St. Louis Police Retirement Systems v. Severson et al

Filing 128

FINAL ORDER AND JUDGMENT. Signed by Judge Yvonne Gonzalez Rogers on 8/12/14. (Attachments: # 1 Exhibit A: Stipulation of Settlement)(fs, COURT STAFF) (Filed on 8/12/2014)

EXHIBIT A

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KESSLER TOPAZ
MELTZER & CHECK, LLP
Eli R. Greenstein (217945)
One Sansome Street, Suite 1850
San Francisco, CA 94104
Phone: [phone]
Fax: [phone]
[e-mail]
-and-

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Eric L. Zagar (250519)
James H. Miller
Matthew A. Goldstein
280 King of Prussia Road
Radnor, PA 19087
Phone: [phone]
Fax: [phone]
[e-mail]
[e-mail]
[e-mail]

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Attorneys for Plaintiff

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
ST. LOUIS POLICE RETIREMENT SYSTEM,
On Behalf Of Itself and All Others Similarly
Situated and Derivatively on Behalf of Nominal
Defendant ABAXIS, INC.,

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Plaintiff,
v.

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STIPULATION OF SETTLEMENT

CLINTON H. SEVERSON, ALBERTO R.
SANTA INES, KENNETH P. ARON,
VLADIMIR E. OSTOICH, DONALD P.
WOOD, MARTIN V. MULROY, RICHARD J.
BASTIANI, MICHAEL D. CASEY, HENK J.
EVENHUIS, PRITHIPAL SINGH, VERNON
E. ALTMAN, AND ERNEST S. TUCKER,

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CASE NO. 12-CV-05086-YGR

Defendants,
and
ABAXIS, INC.
Nominal Defendant.

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STIPULATION OF SETTLEMENT
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STIPULATION OF SETTLEMENT

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This Stipulation of Settlement (the “Stipulation” or the “Settlement”), is made and entered

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into by and among the following Parties (as defined further in ¶ 1.11 hereof), each by and through

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their respective counsel: (i) St. Louis Police Retirement System (“Plaintiff”) on behalf of itself and

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all others similarly situated, and derivatively on behalf of Abaxis, Inc. (“Abaxis” or the

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“Company”); (ii) defendants Clinton H. Severson (“Severson”), Alberto R. Santa Ines (“Santa

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Ines”), Kenneth P. Aron (“Aron”), Vladimir E. Ostoich (“Ostoich”), Donald P. Wood (“Wood”),

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Martin V. Mulroy (“Mulroy”), Richard J. Bastiani (“Bastiani”), Michael D. Casey (“Casey”), Henk

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J. Evenhuis (“Evenhuis”), Prithipal Singh (“Singh”), Vernon E. Altman (“Altman”) and Ernest S.

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Tucker (“Tucker”) (collectively, the “Individual Defendants”); and (iii) nominal defendant Abaxis

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(collectively with the Individual Defendants, “Defendants”). This Stipulation is intended by the

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Parties to fully, finally and forever resolve, discharge and settle the Released Claims (as defined in

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¶ 1.17 hereof), upon and subject to the terms and conditions hereof.

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otherwise defined shall have the definitions set forth in ¶¶ 1.1-1.18 below.

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I.

Capitalized terms not

INTRODUCTION AND BACKGROUND OF THE ACTION

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On October 1, 2012, Plaintiff filed in the Court a Verified Shareholder Class Action and

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Derivative Complaint (the “Complaint”) that asserted class claims on behalf of a class of all persons

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and entities that held common stock in Abaxis as of the close of business on August 31, 2012,

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which represents the record date for the shareholders entitled to vote at Abaxis’s October 24, 2012

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Annual Meeting (excluding the Individual Defendants, members of the immediate family of any

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Individual Defendant, and any person, firm, trust, corporation, or other entity related to, or affiliated

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with, any Individual Defendant (“Excluded Persons”), and the legal representatives, heirs,

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successors or assigns of any such Excluded Person) (the “Class”). The Complaint also asserted

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derivative claims on behalf of nominal defendant Abaxis against the Individual Defendants

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alleging, inter alia, that: (1) the Grantor Defendants violated the terms of the Company’s 2005

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Equity Incentive Plan (the “2005 Plan”) by purportedly granting to the Officer Defendants and

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other Abaxis employees more restricted stock units (“Restricted Stock Units” or “RSUs”) than

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could be settled pursuant to the 500,000 share limit contained in the 2005 Plan (the “Restricted
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Stock Limit”); and (2) in total, the Abaxis board of directors (the “Board”) issued 870,179 shares of

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common stock upon settlement of Restricted Stock Units granted under the 2005 Plan since October

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2005 (370,179 shares in excess of the Restricted Stock Limit) and granted a total of 2,045,000

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Restricted Stock Units pursuant to the 2005 Plan (representing, if settled, 1,545,000 more shares

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than could be issued in accordance with the Restricted Stock Limit) (the “Excess RSUs”).

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Also on October 1, 2012, Plaintiff filed a motion for preliminary injunction seeking to

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enjoin Abaxis’ annual meeting of shareholders scheduled for October 24, 2012 (the “2012 Annual

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Meeting”) because the Company’s September 27, 2012 Form DEF 14A proxy statement (the “2012

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Proxy”) allegedly contained materially false and misleading statements regarding a proposed

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amendment to the 2005 Plan (the “Plan Amendment”).

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On October 23, 2012, the Court granted, in part, Plaintiff’s motion for preliminary

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injunction, enjoining the shareholder vote on the Plan Amendment until the Company made certain

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additional disclosures in the 2012 Proxy sought by Plaintiff. On October 24, 2012, the Company

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filed with the United States Securities and Exchange Commission (“SEC”) supplemental proxy

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materials containing the additional disclosures required by the Court. On November 8, 2012, the

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Company reconvened the 2012 Annual Meeting in order to allow shareholders to vote on the Plan

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Amendment, which was approved.

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On December 28, 2012, Defendants filed motions to dismiss Plaintiff’s derivative claims

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contained in the Complaint (the “Motions to Dismiss”), in which Defendants argued that Plaintiff,

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inter alia, failed to adequately plead demand futility and failed to state a claim for relief.

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Defendants’ Motions to Dismiss have been fully briefed and oral argument was held on May 7,

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2013. At the request of the Parties, the Court agreed to defer ruling on the Motions to Dismiss

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pending the Parties’ efforts to reach a settlement of the Action.

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Counsel for the Parties engaged in settlement negotiations in or about May 2013 and

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attended a mediation on September 20, 2013. Following the exchange of numerous proposals and

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counter proposals, and related negotiations, the Parties reached an agreement in principle to settle

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the Action on the terms set forth herein, which include changes to the Company’s corporate

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governance practices and policies. However, the Parties did not begin negotiating the amount of
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attorneys’ fees and expenses payable to Plaintiff’s Counsel as a result of the benefits conferred due

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to the prosecution and settlement of the Action until after the substantive terms of the Settlement

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were negotiated and agreed to.

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memorandum of understanding (the “MOU”) memorializing their agreement in principle to settle

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the Action. Following additional negotiations among the Parties, the Parties have been unable to

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agree upon the amount of attorneys’ fees and expenses payable to Plaintiff’s Counsel.

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II.

On or about December 10, 2013, the Parties entered into a

PLAINTIFF’S CLAIMS AND BENEFITS OF THE SETTLEMENT

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Plaintiff believes that the claims it has asserted in the Action have merit. Plaintiff, however,

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recognizes and acknowledges the expense and length of continued proceedings necessary to

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prosecute the Action against the Individual Defendants through trial and appeals. Plaintiff and its

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counsel have also taken into account the uncertain outcome and the risk of any litigation, especially

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in complex actions such as the Action, as well as the difficulties and delays inherent in such

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litigation. Plaintiff and its counsel are also mindful of the inherent problems of proof and possible

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defenses to the claims asserted in the Action. Based on their evaluation, Plaintiff and its counsel

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have determined that the Settlement set forth in this Stipulation is in the best interests of Abaxis and

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its shareholders. Plaintiff’s Counsel believe that the Settlement set forth in the Stipulation confers

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substantial benefits upon Abaxis and its shareholders. Plaintiff’s Counsel base this conclusion

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upon, inter alia, their extensive investigation during the development, prosecution and settlement of

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the Action, which included, inter alia: (i) inspecting, reviewing and analyzing the Company’s

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filings with the SEC; (ii) researching corporate governance issues; and (iii) researching the

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applicable law with respect to the claims asserted in the Action and the potential defenses thereto.

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III.

INDIVIDUAL DEFENDANTS’ DENIALS OF WRONGDOING AND LIABILITY

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The Individual Defendants have denied, and continue to deny, that they have committed any

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breach of fiduciary duty, waste of assets, or any other violation of law or engaged in any of the

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wrongful acts alleged in the Action, or that they have been unjustly enriched by any of the acts

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alleged in the Action, and expressly maintain that they diligently and scrupulously complied with

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their fiduciary and other legal duties, to the extent such duties exist. Nonetheless, the Individual

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Defendants have also taken into account the uncertainty and risks inherent in any litigation,
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especially in complex cases like the Action. Therefore, they have determined that it is desirable and

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beneficial that the Action be fully and finally settled in the manner and upon the terms and

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conditions set forth in this Stipulation.

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Stipulation confers benefits upon Abaxis and its shareholders and that the Settlement is in the best

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interests of Abaxis and its shareholders.

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IV.

Abaxis believes that the Settlement set forth in this

TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT

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NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among the

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Plaintiff (for itself and derivatively on behalf of Abaxis), the Individual Defendants and Abaxis, by

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and through their respective counsel or attorneys of record, as follows:

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1.

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

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1.1

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October 27, 2010.

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1.2

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Definitions

“2010 Annual Meeting” means Abaxis’ annual meeting of shareholders held on

“2010 Proxy” means Abaxis’ proxy statement issued on or about September 15,

2010 in connection with the 2010 Annual Meeting.
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“Action” means the above-captioned action styled, Case No. 4:12-cv-05086-YGR;

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St. Louis Police Retirement System, On Behalf of Itself and All Others Similarly Situated and

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Derivatively on Behalf of Nominal Defendant Abaxis, Inc. v. Clinton H. Severson, Alberto R. Santa

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Ines, Kenneth P. Aron, Vladimir E. Ostoich, Donald P. Wood, Martin V. Mulroy, Richard J.

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Bastiani, Michael D. Casey, Henk J. Evenhuis, Prithipal Singh, Vernon E. Altman, and Ernest S.

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Tucker, Defendants, and Abaxis, Inc., Nominal Defendant, pending in the United States District

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Court for the Northern District of California.

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1.4

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California.

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1.5

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“Court” means the United States District Court for the Northern District of

“Effective Date” means the first date by which all of the events and conditions

specified in ¶ 7.1 of this Stipulation have been met and have occurred.
1.6

“Final Order and Judgment” or “Judgment” means the order and judgment to be

rendered by the Court, substantially in the form attached hereto as Exhibit C.
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“Final” means the time when a judgment that has not been reversed, vacated or

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modified in any way is no longer subject to appellate review, either because of disposition on

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appeal and conclusion of the appellate process or because of passage, without action, of time for

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seeking appellate review. More specifically, it is that situation when: (a) either no appeal has been

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filed and the time has passed for any notice of appeal to be timely filed in the Action; or (b) an

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appeal has been filed and the court of appeals has/have either affirmed the judgment or dismissed

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that appeal and the time for any reconsideration or further appellate review has passed; or (c) a

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higher court has granted further appellate review and that court has either affirmed the underlying

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judgment or affirmed the court of appeals’ decision affirming the judgment or dismissing the

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appeal.
1.8

“Grantor Defendants” means defendants Severson, Bastiani, Casey, Evenhuis, Singh

Altman and Tucker.
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“Notice” or “Notice of Proposed Settlement” means the notice of the Settlement to

be provided by Abaxis, substantially in the form of the attached Exhibit B.

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1.10

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and Mulroy.

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1.11

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“Officer Defendants” means defendants Severson, Santa Ines, Aron, Ostoich, Wood

“Parties” means, collectively, (i) Plaintiff; (ii) the Individual Defendants; and (iii)

Abaxis.
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“Person” means an individual, corporation, limited liability company, professional

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corporation, partnership, limited partnership, limited liability partnership, association, joint stock

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company, estate, legal representative, trust, unincorporated association, government or any political

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subdivision or agency thereof, and any business or legal entity, and each of their spouses, heirs,

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predecessors, successors, representatives, or assignees.

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1.13

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White, P.A.

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1.14

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“Plaintiff’s Counsel” means Kessler Topaz Meltzer & Check, LLP and Saxena

“Preliminary Order” means the order to be rendered by the Court, substantially in the

form of the attached Exhibit A.

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1.15

“Related Persons” means each of a person’s spouses, heirs, executors, estates,

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marital communities, trustees, agents or administrators, present and former attorneys, legal

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representatives, assigns, past and present directors, officers, agents, advisors, employees, affiliates,

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predecessors, successors, parents, subsidiaries, divisions, affiliated entities, and any person or entity

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acting for or on behalf of any of them and each of them (including without limitation, any

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investment bankers, accountants, insurers, reinsurers, attorneys and any past, present or future

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officers, directors and employees of them).

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1.16

“Released Persons” means Plaintiff and Defendants, and their respective Related

Persons.
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“Released Claims” means any claims, demands, rights, actions, causes of action,

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liabilities, damages, losses, obligations, judgments, duties, suits, costs, expenses, matters, and issues

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known or unknown, including Unknown Claims, contingent or absolute, suspected or unsuspected,

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disclosed or undisclosed, liquidated or unliquidated, matured or unmatured, accrued or unaccrued,

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apparent or unapparent, whether state, federal, or foreign, common law, statutory, or regulatory,

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including, without limitation, claims under the federal securities laws, that have been or could have

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been asserted in any court, tribunal or proceeding: (a) by Plaintiff, or any Abaxis shareholder,

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derivatively on behalf of Abaxis, or by Abaxis, against any Released Person concerning the

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granting and/or receipt of the Excess RSUs, the 2005 Plan, the 2010 Proxy and/or any disclosures

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related to the 2010 Annual Meeting, the 2012 Proxy and/or any disclosures related to the 2012

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Annual Meeting; (b) by Plaintiff, individually and/or on behalf of the Class, or by any member of

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the Class, against Abaxis or any Released Person, concerning the granting and/or receipt of the

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Excess RSUs, the 2005 Plan, the 2010 Proxy and/or any disclosures related to the 2010 Annual

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Meeting, the 2012 Proxy and/or any disclosures related to the 2012 Annual Meeting; and (c) by

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Plaintiff, any Abaxis shareholder, the Individual Defendants or Abaxis, concerning the settlement of

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the Action; provided, however, that Released Claims do not include claims to enforce the

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Settlement, or claims regarding the value of Plaintiff’s securities other than those claims related to

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these subjects above.

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1.18

“Unknown Claims” means any of the Released Claims which Plaintiff, any Abaxis

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shareholder, the Individual Defendants or Abaxis do not know or suspect to exist in his, her or its

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favor at the time of the release of the Released Persons, including claims which, if known by him,

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her or it, might have affected his, her or its settlement with and release of the Released Persons, or

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might have affected his, her or its decision not to object to this Settlement. With respect to any and

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all Released Claims, the Parties stipulate and agree that, upon the Effective Date, Plaintiff, the

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Individual Defendants, and Abaxis shall expressly waive and each of the Abaxis shareholders shall

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be deemed to have, and by operation of the final order and judgment shall have, expressly waived

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any and all provisions, rights and benefits conferred by any law of any jurisdiction or any state or

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territory of the United States, or principle of common law, which is similar, comparable or

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equivalent to California Civil Code § 1542, which provides:

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A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER
FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN
BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR.

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The Plaintiff, Individual Defendants, Abaxis and Abaxis shareholders may hereafter discover facts

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in addition to or different from those which he, she or it now knows or believes to be true with

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respect to the subject matter of the Released Claims, but, upon the effective date of the Settlement,

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the Plaintiff, Individual Defendants and Abaxis shall expressly settle and release, and each Abaxis

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shareholder shall be deemed to have, and by operation of the final order and judgment shall have,

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fully, finally, and forever settled and released, any and all Released Claims, known or unknown,

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suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, which

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now exist, or heretofore have existed upon any theory of law or equity now existing or coming into

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existence in the future, including, but not limited to, conduct which is negligent, intentional, with or

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without malice, or a breach of any duty, law or rule, without regard to the subsequent discovery or

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existence of such different or additional facts. The Parties acknowledge, and Abaxis shareholders

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shall be deemed by operation of the Final Order and Judgment to have acknowledged, that the

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foregoing waiver was separately bargained for and is a key element of the Settlement of which this

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release is a part.

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2.

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The Parties agree that, as a result of the filing, pendency, prosecution and settlement of the

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Action, Abaxis and/or the Board shall take all necessary steps to adopt the corporate governance

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measures outlined below in consideration of the Settlement and maintain such measures for five

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years from the date of adoption. The Parties agree the measures set forth below constitute a benefit

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to Abaxis and its shareholders.

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Terms of the Settlement

A.

The Compensation Committee Charter shall be revised to require the

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Compensation Committee on an annual basis to review, with the assistance

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of outside counsel, Abaxis’ equity incentive plans;

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B.

Prior to the granting of any equity incentive award(s) to executive officers,

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the Board and/or Compensation Committee shall review, with the assistance

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of outside counsel, Abaxis’ equity incentive plans to ensure compliance

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therewith;

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C.

Equity awards to executive officers shall be approved at a meeting of the

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Compensation Committee or Board, as applicable, and not by unanimous

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written consent;

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D.

Abaxis directors shall be required to receive annual education on relevant

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topics, e.g., administration of the Company’s compensation plans, disclosure

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obligations to shareholders and the Company’s NASDAQ listing

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requirements;

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E.

The Company’s annual proxy statement shall contain a certification from the

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Compensation Committee and/or the Board, as applicable, that they have

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reviewed the terms of the Company’s equity incentive plans and that all

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equity awards granted during the prior fiscal year were granted in compliance

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with the terms of the Company’s equity incentive plans;

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F.

The Board or Compensation Committee shall retain an independent
compensation consultant each year;

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G.

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The Compensation Committee Charter shall be revised to require the
Compensation Committee to consist of at least three (3) members;

H.

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The Company’s stock plan administrator shall:
1.

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Become a member of the National Association of Stock Plan
Professionals; and

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2.

Attend a minimum of eight (8) hours of training sponsored by the

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National Association of Stock Plan Professionals per fiscal year for

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the next five (5) fiscal years;

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I.

The Company, with the assistance of outside counsel, will conduct an annual

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training session for the Company’s stock plan administrator regarding equity

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incentive plan administration procedures;

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J.

The Company will adopt a compensation clawback policy that includes the

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following provisions, among other things:

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1.

If the Company is required to prepare an accounting restatement for

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any fiscal quarter or year due to the material noncompliance of the

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Company with any financial reporting requirement, and the Board

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determines that an officer’s misconduct contributed to the

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noncompliance that resulted in the obligation to restate the

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Company’s financial statements, the Board may require (i) in the case

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of the Company’s Chief Executive Officer and Chief Financial

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Officer, that each such individual repay to the Company the

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compensation listed in paragraphs (a), (b), and (c) below, regardless

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of which officer’s misconduct contributed to the noncompliance that

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resulted in the obligation to restate the Company’s financial

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statements, and (ii) in the case of any other officer whose misconduct

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contributed to the noncompliance which resulted in the obligation to

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restate the Company’s financial statements, that each such individual

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repay to the Company the compensation listed in (a), (b) and (c)

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below, in each case as and to the extent permitted by applicable law:

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a.

Up to the full amount of the difference between any bonus

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compensation received by the officer that was calculated

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based on the financial statements that were subsequently

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restated and the lower bonus compensation to which the

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officer would have been entitled had the financial statements

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been properly reported;

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b.

Up to the full amount of any equity incentive grant received

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by the officer that was determined based on the financial

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statements that were subsequently restated; and

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c.

If, after the release of earnings for any period with respect to

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which financial statements were subsequently restated and

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prior to the announcement of such restatement, the officer sold

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any shares of Company common stock acquired pursuant to an

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option or other award granted after the adoption of this policy

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under the Company’s equity incentive plans, the excess of (i)

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the actual aggregate sales proceeds from the officer’s sale of

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those shares, over (ii) the aggregate sales proceeds the officer

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would have received from the sale of those shares at a price

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per share determined appropriate by the Board in its discretion

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to reflect what the Company’s common stock price would

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have been if the restatement had occurred prior to such sales;

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provided, however, that the aggregate sales proceeds

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determined by the Board under this clause (1) with respect to

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shares acquired upon exercise of an option shall not be less

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than the aggregate exercise price paid for those shares; and

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2.

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The Board may seek recoupment from the officer(s) for the amounts

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described above from any of the following sources: prior incentive

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compensation payments; future payments of incentive compensation;

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cancellation of outstanding equity awards; future equity awards; and

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direct repayment. To the extent permitted by applicable law, the

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Company may offset such amount against any compensation or other

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amounts owed by the Company to the officer. If an amount repaid to

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the Company under the Policy will not be fully deductible by the

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officer, the Board may, in its discretion, reduce the amount to be

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repaid by the amount determined by the Board to reasonably take into

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account the adverse tax consequences of such repayment to the

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officer.

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3.

Settlement Class

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3.1

The Parties agree, for settlement purposes only, to the certification of the Action as a

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mandatory non-opt-out class action, pursuant to Federal Rules of Civil Procedure 23(a), 23(b)(1)

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and 23(b)(2), on behalf of the Class, as defined above. In the event the Settlement does not become

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final for any reason, the certification of the Class shall be deemed vacated, and the Action shall

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proceed as though the Class had never been certified.

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4.

Procedure for Implementing the Settlement

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4.1

After execution of the Stipulation, Plaintiff and Defendants shall submit the

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Stipulation together with its exhibits to the Court and shall apply for entry of an order substantially

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in the form of Exhibit A hereto, requesting, inter alia, the preliminary approval of the Settlement set

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forth in the Stipulation and approval of the Notice, substantially in the form of Exhibit B hereto,

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which shall include the general terms of the Settlement set forth in this Stipulation, including, but

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not limited to, the maximum amount of attorneys’ fees and expenses that Plaintiff’s Counsel will

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seek in an application to the Court and the date of the Settlement Hearing, as defined in ¶ 4.2 below.

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Notice of the Proposed Settlement shall be provided by Abaxis at its expense by causing the Notice

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to be filed with the SEC on Form 8-K, in accordance with the Preliminary Order, or as otherwise
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ordered by the Court. Abaxis will also be responsible for any and all costs associated with the

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dissemination of any additional notice ordered by the Court. Counsel for Abaxis shall, at least

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twenty one (21) business days before the Settlement Hearing (as defined below), file with the Court

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an appropriate affidavit with respect to the preparation and dissemination of the Notice.

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4.2

Plaintiff will request that after the Notice is given, the Court hold a hearing (the

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“Settlement Hearing”) to consider and determine whether to approve the terms of the Settlement as

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fair, reasonable and adequate and to consider Plaintiff’s Counsel’s application to the Court for an

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award of attorneys’ fees and reimbursement of expenses.

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5.

Releases

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5.1

Upon the Effective Date, Plaintiff, Abaxis, and each member of the Class (solely in

11

his, her or its capacity as an Abaxis shareholder) shall be deemed to have, and by operation of the

12

Final Order and Judgment shall have, fully, finally, and forever released, relinquished and

13

discharged the Released Claims against the Released Persons and any and all claims (including

14

Unknown Claims) arising out of, relating to, or in connection with, the defense, settlement or

15

resolution of the Action against the Released Persons.

16

5.2

Upon the Effective Date each of the Released Persons and each Abaxis shareholder

17

shall be deemed to have, and by operation of the Final Order and Judgment shall have, fully, finally,

18

and forever released, relinquished and discharged Plaintiff and Plaintiff’s Counsel from all claims

19

(including Unknown Claims) arising out of, relating to, or in connection with, the institution,

20

prosecution, assertion, settlement or resolution of the Action or the Released Claims.

21
22

5.3

Nothing herein shall in any way impair or restrict the rights of any Party to enforce

the terms of the Stipulation.

23

6.

Plaintiff’s Counsel’s Attorneys’ Fees and Expenses

24

6.1

Plaintiff contends that its counsel is entitled to an award of attorneys’ fees and

25

expenses for their role in the prosecution and settlement of the Action, and the Parties have

26

attempted to negotiate an amount of fees and expenses to be paid to Plaintiff’s Counsel. As of the

27

date of this Stipulation, the Parties have not reached agreement on an award of attorneys’ fees and

28

expenses. Plaintiff’s Counsel intends to apply to the Court for an award of attorneys’ fees and
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1

expenses of no more than $2,000,000 in the aggregate, and the Parties intend to, and do, preserve all

2

arguments in connection with any petition for attorneys’ fees and expenses by Plaintiff’s Counsel.

3

Defendants may oppose the amount of any application for fees and expenses made by Plaintiff’s

4

Counsel. Abaxis and/or its insurance carrier shall pay such fees and expenses as may be awarded

5

by the Court (the “Fee Award”). Any failure of the Court to approve the Settlement shall have no

6

impact on or preclude Plaintiff’s Counsel from applying for an award of attorneys’ fees and

7

expenses on grounds of mootness, and Defendants reserve the right to oppose any such application.

8

However, any failure by the Parties to reach agreement on an amount of fees and expenses, or by

9

the Court to approve the amount of such fees, shall not affect the validity of the Settlement.

10

6.2

The payment of the Fee Award shall be made by Abaxis and/or its insurance carrier

11

within ten (10) calendar days after entry of the Final Order and Judgment. The Fee Award shall be

12

paid by check or wire transfer to an account designated by Kessler Topaz Meltzer & Check, LLP,

13

and such payment shall fully discharge any and all obligations of the Defendants with respect to

14

attorneys’ fees and expenses of Plaintiff. Any such payment shall be made subject to Plaintiff’s

15

Counsel’s obligation to make refunds or repayment to the Company if any specified condition to the

16

Settlement is not satisfied. Any order or proceeding relating to the Fee Award, or any appeal from

17

any order relating thereto or reversal or modification thereof, shall not operate to terminate or

18

cancel this Stipulation, or affect or delay the finality of the Order and Final Judgment approving the

19

Stipulation and the Settlement as set forth herein.

20

7.

Conditions of Settlement, Effect of Disapproval, Cancellation or Termination

21

7.1

The Effective Date of this Stipulation shall be conditioned on the occurrence of all of

22
23
24
25
26
27

the following events:
(a)

The conditional certification of the Action as a non-opt-out class action

pursuant to Fed. R. Civ. P. 23 on behalf of a Class as defined herein;
(b)

the entry by the Court of the Final Order and Judgment, substantially in the

form of Exhibit C hereto; and
(c)

the Final Order and Judgment has become Final.

28
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7.2

If any of the conditions specified in ¶ 7.1 are not met, then this Stipulation shall be

2

canceled and terminated unless the Parties mutually agree in writing, by and through their

3

respective counsel, to proceed with the Stipulation.

4

7.3

In the event that the Stipulation or Settlement is not approved by the Court, or the

5

Settlement is terminated for any reason, the Parties shall be restored to their respective positions in

6

the Action as of December 10, 2013, the last date before the execution of the MOU, and all

7

negotiations, proceedings, documents prepared and statements made in connection herewith shall be

8

without prejudice to the Parties, shall not be deemed or construed to be an admission by any Party

9

of any act, matter, or proposition and shall not be used in any manner for any purpose in any

10

subsequent proceeding in the Action or in any other action or proceeding. In such event, the terms

11

and provisions of the Stipulation, with the exception of ¶¶ 1.1-1.18, 7.2, 8.6, 8.8, 8.9, 8.10, 8.11 and

12

8.13 herein, shall have no further force and effect with respect to the Parties and shall not be used in

13

the Action or in any other proceeding for any purpose, and any judgment or orders entered by the

14

Court in accordance with the terms of the Stipulation shall be treated as vacated, nunc pro tunc.

15

8.

Miscellaneous Provisions

16

8.1

The Parties (a) acknowledge that it is their intent to consummate this Stipulation; and

17

(b) agree to cooperate to the extent reasonably necessary to effectuate and implement all terms and

18

conditions of this Stipulation and to exercise their best efforts to accomplish the foregoing terms

19

and conditions of this Stipulation. The Parties and their counsel agree that they will refrain from

20

disparaging each other in any publicly disseminated statements in connection with the Action.

21

8.2

The Parties intend this Settlement to be a final and complete resolution of all

22

disputes between Plaintiff, Abaxis, and the Individual Defendants with respect to the Action. The

23

Settlement compromises claims which are contested and shall not be deemed an admission by any

24

Party as to the merits of any claim, allegation or defense. The Parties further agree that the claims

25

are being settled voluntarily after consultation with competent legal counsel. The Final Order and

26

Judgment shall contain a finding that during the course of the litigation, the Parties and their

27

respective counsel at all times complied with the requirements of Federal Rule of Civil Procedure

28

11 and all other similar laws.
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8.3

1

Pending final determination of whether the Settlement should be approved, all

2

proceedings and all further activity between the Parties regarding or directed toward the Action,

3

except for those activities and proceedings relating to this Stipulation and the Settlement, shall be

4

stayed.

5

8.4

Pending the Effective Date of this Stipulation or the termination of the Stipulation

6

according to its terms, Plaintiff and all Abaxis shareholders, and their respective Related Persons,

7

shall be barred and enjoined from commencing, prosecuting, instigating, or in any way participating

8

in the commencement or prosecution of any action asserting any Released Claims against any

9

Released Person.

10

8.5

The provisions contained in this Stipulation (including any exhibits attached hereto)

11

shall not be deemed a presumption, concession, or admission by any Party of any fault, liability, or

12

wrongdoing, or lack of merit as to any facts or claims alleged or asserted in the Action or in any

13

other action or proceeding, and shall not be interpreted, construed, deemed, invoked, offered, or

14

received into evidence or otherwise used by any person in the Action or in any other action or

15

proceeding, whether civil, criminal, or administrative, except in connection with any proceeding to

16

enforce the terms of the Settlement. The Released Persons may file the Stipulation and/or the Final

17

Order and Judgment in any action that may be brought against them in order to support a defense or

18

counterclaim based on principles of res judicata, collateral estoppel, full faith and credit, release,

19

good faith settlement, judgment bar or reduction or any other theory of claim preclusion or issue

20

preclusion or similar defense or counterclaim.

21
22
23
24
25

8.6

The exhibits to this Stipulation are material and integral parts hereof and are fully

incorporated herein by this reference.
8.7

The Stipulation may be amended or modified only by a written instrument signed by

or on behalf of all Parties or their respective successors-in-interest.
8.8

This Stipulation and the exhibits attached hereto constitute the entire agreement

26

among the Parties and no representations, warranties or inducements have been made to any Party

27

concerning the Stipulation or any of its exhibits other than the representations, warranties and

28
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covenants contained and memorialized in such documents. Except as otherwise provided herein,

2

each Party shall bear its own costs.

3

8.9

Each Party severally acknowledges that no promise, inducement or agreement not

4

expressed herein has been made to it or him, that this Stipulation contains the entire agreement

5

between or among the Parties concerning the matters described in this Stipulation, and, except as

6

expressly provided herein, that there are no third-party beneficiaries to this Stipulation.

7
8
9

8.10

This Stipulation shall be binding upon and shall inure to the benefit of the Parties

and their respective agents, successors, executors, heirs, and assigns.
8.11

This Stipulation and the Settlement contemplated by it shall be governed by and

10

construed in accordance with the laws of the State of California without regard to conflict of laws

11

principles. Any action arising out of or relating to this Stipulation shall be brought exclusively in

12

the Court, or if the Court shall lack subject-matter jurisdiction over the action, then in such state

13

court of the State of California as may have subject-matter jurisdiction over such action.

14

8.12

If any provision or provisions of this Stipulation shall be held to be invalid, illegal,

15

unenforceable or in conflict with the law of the State of California, the validity, legality and

16

enforceability of the remaining provisions of the Stipulation shall not in any way be affected or

17

impaired thereby.

18
19
20

8.13

Each counsel or other Person executing this Stipulation or its exhibits on behalf of

any Party hereby warrants that such Person has the full authority to do so.
8.14

This Stipulation may be executed in one or more counterparts. A faxed or pdf

21

signature shall be deemed an original signature for the purposes of this Stipulation. All executed

22

counterparts, and each of them, shall be deemed to be one and the same instrument. A complete set

23

of counterparts, either originally executed or copies thereof, shall be filed with the Court.

24
25
26

8.15

This Stipulation shall be binding upon, and inure to the benefit of, the successors and

assigns of the Parties and the Released Persons.
8.16

The Court shall retain jurisdiction with respect to implementation and enforcement

27

of the terms of the Stipulation, and the Parties submit to the jurisdiction of the Court for purposes of

28

implementing and enforcing the Settlement embodied in the Stipulation.
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