AGNT 8-K
AGNT, Inc. (AGNT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01Entry into a Material Definitive Agreement.
Settlement of Litigation
On December 9, 2024, eXp World Holdings, Inc. (the “Company”) and its subsidiaries, eXp Realty, LLC, eXp Realty of California, Inc., eXp Realty of Southern California, Inc., eXp Realty of Greater Los Angeles, Inc., and eXp Realty of Northern California, Inc. (collectively, “eXp”),entered into a definitive settlement agreement (the “Settlement Agreement”) to resolve on a nationwide basis the pending class action lawsuit brought by 1925 Hooper LLC, et al. (United States District Court for the Northern District of Georgia, Atlanta Division Case No. 1:23-cv-05392- SEG) (the “Lawsuit”). The settlement resolves all claims in the Lawsuit and similar claims on a nationwide basis against the Company (collectively, the “Claims”) and release eXp, its subsidiaries, related entities and affiliates, and their independent contractor real estate agents in the United States from the Claims.
As set forth in the Settlement Agreement, eXp has agreed to pay, into a qualified settlement fund, $34 million (the “Settlement Amount”), which will be paid as follows: 50% of the Settlement Amount within 30 business days after preliminary court approval of the Settlement Agreement, which the Company expects to occur in the first or second quarter of 2024, and 50% of the Settlement Amount on or before the one-year anniversary of initial settlement payment, which amounts will be released from escrow subject to the terms of the Settlement Agreement.
In addition, eXp agreed to make certain changes to its business practices and emphasize certain practices that have been a part of eXp’s longstanding policies and practices, including: reminding its agents that eXp has no rule requiring agents to make or accept offers of compensation from buyer representatives; requiring its agents to disclose to clients that commissions are not set by law and are fully negotiable; prohibiting its buyer agents from claiming buyer agent services are free, unless they will receive no financial compensation; requiring its brokerages and agents disclose to the buyer the listing broker’s offer of compensation for prospective buyers’ agents; prohibiting its agents from using any technology (or manual methods) to sort listings by offers of compensation, unless requested by the client; reminding its brokerages and agents of their obligation to show properties regardless of compensation for buyers’ agents for properties that meet the buyer’s priorities; and developing training materials for its brokerages and agents that support all the practice changes outlined in the injunctive relief.
The Settlement Agreement remains subject to preliminary and final court approval and will be effective upon final approval by the court.
The Settlement Agreement and any actions taken to carry out the Settlement Agreement are not an admission or concession of liability, or of the validity of any claim, defense, or point of fact or law on the part of any party.
The foregoing descriptions of the Settlement Agreement and the transactions contemplated thereby contained in this Current Report on Form 8-K do not purport to be complete and are qualified in their entirety by reference to the Settlement Agreement, a copy of which is filed herewith as Exhibit 10.1 and is incorporated herein by reference.
Forward-Looking Statements
This Current Report on Form 8-K includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are often identified by the use of words such as “believe,” “intend,” “expect,” “estimate,” “plan,” “outlook,” “project,” “anticipate,” “may,” “will,” “would” and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. Forward-looking statements include statements related to the Lawsuit and the Settlement Agreement, including preliminary and final court approval of the Settlement Agreement, the amount and timing of payments pursuant to the Settlement Agreement; the expected $34.0 million pre-tax charge for the Settlement Amount and the impact of such charge on the Company’s results of operations and cash flows; and changes to the business practices of the Company and the impact that such changes may have on the business or results of operations of the Company. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily accurately indicate the times at which such performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include, without limitation, the ability of the parties to obtain preliminary and final court approval of the proposed Settlement and the final terms being substantially the same as those set forth in the proposed Settlement, and those risks and uncertainties described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission (“SEC”) and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company’s website at www.expworldholdings.com and on the SEC website at www.sec.gov. Readers are cautioned not
to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no obligation, to update this information to reflect future events or circumstances.
Item 9.01Financial Statements and Exhibits
(d) Exhibits.
Exhibit No. | Description |
10.1 | |
104 | Inline XBRL for the cover page of this Current Report on Form 8-K |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| eXp World Holdings, Inc. |
| (Registrant) |
|
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Date: January 8, 2025 | /s/ James Bramble |
| James Bramble |
| Chief Legal Counsel |
Exhibit 10.1
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
1925 HOOPER LLC; ROBERT J. ARKO; and ANDREW M. MOORE; on behalf of themselves and all others similarly situated, Plaintiffs, v. NATIONAL ASSOCIATION OF REALTORS, et al., Defendants. | Case No. 1:23-cv-05392-MHC |
SETTLEMENT AGREEMENT
This Settlement Agreement (“Settlement Agreement”) is made and entered into this 9th day of December 2024 (the “Execution Date”), by and between Defendant eXp World Holdings, Inc. (“eXp Holdings”), eXp Realty, LLC, eXp Realty of California, Inc., eXp Realty of Southern California, Inc., eXp Realty of Greater Los Angeles, Inc., and eXp Realty of Northern California, Inc. (together with eXp Holdings, “eXp”), and Plaintiffs 1925 Hooper LLC, Robert J. Arko and Andrew M. Moore (collectively “Plaintiffs”), who filed suit in the above captioned action both individually and as representatives of one or more putative classes of home sellers. Plaintiffs enter this Settlement Agreement both individually and on behalf of the Settlement Class, as defined below.
WHEREAS, in the Action Plaintiffs allege that eXp Holdings participated in a conspiracy to raise, fix, maintain, or stabilize real estate commissions in violation of Section 1 of the Sherman Act and corresponding state laws;
WHEREAS, eXp Holdings denies Plaintiffs’ allegations in the Action and has asserted defenses to Plaintiffs’ claims;
WHEREAS, extensive arm’s-length settlement negotiations have taken place between Plaintiffs’ Co-Lead Counsel and counsel for eXp, including, among other things, bilateral negotiations, a mediation with two nationally recognized and highly experienced mediators at the conclusion of which a binding Settlement Term Sheet was executed, and the subsequent drafting and negotiation of this Settlement Agreement;
WHEREAS, the Action will continue against the Non-eXp Defendants unless Plaintiffs separately settle with any of the Non-eXp Defendants;
WHEREAS, Plaintiffs have conducted an extensive investigation into the facts and the law regarding the claims asserted in the Action, and have concluded that a settlement with eXp according to the terms set forth below is fair, reasonable, and adequate and in the best interest of Plaintiffs and the Settlement Class;
WHEREAS, eXp believes that it is not liable for the claims asserted and has good defenses to Plaintiffs’ claims, but nevertheless has decided to enter into this Settlement Agreement to avoid further expense, inconvenience, and the distraction of burdensome and protracted litigation, to obtain the nationwide releases, orders, and judgment contemplated by this Settlement Agreement, and to put to rest with finality all claims that Plaintiffs and Settlement Class Members have or could have asserted against the Released Parties, as defined below; and
WHEREAS, eXp, in addition to the settlement payments set forth below, has agreed to cooperate with Plaintiffs and to implement certain practice changes, each as set forth in this Settlement Agreement.
NOW, THEREFORE, in consideration of the agreements and releases set forth herein and other good and valuable consideration, and intending to be legally bound, it is agreed by and between eXp and the Plaintiffs that the Action be settled, compromised, and dismissed with prejudice as to eXp Holdings only, without costs to Plaintiffs, the Settlement Class or eXp except as provided for herein, subject to the approval of the Court, on the following terms and conditions:
The following terms, as used in this Settlement Agreement, have the following meanings:
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KNIGHT PALMER LLC
1360 Peachtree Street, Suite 1201
Atlanta, GA 30309
KABAT, CHAPMAN & OZMER LLP
171 17th Street NW, Suite 1550
Atlanta, GA 30363
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B.Stipulation to Class Certification
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C.Approval of this Settlement Agreement and Dismissal of the Action
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The Parties shall take all reasonable actions as may be necessary to obtain final approval of the Settlement Agreement without modification to any of its material terms and conditions.
D.Releases, Discharge, and Covenant Not to Sue
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A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.
or any equivalent, similar or comparable present or future law or principle of law of any jurisdiction, including but not limited to Section 20-7-11 of the South Dakota Codified Laws, which provides that “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR;” or (ii) any law or principle of law of any jurisdiction that would limit or restrict the effect or scope of the provisions of the release set forth above, without regard to the subsequent discovery or existence of such other, different, or additional facts. The Releasing Parties acknowledge that the inclusion of unknown claims in the definition of Released Claims was separately bargained for and was a material element of the Settlement Agreement.
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E.Payment of the Settlement Amount
F.The Settlement Fund
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G.Taxes
H.Rescission
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I.Practice Changes
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| i. | advise and at least yearly remind eXp’s agents (including, without limitation, independent contractor real estate agents) that there is no eXp requirement that they must make offers to or must accept offers of compensation from buyer brokers or other buyer representatives or that, if made, such offers must be blanket, unconditional, nonnegotiable or unilateral; |
| ii. | require that any eXp agents (including, without limitation, independent contractor real estate agents) disclose to prospective home sellers and buyers and state in conspicuous language that broker commissions are not set by law and are fully negotiable (i) in their listing agreement if it is not a government or MLS-specified form, (ii) in their buyer representation agreement if there is one and it is not a government or MLS-specified form, and (iii) in pre-closing disclosure documents if there are any and they are not government or MLS-specified forms. In the event that the listing agreement, buyer representation agreement, or pre-closing disclosure documents is a government or MLS-specified form, then eXp will require that any eXp agents include a disclosure with conspicuous language expressly stating that broker commissions are not set by law and are fully negotiable; |
| iii. | prohibit all eXp agents (including, without limitation, independent contractor real estate agents) acting as cooperating broker, buyer broker or other buyer representative from advertising or otherwise representing that their services are free unless they will receive no financial compensation from any source for those services; |
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| iv. | require that eXp owned brokerages and their agents disclose any offer of compensation made in connection with each home marketed to prospective buyers in any format. For purposes of clarity, a seller’s offer or “seller’s concession” within the MLS fields that are not limited to or conditioned on it being used to compensate a cooperating broker, buyer broker or other buyer representative, but may be used as such, is not an “offer of compensation” for purposes of this subparagraph; |
| v. | prohibit eXp agents (including, without limitation, independent contractor real estate agents) from utilizing any technology or taking manual actions to filter out or restrict listings that are searchable by and displayed to consumers based on the level of compensation offered to any cooperating broker, buyer broker or other buyer representative unless directed to do so by the client (and eliminate any internal eXp systems or technological processes that may currently facilitate such practices); |
| vi. | advise and at least yearly remind eXp company owned brokerages and their agents of their obligation to (and recommend and encourage that any franchisees and their agents) show properties regardless of the existence or amount of compensation offered to buyer brokers or other buyer representatives provided that each such property meets the buyer’s articulated purchasing priorities; |
| vii. | for each of the above points, for any company-owned brokerages, franchisees, and their agents, develop training materials consistent with the above relief and eliminate or modify any contrary training materials currently used. |
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J.Cooperation
| i. | eXp will use reasonable best efforts to produce relevant summary-level, companywide transactional data limited to the class period. This data will be aggregated on a quarterly basis and will provide transactional volume, transactional value, and commissions paid on a state by state basis. The data will be sufficient to show volume of commerce and the average commission percentage. To the extent reasonably feasible, the data will be produced at a generally similar time to when other Defendants produce transactional data in the Action. |
| ii. | eXp will produce documents sufficient to show its and its officers, employees, and agents’ membership and participation in NAR, that was subject to, and complied with the challenged NAR rules during the class period, including whether and how eXp accepted, adopted and implemented the challenged NAR rules. |
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| iii. | eXp will provide up to seven hours of 30(b)(6) testimony and up to seven hours of 30(b)(1) testimony of no more than two 30(b)(1) witnesses. The time only includes Plaintiffs’ questioning and does not include questioning by any other party. Notwithstanding anything to the contrary in this Paragraph, no eXp deposition witness will sit for more than seven hours on the record of questioning, including questioning from Plaintiffs and any other party, provided that Plaintiffs get up to 4.5 hours. eXp will make one, mutually agreed upon, witness available at trial, as necessary, and provide access via counsel to that witness prior to trial testimony for up to two (2) hours. |
| iv. | eXp will use reasonable best efforts to authenticate documents and/or things produced by it in the Action where the facts indicate that the documents and/or things at issue are authentic, by declarations or affidavits if possible, or at hearings or trial if necessary; |
| v. | eXp will use reasonable best efforts to provide the facts necessary to establish that documents and/or things produced by it in the Action are “business records,” a present sense impression, an excited utterance, a recorded recollection, or are otherwise admissible under the Federal Rules of Evidence, by declarations or affidavits if possible, or at hearings or trial if necessary; |
| vi. | eXp will use reasonable best efforts at its expense to provide relevant class member and listing data and answer questions about that data to support the provision of class notice, administration of any settlements, or the litigation of the Action; |
| vii. | if another Defendant includes a witness on a witness list who is then a current officer or employee of eXp or its subsidiaries, eXp will cooperate in providing access via counsel to that witness prior to trial testimony for up to two (2) hours; |
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| viii. | eXp agrees not to provide greater assistance in discovery or trial to any defendant than to the Plaintiffs, unless required by subpoena or other compulsory process. |
K.Miscellaneous
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If directed to Plaintiffs, the Settlement Class, or any member of the Settlement Class, to:
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Bryan Knight
Jonathan Palmer
KNIGHT PALMER LLC
1360 Peachtree Street, Suite 1201
Atlanta, GA 30309
Nathan Chapman
KABAT, CHAPMAN & OZMER LLP
171 17th Street NW, Suite 1550
Atlanta, GA 30363
If directed to eXp:
Stephen J. Siegel
Andrew D. Campbell
Elizabeth C. Wolicki
Julie Johnston-Ahlen
ARMSTRONG TEASDALE LLP
100 North Riverside Plaza
Chicago, IL 60606
James A. Morsch
SAUL EWING LLP
161 N. Clark Street, Suite 4200
Chicago, IL 60601
[The remainder of this page is intentionally left blank.]
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CO-LEAD COUNSEL /s/ Bryan Knight KNIGHT PALMER LLC /s/ Nathan Chapman ex KABAT, CHAPMAN & OZMER LLP EXP WORLD HOLDINGS, INC., EXP REALTY, LLC, EXP REALTY OF CALIFORNIA, INC., EXP REALTY OF SOUTHERN CALIFORNIA, INC., EXP REALTY OF GREATER LOS ANGELES, INC., AND EXP REALTY OF NORTHERN CALIFORNIA, INC. By: /s/ James Bramble James Bramble, General Counsel and authorized signatory | |
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1925 HOOPER LLC; ROBERT J. ARKO; and ANDREW M. MOORE; on behalf of themselves and all others similarly situated, Plaintiffs, v. NATIONAL ASSOCIATION OF REALTORS, et al., Defendants. | Case No. 1:23-cv-05392-MHC |
Plaintiffs 1925 Hooper LLC, Robert J. Arko, and Andrew M. Moore (collectively “Plaintiffs”) and Defendant eXp World Holdings, Inc. (“eXp Holdings”), eXp Realty, LLC, eXp Realty of California, Inc., eXp Realty of Southern California, Inc., eXp Realty of Greater Los Angeles, Inc., and eXp Realty of Northern California, Inc. (together with eXp Holdings, “eXp”) (collectively, “the Parties”), by and through and including their undersigned counsel, stipulate and agree as follows:
WHEREAS, each firm defined in the Settlement Agreement as Co-Lead Counsel desires to give an undertaking (the “Undertaking”) for repayment of the award of attorneys’ fees, costs, and expenses approved by the Court, and
WHEREAS, the Parties agree that this Undertaking is in the interests of all Parties and in service of judicial economy and efficiency.
NOW, THEREFORE, the undersigned counsel, individually and as agent for his/her law firm, hereby submits both to the jurisdiction of the Court for the purpose of enforcing the provisions of this Undertaking.
Capitalized terms used herein without definition have the meanings given to them in the Settlement Agreement.
By receiving any payments pursuant to the Settlement Agreement, Co-Lead Counsel and their shareholders, members, and/or partners submit to the jurisdiction of the United States District Court for the
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Northern District of Georgia for the enforcement of, and any and all disputes relating to or arising out of, the reimbursement obligation set forth herein and in the Settlement Agreement.
In the event that the Settlement Agreement does not receive final approval or any part of the final approval is vacated, overturned, reversed, or rendered void as a result of an appeal, or the Settlement Agreement is voided, rescinded, or otherwise terminated for any other reason, Co-Lead Counsel shall, within thirty (30) days, repay to eXp, based upon written instructions provided by eXp, the full amount of the attorneys’ fees, expenses and costs paid to Co-Lead Counsel from the Settlement Fund, including any accrued interest.
In the event the Settlement Agreement becomes Effective, but the attorneys’ fees, costs, and expenses awarded by the Court or any part of them are vacated, overturned, modified, reversed, or rendered void as a result of an appeal, Co-Lead Counsel shall within thirty (30) days repay to the Settlement Fund, based upon written instructions provided by the settlement administrator, the attorneys’ fees, expenses and costs paid to Co-Lead Counsel from the Settlement Fund in the amount vacated or modified, including any accrued interest.
This Undertaking and all obligations set forth herein shall expire upon finality of all appeals of the final settlement order and judgment pertaining to attorneys’ fees, such that the finality of those fees no longer remains in doubt.
In the event Co-Lead Counsel fails to repay to eXp any of the attorneys’ fees, expenses and costs that are owed to it pursuant to this Undertaking, the Court shall, upon application of eXp, and notice to Co-Lead Counsel, summarily issue orders, including but not limited to judgments and attachment orders against Co-Lead Counsel.
The undersigned stipulate, warrant, and represent that they have both actual and apparent authority to enter into this stipulation, agreement, and undertaking on behalf of each firm identified as Co-Lead Counsel. This agreement will only be effective upon its execution by each firm identified in the Settlement Agreement as Co-Lead Counsel.
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Co-Lead Counsel acknowledge that this Undertaking is a material component of the Settlement Agreement and agree to use its reasonable efforts to timely effect the terms specified in this Undertaking. Each undersigned Co-Lead Counsel warrants and represents that it is not “insolvent” within the meaning of applicable bankruptcy laws as of the time this Undertaking is executed.
This Undertaking 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.
Signatures by facsimile or PDF shall be as effective as original signatures.
The undersigned declare under penalty of perjury under the laws of the United States and the State of Georgia that they have read and understand the foregoing and that it is true and correct.
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IT IS SO STIPULATED THROUGH COUNSEL OF RECORD:
CO-LEAD COUNSEL /s/ Bryan Knight KNIGHT PALMER LLC /s/ Nathan Chapman KABAT, CHAPMAN & OZMER LLP EXP WORLD HOLDINGS, INC., EXP REALTY, LLC, EXP REALTY OF CALIFORNIA, INC., EXP REALTY OF SOUTHERN CALIFORNIA, INC., EXP REALTY OF GREATER LOS ANGELES, INC., AND EXP REALTY OF NORTHERN CALIFORNIA, INC. By: /s/ James Bramble James Bramble, General Counsel and authorized signatory | |
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