SETTLEMENT AGREEMENT AND RELEASE Plaintiffs and Class

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					                SETTLEMENT AGREEMENT AND RELEASE
        Plaintiffs and Class Representatives MARTIN EHRLICH, ALEX WONG,

BARBARA BRACKENBURY, AND MIKE DIRKES                        (“Plaintiffs” or “Class

Representatives”), by and through their counsel, and Defendant BMW of North

America, LLC (“BMW”), by and through its counsel, hereby enter into this Settlement

Agreement and Release (“Settlement Agreement”), subject to the approval of the

Court, providing for the settlement of the claims herein described against BMW (the

“Settlement”) and the Mutual Release set forth herein.

        WHEREAS, Plaintiff MARTIN EHRLICH has filed a putative class action on

behalf of a California class against BMW in the United States District Court for the

Central District of California captioned Ehrlich v. BMW of North America LLC, 2:10-

cv-01151-ABC (PJWx) (the “Ehrlich Action”), asserting claims for (1) Violation of

California’s Consumer Legal Remedies Act, California Civil Code § 1750, et seq.

(“CLRA”), (2) Violation of California’s Unfair Business Practices Act, California

Business & Professions Code § 17200, et seq. (“UCL”) pursuant to California’s Secret

Warranty Law, California Civil Code § 1795.90, et seq., (3) Violation of UCL other

than Violation of California’s Secret Warranty Law, California Business &

Professions Code § 17200, et seq., and (4) Breach of Implied Warranty pursuant to

Song-Beverly Consumer Warranty Act, California Civil Code §§ 1792 and 1791.1, et

seq.;


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      WHEREAS, Plaintiffs ALEX WONG, BARBARA BRACKENBURY, AND

MIKE DIRKES have filed a putative class action on behalf of a California and

Nationwide class against BMW in the United States District Court for the Central

District of California captioned Wong et al. v. BMW of North America, LLC et al.,

2:11-cv-05092-ABC -PJW (the “Wong Action”), asserting claims for (1) Breach of

Express Warranty Under N.J. Stat. Ann. 12A:2-313, (2) Breach of Written Warranty

Under the Magnusson-Moss Warranty Act, (3) Violation of Various States’ Express

Warranty Statutes, (4) Breach of Implied Warranty Under N.J. Stat. Ann. 12A:2-314,

(5) Violation of Various States’ Implied Warranty Statutes, (6) Violation of

California’s Consumer Legal Remedies Act, and (7) Violation of California’s Unfair

Business Practices Act.

      WHEREAS, Plaintiffs and BMW (the “Parties”) recognize that the outcomes

in the Ehrlich Action and Wong Action (together the “Litigation” or “Action”) are

uncertain and that pursuing the Litigation to judgment would entail substantial cost,

risk, and delay;

      WHEREAS, the Parties have explored and discussed at length the factual and

legal issues in the Litigation and have participated in multiple in-person mediations

and telephonic meetings concerning the issues raised by Plaintiffs in the Litigation;

      WHEREAS, Plaintiffs and their counsel have conducted an investigation and

evaluation of the factual and legal issues raised by the claims asserted in the Litigation


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and believe that, in light of the cost, risk, and delay of continued litigation balanced

against the benefits of the Settlement as set forth in this Settlement Agreement, that

such settlement is in the best interests of the Class, and is fair, reasonable, and

adequate;

      WHEREAS, for purposes of this settlement only, the Parties agree to the

certification of a settlement class (“Class” or “Settlement Class”) generally defined as

follows:

             All current and former owners and lessees within the continental

             United States of the following vehicles (“Class Vehicle”):

              x    MINI R50 (June 11, 2001—Nov. 28, 2006 production

                   period);

              x    MINI R52 (March 6, 2004—July 31, 2008 production

                   period);

              x    MINI R53 (July 18, 2001—Nov. 28, 2006 production

                   period);

      WHEREAS, the Parties desire to compromise and settle all issues, claims,

and/or facts asserted in the Litigation or that could have been reasonably asserted

based upon the facts alleged in the Litigation by or on behalf of members of the Class;

      WHEREAS, the Parties agree that the following persons and entities should be

excluded from the Class: (1) BMW, its subsidiaries and affiliates, officers, directors,

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and employees, (2) Insurers of the Class Vehicles, (3) all persons and/or entities

claiming to be subrogated to the rights of Class Members, (4) issuers or providers of

extended vehicle warranties or issuers or providers of extended service contracts, (5)

individuals and/or entities who validly and timely opt-out of the Settlement,

(6) consumers or businesses that have purchased Class Vehicles previously deemed a

total loss (i.e. salvage) (subject to verification through Carfax or other means),

(7) current and former owners of a Class Vehicle that previously have released their

claims against BMW with respect to the issues raised in the Litigation, (8) any current

or former owner or lessee of a Class Vehicle that has received or obtained full

reimbursement in money or in kind (goodwill) or warranty replacement or assistance

with respect replacement of a windshield on a Class Vehicle, (9) United States

residents that have purchased Class Vehicles in the United States but have since

transported the vehicle outside the United States for permanent use abroad, (10)

Individuals or entities that have purchased and/or leased Class Vehicles as “fleet”

vehicles (i.e. rentals or company vehicles), and (11) the Judge(s) and/or attorneys to

whom the Litigation is or will be assigned;

      WHEREAS, Plaintiffs, by and through Class Counsel, have: (a) made a thorough

investigation of the facts and circumstances surrounding the allegations asserted in the

Litigation; (b) engaged in investigation and discovery of the claims asserted in the




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Litigation, and (c) have evaluated and considered the law applicable to the claims

asserted in the Litigation, including the defenses that BMW likely would assert;

      WHEREAS, BMW does not believe Plaintiffs’ claims are meritorious and has

denied and continues to deny that it is legally responsible or liable to Plaintiffs or any

member of the Class for any of the matters asserted in this Litigation, but has

concluded that settlement is desirable to avoid the time, expense, and inherent

uncertainties of defending protracted litigation and to resolve, finally and completely

all pending and potential claims of Plaintiffs and all members of the Class relating to

claims which were or could have been asserted by Plaintiffs and the Class in this

Litigation relating to the alleged practices and claimed defects at issue;

      WHEREAS, Plaintiffs’ counsel is experienced in this type of class litigation,

recognize the costs and risks of prosecution of this Litigation, and believe that it is in

Plaintiffs’ interest and the interest of all Class Members, to resolve this Action, and

any and all claims against BMW arising from the conduct alleged in the Action, in this

Settlement Agreement;

      WHEREAS, significant arm’s-length settlement negotiations have taken place

between the Parties and, as a result, this Settlement Agreement has been reached,

subject to the Court approval process set forth herein;




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      WHEREAS, the undersigned Parties believe that this Settlement Agreement

offers significant benefits to Class Members and is fair, reasonable, adequate and in

the best interest of Class Members; and

      WHEREAS, this Settlement Agreement is made and entered into by and

among Plaintiffs, individually and on behalf of the Class, and BMW;

      NOW, THEREFORE, it is hereby stipulated and agreed, by and between the

undersigned Parties, as follows:



I.    DEFINITIONS

      As used in this Settlement Agreement, the following terms shall have the

meaning set forth below. Where appropriate, terms used in the singular shall be

deemed to include the plural and vice versa.

      1)     Action. “Action” shall mean the Ehrlich Action and the Wong Action,

which the Court consolidated on November 9, 2011, and together are now referred to

as “In Re MINI Windshield Actions” Master File No. 2:10-cv-01151-ABC (PJWx),

and also defined herein as the “Litigation.”

      2)     BMW.      “BMW” shall mean BMW of North America, LLC, the

defendant in this Action.

      3)     Claim. “Claim” means a request for reimbursement for an Out-of-

Pocket Expense.


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      4)     Claim Form. “Claim Form” shall mean a form to be used by Class

Members to request reimbursement for an Out-of-Pocket Expense.

      5)     Claim Validation Process. “Claim Validation Process” shall mean the

process in which, upon being notified of a conditionally approved Claim by the

Claims Administrator, BMW will have sixty (60) days to (i) match the vehicle VIN to

the Claim; (ii) determine if the Claim has been previously paid in whole or in part by

BMW through goodwill payments or warranty payments; (iii) determine if the Class

Member had previously released any claims against BMW for cracks in the

windshield of a Class Vehicle as a result of a settlement of a claim or lawsuit; (iv)

conduct a data search to determine if the Class Vehicle has previously been involved

in an accident; and (v) enter data into the BMW warranty database concerning the

Class Vehicle and windshield on the Class Vehicle.

      6)     Claims Administrator. “Claims Administrator” shall mean an entity

retained by BMW, and approved by the Court, to administer Claims.

      7)     Class. “Class” shall mean all residents of the United States who

currently own or lease, or previously owned or leased, a Class Vehicle. Excluded

from the Class are (1) BMW, its subsidiaries and affiliates, officers, directors, and

employees, (2) Insurers of the Class Vehicles, (3) all persons and/or entities claiming

to be subrogated to the rights of Class Members, (4) issuers or providers of extended

vehicle warranties or issuers or providers of extended service contracts, (5)


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individuals and/or entities who validly and timely opt-out of the Settlement, (6)

consumers or businesses that have purchased Class Vehicles previously deemed a

total loss (i.e. salvage) (subject to verification through Carfax or other means), (7)

current and former owners of a Class Vehicle that previously have released their

claims against BMW with respect to the issues raised in the Litigation, (8) any current

or former owner or lessee of a Class Vehicle that has received or obtained full

reimbursement in money or in kind (goodwill) or warranty replacement or assistance

with respect replacement of a windshield on a Class Vehicle, (9) United States

residents that have purchased Class Vehicles in the United States but have since

transported the vehicle outside the United States for permanent use abroad, (10)

Individuals or entities that have purchased and/or leased Class Vehicles as “fleet”

vehicles (i.e. rentals or company vehicles), and (11) the Judge(s) and/or attorneys to

whom the Litigation is or will be assigned.

      8)     Class Counsel. “Class Counsel” shall mean Initiative Legal Group

APC, Strategic Legal Practices, APC, and the Law Office of Robert L. Starr..

      9)     Class Counsel Fees and Expenses. “Class Counsel Fees and Expenses”

shall mean Class Counsel’s reasonable attorneys’ fees and expenses, which are

subject to approval of the Court.

      10)    Class Members.         “Class Members” are all current and former

owners/lessees of Class Vehicles who are not specifically excluded from the Class,


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who do not opt-out of the Proposed Settlement Class, or whose objection (if any) is

overruled by the Court.

      11)    Class Representatives. “Class Representatives” shall mean Martin

Ehrlich, Alex Wong, Barbara Brackenbury, and Mike Dirkes.

      12)    Class Notice. “Class Notice” shall mean the Court-approved form of

notice to the Class, mutually prepared and agreed upon by the Parties, informing the

Class of, among other things, (i) the preliminary approval of the Settlement; (ii) the

scheduling of the Final Approval Hearing; (iii) their opportunity to comment on or

object to, or exclude themselves from, the Settlement; and (iv) their opportunity to

submit a Claim.

      13)    Class Vehicle(s). “Class Vehicles” are MINI R50 (June 11, 2001—Nov.

28, 2006 production period), MINI R52 (March 6, 2004—July 31, 2008 production

period), MINI R53 (July 18, 2001—Nov. 28, 2006 production period), sold or leased

in the continental United States.

      14)    Class Windshields.       “Class Windshields” refer to (1) an OEM

Windshield installed on a Class Vehicle as original equipment or (2) a replacement

OEM windshield installed on a Class Vehicle by an authorized MINI dealer.

      15)    Court. “Court” shall mean the United States District Court for the

Central District of California, the Honorable Audrey B. Collins, or her duly appointed

successor.


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      16)    Defendants. “Defendants” shall mean BMW NA, BMW HOLDING,

Bayerische Motoren Werke Aktiengesellschaft (BMW AG), all BMW AG

subsidiaries and related entities, BMW Financial Services, LLC and every entity

involved in the design, development, manufacture, sale, lease or distribution of the

Class Vehicles, and the foregoing entities’ past and present officers, directors,

shareholders, predecessors in interest, and successors in interest.

      17)    Defendants’ Counsel.       “Defendants’ Counsel” shall mean Lewis

Brisbois Bisgaard & Smith LLP.

      18)    Effective Date. “Effective Date” shall mean the date following the entry

of the Final Approval Order on which the time for any appeal expires, or the date on

which all appeals from the Final Approval Order are finally decided or terminated,

whichever date is later.

      19)    Final Approval Hearing. “Final Approval Hearing” shall mean the

hearing at which the Court will consider and finally decide whether to enter the Final

Approval Order.

      20)    Final Approval Order. “Final Approval Order” shall mean the order of

the Court that approves this Settlement Agreement and makes such other final rulings

as are contemplated by this Settlement Agreement, which may or may not include

approving payment of Incentive Awards and Class Counsel’s Fees and Expenses, and

which shall be mutually prepared and agreed upon by the Parties.


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      21)       Incentive Awards. “Incentive Awards” shall mean the amounts to be

negotiated by the Parties that BMW will pay to the Class Representatives to

compensate them for their time and efforts on behalf of the Class, subject to approval

of the Court.

      22)       Litigation. “Litigation” shall mean the Action as defined above.

      23)       Objection and Comment Date. “Objection and Comment Date” shall

mean the date agreed upon by the Parties or otherwise ordered by the Court for

members of the Class to comment on or object to the Settlement Agreement’s terms

or provisions and submit any required statements, proof, or other materials and/or

argument.

      24)       Out of Pocket Expense. “Out of Pocket Expense” means reasonable

money paid by or on behalf of a Class Member to replace a Class Windshield that

sustained a Stress Crack, which the Class Member was not otherwise fully reimbursed

by insurance, warranty, or goodwill. Out of Pocket Expenses for personal injury or

property damage other than damage to the Class Windshield are specifically excluded

from the settlement, including but not limited to money paid by or on behalf of a

Class Member in furtherance of repairs to a Class Vehicle not related to the Class

Windshield. Money paid by or on behalf of a Class Member to replace a Class

Windshield that is not caused by a Stress Crack is not an Out of Pocket Expense. Out

Of Pocket Expenses are limited to reasonable parts and labor for a replacement Class


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Windshield, and are subject to the maximum allowable replacement cost and

reimbursement percentages set forth in this Settlement Agreement. No other costs,

including but not limited to, costs for rental vehicles and/or loaners, are eligible for

reimbursement.

      25)    Parties. “Parties” shall mean the Plaintiffs and Defendants.

      26)    Plaintiffs. “Plaintiffs” shall mean the Class Representatives as defined

above.

      27)    Preliminary Approval Order. “Preliminary Approval Order” shall

mean the order of the Court preliminarily approving this Settlement Agreement,

which shall be mutually prepared and agreed upon by the Parties.

      28)    Reimbursement Period. “Reimbursement Period” shall mean the first 5

years/55,000 miles (whichever occurs first) from the date the Class Vehicle originally

was put in service.

      29)    Released Claims. “Released Claims” refers to the claims released by

this Settlement Agreement, as set forth in Section VIII and its related subsections.

      30)    Request for Exclusion. “Request for Exclusion” shall mean a request

by any Class Member for exclusion from the Settlement.

      31)    Required Documentation. “Required Documentation” shall mean a

receipt, work order, or other documentary evidence which reflects the date, price,




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vehicle information and description of the vehicle part (i.e. windshield) that was

replaced.

      32)    Required Deductible Documentation.               “Required Deductible

Documentation” shall mean, for Claims that seek reimbursement of insurance

deductibles, (1) a repair order or invoice evidencing a replacement of a Class

Windshield on a Class Vehicle during the Reimbursement Period, and (2) proof of

payment of the deductible amount (check, credit card receipt, or cash invoice), and (3)

proof of the insurance deductible amount (letter from insurer stating deductible

amount or declarations page for relevant insurance policy showing deductible).

      33)    Settlement. “Settlement” shall mean the agreement by the Parties to

resolve this Litigation, the terms of which have been memorialized and provided for

in this Settlement Agreement.

      34)    Settlement Agreement.        “Settlement Agreement” shall mean this

Settlement Agreement and Release.

      35)    Settlement Class Members. “Settlement Class Members” shall have

the same meaning as Class Members.

      36)    Stress Crack. “Stress Crack” shall mean a crack in a Class Windshield

that is not caused (1) by an outside influence (rock, road debris, or other event that

normally would cause a windshield to chip and/or crack), or (2) motor vehicle

accident/collision, or (3) an act of God (weather conditions or damage caused by


                                          13
weather conditions, such as hailstorms, lightning, earthquakes and tornados, etc.).

However, unless there is proof of a crack caused by an outside influence in the

documents supplied by a class member or in Defendants’ database, Defendants will

accept the claim for reimbursement under the Settlement Agreement and will not

otherwise dispute the claim.

       37)   VIN. “VIN” shall mean the vehicle identification number for a Class

Vehicle.

       38)   Warranty Period.        “Warranty Period” shall mean the normal 4

year/50,000 mile (whichever occurs first) standard warranty period for MINI vehicles.

II.   REQUIRED EVENTS

      Promptly after execution of this Settlement Agreement by all Parties:

      A.     Class Counsel and Defendants’ Counsel shall take all reasonable and

necessary steps, to obtain entry of the Preliminary Approval Order and obtain entry of

the Final Approval Order.

      B.     In the event that the Court fails to issue the Preliminary Approval Order,

or fails to issue the Final Approval Order, this Settlement Agreement is voidable by

either party. However, the Parties agree to use their best efforts, consistent with this

Settlement Agreement, to cure any defect(s) identified by the Court.

      C.     The Parties acknowledge that prompt approval, consummation, and

implementation of the Settlement set forth in this Settlement Agreement is essential.


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The Parties shall cooperate with each other in good faith to carry out the purposes of

and effectuate this Settlement Agreement, shall promptly perform their respective

obligations hereunder, and shall promptly take any and all actions and execute and

deliver any and all additional documents and all other materials and/or information

reasonably necessary or appropriate to carry out the terms of this Settlement

Agreement and the transactions contemplated hereby.

       D.    Upon Entry of the Final Approval Order, this Action shall be dismissed,

on its merits and with prejudice, subject to the continuing jurisdiction of this Court.

The Final Approval Order also will enjoin the prosecution of any litigation or class

action related to the Class Windshields on behalf of any member of the Class (other

than individuals who timely and properly opt out of or request exclusion from the

Class).

III.   SETTLEMENT TERMS

       A.    Reimbursement for Class Windshields that Sustained a Stress Crack

             Before the Effective Date.

       (1)   BMW will reimburse Class Members for their reasonable Out-of-Pocket

Expenses (including reasonable labor costs) incurred prior to the Effective Date to

replace a Class Windshield that sustained a Stress Crack during the Reimbursement

Period, and for which Required Documentation is provided, as follows:




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             (a) 75% reimbursement for Out Of Pocket Expenses incurred to

                  replace a Stress Cracked original factory installed windshield

                  (subject to the limitations below);

             (b) 40% reimbursement for Out Of Pocket Expenses incurred to

                  replace the first Stress Cracked replacement Original Equipment

                  Manufacturer (“OEM”) windshield installed by an authorized

                  MINI dealership (subject to the limitations below);

             (c) 30% reimbursement for Out Of Pocket Expenses incurred to

                  replace the second or later Stress Cracked replacement OEM

                  windshield installed by an authorized MINI dealership (subject to

                  the limitations below).

      (2)    Reimbursement is not available for (1) any non-OEM windshield that

sustains a crack, or (2) a crack in any OEM windshield that is not installed by an

authorized MINI dealer.

      (3)    The reimbursement amount under section III(A)(1)(a)-(c) shall be the

lesser of (1) Out of Pocket Expenses actually incurred multiplied by the applicable

percentages in section III(A)(1)(a)-(c), or (2) $1,250, the total maximum allowable

amount for a windshield replacement, including labor costs multiplied by the

applicable percentages in section III(A)(1)(a)-(c).      Labor rates are deemed

“reasonable” if they are commensurate with the prevailing hourly labor rates charged


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by authorized MINI dealerships in the city or county where the Class Windshield is

replaced.

      B.     Replacement of Class Windshields That Sustain Stress Cracks After the

             Effective Date

      If Class Members seek to replace a Class Windshield on a Class Vehicle due to

a Stress Crack after the Effective Date, the following terms apply:

      (1)    Class Vehicles that are presented to an authorized MINI dealership for

replacement of a Class Windshield due to a Stress Crack during the Warranty Period

will be subject to the normal terms and conditions of the MINI 4 year/50,000 mile

warranty.

      (2)    Class Vehicle that are presented to authorized MINI dealerships for a

Stress Crack to a Class Windshield after the Effective Date and after the Warranty

Period has expired but within 5 year/55,000 miles Reimbursement Period are eligible

for coverage pursuant to the reimbursement percentages in section III(A)(1)(a)-(c),

and any terms, conditions, and provisions set forth in this Settlement.

      C.     Reimbursement of Insurance Deductibles.

      BMW will reimburse Class Members for any insurance deductibles they paid to

replace a Class Windshield that sustained a Stress Crack during the Reimbursement

Period prior to the Effective Date. To obtain reimbursement for such deductibles,

Class Members must submit a Claim Form and provide the Required Deductible


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Documentation. Claims for reimbursement of insurance deductibles under this

paragraph are subject to the percentages set forth in section III(A)(1)(a)-(c).

      D.     Conditions for Obtaining Reimbursement

      (1)    To obtain reimbursement under Section III(A) or III(C), Class Members

must submit a Claim Form with all Required Documentation or Required Deductible

Documentation (as applicable), and certify under penalty of perjury on the Claim

Form that the Class Windshield sustained a Stress Crack. Absent proof of a crack

caused by an outside influence in the documents supplied by a Class Member or in

Defendants’ database, Defendants will accept for reimbursement purposes and will

not dispute a documented claim, a signed declaration by the claimant, under the

penalty of perjury, that the crack on the Class Windshield for which reimbursement is

sought was caused by a Stress Crack. The declaration will be part of the Claim Form

Class Members must sign when they submit a claim for reimbursement, and will state

as follows: “I declare under penalty of perjury that (1) the crack on the Class

Windshield for which reimbursement is sought occurred during the Reimbursement

Period, (2) I am seeking reimbursement for Out Of Pocket costs incurred limited to

this windshield replacement, and (3) the crack on the Class Windshield was caused by

a Stress Crack (i.e. the crack was not caused (1) by an outside influence (rock, road

debris, or other event that normally would cause a windshield to chip and/or crack), or

(2) motor vehicle accident/collision, or (3) an act of God (weather conditions or


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damage caused by weather conditions, such as hailstorms, lightning, earthquakes and

tornados, etc.).”

       (2)    Class Members shall have 120 days from the Effective Date of the

Settlement to submit a Claim.

       (3)    No reimbursement under section III(A) or III(C) is available to any Class

Member that had 100% of the replacement costs for a cracked Class Windshield paid

by warranty or goodwill. If a Class Member received less than 100% reimbursement

under goodwill or warranty, he may make a claim for any unreimbursed portion of

their Out of Pocket Expenses subject to the percentages set forth in Section

III(A)(1)(a)-(c).

IV.   NOTICE AND RELATED PROVISIONS

      A.     Mailed Notice: Within one hundred and twenty (120) days of the Court’s

entry of a Preliminary Approval Order, BMW will provide notice of this settlement

by first class mail to all known Class Members who purchased or leased a Class

Vehicle. Notice will be given both to original Class Vehicle owners and/or lessees

whose names and contact information is within BMW’s consumer data, and to current

Class Vehicle owners by employing Polk or any similar service.

      B.     Settlement Website: BMW will require that the Claims Administrator

maintain a website that will contain: (1) instructions on how to file a Claim; (2)

instructions on how to contact BMW or Class Counsel for assistance; (3) a copy of the


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class notice and the Settlement Agreement; and (4) other information BMW and Class

Counsel mutually agree is relevant for dissemination to Class Members regarding the

proposed settlement.

      C.     The Parties agree that any publications (through websites, website

postings, chat rooms, media interviews, etc.) or any other communications by the

parties regarding this Settlement will be consistent with the Settlement Agreement,

Class Notice, Claim Form, Preliminary Approval Order, Final Approval Order, and

any press release that may be mutually prepared and agreed upon by the Parties.

Nothing in this paragraph shall limit (1) Class Counsel’s ability to communicate with

Class Representatives, putative Class Members, or the Court, and (2) BMW’s ability

to communicate with its dealers and consumers, or the Court.

      D.     Proof of Notice. No later than ten (10) days prior to the Final Approval

Hearing, BMW shall provide an affidavit for the Court, with a copy to Class Counsel,

attesting that notice was disseminated in a manner consistent with the terms of this

Settlement Agreement, or those otherwise required by the Court.

      E.     All costs of the Claims Administrator and Class Notice will be paid by

BMW. There shall be no charge to BMW, however, if the Class Notice is posted on

Class Counsel’s website(s), or for posting any other information on such website(s).




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V.    CLAIMS ADMINISTRATOR

      A.     BMW will employ Gilardi & Co., or a similarly qualified Claims

Administrator approved by the Court, to administer the Claims process.

      B.     The Claims Administrator will be responsible for implementing and

administering reimbursement claims by Class Members, including, but not limited

to, the following tasks:

             (1)    Receive and conduct an initial validation screening of claims to

             determine timeliness of submission, completeness of the Claim, and

             completeness of Required Documentation;

             (2)    Transmitting all approved Claims to BMW for the Claim

             Validation Process.

             (3)    Collect and transmit to Class Counsel and BMW the names and

             contact information of Class Members who “opt out” of the proposed

             settlement.

      C.     All Claims that the Claims Administrator approves for payment will be

transmitted to BMW for the Claim Validation Process, which BMW will complete

within sixty (60) days.       Claims that are incomplete (e.g. lack Required

Documentation) or are not approved for payment by the Claims Administrator will not

undergo the Claim Validation Process until the Claim is complete.




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      D.     Once BMW completes the Claim Validation Process, the Claims

Administrator is required within thirty (30) days to send to the Class Member by first

class mail either all reimbursements requested under Section III herein or, if fewer

than all requested reimbursements are approved, a written explanation stating all

reasons for refusing to send the reimbursement(s), including steps the Class Member

can take to cure the deficiencies. The approved reimbursements will be paid in the

form of a check that must be cashed within ninety (90) days from the date on the

check.

      E.     Any Class Member whose claim is deemed incomplete (e.g. lacking

Required Documentation or Required Deductible Documentation), or whose claim is

denied in whole or in part will receive a notice from the Claims Administrator by first

class mail a written explanation stating the reasons for refusing to send the

reimbursement(s), including steps the individual can take to cure the deficiencies. The

Class Member receiving such notice will be allowed thirty (30) days to submit

materials to cure the deficiencies. Submissions by the Class Member, if subsequently

approved for payment, will be subject to the Claim Validation Process and the

procedures outlined in Paragraph V(C)-V(D). The Claims Administrator, on a

monthly basis, shall provide to Class Counsel and Defendants’ counsel summary

information concerning the number of claims made, number of claims validated,

number of returned claimed for incompleteness, and total amount of payouts on


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claims made such that Class Counsel and Defendant’s counsel may inspect and

monitor the claims process.

      F.     In any instance in which the Claims Administrator finally denies a Claim,

the Class Member disputing the final determination must first contact BMW Customer

Relations to attempt to informally resolve his or her dispute with respect to a denied

claim. If an informal resolution cannot be achieved, all such disputes shall be jointly

presented for resolution through binding arbitration before a mutually acceptable

arbitrator. The parties waive their right to appeal the arbitrator’s decision, in whole or

in part. In the event of arbitration, Class Counsel or the Class Members shall jointly

submit all disputed claims within seventy-five (75) days after receipt from BMW of

its rejection of said claims and the basis supporting the rejection. No disputed claims

may be submitted to arbitration unless submitted within the seventy-five (75) day

time frame specified in this paragraph. BMW shall be responsible for the fees of the

arbitrator and its own legal fees, but not for any attorney’s fees incurred by Class

Counsel or the Class Member in connection with such arbitration.

VI.   REQUESTS FOR EXCLUSION BY CLASS MEMBERS

      A.     The provisions of this paragraph shall apply to any Request for

Exclusion. Any Class Member may make a Request for Exclusion by mailing or

delivering such request in writing to the Claims Administrator, Class Counsel, and to

Defendants’ Counsel at the addresses set forth in the Class Notice. Any Request for


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Exclusion must be postmarked or delivered not later than the date specified in the

Court’s Preliminary Approval Order. The Request for Exclusion shall (i) state the

Class Member’s full name and current address, (ii) provide the model year and VIN of

his/her/its Class Vehicle(s) and the approximate date(s) of purchase or lease, and (iii)

specifically and clearly state his or her desire to be excluded from the Settlement and

from the Class. Failure to comply with these requirements and to timely submit the

Request for Exclusion will result in the Class Member being bound by the terms of the

Settlement.

      B.      Any Class Member who submits a timely Request for Exclusion may not

file an objection to the Settlement and shall be deemed to have waived any rights or

benefits under this Settlement Agreement.

      C.      The parties shall jointly report the names of all individuals who have

submitted a Request for Exclusion to the Court no less than ten (10) days prior to the

Final Approval Hearing.

VII. OBJECTIONS BY SETTLEMENT CLASS MEMBERS

      A.      The Parties will request that the Court enter an order requiring any Class

Member who wishes to be heard orally at the Final Approval Hearing, or who wishes

for any objection to be considered, to file a written notice of objection by the

Objection Date, as well as a notice of intention to appear at the Final Approval

Hearing. To state a valid objection to the Settlement, an objecting Class Member


                                           24
must provide the following information in his of her written objection: (i) full name,

current address, and current telephone number; (ii) the model year of the Class

Vehicle(s), as well as the Class Vehicle’s VIN; (iii) a statement of the position(s) the

objector wishes to assert, including the factual and legal grounds for the position; and

(iv) provide copies of any other documents that the objector wishes to submit in

support of his/her/its position. In addition, any Class Member objecting to the

Settlement shall provide a detailed list of any other objections submitted by the

objector, or the objector’s counsel, to any class action settlements submitted in any

court, whether state, federal or otherwise, in the United States in the previous five (5)

years. If the Class Member or his or her counsel has not objected to any other class

action settlement in any court in the United States in the previous five (5) years, he or

she shall affirmatively so state in the written materials provided in connection with the

objection to this Settlement. Finally, subject to approval of the Court, any objecting

Class Member may appear, in person or by counsel, at the Final Approval Hearing

held by the Court, to show cause why the proposed Settlement should not be approved

as fair, adequate and reasonable, or object to any petitions for attorneys’ fees,

incentive awards, and reimbursement of reasonable litigation costs and expenses. The

objecting Class Member must file with the Clerk of the Court and serve upon all

counsel designated in the Class Notice, a notice of intention to appear at the Fairness

Hearing (“Notice of Intention to Appear”) by the Objection Deadline or on such other


                                           25
date that may be set forth in the Class Notice. The Notice of Intention to Appear must

include copies of any papers, exhibits, or other evidence that the objecting Class

Member (or his/her/its counsel) will present to the Court in connection with the

Fairness Hearing. Any Class Member who does not provide a Notice of Intention to

Appear in complete accordance with the deadlines and other specifications set forth in

the Class Notice, and who has not filed an objection in complete accordance with the

deadlines and other specifications set forth in this Settlement Agreement and the Class

Notice, subject to approval by the Court, will be deemed to have waived any

objections to the Settlement and can be barred from speaking or otherwise presenting

any views at the Final Approval Hearing. The filing of an objection allows Class

Counsel or Defendants’ Counsel to notice such objecting person for and take his or

her deposition consistent with the Federal Rules of Civil Procedure at an agreed-upon

location, and to seek any documentary evidence or other tangible things that are

relevant to the objection. Failure by an objector to make himself or herself available

for a deposition or comply with expedited discovery requests may result in the Court

striking said objector’s objection and otherwise denying that person the opportunity to

make an objection or be further heard. The Court reserves the right to tax the costs of

any such discovery to the objector or the objector’s counsel should the Court

determine that the objection is frivolous or is made for an improper purpose.




                                          26
      B.     The agreed-upon procedures and requirements for filing objections in

connection with the Final Approval Hearing are intended to ensure the efficient

administration of justice and the orderly presentation of any Class Member’s objection

to the Settlement Agreement, in accordance with the due process rights of all Class

Members. The Preliminary Approval Order and Class Notice will require all Class

Members who have any objections to file such notice of objection or request to be

heard with the Court, and serve by mail or hand delivery such notice of objection or

request to be heard upon Class Counsel and Defendants’ Counsel at the addresses set

forth in the Class Notice, by no later than the Objection Date. The Preliminary

Approval Order will further provide that objectors who fail to properly or timely file

their objections with the Court, along with the required information and

documentation set forth above, or to serve them as provided above, may not be heard

during the Final Approval Hearing, their objections may be waived and their

objections may not be considered by the Court, at the Court’s discretion.

      C.     In the event of an appeal from any order of the Court granting final

approval, Class Counsel agrees that it will be solely responsible for defending the

Court’s final approval order on appeal at their own cost. BMW will join and/or not

oppose Class Counsel’s defense of the final approval order. If the appeal relates to the

Court’s order approving Class Counsel’s attorney’s fees and/or costs, it will be up to

BMW’s discretion whether to join or oppose such appeals. Any fees and/or costs


                                          27
incurred by Class Counsel in such appeals, including fees and/or costs incurred to

settle any claims by objectors, are the sole responsibility of Class Counsel. Class

Counsel may not seek to recover such fees and/or costs from BMW unless (1) BMW

is sole party appealing the Court’s award with respect to Class Counsel’s attorney’s

fees and/or costs, and (2) BMW is unsuccessful in such an appeal (i.e. the appeal does

not result in an order or decision of the Court of Appeal or of the district court that

reduces the attorney’s fees or costs awarded to Class Counsel).

VIII. MUTUAL RELEASE, DISMISSAL OF ACTION, AND JURISDICTION

      OF COURT

      A.     By this Settlement Agreement and the following Release, Defendants are

released from any and all claims or causes of action that were, or could have been,

asserted by the Plaintiffs or any Class Members against them, regarding the Class

Vehicle’s Class Windshields as alleged in the Action. Without assuming that the

Release given by this Settlement Agreement is a general release, Plaintiffs and Class

Members expressly waive and relinquish to the fullest extent permitted by law, the

rights provided by Section 1542 of the California Civil Code, which provides as

follows:

             A general release does not extend to claims which the creditor does

             not know or suspect to exist in his favor at the time of executing

             the release which if known by him must have materially affected his


                                          28
             settlement with the debtor.

Plaintiffs and the Settlement Class Members recognize that, even if they later discover

facts in addition to or different from those which they now know or believe to be true,

they nevertheless agree that, upon entry of the Final Approval Order and

accompanying Judgment, Plaintiffs and the Settlement Class Members fully, finally,

and forever settle and release any and all of the Released Claims. The Parties

acknowledge that the foregoing waiver and release was bargained for and is a material

element of the Settlement Agreement.

      B.     This Settlement Agreement and Release does not affect the rights of

Class Members who timely and properly request exclusion from the Settlement

Agreement. The Settlement Agreement and Release does not release claims for

personal injury, property damage, or claims for subrogation.

      C.     The administration and consummation of the Settlement as embodied in

this Settlement Agreement shall be under the authority of the Court. The Court shall

retain jurisdiction to protect, preserve, and implement the Settlement Agreement,

including, but not limited to, the Release. The Court expressly retains jurisdiction to

enter such further orders as may be necessary or appropriate in administering and

implementing the terms and provisions of the Settlement Agreement, including, but

not limited to, orders enjoining Class Members from prosecuting claims that are




                                           29
released pursuant to the Settlement Agreement and allowing for discovery related to

objecting persons.

      D.     Upon issuance of the Final Approval Order: (i) the Settlement Agreement

shall be the exclusive remedy for any and all Class Members, except those who have

opted out in accordance with the terms and provisions hereof; (ii) Defendants shall not

be subject to liability or expense of any kind to any Class Member(s) for reasons

related to the Litigation except as set forth herein; and (iii) Class Members shall be

permanently barred from initiating, asserting, or prosecuting any and all released

claims against Defendants.

IX.   ADMINISTRATION, ATTORNEYS’ FEES AND INCENTIVE AWARDS

      A.     All expenses incurred in administering this Settlement Agreement,

including, without limitation, the cost of the Class Notice, and the cost of distributing

and administering the benefits of the Settlement Agreement, shall be paid by BMW,

subject to the limitations contained herein and approval of the Court. For the purposes

of this Settlement Agreement only, Defendants agree that Plaintiffs shall be deemed

the prevailing Parties and entitled to reasonable attorneys’ fees and expenses. The

Parties will attempt to reach agreement on Class Counsel’s Fees and Expenses to be

paid to Class Counsel under the Settlement, for which Class Counsel may apply to the

Court without objection from BMW. If the Parties are unable to reach agreement, the

Parties agree to permit the Court to determine Class Counsel’s Fees and Expenses. In


                                           30
that case, Class Counsel will make an application for Class Counsel’s Fees and

Expenses to the Court, to which BMW may respond as it deems appropriate. Class

Counsel’s Fees and Expenses as agreed by the parties or approved by the Court shall

be paid to Class Counsel within fourteen (14) days after the Effective Date provided

required documentation, such as W-9 forms, timely are provided to BMW.

      B.     The Parties agree to negotiate Incentive Awards for the Plaintiffs for their

work on behalf of the Class. Such award (or the award amount approved by the Court

(if different)) shall be paid by check and delivered to Class Counsel as agreed upon by

the Parties within fourteen (14) days after the Effective Date provided required

documentation, such as W-9 forms, timely are provided to BMW.

X.    REPRESENTATIONS, WARRANTIES AND COVENANTS

      A.     Class Counsel, who are signatories hereof, represent and warrant that

they have the authority, on behalf of Plaintiffs, to execute, deliver, and perform this

Settlement Agreement and to consummate all of the transactions contemplated hereby.

This Settlement Agreement has been duly and validly executed and delivered by Class

Counsel and Plaintiffs and constitutes their legal, valid and binding obligation.

      B.     BMW, through its undersigned attorneys, represents and warrants that it

has the authority to execute, deliver, and perform this Settlement Agreement and to

consummate the transactions contemplated hereby. The execution, delivery and

performance by BMW of this Settlement Agreement and the consummation by it of


                                          31
the actions contemplated hereby have been duly authorized by all necessary corporate

action on the part of BMW. This Settlement Agreement has been duly and validly

executed and delivered by BMW and constitutes its legal, valid, and binding

obligation.

XI.   MISCELLANEOUS PROVISIONS

      A.      This Settlement Agreement is not to be used in evidence and shall not at

any time be construed or deemed to be any admission or concession by BMW with

respect to any alleged wrongdoing, fault, or omission of any kind whatsoever,

regardless of whether or not this Settlement Agreement results in entry of a Final

Approval Order as contemplated herein.           BMW specifically denies all of the

allegations made in connection with the Litigation.             Neither this Settlement

Agreement nor any class certification pursuant to it shall constitute, in this or in any

other proceeding, an admission by BMW, or evidence or a finding of any kind, that

any requirement for class certification is satisfied with respect to the Litigation, or any

other litigation, except for the limited purpose of settlement pursuant to this

Settlement Agreement. This Settlement Agreement also is made with the Parties’

express understanding and agreement that (a) under applicable laws, it is appropriate

that a class be certified for settlement purposes only; (b) BMW contests and denies

that any class, including the proposed Settlement Class, is suitable for certification as

a class under the law of any jurisdiction, other than for the purposes of this Settlement


                                            32
Agreement; and (c) notwithstanding any other provisions of this Settlement

Agreement, all actions and proceedings pursuant to it shall be consistent with the

foregoing. This provision shall survive the expiration or voiding of the Settlement

Agreement.

        B.   This Settlement Agreement is entered into only for purposes of

Settlement. In the event that the Final Approval Order is not entered or a Final

Approval Order is subsequently reversed by an appeal, this Settlement Agreement,

including any releases or dismissals hereunder, is canceled, and no term or condition

of this Settlement Agreement, or any draft thereof, or of the discussion, negotiation,

documentation or other part or aspect of the Parties’ settlement discussions, shall have

any effect, nor shall any such matter be admissible in evidence for any purpose, or

used for any purposes whatsoever in the Litigation, and all Parties shall be restored to

their prior rights and positions as if the Settlement Agreement had not been entered

into.

        C.   The Parties agree that BMW may withdraw or terminate this Settlement

Agreement prior to the Settlement Hearing if more than five percent (5%) of Class

Members have submitted valid and timely Requests for Exclusion. For purposes of

determining whether the conditions for withdrawal or termination of the Settlement

Agreement have occurred, copies of all Requests for Exclusion timely received,

together with copies of all written revocations of Requests for Exclusion, shall be


                                          33
delivered to the Defendants’ Counsel within three (3) days of receipt by the Claim

Administrator, but, in no event, later than ten (10) Court days before the Final

Approval Hearing. In the event of a withdrawal from this Settlement Agreement in

accordance with the terms of this paragraph, this Settlement Agreement shall become

null and void and of no further force and effect.

      D.     The Class Counsel Fees and Expenses, as awarded by the Court, shall be

paid in accordance with the terms set forth in paragraph IX(A) of the Settlement

Agreement within fourteen (14) days after the Effective Date of the Settlement

Agreement.

      E.     The headings of the sections and paragraphs of this Settlement

Agreement are included for convenience only and shall not be deemed to constitute

part of this Settlement Agreement or to affect its construction.

      F.     This Settlement Agreement may not be modified or amended except in

writing and signed by all of the Parties.

      G.     This Settlement Agreement may be executed in one or more counterparts,

each of which shall be deemed an original but all of which together shall constitute

one and the same instrument.

      H.     This Settlement Agreement shall be governed by and construed in

accordance with the substantive laws of the State of California without giving effect to




                                            34
any choice or conflict of law provision, or rule that would cause the application of the

laws of any other jurisdiction.

      I.     Except as otherwise provided in this Settlement Agreement, each party to

this Settlement Agreement shall bear his, her or its own costs of the Litigation.

      J.     The Parties to this Settlement Agreement reserve the right, by agreement

and subject to the Court’s approval, to grant any reasonable extensions of time that

might be necessary to carry out any of the provisions of this Settlement Agreement, as

well as to correct any inadvertent, non-substantive mistakes or typographical errors

contained in any of the Settlement papers.

      K.     Proper notice shall be given to Plaintiffs and BMW of all applications for

Court approval or Court orders required under this Settlement Agreement.

      L.     The determination of the terms of, and the drafting of, this Settlement

Agreement has been by mutual agreement after negotiation, with consideration by and

participation of all Parties and their counsel. Since this Settlement Agreement was

drafted with the participation of all Parties and their counsel, the presumption that

ambiguities shall be construed against the drafter does not apply. The Parties were

represented by competent and effective counsel throughout the course of settlement

negotiations and in the drafting and execution of this Settlement Agreement, and there

was no disparity in bargaining power among the Parties to this Settlement Agreement.




                                          35
      M.     This Settlement Agreement constitutes the entire, fully integrated

agreement among the Parties and cancel and supersede all prior written and unwritten

agreements and understandings pertaining to the Settlement of the Litigation.

      N.     The Parties agree that any disputes regarding the meaning of the terms

and conditions of this Settlement Agreement, the Parties’ rights and obligations under

this Settlement Agreement, and/or as to any disagreement regarding the manner in

which any issue or dispute arising under this Settlement Agreement should be

resolved, shall be submitted to the Court for resolution.

      O.     All notices to the Parties or counsel required by this Settlement

Agreement shall be made in writing and communicated by electronic and regular mail

to the following addresses (unless one of the Parties subsequently designates one or

more other designees):

                   Class Counsel:
Strategic Legal Practices
Payam Shahian, Esq.
1875 Century Park East, Suite 700
Los Angeles, CA 90067
Telephone: (310) 277-1040
Facsimile: (310) 943-3838
e-mail: pshahian@slpattorney.com

The Law Office of Robert L. Starr
Robert L. Starr, Esq.
23277 Ventura Boulevard
Woodland Hills, California, 91364-1002
Telephone: (888) 366-4080
Facsimile: (310) 225-9042
e-mail: starresq@hotmail.com
                                          36
February 6, 2012

				
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