exhibit_10-1.htm


    EXHIBIT
10.1

     

    
      Kim E.
Miller, (SBN
178370)                                                                           Elaine
Byszewski (SBN 222304)

      KAHN
GAUTHIER SWICK,
LLC                                                                 HAGENS
BERMAN SOBOL

      12 E.
41st St., Ste.
1200                                                                                   SHAPIRO
LLP

      New York,
New York
10017                                                                           700
South Flower Street, Suite 2940

      Tel:  (xxx)
xxx-xxxx                                                                                   
         Los Angeles,
CA  90017

      Fax:  (xxx)
xxx-xxxx                                                                                 
          Tel:  (xxx)
xxx-xxxx

      E-mail:  xxxxxxxxxxx                                                                   Fax:  (xxx)
xxx-xxxx


       

      Lewis S.
Kahn

      KAHN
GAUTHIER SWICK,
LLC                                                                 Liaison Counsel for the
Class

      650
Poydras St., Suite 2150

      New
Orleans, LA  70130

      Tel:  (xxx)
xxx-xxxx

      Fax:  (xxx)
xxx-xxxx

      E-mail:
xxxxxxxxxxxx

      


      Lead
Counsel for the Class


      UNITED
STATES DISTRICT COURT

      CENTRAL
DISTRICT OF CALIFORNIA

      WESTERN
DIVISION

      
        	
                 

                 

                 

                 

                In
      re:  U.S. AUTO PARTS NETWORK,

                INC.
      SECURITIES LITIGATION

              	
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                Master
      File No.:  CV 07-2030-GW (JC)

                 

                CLASS ACTION

                 

                STIPULATION
      OF SETTLEMENT

              


      

      
    This
Stipulation of Settlement dated as of May 1, 2008 (the “Stipulation”), is
made and entered into by and among the following Settling Parties (as defined
further in Section IV hereof) to the above-entitled Litigation:
(i) the Lead Plaintiff (on behalf of itself and each of the Class Members),
by and through its counsel of record in the Litigation; and (ii) the
Defendants, by and through their counsel of record in the
Litigation.  The Stipulation is intended by the Settling Parties to
fully, finally, and forever resolve, discharge, and settle the Released Claims,
upon and subject to the terms and conditions hereof

       

      
        	
                I.

              	
                THE
      LITIGATION

              


      

      


      On and
after March 28, 2007, the following actions were filed in the United States
District Court for the Central District of California, Western Division, as
securities class actions on behalf of purchasers of the publicly-traded
securities of U.S. Auto Parts Network, Inc.  (“U.S. Auto” or the
“Company”) during a defined period of time:

       

      
        	 	
                CASE NAME

              	 	
                CASE NUMBER

              	 
	 	
                Johnson v.
      US. Auto Parts, et al.

              	 	
                2:07-cv-02030-GW-JC

              	 
	 	
                Nopper v.
      US. Auto Parts, et al.

              	 	
                2:07-cv-02775-GW-JC

              	 


      

      


      On
May 15, 2007, the Court consolidated the above cases as In re U.S. Auto
Parts Network, Inc., 2:07-cv-02030.  On August 16, 2007, the
Court appointed Sasco Investments, LP as Lead Plaintiff pursuant to
§21D(a)(3)(B) of the Securities Act of 1933 (the “Securities Act”), as amended
by the Private Securities Litigation Reform Act of 1995 (the “PSLRA”), and
approved its selection of Kahn Gauthier Swick, LLC as Lead Counsel in the
consolidated action (the “Litigation”), and Hagens Berman Sobol Shapiro, LLP as
liaison counsel.

       

      On
September 5, 2007, a competing lead plaintiff movant that was not appointed
moved to intervene pursuant to Federal Rule of Civil Procedure 24.  On
September 24, 2007, Lead Plaintiff filed a non-opposition to the motion to
intervene.  On September 25, 2007, the motion to intervene was
withdrawn.

       

      In
anticipation of filing a consolidated amended pleading, Lead Plaintiff conducted
an intensive investigation and filed the operative complaint in the Litigation,
the Amended Consolidated Class Action Complaint for Violation of Federal
Securities Laws (the “Complaint”), on October 4, 2007.

       

      The
Defendants named in the Complaint are: U.S. Auto Parts Network, Inc. (“the
Company”); Sol Khazani, Chairman of the Company’s Board and co-founder of the
Company during the relevant time period; Mehran Nia, President, CEO, and
Director of the Company and a member of the Board of Directors during the
relevant time period; Richard Pine, Vice President of Strategic Planning and
Director for the Company during the relevant time period; Company board members
Frederic W. Harman, Robert J. Matjeles, and Ellen F. Siminoff; and Michael J.
McClane, CFO, Executive Vice President of Finance, and Treasurer of the Company
during the relevant time period (collectively, “the Individual Defendants”); Oak
Investment Partners XI, LP (“Other Controlling Defendant”); and RBC Capital
Markets Corporation, Thomas Weisel Partners, LLC, Piper Jaffray & Co.,
and JMP Securities LLC (collectively, the “Underwriter Defendants).

       

      The
Complaint alleges violations of §§11, 12 and 15 of the Securities Act on behalf
of a class of all purchasers of the publicly-traded securities of U.S. Auto
between February 9, 2007 (the date of the Company’s Initial Public Offering
(“IPO”)) and March 20, 2007, inclusive (the “Class Period”).  The
Complaint alleges that at the time of the IPO there existed negative conditions
which were not disclosed in the IPO Registration Statement and Prospectus and
which adversely affected the Company.

       

      The
Complaint alleges that the Company had failed to properly integrate the
recently-acquired ThePartsbin.com, Inc. (“Partsbin”), which used a very
different system to conduct business.  ¶¶37-38.  The
companies’ systems were not cross-connected and orders had to be entered
manually, the Company stocked inventory in warehouses and used live salespersons
to process orders while Partsbin had no inventory and no sales personnel to
process orders.  ¶¶42, 38-39.  The Company could not
assimilate Partsbin’s drop-ship order fulfillment system or Partsbin’s diverse
business culture and operations.  ¶¶38-39.

       

      The
Complaint further alleges that the Company was also unable or failed to fill
customer orders, to keep the online catalogue information current, or to retain
key employees from Partsbin’s catalog department that were crucial to
successfully integrating the two companies and ensuring that the dual order
fulfillment methods were working properly and had oversight by trained
personnel.  Inventory was often not available or was priced
differently than advertised.  ¶¶43-47.  Partsbin sent
customers incomplete or incorrect orders to prevent the issuance of customer
credits and erected obstacles to obtaining those credits.  Revenues
were inflated as a result of customer cancellations for improperly filled
orders.  Id.

       

      The
Complaint alleges that the Company also failed to disclose substantial credit
risks associated with Partsbin’s drop-ship order fulfillment system, under which
Partsbin was responsible for paying the third-party vendors, who shipped the
orders directly, whether or not the customer payment came
through.  ¶¶48-49.  Partsbin faced inventory risks because
returned parts were sent directly to Partsbin, and not to the
vendors.  Partsbin risked receiving thousands of dollars of returned
merchandise daily with no adequate control or ability to predict inventory
return levels.  In addition, Plaintiff alleges that Partsbin also had
credit programs which inflated revenue reporting by unnecessarily delaying the
issuance of customer credits through a complicated multi-step process, not
disclosed to customers, through which customers must go to obtain credits,
¶¶50-58.

       

      The
Complaint alleges that the Company also failed to disclose materially decreased
profit margins and revenues in the period leading up to the IPO, (¶¶59-60)
material control deficiencies which operated to prevent minimum standards of
good corporate governance or controls and procedures, as required by the
Securities Exchange Commission (“SEC”) and the Company’s own internal guidelines
and standards of business conduct.  ¶¶61-63.  And, at the
time of the IPO, Defendants had not conducted an adequate due diligence into the
Company or the recently-acquired Partsbin.  ¶62.

       

      Further,
the Complaint alleges the Company failed to maintain adequate staff to address
customer complaints and other issues, in spite of letters from the Better
Business Bureau, complaints from attorneys, and complaints from Attorneys
General of various States.  ¶¶64-71.  The extremely high
volume of Partsbin customer complaints involving failure of Partsbin to issue
credits for returned or cancelled or wrong merchandise and the lack of an
adequate procedure or control mechanism at Partsbin to deal with and adequately
address the issues arising therefrom or any adequate control, were omitted from
the Prospectus.  ¶69.

       

      The
Complaint alleges that the Company also made material misstatements as to its
business plan, growth strategy, and the state of the integration of
Partsbin.  ¶¶72-75.  The statements failed to reflect the
Company’s failure to integrate, its inability to properly fill customer orders,
or its inability to keep its crucial online catalogue updated.  The
Company stated that customers experienced tangible benefits from the Company’s
business model and operations solutions, when in fact the adverse conditions at
the Company prevented any such benefits from being
realized.  ¶¶76-79.  The IPO also contained untrue
statements about the Company’s order fulfillment system, available inventory,
and reserve for returns, statements which were for the reasons discussed
above.  ¶¶80-81.  Additionally, the Company failed to
maintain adequate technology and management systems, contrary to statements in
the IPO touting the Company’s technological
competencies.  ¶¶82-83.

       

      The
Complaint alleges that the Company also suffered from numerous GAAP and SEC
regulation violations by failure to adequately disclose, despite SEC requests
that the Company do so, the issues regarding Partsbin integration, the Company’s
revenue recognition policies, the Company’s true return and credit policies, and
the Company’s inventory and order fulfillment
issues.  ¶¶84-110.  The IPO also failed to adequately
disclose the internal control issues at the Company, issues which prevented the
Company from being able to assure strict compliance with its internal guidelines
for accounting, financial reporting and forecasting - including its use of
estimates.  ¶¶111-114.

       

      On
March 20, 2007, after Defendants announced results for the fourth quarter
and full year 2007 that were well below plan, over 18.33 million shares of U.S.
Auto Parts traded, more than 1.8 times the number of shares sold in the IPO, and
the stock subsequently fell over 50%.  The Complaint alleges that upon
the publication of this news, the true undisclosed negative conditions that
existed at the time of the February 2007 IPO, and that continued to adversely
impact the Company after that time, came to light.  As this adverse
information became known to investors, the artificial inflation was immediately
eliminated from U.S. Auto Parts’ share price, and Class members who purchased in
the IPO or traceable thereto were damaged as a result of this related share
price decline.

       

      On
October 31, 2007 the Company and Individual Defendants moved the Court to
dismiss the Complaint.  That same day, the Underwriter Defendants
filed a joinder thereto.  In their motion to dismiss, Defendants
argued that the Complaint’s allegations sounded in fraud and were therefore
subject to—and failed to meet—the requirements of Fed. R. Civ. P. 9(b), which
requires allegations of fraud to be pleaded with
particularity.  Defendants also argued that the Complaint failed to
allege actionable misstatements or omissions by Defendants; that Plaintiff
failed to allege adequately that the alleged misstatements and omissions had
caused Plaintiff’s losses; and that Plaintiff failed to adequately allege
control person liability against Oak Investment Partners XI, LP (“the Other
Controlling Defendant”).  Defendants concluded that these arguments
together rendered Plaintiff’s allegations in the Complaint legally insufficient,
and on that basis moved the Court to dismiss the Complaint pursuant to Fed. R.
Civ. Pr. 9(b) and 12(b)(6).

       

      On
November 27, Lead Plaintiff filed its memorandum of law in opposition to
Defendants’ motion to dismiss, responding to each of Defendants’
arguments.  Plaintiff contended that the allegations Complaint sounded
in negligence, not in fraud, and that, therefore, the pleading requirement was
that of Fed. R. Civ. P. 8, not the stricter requirements of
9(b).  Plaintiff also argued that should the Court find that the
allegations sounded in fraud, that Plaintiff had complied with the requirements
of 9(b) by alleging the what, where, when, who, and why false of each statement
or omission.  Plaintiff further argued that actionable misstatements
or omissions by Defendants in the IPO were adequately pled; that such alleged
omissions had caused Plaintiff’s losses; and that Plaintiff adequately alleged
control person liability against Oak Investment Partners XI,
LP.  Plaintiffs concluded that the allegations in the Complaint were
therefore legally sufficient, and that Defendants’ motion to dismiss should be
denied.

       

      On
December 13, 2007 Defendants filed their reply memorandum of law in further
support of their motion to dismiss the Complaint, and the next day the
Underwriter Defendants filed a Joinder to that reply.

       

      A hearing
on the motion to dismiss was initially set for December 20,
2007.  Pursuant to a scheduling stipulation filed by the parties, the
Court continued to February 4, 2008 in order to permit the parties to
conduct a mediation.

       

      On
January 30, 2007, Lead Counsel, and Counsel for the Company and the
Individual Defendants met in Newport Beach, California to mediate the case
before a retired United States District Judge, the Honorable Layn
R.  Phillips.  At that time, the parties reached an
agreement in principle to settle the Litigation.  On February 4,
2008, the Court ordered the Hearing on the Motion to Dismiss continued to
April 7, 2008 in light of the Parties’ agreement in principle.

       

      On or
about February 8, 2008, Defendants produced approximately 1500 pages of
emails from the files of the Chief Financial Officer, Controller, Director of
Finance and Sarbanes-Oxley Manager and more than 350 Excel spreadsheets and
other attachments.  On March 27, 2008, documents from the
Underwriter Defendants were produced.  Lead Counsel carefully reviewed
and analyzed all documents in order to confirm the fairness, reasonableness, and
adequacy of the proposed settlement.  In total, over 60,000 pages of
documents were produced by Defendants.

       

      
        	
                II.

              	
                DEFENDANTS’
      DENIALS OF WRONGDOING AND LIABILITY

              


      

      


      Defendants
have denied and continue to deny each and all of the claims and contentions
alleged by Lead Plaintiff in the Litigation.  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.  Defendants also
have denied and continue to deny, inter alia, the allegations
that the Lead Plaintiff and the Class have suffered damage, that the prices of
U.S. Auto securities were artificially inflated by reasons of alleged
misrepresentations, non-disclosures or otherwise, and that Lead Plaintiff and
the Class were harmed by the conduct alleged in the Complaint, and Defendants
believe that the evidence developed to date supports their
position.

       

      Nonetheless,
Defendants have concluded that further conduct of the Litigation would be
protracted and expensive and have taken into account the uncertainty and risks
inherent in any litigation, especially in complex cases like the
Litigation.  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 LEAD PLAINTIFF AND BENEFITS OF
SETTLEMENT

              


      

      


      Lead
Plaintiff believes that the claims asserted in the Litigation have merit and
that the evidence developed to date supports the claims.  However,
Lead Plaintiff recognizes and acknowledges the expense and length of continued
proceedings necessary to prosecute the Litigation against Defendants through
trial and through appeals.  Lead Plaintiff has also taken into account
the uncertain outcome and the risk of any litigation, especially in complex
actions such as the Litigation, as well as the difficulties and delays inherent
in such litigation, as well as the risk of inability to pay a judgment by
Defendants.  Lead Plaintiff is also mindful of the inherent problems
of proof and possible defenses to the securities law violations asserted in the
Litigation.  Lead Plaintiff believes that the settlement set forth in
the Stipulation confers substantial benefits upon the Class.  Based on
their evaluation, Lead Plaintiff and Lead Counsel have determined that the
settlement set forth in the Stipulation is in the best interests of the Lead
Plaintiff and the Class.

       

      
        	
                IV.

              	
                TERMS
      OF STIPULATION AND AGREEMENT OF
SETTLEMENT

              


      

      


      NOW,
THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among the Lead Plaintiff
(for itself and the Class Members) and Defendants, by and through their counsel,
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.

       

      
        	
                 
      

              	
                1.      
      Definitions

              


      

       

      As used
in the Stipulation, the following terms have the meanings specified
below:

      1.1           “Authorized
Claimant” means any Class Member whose claim for recovery has been allowed
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 Complete Claims Solutions.

       

      1.4           “Class”
means all Persons who purchased common stock of U.S. Auto pursuant to its
February 9, 2007 Initial Public Offering (“IPO” or the “Offering”) of 10
million shares of common stock, defined for purposes of this settlement as
purchasers between February 9, 2007 and March 20,
2007.  Excluded from the Class are Defendants, members of the
immediate families of the Individual Defendants, current or former directors and
officers of U.S. Auto and the legal representatives, heirs, successors, or
assigns of any such excluded Person.  Also excluded from the Class are
those Persons who timely and validly request exclusion from the Class pursuant
to the Notice of Pendency and Proposed Settlement of Class Action.

       

      1.5           “Class
Member” or “Member of the Class” means a Person who falls within the definition
of the Class as set forth in ¶1.4 of the Stipulation.

       

      1.6           “Class
Period” means February 9, 2007 to March 20, 2007.

       

      1.7           “U.S.
Auto” means U.S. Auto Parts Network, Inc.

       

      1.8           “Defendants”
means U.S. Auto, the Individual Defendants, and the Underwriter
Defendants.

       

      1.9           “Effective
Date” means the first date by which all of the events and conditions specified
in ¶7.1 of the Stipulation have been met and have occurred.

       

      1.10           “Escrow
Agent” means Kahn Gauthier Swick, LLC, or its successor(s).

       

      1.11           “Final”
means when the last of the following with respect to the Judgment approving the
Stipulation, substantially in the form of Exhibit B hereto, shall occur:
(i) the expiration of the time to file a motion to alter or amend the
Judgment under Federal Rule of Civil Procedure 59(e) has passed without any such
motion having been filed; (ii) the expiration of the time in which to
appeal the Judgment has passed without any appeal having been taken, which date
shall be deemed to be thirty (30) days following the entry of the Judgment,
unless the date to take such an appeal shall have been extended by Court order
or otherwise, or unless the 30th day falls on a weekend or a Court holiday, in
which case the date for purposes of this Stipulation shall be deemed to be the
next business day after such 30th day; and (iii) if such motion to alter or
amend is filed or if an appeal is taken, immediately after the determination of
that motion or appeal so that it is no longer subject to any further judicial
review or appeal whatsoever, whether by reason of affirmance by a court of last
resort, lapse of time, voluntary dismissal of the appeal or otherwise, and in
such a manner as to permit the consummation of the settlement substantially in
accordance with the terms and conditions of this Stipulation.  For
purposes of this paragraph, an “appeal” shall include any petition for a writ of
certiorari or other writ that may be filed in connection with approval or
disapproval of this settlement, but shall not include any appeal that concerns
only the issue of attorneys’ fees and reimbursement of costs or the Plan of
Allocation of the Settlement Fund.

       

      1.12           “Individual
Defendants” means Sol Khazani, Mehran Nia, Richard E. Pine, Frederic W. Harman,
Robert J. Majteles, Ellen F. Siminoff, and Michael J. McClane.

       

      1.13           “Other
Controlling Defendant” means Oak Investment Partners XI, LP.

       

      1.14           “Underwriter
Defendants” means RBC Capital Markets Corporation, Thomas Weisel Partners LLC,
Piper Jaffray & Co. and JMP Securities LLC.

       

      1.15           “Judgment”
means the judgment to be rendered by the Court, substantially in the form
attached hereto as Exhibit B.

       

      1.16           “Lead
Counsel” means Kahn Gauthier Swick, LLC.

       

      1.17           “Lead
Plaintiff” means Sasco Investments, LP.

       

      1.18           “Person”
means an individual, corporation, partnership, limited partnership, association,
joint stock company, estate, legal representative, trust, unincorporated
association, government or any political subdivision or agency thereof, and any
business or legal entity and their spouses, heirs, predecessors, successors,
representatives, or assignees.

       

      1.19           “Plan
of Allocation” means a plan or formula of allocation of the Settlement Fund
whereby the Settlement Fund shall be distributed to Authorized Claimants after
payment of expenses of notice and administration of the settlement, Taxes and
Tax Expenses, such attorneys’ fees, costs, expenses and interest as may be
awarded by the Court.  Any Plan of Allocation is not part of the
Stipulation and Defendants and their Related Parties shall have no
responsibility for, interest in, or liability whatsoever with respect to the
distribution of the Net Settlement Fund, the Plan of Allocation, the
determination, administration, or calculation of claims, the payment or
withholding of Taxes or Tax Expenses, any losses incurred in connection
therewith, or any payment of attorneys’ fees and expenses to Lead Counsel over
and above payment from the Settlement Fund.

       

      1.20           “Related
Parties” means each of a Defendant’s past or present directors, officers,
employees, partners, insurers, co-insurers, reinsurers, agents, controlling
shareholders, attorneys, accountants, auditors, advisors, investment advisors,
personal or legal representatives, predecessors, successors, parents,
subsidiaries, divisions, joint ventures, assigns, spouses, heirs, related or
affiliated entities, any entity in which a Defendant has a controlling interest,
any members of an Individual Defendant’s immediate family, or any trust of which
an Individual Defendant is the settlor or which is for the benefit of an
Individual Defendant’s family.

       

      1.21           “Released
Claims” shall collectively mean all claims demands, rights, liabilities and
causes of action of every nature and description whatsoever, known or unknown,
whether or not concealed or hidden, asserted or that might have been asserted,
including, without limitation, claims for negligence, gross negligence, breach
of duty of care and/or breach of duty of loyalty, fraud, breach of fiduciary
duty, or violations of any state or federal statutes, rules or regulations or
common law principles, by the Lead Plaintiff or any Class Member against the
Defendants and/or their Related Parties arising out of, relating to, or in
connection with the purchase or sale of the publicly-traded securities of U.S.
Auto by Lead Plaintiff or any Class Member during the Class Period.

       

      1.22           “Released
Persons” means each and all of the Defendants and each and all of their Related
Parties.

       

      1.23           “Settlement
Fund” means the principal amount of Ten Million ($10,000,000) in cash to be paid
to the Escrow Agent pursuant to ¶2.1 of this Stipulation, plus all interest
earned thereon pursuant to ¶¶2.1, 2.2 and 2.6.

       

      1.24           “Settling
Parties” means, collectively, each of the Defendants, and the Lead Plaintiff on
behalf of itself and the Class Members.

       

      1.25           “Notice
Order” means the preliminary order as approved by the Court for mailing and
publication as defined in ¶3.1 hereof.

       

      
        	
                 
      

              	
                2.      
      The Settlement

              


      

      


      
        	
                 
      

              	
                a.

              	
                The
      Settlement Fund

              


      

       

      2.1           U.S.
Auto shall pay or cause to be paid the sum of Ten Million ($10,000,000) in cash,
within the time set forth in ¶ 2.2, below, into an interest bearing account
maintained by the Escrow Agent in settlement of the Litigation which, with any
accrued interest, shall constitute the Settlement Fund.  Other than
the obligation of U.S. Auto to pay or cause to be paid this amount to the Escrow
Agent, no Defendant shall have any obligation to make any payment pursuant to
this Agreement.

       

      2.2           Subject
to the terms of this Stipulation, U.S. Auto shall pay or cause to be paid
$100,000 of the Settlement Fund into the Escrow Account within ten (10) business
days of the execution of the Notice Order as defined in ¶ 3.1
hereof.  Defendants shall pay or see to the payment of the remaining
balance of the Settlement Fund into the Escrow Account within 30 days following
the Court’s issuance of the Notice Order.

       

      
        	
                 
      

              	
                b.

              	
                The
      Escrow Agent

              


      

       

      2.3           The
Escrow Agent may invest the Settlement Fund deposited pursuant to ¶2.1 hereof 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 and shall
reinvest the proceeds of these instruments as they mature in similar instruments
at their then-current market rates.  The Escrow Agent shall bear all
risks related to investment of the Settlement Fund.

       

      2.4           The
Escrow Agent shall not disburse the Settlement Fund except as provided in the
Stipulation, by an order of the Court, or with the written agreement of counsel
for all parties.

       

      2.5           Subject
to further order and/or direction as may be made by the Court, the Escrow Agent
is authorized to execute such transactions on behalf of the Class Members as are
consistent with the terms of the Stipulation.

       

      2.6           All
funds held by the Escrow Agent shall be deemed and considered to be in custodia legis of the Court,
and shall remain subject to the jurisdiction of the Court, until such time as
such funds shall be distributed pursuant to the Stipulation and/or further
order(s) of the Court.

       

      2.7           Within
thirty (30) days after payment of the Settlement Fund to the Escrow Agent
pursuant to ¶2.1 hereof, the Escrow Agent may establish a “Class Notice and
Administration Fund,” and may deposit up to $100,000 from the Settlement Fund in
it.  The Class Notice and Administration Fund may be used by Lead
Counsel to pay costs and expenses reasonably and actually incurred in connection
with providing notice to the Class, locating Class Members, assisting with the
filing of claims, administering and distributing the Settlement Fund to
Authorized Claimants, processing Proof of Claim and Release forms and paying
escrow fees and costs, if any.  The Class Notice and Administration
Fund may also be invested and earn interest as provided for in ¶2.3 of this
Stipulation.  Any costs or expenses expended for notice or claims
administration in excess of $100,000 shall be paid from the Settlement Fund,
subject to approval of Lead Counsel.  In no event shall Defendants
have any responsibility for or liability with respect to the Escrow Agent or its
actions, the Class Notice and Administration Fund, the Settlement Fund or the
administration of the Settlement Fund.

       

      
        	
                 
      

              	
                c.

              	
                Taxes

              


      

      


      2.8       (a) The
Settling Parties and the Escrow Agent agree to treat the Settlement Fund as
being at all times a “qualified settlement fund” within the meaning of Treas.
Reg. §1.468B-1.  In addition, the Escrow Agent shall timely make such
elections as necessary or advisable to carry out the provisions of this ¶2.8,
including the “relation-back election” (as defined in Treas. Reg. §1.468B-1)
back to the earliest permitted date.  Such elections shall be made in
compliance with the procedures and requirements contained in such
regulations.  It shall be the responsibility of the Escrow Agent to
timely and properly prepare and deliver the necessary documentation for
signature by all necessary parties, and thereafter to cause the appropriate
filing to occur.

       

          (b)  For
the purpose of § 1.468B of the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder, the “administrator” shall be the
Escrow Agent.  The Escrow Agent shall timely and properly file all
informational and other tax returns necessary or advisable with respect to the
Settlement Fund (including without limitation the returns described in Treas.
Reg. § 1.468B-2(k)).  Such returns (as well as the election
described in ¶2.8(a) hereof) shall be consistent with this ¶2.8 and in all
events shall reflect that all Taxes (including any estimated Taxes, interest or
penalties) on the income earned by the Settlement Fund shall be paid out of the
Settlement Fund as provided in ¶2.8(c) hereof.

       

          (c)  All
Taxes (including any estimated Taxes, interest or penalties) arising with
respect to the income earned by the Settlement Fund, including any Taxes or tax
detriments that may be imposed upon the Defendants or their Related Parties with
respect to any income earned by the Settlement Fund for any period during which
the Settlement Fund does not qualify as a “qualified settlement fund” for
federal or state income tax purposes (“Taxes”), and (b) expenses and costs
incurred in connection with the operation and implementation of this ¶2.8
(including, without limitation, expenses of tax attorneys and/or accountants and
mailing and distribution costs and expenses relating to filing (or failing to
file) the returns described in this ¶2.8) (“Tax Expenses”), shall be paid out of
the Settlement Fund; in no event shall the Defendants or their Related Parties
have any responsibility for or liability with respect to the Taxes or the Tax
Expenses.  The Escrow Agent shall indemnify and hold each of the
Defendants and their Related Parties harmless for Taxes and Tax Expenses
(including, without limitation, Taxes payable by reason of any such
indemnification).  Further, Taxes and Tax Expenses shall be treated
as, and considered to be, a cost of administration of the Settlement Fund and
shall be timely paid by the Escrow Agent out of the Settlement Fund without
prior order from the Court and the Escrow Agent shall be obligated
(notwithstanding anything herein to the contrary) to withhold from distribution
to Authorized Claimants any funds necessary to pay such amounts including the
establishment of adequate reserves for any Taxes and Tax Expenses (as well as
any amounts that may be required to be withheld under Treas. Reg.
1.468B-2(1)(2)).  The parties hereto agree to cooperate with the
Escrow Agent, each other, and their tax attorneys and accountants to the extent
reasonably necessary to carry out the provisions of this ¶2.8.

       

          (d) For
the purpose of this ¶2.8, references to the Settlement Fund shall include both
the Settlement Fund and the Class Notice and Administration Fund and shall also
include any earnings thereon.

       

      
        	
                 
      

              	
                d.

              	
                CAFA
      Notice

              


      

      
2.9           Settling
Defendants shall no later than ten (10) days following the Court’s entry of the
Order Preliminarily Approving Settlement and Providing For Notice, and pursuant
thereto, serve upon the appropriate State official of each State in which a
Class Member resides and the Attorney General of the United States a notice of
the proposed Settlement in compliance with the requirements of the Class Action
Fairness Act, 28 U.S.C. § 1711 et seq.

       

      
        	
                 
      

              	
                e.

              	
                Termination
      of Settlement

              


      

       

      2.10           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 Class
Notice and Administration Fund (in each case, including accrued interest), less
expenses actually incurred and properly due and owing in connection with the
settlement provided for herein, shall be refunded pro rata to U.S. Auto and/or
any other entities contributing to the Settlement Fund, as provided in ¶7.3
below.

       

      
        	
                 
      

              	
                3.      
      Notice Order and Settlement Hearing

              


      

       

      3.1           Promptly
after execution of the Stipulation, the Settling Parties 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 mailing the Notice of Pendency and Proposed
Settlement of Class Action (the “Notice”) substantially in the form of
Exhibit A-1 hereto and publication of a summary notice substantially in the
form of Exhibit A-3 hereto.  The Notice shall include the general
terms of the settlement set forth in the Stipulation, the proposed Plan of
Allocation, the general terms of the Fee and Expense Application and the date of
the Settlement Hearing.

       

      3.2           Lead
Counsel shall request that after notice is given, the Court hold a hearing (the
“Settlement Hearing”) and approve the settlement of the Litigation as set forth
herein.  At or after the Settlement Hearing, Lead Counsel also will
request that the Court approve the proposed Plan of Allocation and the Fee and
Expense Application.  Lead Counsel may also request Court approval of
an application by Lead Plaintiff for reimbursement for reasonable costs and
expenses, including Plaintiffs’ counsel’s time spent on the
Litigation.  Promptly after execution of this Stipulation, the
Settling Parties 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.  The Notice Order shall
specifically include provisions that, among other things, will:

       

      (a)  Preliminarily
approve this Stipulation and the Settlement set forth herein as being fair,
just, reasonable and adequate to all Settling Parties;

       

      (b)  Approve
the form of Notice of Pendency and Settlement of Class Action (the “Notice”)
(substantially in the form of Exhibit A-1 hereto) for mailing to Members of
the Settlement Class;

       

       

      (c)  Approve
the form of Proof of Claim and Release (“Proof of Claim and Release”)
(substantially in the form of Exhibit A-2 hereto) for mailing to Members of
the Settlement Class;

       

      (d)  Approve
a summary notice of the Settlement for publication (the “Summary Notice”)
(substantially in the form of Exhibit A-3 hereto);

       

      (e)  Direct
Lead Plaintiff’s Counsel to mail or cause to be mailed by first class mail the
Notice and the Proof of Claim and Release to those Persons in the Settlement
Class who can be identified through reasonable effort, on or before the
date specified in the Notice Order;

       

      (f)   Direct
that nominees who purchased or otherwise acquired U.S. Auto common stock during
the relevant time periods send the Notice and Proof of Claim and Release form to
all beneficial owners of such U.S. Auto common stock within ten (10) days after
receipt of the Notice or send a list of the names and addresses of such
beneficial owners to Lead Plaintiff’s Counsel within ten (10) days of receipt of
the Notice;

       

      (g)  Direct
Lead Plaintiff’s Counsel to cause the Summary Notice to be published once in a
widely circulated national business-oriented publication or wire service on or
before the date specified in the Notice Order;

       

      (h)  Provide
that Settlement Class Members who wish to participate in the Settlement provided
for in this Stipulation shall complete and file Proof of Claim and Release forms
pursuant to the instructions contained therein;

       

      (i)   Find
that the notice given pursuant to subparagraphs (b)-(g) above, constitutes the
best notice practicable under the circumstances, including individual notice to
all Persons in the Settlement Class who can be identified upon reasonable
effort, and constitutes valid, due and sufficient notice to all Persons in the
Settlement 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 (the “Settlement Hearing”) to be held by the Court to consider and
determine whether the Settlement proposed by this Stipulation should be approved
as fair, reasonable and adequate and whether the Judgment approving the
Settlement should be entered;

       

      (k)  Provide
that any Settlement Class Member who so desires may exercise the right to
exclude themselves from the Settlement Class but only if they comply with the
requirements for so doing as set forth in the Notice;

       

      (l)   Provide
that at or after the Settlement Hearing, the Court shall determine whether the
proposed Plan of Allocation should be approved;

       

      (m) 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 reimbursement of
expenses should be awarded to Lead Plaintiff’s Counsel out of the Settlement
Fund;

       

      (n)  Provide
that pending final determination of whether the Settlement contained in this
Stipulation should be approved, neither the Lead Plaintiff nor any Settlement
Class Member, either directly, representatively, or in any other capacity shall
commence or prosecute any action or proceeding in any court or tribunal
asserting any of the Released Claims against the Released Persons;

       

      (o)  Provide
that any objections to: (i) the Settlement proposed by this Stipulation;
(ii) entry of the Judgment approving the Settlement; (iii) the
proposed Plan of Allocation; or (iv) Lead Plaintiff’s Counsel’s fee and
expense application(s), and any papers submitted in support of said objections
shall be considered by the Court at the Settlement Hearing only if, on or before
the date specified in the Notice Order, Persons making objections shall file and
serve written objections (which shall set forth each objection and the basis
therefor) and copies of any papers in support of their position as set forth in
the Notice Order; and

       

      (p)  Provide
that the Settlement Hearing may, from time to time and without further notice to
the Settlement Class, be continued or adjourned by Order of the
Court.

       

      
        	
                 
      

              	
                4.    
      Releases

              


      

       

      4.1           Upon
the Effective Date, as defined in ¶1.9 hereof, Lead Plaintiff, 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 against the Released Persons, whether or not such Class Member
executes and delivers a Proof of Claim and Release form.

       

      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, all Class Members and anyone claiming through or on behalf
of any of them, will be forever barred and enjoined from commencing,
instituting, prosecuting, or continuing to prosecute any action or other
proceeding in any court of law or equity, arbitration tribunal, or
administrative forum, asserting the Released Claims against any of the Released
Persons.

       

      4.4           Upon
the Effective Date, as defined in ¶1.9 hereof, 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 the Lead Plaintiff,
each and all of the Class Members, and Lead 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 Calculation of Claims, Final Awards and Supervision and
      Distribution of Settlement Fund

              


      

       

      5.1           The
Claims Administrator shall administer and calculate the claims submitted by
Class Members.

       

      5.2           The
Settlement Fund shall be applied as follows:

       

      (a)  to
pay all the costs and expenses reasonably and actually incurred in connection
with providing notice, locating Class Members, assisting with the filing of
claims, administering and distributing the Settlement Fund to Authorized
Claimants, processing Proof of Claim and Release forms and paying escrow fees
and costs, if any;

       

      (b)  to
pay the Taxes and Tax Expenses described in ¶2.8 hereof;

       

      (c)  to
pay Lead Counsel’s attorneys’ fees and expenses (the “Fee and Expense Award”),
to the extent allowed by the Court; and

       

      (d)  ater
the Effective Date, to distribute the balance of the Settlement Fund (the “Net
Settlement Fund”) to Authorized Claimants as allowed by the Stipulation, the
Plan of Allocation, or the Court.

       

      5.3           Upon
the Effective Date and thereafter, and in accordance with the terms of the
Stipulation, the Plan of Allocation, or such further approval and further
order(s) of the Court as may be necessary or as circumstances may require, the
Net Settlement Fund shall be distributed to Authorized Claimants, subject to and
in accordance with the following.

       

      5.4           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 are specified in the Proof
of Claim and Release and as are reasonably available to the Authorized
Claimant.

       

      5.5           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 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 releases
contained herein, and the Judgment.

       

      5.6           The
Net Settlement Fund shall be distributed to the Authorized Claimants
substantially in accordance with a Plan of Allocation to be described in the
Notice and approved by the Court.  If there is any balance remaining
in the Net Settlement Fund after six (6) months from the date of distribution of
the Net Settlement Fund (whether by reason of tax refunds, uncashed checks or
otherwise), Lead Counsel shall, if feasible, reallocate such balance among
Authorized Claimants in an equitable and economic
fashion.  Thereafter, any balance which still remains in the Net
Settlement Fund shall be donated to an appropriate, non-profit organization
agreed upon by Lead Counsel.

       

      5.7           This
is not a claims-made settlement and, if all conditions of the Stipulation are
satisfied and the settlement becomes Final, no portion of the Settlement Fund
will be returned to U.S. Auto or any insurer.

       

      5.8           No
Person shall have any claim against Lead Counsel, the Claims Administrator or
other entity designated by Lead Counsel based on distributions made
substantially in accordance with the Stipulation and the settlement contained
herein, the Plan of Allocation, or further order(s) of the Court.

       

      5.9           It
is understood and agreed by the Settling Parties that any proposed Plan of
Allocation of the Net Settlement Fund including, but not limited to, any
adjustments to an Authorized Claimant’s 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 proceeding relating to
the Plan of Allocation shall not operate to terminate or cancel the Stipulation
or affect or delay the finality of the Court’s Judgment approving the
Stipulation and the settlement set forth therein (including the releases
contained therein), or any other orders entered pursuant to the
Stipulation.

       

      
        	
                 
      

              	
                6.    
      Lead Counsel’s Attorneys’ Fees and Reimbursement of
    Expenses

              


      

       

      6.1           Lead
Counsel may submit an application or applications (the “Fee and Expense
Application”) for distributions to them from the Settlement Fund for:
(a) an award of attorneys’ fees; and (b) reimbursement of actual
expenses, including the fees of any experts or consultants incurred in
connection with prosecuting the Litigation, plus any interest on such attorneys’
fees and expenses at the same rate and for the same periods as earned by the
Settlement Fund (until paid), as may be awarded by the Court.  Lead
Counsel reserves the right to make additional applications for fees and expenses
incurred.  Defendants do not by this Stipulation take any position on
any application for fees and expenses that Lead Counsel may file.

       

      6.2           The
attorneys’ fees and expenses, as awarded by the Court, shall be paid to Lead
Counsel from the Settlement Fund, as ordered, immediately after the Court
executes an order awarding such fees and expenses.

       

      6.3           The
procedure for and the allowance or disallowance by the Court of any applications
by Lead Counsel for attorneys’ fees and expenses, including the fees of experts
and consultants, to be paid out of the Settlement Fund, are not part of the
settlement set forth in the Stipulation, and are to be considered by the Court
separately from the Court’s consideration of the fairness, reasonableness and
adequacy of the settlement set forth in the Stipulation, and any order or
proceedings relating to the Fee and Expense Application, or 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 the settlement of the Litigation set
forth therein (including the releases contained therein).

       

      
        	
                 
      

              	
                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
Settlement Fund has been funded as required by ¶2.1 hereof;

      (b)           Defendants
have not exercised their option to terminate the Stipulation pursuant to the
terms of the Supplemental Agreement referenced in ¶7.8 hereof;

      (c)           the
Court has entered the Notice Order, as required by ¶3.1 hereof;

      (d)           the
Court has entered the Judgment, or a judgment substantially in the form of
Exhibit B hereto; and

      (e)           the
Judgment has become Final, as defined in ¶1.11 hereof.

       

      7.2           Upon
the occurrence of all of the events referenced in ¶7.1 hereof, any and all
remaining interest or right of Defendants in or to the Settlement Fund, if any,
shall be absolutely and forever extinguished.  If all of the
conditions specified in ¶7.1 hereof are not met, then the Stipulation shall be
canceled and terminated subject to ¶7.4 hereof unless Lead Counsel and counsel
for Defendants mutually agree in writing to proceed with the
Stipulation.

       

      7.3           Unless
otherwise ordered by the Court, in the event the Stipulation shall terminate, or
be canceled, or shall not become effective for any reason, then within ten (10)
business days after written notification of such event is sent by counsel for
Defendants to the Escrow Agent and in accordance with the terms of ¶2.10 hereof;
the Settlement Fund (including accrued interest), plus any amount then remaining
in the Class Notice and Administration Fund (including accrued interest), less
expenses and any costs which have either been disbursed pursuant to ¶2.7 hereof
or are determined to be chargeable to the Class Notice and Administration Fund,
shall be refunded by the Escrow Agent to the respective entities that
contributed to the Settlement Fund, pursuant to written instructions from U.S.
Auto or its successor-in-interest.  At the request of counsel to U.S.
Auto, the Escrow Agent or its designee shall apply for any tax refund owed on
the Settlement Fund and pay the proceeds, after deduction of any fees or
expenses incurred in connection with such application(s) for refund, pursuant to
written direction from U.S. Auto or its successor-in-interest.

       

      7.4           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 the date this Settlement Agreement
was fully executed.  In such event, the terms and provisions of the
Stipulation, with the exception of ¶¶2.10, 7.3-7.5, and 8.4 hereof; shall have
no further force and effect with respect to the Settling Parties and shall not
be used in this Litigation or in any other proceeding for any purpose, 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 Lead Counsel shall
constitute grounds for cancellation or termination of the
Stipulation.

       

      7.5           If
the Effective Date does not occur, or if the Stipulation is terminated pursuant
to its terms, neither the Lead Plaintiff nor Lead Counsel shall have any
obligation to repay any amounts actually and properly disbursed from the Class
Notice and Administration Fund.  In addition, any expenses already
incurred and properly chargeable to the Class Notice and Administration Fund
pursuant to ¶2.7 hereof at the time of such termination or cancellation, but
which have not been paid, shall be paid by the Escrow Agent in accordance with
the terms of the Stipulation prior to the balance being refunded in accordance
with ¶¶2.10 and 7.3 hereof.

       

      7.6           If
a case is commenced in respect to 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 the entry of a final order
of a court of competent jurisdiction determining the transfer of the Settlement
Fund, or any portion thereof, by or on behalf of such Defendant to be a
preference, voidable transfer, fraudulent transfer or similar transaction, then,
at Lead Plaintiff’s option, as to such Defendant, the releases given and
Judgment entered in favor of such Defendant pursuant to this Stipulation shall
be null and void.

       

      7.7           Notwithstanding
the foregoing ¶7.6, Lead Plaintiff’s right to nullify the releases and Judgment
as to any Defendant pursuant to ¶7.6 hereof shall expire upon the Effective
Date.

       

      7.8           Pursuant
to Fed. R. Civ. P. 23(e)(3), under which the parties seeking approval must file
a statement identifying any agreement made in connection with the proposal,
there is a Supplemental Agreement to this Stipulation of Settlement with
additional provisions confidentially agreed upon between the
Parties.

       

      
        	
                 
      

              	
                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 reasonable best efforts to accomplish the foregoing terms and
conditions of the Stipulation.

       

      8.2           The
Settling Parties intend this settlement 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.  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 Federal Rule of Civil Procedure
11.  While retaining their right to deny liability, Defendants agree
that the amount paid to the Settlement Fund 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.  The Settling Parties reserve their right to rebut, in a
manner that such party determines to be appropriate, any contention made in any
public forum that the Litigation was brought or defended in bad faith or without
a reasonable basis.

       

      8.3           Neither
the Stipulation nor the settlement contained therein, nor any act performed or
document executed pursuant to or in furtherance of the Stipulation or the
settlement: (a) 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 Defendants or their Related Parties; or (b) is or may be
deemed to be or may be used as an admission of, or evidence of, any fault or
omission of any of the Defendants or their Related Parties in any civil,
criminal or administrative proceeding in any court, administrative agency or
other tribunal.  Defendants and/or their Related Parties may file the
Stipulation and/or the Judgment in any action that may be brought against them
in order to support a defense or counterclaim based on principles of res judicata, collateral
estoppel, release, good faith settlement, judgment bar or reduction or any other
theory of claim preclusion or issue preclusion or similar defense or
counterclaim.

       

      8.4           All
agreements made and orders entered during the course of the Litigation relating
to the confidentiality of information shall survive this Stipulation, pursuant
to their terms.

       

      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
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.

       

      8.8           Lead
Counsel, on behalf of the Class, are expressly authorized by Lead Plaintiff to
take all appropriate action required or permitted to be taken by the Class
pursuant to the Stipulation to effectuate its terms and also are expressly
authorized to enter into any modifications or amendments to the Stipulation on
behalf of the Class which they deem appropriate.

       

      8.9           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.

       

      8.10         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.  A complete set of original executed counterparts shall be
filed with the Court.

       

      8.11         The
Stipulation shall be binding upon, and inure to the benefit of, the successors
and assigns of the parties hereto.

       

      8.12         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.

       

      8.13           The
Stipulation and the Exhibits hereto shall be considered to have been negotiated,
executed and delivered, and to be wholly performed, in the State of California,
and the rights and obligations of the parties to the Stipulation shall be
construed and enforced in accordance with, and governed by, the internal,
substantive laws of the State of California without giving effect to that
State’s choice-of-law principles.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      IN
WITNESS WHEREOF, the parties hereto have caused the Stipulation to be executed,
by their duly authorized attorneys dated as of May 1, 2008.

       

      Dated:  May
1, 2008                        By: /s/KIM E.
MILLER

      


      Kim E.
Miller (SBN 178380)

      KAHN
GAUTHIER SWICK, LLC

      12 E.
41st Street, 12th Floor

      New York,
NY 10017

      Tel:
(xxx) xxx-xxxx

      Fax:
(xxx) xxx-xxxx

      Email:
xxxxxxxxxxxxxxxx

      
Lewis S.
Kahn

      KAHN
GAUTHIER SWICK, LLC

      650
Poydras Street, Suite 2150

      New
Orleans, LA 70130

      Tel:
(xxx) xxx-xxxx

      Fax:
(xxx) xxx-xxxx

      Email:
xxxxxxxxxxxxxxxx

      


      Lead
Counsel for the Class

      


      Elaine
Byszewski (SBN 222304)

      HAGENS
BERMAN SOBOL SHAPIRO, LLP

      700 South
Flower Street, Suite 2940

      Los
Angeles, CA 90017

      Tel:
(xxx) xxx-xxxx

      Fax:
(xxx) xxx-xxxx

      


      Liaison
Counsel for the Class

      


      Dated:  May
1, 2008                        By: /s/NINA F.
LOCKER

      


      Nina F.
Locker

      Peri
Nielsen

      Luke
Liss

      WILSON
SONSINI GOODRICH & ROSATI P.C.

      650 Page
Mill Road

      Palo
Alto, California 94304-1050

      Tel:
(xxx) xxx-xxxx

      Fax:
(xxx) xxx-xxxx

      


      Counsel
for Defendants U.S Auto Parts Network, Inc., Sol Khazani, Mehran Nia, Michael J.
McClane, Richard E. Pine, Robert T. Majteles, Frederic W. Harman, Ellen F.
Siminoff and Oak Investment Partners XI, LLC

      


      Dated:  May
1, 2008                        By: /s/ROBERT A.
SACKS

      


      Robert A.
Sacks

      Diane L.
McGimsey

      SULLIVAN
& CROMWELL LLP

      1888
Century Park East

      Los
Angeles, CA 90067

      Tel: 
(xxx) xxx-xxxx

      Fax: 
(xxx) xxx-xxxx

      


      Counsel
for Defendants RBC Capital Markets Corporation, Thomas Weisel Partners LLC,
Piper Jaffray & Co. and JMP Securities LLC