1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK In re NAMASTE TECHNOLOGIES INC. SECURITIES LITIGATION Case No.: 1:18-CV-10830-GHW SECOND AMENDED STIPULATION AND AGREEMENT OF SETTLEMENT This Second Amended Stipulation and Agreement of Settlement, dated as of October 25 2019 (the “Stipulation”), is entered into between (a) lead plaintiffs Janita Holgate, Linda M. Rich and Minako Caddeo (collectively, “Lead Plaintiffs”) and plaintiff Willard Workman (together with Lead Plaintiffs, the “Plaintiffs”), on behalf of themselves and the Settlement Class (defined below); and (b) defendant Namaste Technologies Inc. (“Namaste”), and defendants Sean Dollinger, Philip van den Berg, and Kenneth Ngo (collectively, the “Individual Defendants,” together with Namaste, the “Defendants,” and Plaintiffs and Defendants together are the “Parties”), and embodies the terms and conditions of the settlement of the above-captioned action (the “Action”). 1 Subject to the approval of the Court and the terms and conditions expressly provided herein, this Stipulation is intended to fully, finally and forever compromise, settle, release, resolve, and dismiss with prejudice the Action and all claims asserted therein. Whereas: A. On October 6, 2018, a class action complaint was filed in the Central District of California, styled McCormick v. Namaste Technologies, et al., Case 2:18-cv-08616-FMO-JC (the “California Action”). 1 All terms with initial capitalization not otherwise defined herein shall have the meanings ascribed to them in ¶ 1 herein. Case 1:18-cv-10830-GHW Document 64-1 Filed 10/25/19 Page 1 of 37
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SOUTHERN DISTRICT OF NEW YORK In re NAMASTE … · Case No.: 1:18-CV-10830-GHW SECOND AMENDED STIPULATION AND AGREEMENT OF SETTLEMENT This Second Amended Stipulation and Agreement
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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
In re NAMASTE TECHNOLOGIES INC. SECURITIES LITIGATION
Case No.: 1:18-CV-10830-GHW
SECOND AMENDED STIPULATION AND AGREEMENT OF SETTLEMENT
This Second Amended Stipulation and Agreement of Settlement, dated as of October 25
2019 (the “Stipulation”), is entered into between (a) lead plaintiffs Janita Holgate, Linda M. Rich
and Minako Caddeo (collectively, “Lead Plaintiffs”) and plaintiff Willard Workman (together with
Lead Plaintiffs, the “Plaintiffs”), on behalf of themselves and the Settlement Class (defined below);
and (b) defendant Namaste Technologies Inc. (“Namaste”), and defendants Sean Dollinger, Philip
van den Berg, and Kenneth Ngo (collectively, the “Individual Defendants,” together with Namaste,
the “Defendants,” and Plaintiffs and Defendants together are the “Parties”), and embodies the
terms and conditions of the settlement of the above-captioned action (the “Action”).1 Subject to
the approval of the Court and the terms and conditions expressly provided herein, this Stipulation
is intended to fully, finally and forever compromise, settle, release, resolve, and dismiss with
prejudice the Action and all claims asserted therein.
Whereas:
A. On October 6, 2018, a class action complaint was filed in the Central District of
California, styled McCormick v. Namaste Technologies, et al., Case 2:18-cv-08616-FMO-JC (the
“California Action”).
1 All terms with initial capitalization not otherwise defined herein shall have the meanings ascribed to them in ¶ 1 herein.
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B. Also on October 6, 2018, the Rosen Law Firm, counsel for the plaintiff in the
“California Action” caused a notice about the pendency of that action to be published in Business
Wire. See Declaration of Jeremy A. Lieberman (Dkt. No. 12).
C. On November 19, 2018, a class action complaint was filed in the United States
District Court for the Southern District of New York, styled Workman v. Namaste Technologies,
et al., Case No. 1:18-cv-10830-GHW.
D. As a result of the publication in the California Action, on December 6, 2018, Lead
Plaintiffs Holgate, Rich and Caddeo filed a motion, pursuant to the PSLRA notice, and attached
certifications attesting that they were willing to serve as representatives for the Class, and to
provide testimony at deposition and trial, if necessary. (Dkt. No. 11).
E. On December 26, 2018, the plaintiff in the California Action filed a voluntary
dismissal. See 2:18-cv-08616-FMO-JC, Dkt. No. 25.
F. On January 22, 2019, by Memorandum Opinion and Order, the Honorable Gregory
H. Woods appointed Holgate, Rich and Caddeo as Lead Plaintiffs for the Action; and approved
Lead Plaintiffs’ selection of Pomerantz LLP as Lead Counsel. (Dkt. No. 17).
G. On April 5, 2019, Plaintiffs filed their Class Action Amended Complaint (the
“Amended Complaint”) asserting claims against all Defendants under Section 10(b) of the
Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder,
and against the Individual Defendants under Section 20(a) of the Exchange Act. (Dkt. No. 32).
The Amended Complaint alleged that the Company and Individual Defendants engaged in stock
price manipulation, tax evasion, made a false claim about a NASDAQ up-listing and
misrepresented that a key transaction was at arm’s length when in fact it was a related party
transaction (the “Dollinger US Transaction”). The Amended Complaint further alleged that
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Defendants made a number of materially false and misleading statements regarding the Dollinger
US Transaction by either affirmatively misrepresenting that the transaction was at arm’s length, or
failing to disclose that it was not an arm’s length transaction. Moreover, the Amended Complaint
alleged that the prices of Namaste publicly-traded securities were artificially inflated as a result of
Defendants’ allegedly false and misleading statements, and declined when the truth was revealed.
H. On April 4, 2019, Defendants indicated their desire to file a motion to dismiss.
(Dkt. No. 29).
I. On April 8, 2019, the Honorable Gregory H. Woods ordered the parties to file pre-
motion letters and set the briefing schedule for Defendants’ proposed motion to dismiss. (Dkt.
No. 33).
J. On May 3, 2019, Defendants filed a pre-motion to dismiss letter with the Court
explaining the grounds upon which they wished to move to dismiss the Amended Complaint. (Dkt.
No. 34).
K. On May 6, 2019, this Court ordered an in-person conference to discuss Defendants’
proposed motion to dismiss. (Dkt. No. 35).
L. On May 8, 2019, Plaintiffs filed a letter in response to Defendants pre-motion to
dismiss letter. (Dkt. No. 36).
M. On May 15, 2019, this Court held and in-person pre-motion conference (Dkt. No.
35) to discuss the grounds for Defendants’ proposed motion.
N. On June 4, 2019 (Dkt. No. 37), Defendants filed a letter informing this Court that
the Plaintiffs and Defendants had agreed to a global mediation of this Action and a related putative
Canadian securities class action, and asked the Court to adjourn the pending motion to dismiss
deadlines, which was granted. (Dkt. No. 38).
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O. On July 22, 2019, Lead Counsel and Defendants’ Counsel participated in a full-day
mediation session before a highly experienced third-party mediator, Jed D. Melnick, Esq. of JAMS
(the “Mediator”). In advance of that session, the Parties exchanged, and provided to the Mediator,
detailed mediation statements and exhibits that addressed liability and damages issues. During the
mediation session, both sides had detailed discussions about the merits of Plaintiffs’ claims and
the defenses to those claims. The Parties reached an agreement in principle to settle the Action.
P. The agreement was memorialized in a memorandum of understanding (the
“Memorandum of Understanding”) which was fully executed on July 26, 2019. The Memorandum
of Understanding sets forth, among other things, the Parties’ agreement to fully and finally settle
and release all claims that were asserted or could have been asserted in the Action in return for a
cash payment by or on behalf of Defendants of $2,750,000 for the benefit of the Settlement Class.
Q. This Stipulation (together with the exhibits hereto) reflects the final and binding
agreement between the Parties.
R. Based upon their investigation, prosecution and mediation of the case, Plaintiffs
and Lead Counsel have concluded that the terms and conditions of this Stipulation are fair,
reasonable and adequate to Plaintiffs and the other members of the Settlement Class, and in their
best interests. Based on Lead Plaintiffs’ direct oversight of the prosecution of this matter and with
the advice of their counsel, Plaintiffs have agreed to settle and release the claims that were asserted
or could have been asserted in the Action pursuant to the terms and provisions of this Stipulation,
after considering, among other things: (a) the substantial financial benefit that Plaintiffs and the
other members of the Settlement Class will receive under the proposed Settlement; and (b) the
significant risks and costs of continued litigation and trial.
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S. This Stipulation constitutes a compromise of matters that are in dispute between
the Parties. Defendants are entering into this Stipulation solely to eliminate the uncertainty, burden
and expense of further litigation. Each of the Defendants denies any wrongdoing, and this
Stipulation shall in no event be construed or deemed to be evidence of or an admission or
concession on the part of any of the Defendants or any of Defendants’ Releasees with respect to
any claim or allegation of any fault or liability or wrongdoing or damage whatsoever, or any
infirmity in the defenses that the Defendants have, or could have, asserted. Defendants expressly
deny that Plaintiffs have asserted any valid claims as to any of them, and expressly deny any and
all allegations of fault, liability, wrongdoing or damages whatsoever. Similarly, this Stipulation
shall in no event be construed or deemed to be evidence of or an admission or concession on the
part of any Plaintiff of any infirmity in any of the claims asserted in the Action, or an admission
or concession that any of the Defendants’ defenses to liability had any merit. Each of the Parties
recognizes and acknowledges, however, that the Action has been initiated, filed and prosecuted by
Plaintiffs in good faith and defended by Defendants in good faith, that the Action is being
voluntarily settled with the advice of counsel, and that the terms of the Settlement are fair, adequate
and reasonable.
NOW THEREFORE, it is hereby STIPULATED AND AGREED, by and among Plaintiffs
(individually and on behalf of all other members of the Settlement Class) and Defendants, by and
through their respective undersigned attorneys and subject to the approval of the Court pursuant
to Rule 23(e) of the Federal Rules of Civil Procedure, that, in consideration of the benefits flowing
to the Parties from the Settlement, all Released Plaintiffs’ Claims as against the Defendants’
Releasees and all Released Defendants’ Claims as against the Plaintiffs’ Releasees shall be settled
and released, upon and subject to the terms and conditions set forth below.
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DEFINITIONS
1. As used in this Stipulation and any exhibits attached hereto and made a part hereof, the
following capitalized terms shall have the following meanings:
a) “AC” means the Class Action Amended Consolidated Class Action Complaint
filed by Plaintiffs in the Action on April 5, 2019.
b) “Action” means the consolidated putative securities class action in the matter
styled In re Namaste Technologies Inc. Securities Litigation, Case No. 1:18-cv-10830-GHW.
c) “Alternate Judgment” means a form of final judgment that may be entered by the
Court in a form other than the form of Judgment provided for in this Stipulation.
d) “Authorized Claimant” means a Settlement Class Member who submits a Proof
of Claim Form to the Claims Administrator that is approved by the Court for payment from the
Net Settlement Fund.
e) “Claim” means a Proof of Claim Form submitted to the Claims Administrator.
f) “Claim Form” or “Proof of Claim Form” means the form, substantially in the
form attached hereto as Exhibit 2 to Exhibit A, that a Claimant or Settlement Class Member must
complete and submit should that Claimant or Settlement Class Member seek to share in a
distribution of the Net Settlement Fund.
g) “Claimant” means a person or entity who or which submits a Claim Form to the
Claims Administrator seeking to be eligible to share in the proceeds of the Settlement Fund.
h) “Claims Administrator” means the firm retained by Lead Plaintiffs and Lead
Counsel, subject to approval of the Court, to provide all notices approved by the Court to potential
Settlement Class Members and to administer the Settlement.
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i) “Class Distribution Order” means an order entered by the Court authorizing and
directing that the Net Settlement Fund be distributed, in whole or in part, to Authorized Claimants.
j) “Court” means the United States District Court for the Southern District of New
York.
k) “Defendants” means Namaste and the Individual Defendants.
l) “Defendants’ Counsel” means BakerHostetler.
m) “Defendants’ Releasees” means Defendants, Sean Dollinger, Philip van den
Berg, Kenneth Ngo, and Namaste’s current or former parents, subsidiaries, predecessors,
successors, divisions, joint ventures and general or limited partnerships, and each of their
respective current or former Officers, directors, trustees, partners, contractors, auditors, principals,
brothers-in-law, and sisters-in-law. As used in this paragraph, “spouse” shall mean a husband, a
wife, or a partner in a state-recognized domestic relationship or civil union.
t) “Individual Defendants” means Sean Dollinger, Philip van den Berg and
Kenneth Ngo.
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u) “Judgment” means the final judgment, substantially in the form attached hereto
as Exhibit B, to be entered by the Court approving the Settlement.
v) “Lead Counsel” means the law firm of Pomerantz LLP.
w) “Lead Plaintiffs” means Janita Holgate, Linda M. Rich and Minako Caddeo.
x) “Litigation Expenses” means costs and expenses incurred in connection with
commencing, prosecuting and settling the Action (which may include the costs and expenses of
Plaintiffs directly related to their representation of the Settlement Class), for which Lead Counsel
intends to apply to the Court for reimbursement from the Settlement Fund.
y) “Namaste” means Namaste Technologies Inc.
z) “Namaste Securities” means Namaste common stock traded on the over-the-
counter (“OTC”) market in the United States under the ticker symbol “NXTTF.”
aa) “Net Settlement Fund” means the Settlement Fund less: (i) any Taxes;(ii) any
Notice and Administration Costs; (iii) any Litigation Expenses awarded by the Court; and (iv) any
attorneys’ fees awarded by the Court.
bb) “Notice” means the Notice of (I) Pendency of Class Action, Certification of
Settlement Class, and Proposed Settlement; (II) Settlement Fairness Hearing; and (III) Motion for
an Award of Attorneys’ Fees and Reimbursement of Litigation Expenses, substantially in the form
attached hereto as Exhibit 1 to Exhibit A, which is to be mailed to Settlement Class Members.
cc) “Notice and Administration Costs” means the costs, fees and expenses that are
incurred by the Claims Administrator and/or Lead Counsel in connection with: (i) providing
notices to the Settlement Class; and (ii) administering the Settlement, including but not limited to
the Claims process, as well as the costs, fees and expenses incurred in connection with the Escrow
Account.
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dd) “Officer” means any officer as that term is defined in Securities and Exchange
Act Rule 16a-1(f).
ee) “Parties” means Defendants and Plaintiffs, on behalf of themselves and the
Settlement Class.
ff) “Plaintiffs” means Lead Plaintiffs and Willard Workman.
gg) “Plaintiffs’ Counsel” means Lead Counsel and Bronstein, Gewirtz & Grossman,
LLC who, at the direction and under the supervision of Lead Counsel, performed services on behalf
of the Settlement Class in the Action.
hh) “Plaintiffs’ Releasees” means Plaintiffs, their respective attorneys, and all other
Settlement Class Members, and their respective current and former officers, directors, agents,
parents, affiliates, subsidiaries, successors, predecessors, assigns, assignees, employees, and
attorneys, in their capacities as such.
ii) “Plan of Allocation” means the proposed plan of allocation of the Net Settlement
Fund set forth in the Notice.
jj) “Preliminary Approval Order” means the order, substantially in the form attached
hereto as Exhibit A, to be entered by the Court preliminarily approving the Settlement and directing
that notice of the Settlement be provided to the Settlement Class.
kk) “PSLRA” means the Private Securities Litigation Reform Act of 1995, 15 U.S.C.
§ 78u-4, as amended.
ll) “Released Claims” means all Released Defendants’ Claims and all Released
Plaintiffs’ Claims.
mm) “Released Defendants’ Claims” means any and all claims, demands, rights,
causes of action, and liabilities, whether based in law or equity, arising under federal, state, local,
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statutory or common law or any other law, rule or regulation including both known and Unknown
Claims, that arise out of or relate in any way to the institution, prosecution, or settlement of the
claims asserted in this Action against the Defendants, including under Rule 11 of the Federal Rules
of Civil Procedure or for any other fees or cost shifting. Released Defendants’ Claims do not
include any claims relating to the enforcement of the Settlement, any claims between or among
the Defendants and Defendants’ Releasees, any claims between the Defendants and Defendants’
Releasees and their respective insurers, or any claims against any person or entity who or which
submits a request for exclusion from the Settlement Class that is accepted by the Court.
nn) “Released Plaintiffs’ Claims” means any and all claims, demands, rights, causes
of action and liabilities, of every nature and description whatsoever, whether based in law or
equity, arising under federal, state, local, statutory or common law, or any other law, rule or
regulation, including both known and Unknown Claims, that have been or could have been
asserted in any forum by the members of the Settlement Class, or the successors or assigns of any
of them, in any capacity, arising out of, based upon or related in any way to the purchase,
acquisition, sale, or ownership of Namaste securities during the Settlement Class Period and (i)
were asserted in the Action or (ii) could have been asserted or could in the future be asserted in
any court or forum and arise out of or are based upon the allegations, transactions, facts, matters
or occurrences, representations, or omissions set forth in the Action. Released Plaintiffs’ Claims
do not include: (i) any claims relating to the enforcement of the Settlement; and (ii) any claims of
any person or entity who or which submits a request for exclusion that is accepted by the Court.
oo) “Releasee(s)” means each and any of the Defendants’ Releasees and each and any
of the Plaintiffs’ Releasees.
pp) “Releases” means the releases set forth in ¶¶ 5-6 of this Stipulation.
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qq) “Settlement” means the settlement between Lead Plaintiffs and Defendants on the
terms and conditions set forth in this Stipulation.
rr) “Settlement Amount” means $2,750,000.00 in cash.
ss) “Settlement Class” means, for settlement purposes only, all persons or entities
who or which purchased or otherwise acquired Namaste Securities between November 29, 2017
and March 6, 2019, inclusive (the “Settlement Class Period”) and were allegedly damaged thereby.
Excluded from the Settlement Class are Defendants, the present and former Officers and directors
of Namaste and any subsidiary thereof, and the Immediate Family members, legal representatives,
heirs, successors or assigns of such excluded persons and any entity in which any such excluded
person has or had a controlling interest during the Settlement Class Period. Also excluded from
the Settlement Class are any persons and entities who or which exclude themselves by submitting
a valid and timely request for exclusion.
tt) “Settlement Class Member” means each person and entity who or which is a
member of the Settlement Class.
uu) “Settlement Class Period” means the period between November 29, 2017 and
March 6, 2019, inclusive.
vv) “Settlement Fund” means the Settlement Amount plus any and all interest earned
thereon.
ww) “Settlement Hearing” means the hearing set by the Court under Rule 23(e)(2) of
the Federal Rules of Civil Procedure to consider final approval of the Settlement.
xx) “Summary Notice” means the Summary Notice of (I) Pendency of Class Action,
Certification of Settlement Class, and Proposed Settlement; (II) Settlement Fairness Hearing; and
(III) Motion for an Award of Attorneys’ Fees and Reimbursement of Litigation Expenses,
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substantially in the form attached hereto as Exhibit 3 to Exhibit A, to be published as set forth in
the Preliminary Approval Order.
yy) “Taxes” means: (i) all federal, state and/or local taxes of any kind (including any
interest or penalties thereon) on any income earned by the Settlement Fund; (ii) the expenses and
costs incurred by Lead Counsel in connection with determining the amount of, and paying, any
taxes owed by the Settlement Fund (including, without limitation, expenses of tax attorneys and
accountants); and (iii) all taxes imposed on payments by the Settlement Fund, including
withholding taxes.
zz) “Unknown Claims” means any Released Plaintiffs’ Claims which any Plaintiff or
any other Settlement Class Member does not know or suspect to exist in his, her or its favor at the
time of the release of such claims, and any Released Defendants’ Claims which any Defendant or
any other Defendants’ Releasee does not know or suspect to exist in his, her, or its favor at the
time of the release of such claims, which, if known by him, her or it, might have affected any of
his, her or its decision(s) with respect to this Settlement, including, without limitation, a Settlement
Class Members’ decision not to opt-out or object. With respect to any and all Released Claims,
the Parties stipulate and agree that, upon the Effective Date of the Settlement, Plaintiffs and
Defendants shall expressly waive, and each of the other Settlement Class Members and each of
the Defendants’ Releasees and each of the Plaintiffs’ Releasees shall be deemed to have waived,
and by operation of the Judgment or the Alternate Judgment, if applicable, shall have expressly
waived, any and all provisions, rights, and benefits conferred by any law of any state or territory
of the United States, or principle of common law or foreign law, which is similar, comparable, or
equivalent to California Civil Code §1542, which provides:
A general release does not extend to claims which the creditor does not know or
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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.
Plaintiffs, any other Settlement Class Member, Defendants, and their respective Releasees
may hereafter discover facts in addition to or different from those which he, she, or it now
knows or believes to be true with respect to the subject matter of the Released Claims, but
the Parties stipulate and agree that, upon the Effective Date of the Settlement, Plaintiffs
and each of the Defendants shall expressly waive, and each of the other Settlement Class
Members and Releasees shall be deemed to have waived, and by operation of the Judgment,
or if applicable, the Alternative Judgment, shall have expressly waived any and all
Released Claims without regard to the subsequent discovery or existence of such different
or additional facts. The Parties acknowledge, and each of the other Settlement Class
Members and each of the Defendants’ Releasees shall be deemed by operation of law to
have acknowledged, that the foregoing waiver was separately bargained for and a key
element of the Settlement.
CLASS CERTIFICATION
2. Solely for the purposes of the Settlement and for no other purpose, Defendants
stipulate and agree to: (a) certification of the Action as a class action pursuant to Rules
23(a) and 23(b)(3) of the Federal Rules of Civil Procedure on behalf of the Settlement
Class; (b) certification of Lead Plaintiffs as Class Representatives for the Settlement Class;
and (c) appointment of Lead Counsel as Class Counsel for the Settlement Class pursuant
to Rule 23(g) of the Federal Rules of Civil Procedure.
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PRELIMINARY APPROVAL OF SETTLEMENT
3. Promptly upon execution of this Stipulation, Lead Plaintiffs will move for preliminary
approval of the Settlement, certification of the Settlement Class for settlement purposes only, and
the scheduling of a hearing for consideration of final approval of the Settlement, which motion
shall be unopposed by Defendants. Concurrently with the motion for preliminary approval, Lead
Plaintiffs shall apply to the Court for, and Defendants shall agree to, entry of the Preliminary
Approval Order, substantially in the form attached hereto as Exhibit A.
RELEASE OF CLAIMS
4. The obligations incurred pursuant to this Stipulation are in consideration of: (i) the full
and final disposition of the Action as against Defendants; and (ii) the Releases provided for herein.
5. Pursuant to the Judgment, or the Alternate Judgment, if applicable, without further
action by anyone, upon the Effective Date of the Settlement, Plaintiffs and each of the other
Settlement Class Members, on behalf of themselves, and their current and former officers,
If to Defendants: BAKERHOSTETLER Attn: Douglas W. Greene 999 Third Avenue, Suite 3600 Seattle, WA 98104-4040 Telephone: (206) 566-7090 Facsimile: (206) 624-7317 Email: [email protected]
56. Except as otherwise provided herein, each Party shall bear its own costs.
57. Whether or not the Second Amended Stipulation is approved by the Court and whether
or not the Second Amended Stipulation is consummated, or the Effective Date occurs, the Parties
and their counsel shall use their best efforts to keep all negotiations, discussions, acts performed,
agreements, drafts, documents signed and proceedings in connection with the Stipulation
confidential.
58. All agreements made and orders entered during the course of this Action relating to the
confidentiality of information shall survive this Settlement.
59. No opinion or advice concerning the tax consequences of the proposed Settlement to
individual Settlement Class Members is being given or will be given by the Parties or their counsel;
nor is any representation or warranty in this regard made by virtue of this Second Amended
Stipulation. Each Settlement Class Member’s tax obligations, and the determination thereof, are
the sole responsibility of the Settlement Class Member, and it is understood that the tax
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