According to the docket posted, on May 25, 2001, the Court entered the Final Order and Judgment by U.S. District Judge Kathryn H. Vratil. By the Final Order and Judgment, the settlement is approved as fair, reasonable and adequate, and in the best interest of the Settlement Class and shall be consummated by the parties in accordance with its terms and conditions as set forth in the Stipulation and Settlement.
In a press release dated January 17, 2001, the real estate company J.C. Nichols has agreed to settle a securities fraud class-action lawsuit for $5.7 million. The lawsuit, which was filed by Nichols shareholder John Flake, stemmed from the company's 1998 merger with Raleigh-based Highwoods Properties. At that time, Highwoods acquired Nichols for $65 per share. The lawsuit alleged that the price was not adequate and that the company attempted to keep shareholders from entering into more favorable deals with their stock. Both sides have indicated they are satisfied with the settlement, which was completed before the case went to trial. The settlement must be approved by U.S. District Court Judge Kathryn Vratil, who is expected to schedule a hearing within the next few weeks to rule on its fairness.
As reported by Highwoods Properties, Inc.’s FORM 10-K for the fiscal year ended December 31, 2000, by order dated June 18, 1999, the court granted in part and denied in part our motion to dismiss, and the court thereafter certified the proposed class of plaintiffs with respect to the remaining claims. By order dated August 28, 2000, the court granted in part and denied in part defendants' summary judgment motion. Defendants sought reconsideration of the court's ruling with respect to certain of the securities claims as to which the court denied their summary judgment motion, and by order dated January 11, 2001, the court granted in part that reconsideration motion. On the eve of the trial of this matter, the parties settled all their remaining claims. The terms of that settlement are now being documented.
The original complaint charges defendants with violations of Sections 11, 12(2) and 15 of the Securities Act of 1933 ("Securities Act"), in connection with, among other things, the dissemination of a Joint Proxy/Prospectus on Form S-4 on or about June 2, 1998 (the "Proxy"), containing materially false and misleading statements and omissions of material fact, through which defendants obtained shareholder approval of the acquisition of JCN by Highwoods (the "Acquisition").
Specifically, the complaint alleges, inter alia, that the Proxy was misleading in its recommendation of the Acquisition, its discussion of alternatives to the Acquisition, other offers, the limitations of the scope of the fairness opinion, contained in the Proxy, and the Company's refusal to indemnify Duff & Phelps, an advisor to the ESOP. The complaint also charges certain of the defendants with violations of their common law fiduciary duties under Sections 14(a) and 20 of the Exchange Act, and Sections 409(a) and 502(a) of ERISA in connection with their effectuation of the inadequate and unfair Acquisition.
NOTE: The class includes a subclass (the "Subclass") of all participants in the J.C. Nichols Employee Stock Ownership Plan ("ESOP").