffs' incentive awards, shall be
heard and any papers 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 notice of their intention to appear
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(which shall set forth briefly each objection and the basis therefor) and copies
of any papers in support of their position as set forth in the Notice Order;
(m) establish the procedure and date by which any
potential member of the Class must exercise his right to request exclusion from
the Class;
(n) 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, shall be barred from
asserting any Released Claims against any of the Released Persons and any such
Settlement Class Member shall conclusively be deemed to have released any and
all such Released Claims as against all of the Released Persons; and
(o) 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.
6. Releases and Extinguishment of Cross-Claims
6.1 This Stipulation seeks a termination only of the
litigation between plaintiffs and the Settlement Class, on the one hand, and the
Settling Defendants, on the other, and does not release, transfer or assign any
other claims of plaintiffs or the Settlement Class against Porter.
6.2 Upon the Effective Date, as defined in P. 1.8, each of the
Settlement Class Members shall hereby be deemed to have, and by operation of the
Final Judgment shall have, fully, finally, and forever released, relinquished
and discharged all Released Claims
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against the Released Persons, whether or not such Settlement Class Member
executes and delivers a Proof of Claim and Release.
6.3 Settlement Class Members shall be entitled to receive
distributions from the Settlement Fund only if they file valid and timely Proofs
of Claim and Releases. The Releases to be executed by the Settlement Class
Members shall release all Released Claims against the Released Persons, and
shall be in the form contained in Exhibit A-3 hereto.
6.4 The Settlement also is conditioned on the Settling Parties
seeking and obtaining an Order from the Court barring the assertion of claims
against the Settling Defendants by Porter. The Bar Order will provide for a set
off credit, if any, to which Porter may be entitled in this action by reason of
the Settlement of the claims against the Settling Defendants in this Litigation,
should there be a verdict or judgment against Porter in the Litigation. The Bar
Order will provide that the set off credit, if any, shall be governed by the
proportionate liability rule. Under the proportionate liability rule, the amount
of any judgment subsequently obtained against Porter will be reduced by the
proportion of fault attributable to the Settling Defendants as compared to the
fault of Porter.
7. Final Judgment
7.1 If the Settlement contemplated by this Stipulation is
approved by the Court, counsel for the Settling Parties shall request that the
Court enter Final Judgment substantially in the form annexed hereto as Exhibit
B, providing for:
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(a) approval of the Settlement and adjudging it fair,
adequate and reasonable, and directing its consummation;
(b) approval of the method of notifying members of
the Class as being in compliance with Rule 23 of the Federal Rules of Civil
Procedure and the requirements of due process;
(c) dismissal on the merits and with prejudice the
Litigation as against the Settling Defendants and all Released Claims;
(d) the release and discharge by plaintiffs and the
Class of the Released Persons with respect to all Released Claims, including any
responsibility or liability to members of the Class for administration of the
Settlement;
(e) entry of an order barring and permanently
enjoining the institution or prosecution by plaintiffs, or the Class members,
and any of their present or former officers, directors, agents, attorneys,
representatives, trustees, shareholders, parents, affiliates, subsidiaries,
general or limited partners, heirs, executors, administrators, successors and
assigns, of any other action based upon or connected with the Released Claims;
(f) entry of an order barring and permanently
enjoining claims by Porter against any or all of the Settling Defendants that
are related to the claims in the Litigation. The Bar Order shall apply the
proportionate liability standard; and
(g) continued jurisdiction of the Court to enforce
all terms and provisions of this Stipulation.
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8. Administration and Calculation of
Claims, Final Awards and Supervision
and Distribution of Settlement Fund
8.1 Plaintiffs' Settlement Counsel, 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.
8.2 On and after the Effective Date, subject to approval and
further order(s) of the Court, the Settlement Fund shall be applied as follows:
(a) to pay plaintiffs' counsel attorney's fees,
expenses, costs and interest (the "Fee and Expense Award"), and to pay incentive
awards to plaintiffs, if and to the extent allowed by the Court;
(b) to pay all unpaid costs and expenses (in excess
of the $100,000 Notice and Administration Fund) 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 Fund to the Class, processing Proofs of Claim, and
related matters, and
(c) to distribute the remaining portion to authorized
Claimants as allowed by the Court, in accordance with P. 8.3 below.
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8.3 Upon the Effective Date and thereafter, subject to the
approval and further order(s) of the Court, the balance of the Settlement Fund
after the payments described in P. P. 8.1 and 8.2 above (the "Net Settlement
Fund"), shall be distributed to Settlement Class Members who submit valid,
timely Proofs of Claim and Release ("Authorized Claimants"), subject to and in
accordance with the following:
(a) Within one hundred twenty (120) 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 separate, completed Proof of Claim and Release substantially in
the form of Exhibit A-3 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 submit timely 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 Final Judgment.
(c) The Net Settlement Fund shall be distributed to
the Authorized Claimants in accordance with the Plan of Allocation.
8.4 No Authorized Claimant shall have any claim against
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Plaintiffs' Settlement Counsel, the Claims Administrator, plaintiffs' counsel,
or any Released Persons based on the distributions made substantially in
accordance with the Stipulation and the Settlement contained herein and further
orders of the Court.
9. Plaintiffs' Counsel's Fees and Costs
and Plaintiffs' Incentive Awards
9.1 At the Settlement Hearing or at such other time as the
Court may direct, plaintiffs or their counsel may submit an application (the
"Fee and Expense Application") for distributions to plaintiffs' counsel from the
Settlement Fund for: (i) an award of attorney's fees payable from the Settlement
Fund; (ii) reimbursement of actual expenses and costs, including the fees of
experts and consultants incurred in connection with prosecuting the Litigation;
plus (iii) interest on such fees, expenses and costs at the same rate and for
the same periods as earned by the Settlement Fund.
9.2 The Settling Defendants shall have no standing to
challenge, or to volunteer comment on, the Fee and Expense Application, provided
the fee request contained in the Fee and Expense Application is for not more
than one-third (1/3) of the Settlement Fund.
9.3 The procedure for and the allowance or disallowance by the
Court of the Fee and Expense Application and/or any incentive awards
applications 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,
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reasonableness and adequacy of the Settlement set forth in the Stipulation. Any
order or proceedings relating to the Fee and Expense Application and/or any
incentive awards application, or any appeal from any such order, shall not
operate to terminate or cancel the Stipulation, or affect or delay the finality
of the Court's Final Judgment approving the Stipulation and the Settlement of
the Litigation set forth herein.
9.4 Any award of fees and expenses or incentive amounts shall
be paid to Plaintiffs' Settlement Counsel within 7 days of the later of: (i) the
Effective Date; or (ii) the date any such award become final and is no longer
subject to appeal or review.
9.5 Plaintiffs and their counsel agree that they shall not
seek from the Settling Defendants an award of attorney's fees or costs or
reimbursement or payment of other expenses or amounts that relate to any
activity, conduct or investigation undertaken on behalf of the plaintiffs or the
Class relating to the Litigation, except insofar as the Court may award from the
Settlement Fund.
10. Conditions Of Settlement, Effect of
Disapproval, Cancellation or Termination
10.1 The Effective Date of the Stipulation shall be
conditioned on the occurrence of all of the following events:
(a) the Court has entered the Preliminary Order, as
required by P. 5, above;
(b) the Court has entered the Judgment, or a judgment
substantially in the form of Exhibit B;
(c) the Judgment has become Final, as defined in P.
1.9, above; and
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(d) the last date within which the Settling
Defendants may serve a Termination Notice as provided in paragraph 10.2 shall
have passed without their having done so.
10.2 In addition to the right of termination provided in
paragraph 3.3, the Settling Defendants shall have the right to terminate the
Settlement and this Stipulation by providing notice of their election to do so
in the manner specified in paragraph 11.1 hereof ("Termination Notice") within
thirty days of (a) the Court's declining to enter the Preliminary Order in any
material respect; (b) the Court's refusal to approve this Stipulation or any
material part of it; (c) the Court's declining to enter the Final Judgment in
any material respect; or (d) the date upon which the Final Judgment is modified
or reversed in any material respect by the Court of Appeals or the Supreme
Court.
10.3 Upon the occurrence of all of the events referenced in P.
10.1 above, any and all interest or right of the Settling Defendants in or to
the Settlement Fund shall be absolutely and forever extinguished.
10.4 Neither a modification nor a reversal on appeal of any
order concerning plaintiffs' attorney's fees, costs, expenses and interest,
and/or plaintiffs' incentive awards, shall constitute grounds for cancellation
and termination of the Stipulation.
10.5 If all of the conditions specified in P. 10.1 are not
met, then the Stipulation shall be canceled and terminated unless each of
plaintiffs and the Settling Defendants agrees in writing to proceed with the
Stipulation.
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10.6 In the event that the Stipulation is not approved by the
Court or the Settlement is terminated or fails to become effective in accordance
with its terms, the terms and provisions of the Stipulation, with the exception
of P. P. 10.5-10.7 herein, shall have no further force and effect and shall not
be used in this Litigation or in any other proceeding for any purpose, except as
provided for in P. P. 10.5-10.7; and any Judgment entered by the Court in
accordance with the terms of the Stipulation shall be treated as vacated, nunc
pro tunc.
10.7 If the Effective Date does not occur, or if the
Stipulation is terminated pursuant to its terms, neither plaintiffs nor any of
their counsel nor the Claims Administrator shall have any obligation to repay
any amounts actually and properly disbursed from the Notice and Administration
Fund. In addition, any reasonable expenses already incurred or properly
chargeable to the Notice and Administration Fund at the time of such termination
or cancellation, but which have not been paid, shall be paid in accordance with
the terms of the Stipulation prior to the balance being refunded. After any such
expenses are paid, any funds remaining in the Notice and Administration Fund,
including interest (less any taxes due or payable), shall be returned to the
Settling Defendants.
11. Notices
11.1 Any and all notices, reports or communications which are
required, permitted or contemplated by this Stipulation, and which are made to
any Settling Party or the Claims Administrator by
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another Settling Party or the Claims Administrator shall be in writing and shall
be given by overnight mail, and shall be deemed given on the date of delivery to
counsel, and shall be addressed as follows:
If to Plaintiffs' Settling Counsel or the Claims
Administrator:
Berger & Montague, P.C.
1622 Locust Street
Philadelphia, PA 19103
Attn: Todd S. Collins, Esq.
If to the Settling Defendants:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Attn: Seth M. Schwartz, Esq.
11.2 Any party hereto may, from time to time, change the
address to which such notices, requests, consents, directives or communications
are to be directed, by giving the other party ten days' prior written notice of
the changed address in the manner provided in paragraph 11.1 above.
12. Miscellaneous Provisions
12.1 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 conditions of the Stipulation and to exercise their best
efforts to accomplish the foregoing terms and conditions of the
Stipulation.
12.2 Neither the Stipulation nor the Settlement, nor any
act performed or document executed pursuant to or in furtherance of
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the Stipulation or the Settlement: (i) is or may be deemed to be or may be used
as an admission of, or evidence of, the validity of any Released Claim, or of
any wrongdoing or liability of the Settling Defendants; (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 Settling Defendants in any civil or administrative proceeding in
any court, administrative agency or other tribunal, other than in such
proceedings as may be necessary to consummate or enforce the Stipulation, the
Settlement or the Final Judgment and Order.
12.3 All of the Exhibits to the Stipulation are material and
integral parts hereof and are fully incorporated herein by this reference.
12.4 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.
12.5 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.
12.6 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 instrument. Counsel for the parties to the Stipulation shall
exchange among themselves original signed
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counterparts and a complete set of original executed counterparts
shall be filed with the Court.
12.7 The Stipulation shall be binding upon, and inure to the
benefit of, the successors, assigns, parent corporations, heirs and personal or
legal representatives of the Settling Parties.
12.8 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.
IN WITNESS WHEREOF, the parties hereto have caused the
Stipulation to be executed, by their duly authorized attorneys.
BERGER & MONTAGUE, P.C.
/s/ Todd S. Collins
-----------------------------
Todd S. Collins (TC5914)
Robin B. Shore
1622 Locust Street
Philadelphia, PA 19103
(215) 875-3000
CHAIRMAN, PLAINTIFFS'
EXECUTIVE COMMITTEE
SAVETT FRUTKIN PODELL & RYAN
Stuart H. Savett (55-4614)
Katharine M. Ryan
320 Walnut Street, Suite 508
Philadelphia, PA 19106
(215) 923-5400
WOLF POPPER ROSS WOLF & JONES
Lester L. Levy
Michele Raphael
845 Third Avenue
New York, New York 10022
(212) 759-4600
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WECHSLER HARWOOD HALEBIAN & FEFFER
Robert I. Harwood (RH-3286)
555 Madison Avenue
New York, New York 10022
(212) 935-7400
PLAINTIFFS' EXECUTIVE COMMITTEE
SKADDEN ARPS SLATE MEAGHER & FLOM
/s/ Seth M. Schwartz
------------------------------
Seth M. Schwartz (SS2530)
Ira B. Matetsky (IMI881)
919 Third Avenue
New York, NY 10022
(212) 735-3000
ATTORNEYS FOR DEFENDANTS
SAPIENS INTERNATIONAL
CORPORATION, N.V.,
RON ZUCKERMAN and SHAUL SHANI
33
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Exhibits Intentionally Omitted
