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Exhibit 10.1
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
FOURTH DIVISION
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In re Summit Medical Systems, Inc.
Securities Litigation Civ. No. 97-558 JMR/FLN
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STIPULATION OF SETTLEMENT
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This Stipulation of Settlement, including all exhibits attached hereto
("Stipulation"), is made effective as of September 1, 2000, by and among the
Named Plaintiffs (as hereinafter defined in paragraph V.A.9) on behalf of the
Settlement Class (as hereinafter defined in paragraph V.A.19) by and through all
of their attorneys ("Plaintiffs' Counsel" as hereinafter defined in paragraph
V.A.15) in the Litigation (as hereinafter defined in paragraph V.A.8) and Summit
Medical Systems, Inc., n/k/a Celeris Corp. ("Summit") Edward F. Sweeney, Kevin
R. Green, Anthony W. Rees, Kent J. Thiry, Dennis H. Powers, William J. Cavanagh,
and John M. Nehra ("Defendants" as hereinafter defined in paragraph V.A.7).
1. BACKGROUND OF THE LITIGATION
Plaintiffs commenced this class action pursuant to Sections 10(b) and
20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, and Sections 11 and 15 of the Securities Act of 1933 on behalf of a
class of persons who purchased shares of Summit Medical Systems, Inc. stock
between August 4, 1995, the date of Summit's initial public offering, and March
3, 1997, the date Summit announced that its financial statements had overstated
its revenues since 1994. The original defendants were Summit and certain
individual officers and directors of Summit and Ernst & Young, the accounting
firm which served as an "expert" in connection with Summit's IPO. The Teachers'
Retirement System of Louisiana brought an individual action against Summit and
the same individual defendants. On September 23, 1997, the Summit defendants
moved to dismiss the claims under Section 10(b) and 20(a) of the Securities
Exchange Act of 1934. In an Order dated June 30, 1998, this Court denied the
Summit defendants' motion to dismiss. Ernst & Young was dismissed as a defendant
in this action and a separate suit was later commenced against them. On July 21,
1998, plaintiffs served their Second Amended Class Action Complaint. On August
21, 1998, the Summit defendants answered the Complaint. The Summit defendants
have
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produced a substantial number of documents in response to plaintiffs' discovery
requests and plaintiffs did commence deposition discovery. On February 10, 1999,
this Court appointed retired Judge Robert Schefelbein as Special Master for
settlement purposes. The parties met for a mediation before Judge Schefelbein on
May 18, 1999. Informal discussion occurred after the mediation. After several
months of discussion, the parties reached this agreement.
2. PLAINTIFFS' INVESTIGATION
In connection with their pre-filing investigation and prosecution of
the Litigation, Plaintiffs' Counsel have undertaken an extensive investigation
into the facts and law relating to the matters alleged in the Litigation. They
have reviewed and analyzed publicly available documents and information
including disclosures prior to and during the course of the Litigation by
Summit. In addition to their investigation, Plaintiffs' Counsel have collected
and analyzed data regarding the amount of damages allegedly sustained by the
members of the Settlement Class (as hereinafter defined in paragraph V.A.19). As
a result of this investigation, public disclosures and analysis, the Named
Plaintiffs, the Teachers' Retirement System of Louisiana and Plaintiffs' Counsel
have concluded that the settlement of the Litigation as set forth herein is
fair, reasonable, adequate, and in the best interests of the Settlement Class.
3. REASONS FOR SETTLEMENT
A. BENEFITS OF SETTLEMENT TO THE SETTLEMENT CLASS.
Plaintiffs' Counsel have carefully weighed the benefits to the
Settlement Class of the settlement of the Litigation for the consideration
offered by Defendants against the significant costs, risks of recovery, and
delay that continued prosecution of the Litigation would involve. Plaintiffs'
Counsel recognize the expense and length of continued proceedings necessary to
continue the Litigation against Defendants through discovery, trial and appeals
and have considered the problems
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of proof, and believe that the certainty and amount of this recovery outweigh
the risks of proceeding further with the Litigation.
B. BENEFITS OF SETTLEMENT TO THE DEFENDANTS.
Defendants strongly deny any wrongdoing or liability relating to
matters alleged in the Complaint. Nonetheless, defending this case has been
expensive and time-consuming, so that Defendants have concluded that proceeding
further with the Litigation would, in light of the proposed Settlement, be
unduly expensive, burdensome and protracted. Defendants have devoted, and,
unless this Settlement is made, will continue to devote, substantial time,
energy and resources defending the claims asserted by the Named Plaintiffs in
the Litigation. Moreover, while Defendants consider the risk of an adverse
outcome to be unlikely, the damages sought should that risk materialize are
substantial. Defendants have, therefore, concluded that it is in their best
interests to settle the Litigation in the manner and upon the terms and
conditions set forth in this Stipulation.
IV. INTENT OF THE PARTIES TO THIS SETTLEMENT
The parties to this Stipulation intend, through this stipulation, to
achieve a total peace between and among the class, the Teachers' Retirement
System of Louisiana and Summit and the individual defendants with respect to any
claims asserted, or which could have been asserted against Summit and/or the
individual defendants in this action.
V. TERMS OF THE STIPULATION
Now, therefore, in consideration of the mutual covenants set forth
herein, it is hereby agreed and stipulated to, by and among the undersigned
parties, and Plaintiffs' Counsel, on behalf of the Settlement Class, the
Teachers' Retirement System of Louisiana and Named Plaintiffs, that the
Litigation shall be settled, compromised and dismissed subject to the approval
of this Court pursuant to Federal Rule of Civil Procedure 23(e) upon and subject
to the following terms and conditions.
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1. DEFINITIONS.
1. "Authorized Claimant" means a Claimant who has filed a timely and
adequate Proof of Claim Form and Release (hereinafter defined in paragraph
V.A.17), who is entitled to share in the Class Settlement Fund as defined
herein, and whose claim has been approved for payment by the Escrow Agent and
Plaintiffs' Co-Lead Counsel and allowed by the Court.
2. "Claimant" means a Settlement Class Member who files a Proof of
Claim Form and Release in such form, in such manner, and within such time as the
Court shall prescribe.
3. "Class Settlement Fund" means the sum of $750,000 to be paid as
specified in Paragraph V.E. of this Stipulation, including any interest earned
and to be earned thereon and 100,000 shares of Celeris Corp. stock and 500,000
Celeris Corp. warrants as fully described in Paragraph V.E.1 of this Stipulation
4. "Defendants" means Summit Medical Systems, Inc., Edward F. Sweeney,
Kevin R. Green, Anthony W. Rees, Kent J. Thiry, Dennis H. Powers, William J.
Cavanagh, and John M. Nehra, and all and each of their predecessors, successors
(specifically including Celeris Corporation), assigns, direct and indirect
subsidiaries, divisions, parents, affiliates, and related entities, and all and
each of its and their respective predecessors, successors and assigns, and all
and each of its and their present and former officers, directors, partners,
principals, underwriters, investment banks, employees, attorneys, and agents,
and their respective assigns, successors, agents, representatives, heirs,
executors, and administrators. For purposes of this Stipulation, Ernst & Young
LLP is not included in the definition of Defendants.
5. "Effective Date" means the date on which the Court's Order for Final
Judgment approving this Stipulation, substantially in the form attached hereto
as Exhibit B, becomes Final (hereinafter defined in paragraph V.A.6).
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6. "Escrow Agent" means the escrow agent for the Class Settlement Fund,
and shall be Wells Fargo or any successor thereto appointed by the Court to
serve as custodian and disbursing agent for all assets transferred into the
Class Settlement Fund. The Escrow Agent shall be authorized to execute such
transactions, and only such transactions, as are consistent with the terms of
this Stipulation.
7. "Final" means the date on which the judgment in this Litigation
becomes not subject to further appeals. Thus, "Final" means, without limitation,
the date of expiration of the time for the filing or noticing of any appeal from
Order for the Final Judgment of the Court, without any appeal being filed
therein; or, if any appeal (not including any appeal of any award of attorneys'
fees) is filed in the Litigation, the date upon which the judgment in the
Litigation is finally affirmed on appeal, or the appeal is finally dismissed,
without any request for further discretionary review of such appellate decision
being sought, or, if further discretionary review of such appellate decision is
sought, the date upon which such discretionary review is denied or is granted
and results in a final affirmance to the judgment in the Litigation, not subject
to further appeal or review.
8. "Litigation" means the consolidated class action lawsuit presently
pending in the United States District Court for the District of Minnesota under
the caption: IN RE SUMMIT MEDICAL SYSTEMS, INC. SECURITIES Litigation, Master
File No. 97-558 JMR/FLN and the separate individual action under the caption,
TEACHERS' RETIREMENT SYSTEM OF LOUISIANA V. SUMMIT MEDICAL SYSTEMS, INC., ET
AL., File No. 97-921 JMR/FLN.
9. "Named Plaintiffs" means the named plaintiffs in this Litigation,
specifically Heidi Sue Casavan, Darcie Molitor, Whitney McFarlin, George E.
Faue, Patricia E. Faue, Janice McQuiston, Randolph G. Sunder, Phillip Thomas,
Jong E. Lee, Linda Grady, Mathias Faue, Desiree Swan, Ranjit C. Desai, Priyam R.
Desai, Herbert A. Beron, Gordon E. Bennett, C. William Brown,
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M.D. Trustee o/b/o C. William Brown M.D. P/S Trust DTD 4/1/85, Charles Fisher,
Judith Anne Jacobson, Ann M. Ritz , Joseph Cooper and Constructor's West, Inc.
individually and all of their respective officers, employees, agents, heirs,
executors, and assigns.
10. "Net Settlement Amount" means the amount of the Class Settlement
Fund less (i) all attorney fee and expense awards approved by the Court and (ii)
all other expenses of creating and administering the Class Settlement Fund,
including the fees and expenses of the Escrow Agent.
11. "Order of Preliminary Approval" means the Order preliminarily
approving this settlement in the form substantially as set forth in Exhibit A.
12. "Order for Final Judgment" means the Order approving the Settlement
detailed in this Stipulation in the form substantially as set forth in Exhibit
B.
13. "Person" means any individual, corporation, partnership, a limited
liability company, association, joint stock company, trust, unincorporated
organization, self-regulatory organization, government and any political
subdivision thereof, or any other type of entity.
14. "Plaintiffs' Co-Lead Counsel" means:
Richard A. Lockridge Stanley M. Grossman
Gregg M. Fishbein Patrick V. Dahlstrom
Lockridge Grindal Nauen P.L.L.P. Pomerantz Haudek Block &
100 Washington Avenue South #2200 Grossman
Minneapolis, MN 55401 100 Park Avenue, 26th Floor
New York, NY 10017
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Karen L. Morris
Patrick F. Morris
Morris and Morris
1105 North Market Street, Suite 1600
Wilmington, DE 19801
15. "Plaintiffs' Counsel" means all of the undersigned listed as
Counsel for Plaintiffs and Attorneys for Teachers' Retirement System of
Louisiana.
16. "Proof of Claim Form and Release" means that form, in the form
attached as Exhibit E hereto or in such other form as may be approved by the
Court, which is to be submitted by a Settling Class Member or Members for the
purpose of, and as a prerequisite to, receiving a recovery under this
Stipulation of Settlement.
17. "Released Claims" means any and all manner of actions, causes of
action, suits, obligations, claims, debts, demands, agreements, promises,
liabilities, controversies, costs, expenses, and attorneys' fees whatsoever,
whether in law or in equity and whether based on federal law, state law, common
law, or foreign law right of action or otherwise, foreseen or unforeseen,
matured or unmatured, known or unknown, accrued or not accrued, which the
Settlement Class (hereinafter defined in paragraph V.A.18) and/or the Teachers'
Retirement System of Louisiana or any of them, ever had, now has, or can have,
or shall or may hereafter have, either individually, or as a member of the
Settlement Class against Defendants (as defined in paragraph V.A.4) or any of
them, for, based on, by reason of or arising from or in any way relating to the
conduct alleged in the Litigation, or any action which could either have been
consolidated or coordinated with the Litigation, or any action arising from or
in any way related to the conduct alleged in the Litigation which could have
been brought in any other forum including, but not limited to: (i) claims
arising out of Summit's filings with the SEC during the class period; (ii)
claims which relate directly or indirectly to any of the facts, transactions,
events, occurrences, acts or omissions mentioned or referred to in the Second
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Amended and Consolidated Class Action Complaint; and (iii) claims arising out of
the prosecution or defense of the Litigation, including, but not limited to,
claims related to the execution of, and entering into, this Stipulation,
including but not limited to, claims for fraud in the inducement, negligent
misrepresentation, or fraud.
18. "Settlement Class" means each Named Plaintiff and all persons who
purchased or otherwise acquired shares of Summit during the period August 4,
1995 through March 3, 1997, inclusive on behalf of themselves and their heirs,
executors, administrators, beneficiaries, predecessors, successors, assigns, and
any of their former and present employees, directors, officers, accountants,
agents, attorneys, representatives, affiliates and subsidiaries. Excluded from
the Settlement Class are the Defendants, subsidiaries, affiliates, officers and
directors of Summit, the heirs and members of the immediate families of the
individual defendants, the legal representatives, heirs, successors and assigns
of any Defendant, any entity in which any Defendant has or had a controlling
interest, any persons who make a timely request for exclusion from the
Settlement in accordance with notice, and all persons otherwise excluded by
Order of the Court. The Teachers' Retirement System of Louisiana is not a member
of the Settlement Class.
19. "Settlement Class Member" means a member of the Settlement Class.
20. "Settlement Class Period" means the period August 4, 1995 through
March 3, 1997, inclusive.
21. "Recognized Loss" for settlement purposes means the loss sustained
by an Authorized Claimant, calculated as follows: purchase price of Summit stock
(including fees and commissions) minus $3.875 or, in the event such shares were
sold prior to the end of the Settlement Class Period, the price received for
such shares (net of fees and commissions). If a member of the Settlement Class
sold its, his or her Summit shares at a price (net of fees and commissions)
higher than its, his or hers purchase price for such shares, there is no
Recognized Loss and in such event
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the member of the Settlement Class is not entitled to receive any proceeds of
the Class Settlement Fund with respect to such transactions.
a. "Holding Claim" for settlement purposes means, if the
Authorized Claimant purchased Summit common stock during the Settlement Class
Period and held it through the end of the Settlement Class Period, then the
Recognized Loss shall be one hundred percent (100%) of the difference between
the amount paid for the Summit common stock during the Settlement Class Period
and $3.875 per share, trading price of Summit common stock at the close on the
last day of the Class Period;
b. "Trading Claim" for settlement purposes means, if the
Authorized Claimant purchased Summit common stock during the Settlement Class
Period, then the Recognized Loss shall be fifty percent (50%) of the difference
between the amount paid for and the amount realized from the subsequent sale of
such shares during the Settlement Class Period; and, further,
c. For purposes of calculating claims for transactions in
Summit common stock: (i) the determination of whether a position was held on
March 3, 1997 is to be made on a "first-in, first-out" basis; (ii) profits on
such transactions in Summit common stock during the Settlement Class Period will
be netted against claims as to each transaction to arrive at a total claim for
each Authorized Claimant; and (iii) an Authorized Claimant who has a net profit
in all such transactions shall not share in the Settlement Fund but will be
bound by all the terms of this Stipulation, including the terms of the Order and
Final Judgment.
B. THE COURT'S ORDER APPROVING A CONDITIONAL SETTLEMENT CLASS AND
PRELIMINARILY APPROVING THE SETTLEMENT.
As soon as practicable after execution of this Stipulation of
Settlement, counsel for the undersigned parties shall apply jointly to the Court
for the Order of Preliminary Approval, in form
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and substance substantially identical to the one attached hereto as Exhibit A,
which shall specifically include provisions which:
1. Preliminarily approve the Settlement as embodied in this
Stipulation;
2. For purposes of settlement only, conditionally certify the
Settlement Class pursuant to the Federal Rules of Civil Procedure 23(a) and (b),
and provide that the interests of the Settlement Class Members in enforcing
their rights in the Litigation will be fairly and adequately represented by the
Named Plaintiffs and Plaintiffs' Co-Lead Counsel.
3. Approve the form of Notice of Class Action determination and hearing
on proposed settlement of class action ("Notice of Settlement Hearing")
substantially in the form attached hereto as Exhibit C, for mailing to
Settlement Class Members in order to provide notice of a hearing for approval of
the settlement, and direct that Plaintiffs' Co-Lead Counsel mail or cause to be
mailed such Notice of Settlement Hearing to those Settlement Class Members who
can be identified through reasonable effort, such mailing to be accomplished no
later than ten (10) days after entry of the Order of Preliminary Approval by the
Court and at least forty-five (45) days prior to the date of hearing for final
approval of the Proposed Settlement;
4. Approve the form of summary notice, substantially in the form
attached hereto as Exhibit D, to be published in order to provide notice of the
hearing for approval of the settlement and direct that Plaintiffs' Co-Lead
Counsel cause such summary notice to be published once in the USA Today Monday
Legal Section and the Business Section of the Minneapolis Star Tribune no later
than 20 days after entry of the Order of Preliminary Approval by the Court;
5. Find that the mailing and publication pursuant to paragraphs
V.B.1.b. and V.B.1.c. constitute the best notice practicable under the
circumstances, and constitute due and sufficient notice of the matters set forth
in said notices to all persons entitled to receive notice, and that such
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mailing and publication fully satisfy the requirements of due process and
Federal Rule of Civil Procedure 23;
6. Require any Settlement Class Member who desires to request exclusion
from the Settlement Class to so notify the Clerk of Court and counsel for the
undersigned parties in the manner set forth in the Notice of Settlement Hearing
(Exhibit C attached hereto), and to provide the information required therein;
7. Schedule a hearing to be held by the Court (the "Settlement
Hearing") in order to determine:
(a) whether the settlement should be finally approved as fair,
reasonable, adequate and in the best interests of the Settlement Class;
(b) whether a Final Judgment dismissing the Litigation on the
merits, with prejudice and without costs, should be entered against Settlement
Class Members and in favor of Defendants as required by this Stipulation;
(c) whether the proposed allocation and distribution of the
Net Settlement Amount is fair; and
(d) Plaintiffs' Counsel's petition for an award of attorneys'
fees, experts' fees, costs and expenses ("fee petition");
8. Provide that any objections to the settlement, the allocation of the
settlement proceeds or fee petition shall be heard, and any papers submitted in
support of said objections shall be received and considered by the Court at the
Settlement Hearing (unless, in its discretion, the Court shall direct
otherwise), only if, on or before a date to be specified in the Notice of
Settlement Hearing, persons making objections file notice of their intention to
appear, and file copies of such
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papers with the Clerk of Court and, on or before the date of filing, serve such
papers upon Plaintiffs' Co-Lead Counsel and counsel for Defendant;
9. Approve the form of Proof of Claim and Release, substantially in the
form attached hereto as Exhibit E, and direct that Plaintiffs' Co-Lead Counsel
mail or cause to be mailed such Proof of Claim and Release at the same time, in
the same manner, and to the same persons as provided in paragraph V.B.1.b. above
with respect to the Notice of Settlement Hearing;
10. Provide that, in order to participate in this settlement, a
Settlement Class Member must execute and file a Proof of Claim and Release Form
in the manner provided therein within such time as is allowed by the Court;
11. Provide that, upon entry of the Order for Final Judgment in form
and substance substantially identical to the order submitted by the parties as
Exhibit B to the Stipulation, all Settlement Class Members, regardless of
whether they file a Proof of Claim and Release within the time provided
therefor, shall be permanently barred and enjoined from commencing, instituting,
or prosecuting any action or other proceeding or asserting any claims
constituting or arising from Released Claims against Defendant in any court of
law or equity, arbitration tribunal or administrative or other forum, and that
all Settlement Class Members conclusively shall otherwise be bound by all of the
terms of this Stipulation, including without limitation, the terms of any
judgment entered, and shall be deemed to have released any and all such claims;
12. Provide that, if this Stipulation becomes effective, only persons
who are Authorized Claimants shall have rights in the distribution of the Net
Settlement Amount;
13. Provide that a Proof of Claim and Release filed by mail shall be
deemed to have been filed when postmarked, if mailed by first class mail,
registered mail or certified mail, postage prepaid, addressed in accordance with
the instructions given in the Proof of Claim and Release, and
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that all other Proofs of Claim and Releases shall be deemed to have been filed
at the time they are actually received by Plaintiffs' Co-Lead Counsel or the
Escrow Agent;
14. Provide that proceeds of the settlement contributed to the Class
Settlement Fund shall at all times be one or more "qualified settlement funds"
within the meaning of Treas. Reg. 1.468B-1; and
15. Provide that the Settlement Hearing may, from time to time and
without further notice to Settlement Class Members, be continued or adjourned by
Order of the Court.
C. JUDGMENT TO BE ENTERED BY THE COURT APPROVING THE SETTLEMENT.
Upon final approval by the Court of the settlement set forth in this
Stipulation, a final judgment shall be entered by the Court pursuant to an Order
for Final Judgment in form and substance substantially identical to the one
attached hereto as Exhibit B, which shall specifically include the following
provisions:
1. Approve the settlement set forth in this Stipulation as fair,
reasonable, adequate and in the best interests of the Settlement Class and
direct consummation of the settlement in accordance with the terms and
provisions of this Stipulation;
2. Finally certify a Settlement Class as defined herein in accordance
with Federal Rules of Civil Procedure 23(a) and 23(b)(3);
3. Fully and finally dismiss the Litigation with prejudice and on the
merits in favor of Defendants and against all Settlement Class Members and the
Teachers' Retirement System of Louisiana without costs (except as may be
provided herein) to any undersigned party as against any other;
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4. Adjudge that Settlement Class Members shall, jointly and severally,
conclusively, irrevocably and unconditionally be deemed to have released all
Released Claims, subject only to payment of the monies into the Class Settlement
Fund by Defendant;
5. Bar and permanently enjoin all Settlement Class Members from
instituting, asserting or prosecuting, either directly, representatively,
derivatively or in any other capacity, any and all claims that constitute or
arise from Released Claims;
6. Bar and permanently enjoin all persons from initiating, asserting or
prosecuting any and all future claims for contribution arising out of or
relating to the overstatement of revenues that gave rise to the underlying
Litigation;
7. Award Plaintiffs' Counsel, from out of the Class Settlement Fund,
such attorneys' fees, experts' fees, costs and expenses as the Court may allow;
8. Incorporate the provisions of paragraph V.D.; and
9. Reserve jurisdiction over: (a) implementation of this Settlement and
any distribution to Authorized Claimants, pursuant to further orders of the
Court; (b) disposition of the Class Settlement Fund; (c) the Litigation, until
the judgment contemplated in this paragraph V.C. has become final as
contemplated in paragraph V.A.7., and each and every act agreed to be performed
by the undersigned parties shall have been performed pursuant to this
Stipulation; (d) the Litigation, for the purpose of implementing distributions
to Class Members in accordance with the Notice; and (e) all undersigned parties,
for the purpose of enforcing and administering this Stipulation.
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D. NO ADMISSION OF LIABILITY.
This Stipulation and Settlement, and any and all exhibits or documents
referred to herein, or any terms, conditions or representations therein, or any
action taken to carry out this Stipulation or this Settlement, may not be
construed as or used as an admission by or against defendants of any fault,
wrongdoing or liability whatsoever. Defendants have denied and expressly
continue to deny all of Plaintiffs' claims. Pursuant to this Stipulation and
Settlement, as Ordered by this Court, and pursuant to Federal Rule of Evidence
408, the Rules of Evidence of the various states and the Rules of Evidence
followed by any quasi-judicial bodies, including regulatory and self-regulatory
organizations, and any other applicable law, rule or regulation, the fact of
entering into or carrying out this Stipulation, the exhibits hereto, and any
negotiations and proceedings related hereto, shall not be construed as, offered
into evidence as, or deemed to be evidence of an admission or concession of
liability by or an estoppel against any of the undersigned parties, and shall
not be offered or received into evidence, or considered, in any action or
proceeding against any undersigned party in any judicial, quasi-judicial,
administrative agency, regulatory or self-regulatory organization, or other
tribunal, or proceeding for any purpose whatsoever, other than to enforce the
provisions of this Stipulation or the provisions of any related agreement,
release, or exhibit hereto, or in the case of any subsequent action against the
Defendants, Named Plaintiffs and any Plaintiffs' Counsel or the Class on any or
all of the Released Claims, in order to support a defense of res judicata,
collateral estoppel, accord and satisfaction, release or other theory of claim
or issue preclusion or similar defense.
E. CREATION OF THE CLASS SETTLEMENT FUND.
1. Subject to and in accord with the terms of this Stipulation, and in
full and final settlement of the Released Claims in the Litigation, Defendant
shall deliver or cause to be delivered to the Escrow Agent the sum of Seven
Hundred and Fifty Thousand Dollars ($750,000) to form the
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Class Settlement Fund, within ten (10) business days of the entry of the Order
of Preliminary Approval. Defendants shall also deliver within ten (10) business
days of the entry of the Order of Preliminary Approval a certificate
representing 100,000 shares of Celeris Corporation common stock and a document
representing 400,000 warrants for Celeris Corp. common stock with an exercise
price of $4.00 per share and an expiration date of September 1, 2005.
2. The cash, stock and warrants as set forth in paragraph V.E.1 that
constitute the Class Settlement Fund shall be treated as a Qualified and
Designated Settlement Fund under Section 468B of the Internal Revenue Code and
the regulations or proposed regulations promulgated thereunder (including,
specifically, Treasury Regulations ss.l.468B-l-5 and any successor regulations).
The Escrow Agent, or its designee, shall be the administrator of the Class
Settlement Fund and shall file all informational and other tax returns necessary
to report any income earned by the Class Settlement Fund, and shall be
responsible for taking out of the Class Settlement Fund, as and when legally
required, any tax payments (including interest and penalties) due on income
earned by Class Settlement Fund and request refunds, when and if appropriate,
with any such refunds to become part of the Class Settlement Fund. All tax
(including interest and penalties) due with respect to the income earned by the
Settlement Fund shall be paid by the Class Settlement Fund, and Defendants shall
have no responsibility for the foregoing or any other costs, fees, expenses or
payments, other than the payment of a total of $750,000 and 100,000 shares of
Celeris Corp. common stock and 400,000 warrants for Celeris Corp. stock pursuant
to the terms of this Stipulation.
3. As of the Effective Date, all rights of Defendants in or to the
Class Settlement Fund shall be extinguished, and Defendants shall have no
responsibility or liability with respect to any actions taken or not taken with
respect to the Class Settlement Fund.
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4. Except as provided in this Stipulation, all interest earned on the
Class Settlement Fund shall be added to the Class Settlement Fund and
distributed pursuant to this Stipulation.
5. As soon as their pro rata share of all Recognized Losses can be
determined, a separate payment shall be made to the Teachers' Retirement System
of Louisiana.
F. SUPERVISION AND DISTRIBUTION OF THE CLASS SETTLEMENT FUND.
Defendants shall have no responsibility of any kind with respect to the
distribution of the Court-approved class notice, the allocation of the Net
Settlement Amount or the processing of claims or otherwise with respect to the
administration of this settlement or the Class Settlement Fund.
G. ATTORNEYS' FEES, EXPERT FEES, COSTS AND EXPENSES.
Any attorneys' fees, experts' fees, costs and expenses to be sought or
obtained in connection with the settlement shall be paid out of the Class
Settlement Fund, upon authorization of the Court. Defendants shall have no
responsibility or liability whatsoever with respect to such attorneys' fees,
experts' fees, costs and expenses.
H. COST OF NOTICE AND SETTLEMENT ADMINISTRATION.
Costs of Notice and Settlement Administration shall include the actual
costs incurred in giving notice to Settlement Class Members and in administering
the Settlement, including, but not limited to, printing the Notice to Settlement
Class Members in the form attached as Exhibit C, identifying and notifying
Settlement Class Members, publishing the summary notice in the form of Exhibit
D, contacting brokerage firms and other beneficial owners for the purpose of
identifying and notifying Settlement Class Members, soliciting the filing of
claims and Proofs of Claims and Releases by Settlement Class Members and
processing Proofs of Claims and Releases, determining the validity and amount of
claims to be approved, calculating and allocating the Net Settlement Amount, and
filing all informational and other tax returns necessary to report any income
earned by the Class Settlement Fund and taking out of the Class Settlement Fund
any tax payments due on
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income earned, and request refunds, when and if appropriate. Defendants shall
have no responsibility or liability whatsoever with respect to these costs.
I. RELEASE TERMS.
In consideration of the payment to be made by Defendants and the
issuance of common stock and warrants of Celeris pursuant to this Stipulation,
the Settling Class Members and the Teachers' Retirement System of Louisiana
hereby consent to an Order of the Court effectuating this Stipulation and their
release of Defendants under the following terms:
1. The Teachers' Retirement System of Louisiana and each Settlement
Class Member, on behalf of themselves and their heirs, executors,
administrators, beneficiaries, predecessors, successors, assigns, and any of
their former and present employees, directors, officers, accountants, agents,
attorneys, representatives, affiliates and subsidiaries, releases and forever
discharges any and all manner of actions, causes of action, suits, obligations,
claims, debts, demands, agreements, promises, liabilities, controversies, costs,
expenses, and attorneys' fees whatsoever, whether in law or in equity and
whether based on federal law, state law, common law, or foreign law right of
action or otherwise, foreseen or unforeseen, matured or unmatured, known or
unknown, accrued or not accrued, which they or any of them, either individually
or as a Settlement Class Member, ever had, now have, or can have, or shall or
may hereafter have against Defendants (as defined in paragraph V.A.4) or any of
them, for, based on, by reason of or arising from or in any way relating to the
Released Claims. Each Settlement Class Member releases and forever discharges
Defendants whether or not such Settling Class Member executes and delivers the
Proof of Claim and Release.
2. The Settlement Class Members shall be forever barred and enjoined
from commencing, instituting or prosecuting any action or other proceeding in
any court of law or equity,
18
<PAGE> 20
arbitration tribunal or administrative forum, directly, representatively or
derivatively, that asserts against Defendants any claims that relate to or
constitute any of the Released Claims.
3. The Litigation shall be dismissed with prejudice and on the merits
as to Defendants, and without further costs to any party.
J. CONDITIONS OF SETTLEMENT.
1. This Stipulation shall be deemed terminated and canceled, and shall
have no further force and effect whatsoever, if:
a. there is no Effective Date;
b. the Court denies the motion to enter an Order of
Preliminary Approval of the Settlement and to direct that notice of the
settlement be given, substantially in the forms provided in paragraphs V.B. and
Exhibits A and C hereto, or if such Order is entered, it later is reversed or
modified, whether on appeal or otherwise, so that it is no longer substantially
in the form provided in paragraphs V.B. and Exhibits A and C;
c. the Court denies the motion to enter an Order for Final
Judgment in substantially the form provided in paragraphs V.C. and Exhibit B
hereto, or if such a judgment is entered thereon, it is later reversed or
materially modified, whether on appeal or otherwise.
2. The Defendants shall have the right, at their sole option, to
terminate and cancel this Stipulation if more than 335,000 shares of Summit
common stock held by members of the Settlement Class that are excluded from the
Settlement pursuant to paragraph V.B.6 and Exhibit C, paragraph 5 of this
Stipulation, or otherwise by Order of the Court
a. TERMINATION PRIOR TO HEARING.
Plaintiffs' Counsel shall notify Defendants of the number of
shares electing to opt out of the Settlement within (5) five business days after
the date by which timely requests for exclusion
19
<PAGE> 21
must be received, in accordance with this Stipulation. If the number of shares
electing to opt out of the Settlement exceeds 335,000 shares at that time,
Defendants may elect to terminate and cancel this Stipulation at their sole
option by giving written notice to Plaintiffs' Co-Lead Counsel within (5) five
business days after receipt of this information from Plaintiffs' Co-Lead
Counsel.
b. WITHDRAWAL OF OPT-OUTS
If Plaintiffs' Co-Lead Counsel succeed in causing the
withdrawal of a certain number of opt-outs before the Settlement Hearing
commences so that the number of shares electing to opt-out equals or falls below
335,000 shares, then any notice of election to withdraw pursuant to subparagraph
(a), above, shall be a nullity. The filing of such withdrawal of opt-outs may be
done by Plaintiffs' Co-Lead Counsel;
c. TERMINATION DUE TO EXCLUSION AT HEARING
If the number of shares that have timely elected to opt-out
(and have not been withdrawn) combined with the number of shares excluded by the
Court at the Settlement Hearing exceeds 335,000 shares Defendants may elect to
terminate and cancel this Stipulation at their sole option within (3) three
business days after the Settlement Hearing. In the event the Court reserves its
decision regarding the exclusion of persons from the Settlement Class, the
Defendants' right to terminate and cancel this Stipulation pursuant to this
paragraph shall be preserved until such time as the Court renders its decision,
in which case the Defendants may elect to exercise their right to terminate and
cancel this Stipulation, at their sole option, by giving written notice to
Plaintiffs' Co-Lead Counsel within (3) three business days following receipt of
the Court's decision.
K. MISCELLANEOUS PROVISIONS.
1. All of the exhibits attached hereto are incorporated by this
reference and made a part hereof as though fully set forth herein.
20
<PAGE> 22
2. This Stipulation, including this paragraph, may be amended or
modified only by a written instrument signed by all undersigned parties or their
successors-in-interest and approved by the Court.
3. The waiver by one party of any breach of this Stipulation by any
other party shall not be deemed a waiver of any other, prior or subsequent
breach of this Stipulation.
4. This Stipulation and its exhibits and the separate escrow agreement
constitute the entire agreement among the undersigned parties and no
representations, warranties or inducements have been made to any party
concerning this Stipulation or its exhibits, or the settlement it contemplates,
other than the representations, warranties and covenants contained and
memorialized in this Stipulation and its exhibits and the separate escrow
agreement. In entering into this Stipulation, each member of the Settlement
Class specifically waives and forever releases any and all claims, known or
unknown, whatsoever based on federal, state, local, statutory, or common law or
any other law, rule or regulation related to the execution of, and entry into,
this Stipulation, including, but not limited to, claims for fraud in the
inducement, negligent misrepresentation or fraud.
5. This Stipulation, the settlement described herein, and the
consideration therefore are offered and given in return for and are contingent
upon the releases of the Released Claims described herein, the payment of the
Class Settlement Fund by or on behalf of Defendant, and Defendant receiving a
full and final dismissal on the merits and with prejudice under Rule 54 of the
Federal Rules of Civil Procedure or otherwise, and without costs and attorneys'
fees, approved by the Court and not subject to further appeal or petition for
discretionary review by any person.
21
<PAGE> 23
6. Any allowance, disallowance, or modification of the following shall
not constitute grounds for the termination, cancellation or voiding of this
Stipulation and settlement, and shall not affect the effectiveness of this
Stipulation:
a. any denial or partial denial of applications, motions,
appeals or other proceedings of any kind and nature whatsoever which relate in
any way to any request by Plaintiffs' Counsel for attorneys' fees, costs and
expenses, including the fees of experts and consultants, incurred in the
Litigation by the Plaintiffs' Counsel; or
b. the determination and calculation of allowed claims and the
distribution of the Net Settlement Amount to Authorized Claimants.
7. In the event that the Effective Date does not occur, then, within
ten (10) days after written notice is sent by counsel for any undersigned party
to the Escrow Agent and counsel for all other undersigned parties, the stock and
warrants issued and payment made by or on behalf of Defendants to the Class
Settlement Fund shall be refunded by the Escrow Agent to Defendants, plus any
proceeds realized from the sale of Celeris Corp. common stock and all interest
earned thereon. Any reasonable and necessary amounts actually incurred in
connection with the Costs of Notice and Settlement Administration will not be
refunded to Defendants, up to a maximum of $50,000. In such event, the
undersigned parties shall be deemed to have reverted to their respective
statuses as of the date and time immediately prior to the execution of this
Stipulation, and they shall proceed in all respects as if this Stipulation, its
exhibits, and any related agreements or orders had never been executed, provided
that the portion of the Class Settlement Fund that is not refunded pursuant to
this Paragraph shall be credited against such recovery, if any, whether by
settlement or judgment, which may eventually be obtained from Defendants. In
such event, the undersigned parties jointly will seek vacation of any order
entered or actions taken in connection herewith.
22
<PAGE> 24
8. Plaintiffs' Co-Lead Counsel, on behalf of the Settlement Class and
counsel for the Teachers' Retirement System of Louisiana, represent that they
are expressly authorized by each of the Named Plaintiffs and their client to
sign this Stipulation and to take all appropriate action required or permitted
to be taken by the Settlement Class pursuant to this Stipulation to effectuate
its terms and also are expressly authorized to enter into, on behalf of the
Settlement Class and the Teachers' Retirement System of Louisiana, any
modifications or amendments to this Stipulation which they deem appropriate.
Persons executing the Stipulation on behalf of Named Plaintiffs, the Settlement
Class and the Teachers' Retirement System of Louisiana warrant and represent
that they have full and complete authority to compromise and settle the Released
Claims and that no claims or rights of Named Plaintiffs, the Settlement Class or
the Teachers' Retirement System of Louisiana against Defendant have been
assigned or otherwise transferred.
9. This Stipulation shall be binding upon and inure to the benefit of
the successors and assigns of the undersigned parties.
10. Defendants covenant, warrant and represent that: (i) they have full
power and authority to enter into this Stipulation and all necessary approval
and authority has been obtained; and (ii) neither this Stipulation, nor any
obligation, duty or requirement hereunder, if performed by said party as
provided herein, violate, or would cause a default of, any agreement, contract,
or indenture to which Summit is a party or by which it is bound.
11. This Stipulation and its exhibits shall be governed by the laws of
the State of Minnesota. The parties agree to submit themselves to the
jurisdiction of the United States District Court for the District of Minnesota
for the enforcement, interpretation or construction of the Stipulation and its
exhibits, and all other matters regarding or relating to them.
23
<PAGE> 25
12. Should any of the provisions of this Stipulation conflict with the
terms of the exhibits hereto, the terms of this Stipulation shall control except
for Orders of the Court.
13. This Stipulation may be signed in counterparts without each party
signing the same, and each such counterpart shall constitute one and the same
agreement, provided, however that the Stipulation shall not be binding until it
has been signed by everyone for whom a signature line has been provided.
IN WITNESS WHEREOF, the parties hereto have caused this Stipulation to
be executed by their duly authorized attorneys as of the dates set forth below.
24
<PAGE> 26
Dated: September 27, 2000 LOCKRIDGE GRINDAL NAUEN P.L.L.P.
By: /s/ Richard A. Lockridge
-------------------------------------
Richard A. Lockridge (#64117)
Gregg M. Fishbein (#202009)
Suite 2200
100 Washington Avenue South
Minneapolis, MN 55401
Telephone: (612) 339-6900
POMERANTZ HAUDEK
BLOCK & GROSSMAN
Stanley M. Grossman
Patrick V. Dahlstrom
26th Floor
100 Park Avenue
New York, NY 10017-5516
Telephone: (212) 661-1100
MORRIS AND MORRIS
Karen L. Morris
Patrick F. Morris
Suite 1600
1105 North Market Street
Wilmington, DE 19801
Telephone: (302) 426-0400
CO-LEAD COUNSEL FOR PLAINTIFFS
Dated: September 26, 2000 BADER & BADER
By: /s/ John A. Halpern for I. Walton Bader
---------------------------------------
I. Walton Bader
65 Court Street
White Plains, NY 10601
Telephone: (914) 779-1344
25
<PAGE> 27
JOHN A. HALPERN & ASSOCIATES
By: /s/ John A. Halpern
-------------------------------------
John A. Halpern
500 Plymouth Building
12 South Sixth Street
Minneapolis, MN 55402
Telephone: (612) 375-1980
ATTORNEYS FOR TEACHERS' RETIREMENT
SYSTEM OF LOUISIANA
Dated: September 25, 2000 DORSEY & WHITNEY LLP
By: /s/ Peter W. Carter
-------------------------------------
Peter W. Carter (#227958)
Pillsbury Center South
220 South Sixth Street
Minneapolis, MN 55402
Telephone: (612) 340-2600
ATTORNEYS FOR DEFENDANTS
26
<PAGE> 28
EXHIBIT A
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
FOURTH DIVISION
- - - - - - - - - - - - - - - - - - - - - - - - - - -
In re Summit Medical Systems, Inc.
Securities Litigation Civ. No. 97-558 JMR/FLN
- - - - - - - - - - - - - - - - - - - - - - - - - - -
ORDER PRELIMINARILY APPROVING SETTLEMENT
WHEREAS, the parties to the above-described class action litigation
(the "Litigation") have applied for an Order pursuant to Rule 23(e) of the
Federal Rules of Civil Procedure, preliminarily approving a proposed settlement
of the Litigation in accordance with the Stipulation of Settlement (the
"Stipulation" or "Proposed Settlement") entered into by the parties effective as
of September 1, 2000 and dismissing the Litigation upon the terms and conditions
set forth in the Stipulation.
NOW, THEREFORE, pursuant to Rule 23(e) of the Federal Rules of Civil
Procedure, upon the agreement of the parties and after consideration of the
Stipulation and the exhibits annexed thereto;
IT IS HEREBY ORDERED that:
1. The representations, agreements, terms and conditions of the
parties' Proposed Settlement, as embodied in the Stipulation and all of the
exhibits annexed thereto, are preliminarily approved pending a final hearing on
the Proposed Settlement as provided herein. The Stipulation (including the
definitions set forth therein) is expressly incorporated into and made a part of
this Order.
2. For purposes of the Proposed Settlement only, the Court
conditionally certifies a Settlement Class consisting of: all persons or
entities who purchased or otherwise acquired shares of
<PAGE> 29
Summit Medical Systems, Inc. ("Summit") during the period August 4, 1995 through
March 3, 1997, inclusive on behalf of themselves and their heirs, executors,
administrators, beneficiaries, predecessors, successors, assigns, and any of
their former and present employees, directors, officers, accountants, agents,
attorneys, representatives, affiliates and subsidiaries ("the Settlement
Class"). Excluded from the Settlement Class are the Defendants, subsidiaries,
affiliates, officers and directors of Summit, the heirs and members of the
immediate families of the individual defendants, the legal representatives,
heirs, successors and assigns of any defendant, and any entity in which any
defendant has or had a controlling interest.
3. For purposes of the Proposed Settlement only, the law firms of
Lockridge Grindal Nauen P.L.L.P., 100 Washington Avenue South, Suite 2200,
Minneapolis, Minnesota 55401, Pomerantz Haudek Block & Grossman, 26th Floor, 100
Park Avenue, New York, N.Y., 10017 and Morris and Morris, Suite 1600, 1105 North
Market Street, Wilmington, DE 19801 are hereby appointed and designated as
Co-Lead Counsel for Plaintiffs to act on behalf of the Settlement Class,
including the Named Plaintiffs, and the other Plaintiffs' counsel, with respect
to all acts or consents permitted or required by the Stipulation, or such other
acts as may be reasonably necessary to consummate the Proposed Settlement.
4. Having reviewed the proposed form of Notice of Pendency of Class
Action, Conditional Class Certification, Settlement and Fairness Hearing
submitted by the parties as Exhibit C to the Stipulation ("Notice of Settlement
Hearing") and the Plan of Allocation contained therein, the Court hereby
approves such Notice of Settlement Hearing and directs that Co-Lead Counsel for
Plaintiffs shall mail, or cause to be mailed, such Notice of Settlement Hearing
to all members of the Settlement Class ("Settlement Class Member" or "Settlement
Class Members") who can be identified through reasonable effort. The mailing is
to be made by first class United States mail, postage prepaid no later than 10
days after the date of this Order and at least 45 days prior to the date of
hearing for final approval of the Proposed Settlement.
2
<PAGE> 30
5. Having reviewed the proposed form of Summary Notice of Pendency of
Class Action, Conditional Class Certification, Settlement and Fairness Hearing
submitted by the parties as Exhibit D to the Stipulation ("Summary Notice"), the
Court hereby approves such Summary Notice and directs that Co-Lead Counsel for
Plaintiffs shall cause such Summary Notice to be published once in the Monday
Legal Section of USA Today and in the Business Section of the Minneapolis Star
Tribune no later than 20 days after entry of the Order of Preliminary Approval
by the Court.
6. The Court finds and determines that mailing of the Notice of
Settlement Hearing and publication of the Summary Notice in the USA Today and
Star Tribune newspapers constitute the best notice to the Settlement Class
practicable under the circumstances, constitute due and sufficient notice of the
matters set forth in said Notices, to all persons entitled to receive notice,
and duly satisfy the requirements of due process and of Rule 23 of the Federal
Rules of Civil Procedure.
7. A hearing will be held by this Court in Courtroom 15E, United States
District Court, District of Minnesota, U.S. Courthouse, 300 South Fourth Street,
Minneapolis, Minnesota 55415 at 9:00 a.m. on January 5, 2001 (the "Settlement
Hearing"), to determine (a) whether the proposed class should be finally
certified; (b) whether the Proposed Settlement should be approved as fair,
reasonable, adequate and in the best interests of the Settlement Class; (c)
whether a final judgment dismissing the Litigation on the merits, with prejudice
and without costs, should be entered against Settlement Class Members and in
favor of Defendants as required by the Stipulation; (d) whether the proposed
allocation and distribution of the Net Settlement Amount is fair; and (e)
whether Counsel for Plaintiffs' petition for an award of attorneys' fees,
experts' fees, costs and expenses (the "Fee Petition") should be approved. The
hearing will also consider whether the proposed class should be finally
certified under Federal Rules of Civil Procedure 23(a) and 23(b)(3). The
Settlement Hearing is subject to continuation or adjournment by the Court
without further notice to the Settlement Class members.
3
<PAGE> 31
8. Any Settlement Class Member who desires to appear at the Settlement
Hearing and show cause, if any, why the Proposed Settlement, the allocation of
settlement proceeds or the Fee Petition should not be approved as fair,
reasonable, adequate and in the best interests of the Settlement Class, or why a
final judgment should not be entered consistent with the Stipulation, or why the
class should not be certified as proposed, must serve and file a written notice
of intention to appear and written objections in the form and manner required by
the Notice of Settlement Hearing. Such notice of intention to appear and
objections must be addressed to the Clerk of United States District Court for
the District of Minnesota, U.S. Courthouse, Room 202, 300 South Fourth Street,
Minneapolis, Minnesota 55415; must refer to the action IN RE SUMMIT MEDICAL
SYSTEMS, INC. SECURITIES LITIGATION, Master File No. 97-558 JMR/FLN; must be
filed with and received by the Clerk of Court by December 22, 2000; must
provide, with respect to each transaction in Summit made by such person during
the Settlement Class Period, a statement setting forth the date, type of
transaction, price and quantity of shares involved; must provide a detailed
statement of such person's specific objections to any matter before the Court,
the grounds therefor and the reasons for such person's desiring to appear and be
heard; and must include all documents and other writings such person wishes the
Court to consider. Copies of all materials filed with the Clerk of Court must
also be sent to and received by the following counsel on or before the date
those materials are filed with the Clerk of Court:
Richard A. Lockridge
Gregg M. Fishbein
Lockridge Grindal Nauen P.L.L.P.
100 Washington Avenue South, Suite 2200
Minneapolis, MN 55401
Attorneys for Plaintiffs and the Settlement Class
- and -
Peter W. Carter
Dorsey & Whitney LLP
Pillsbury Center South
220 South Sixth Street
Minneapolis, MN 55402
Attorneys for Defendants
4
<PAGE> 32
9. No person shall be entitled to object to the Proposed Settlement, to
the final judgment to be entered in the Litigation, to the allocation of the
settlement proceeds, or to any award of attorneys' fees, costs and expenses to
Plaintiffs' Counsel, or otherwise to be heard, except by serving and filing a
written notice of intention to appear and written objections in the form and
manner and by the date required by the Notice of Settlement Hearing. Any person
who fails to object in the manner and by the date required shall be deemed to
have waived any objections and shall be forever barred from raising such
objections in this or any other action or proceeding.
10. Having reviewed the proposed form of Proof of Claim and Release
submitted by the parties as Exhibit E to the Stipulation, the Court hereby
approves such Proof of Claim and Release and directs that Plaintiffs' Co-Lead
Counsel shall mail, or cause to be mailed, such Proof of Claim and Release at
the same time, in the same manner, and to the same persons as provided in
Paragraph 3 with respect to the Notice of Settlement Hearing.
11. In order to share in any proceeds resulting from the settlement of
the Litigation, Settlement Class Members must file a Proof of Claim and Release
("Proof of Claim") in the manner provided therein no later than December 15,
2000. A Proof of Claim filed by mail shall be deemed to have been filed when
postmarked, if mailed by first class mail, registered mail or certified mail,
postage prepaid, addressed in accordance with the instructions given in the
Proof of Claim, and all other Proofs of Claim shall be deemed to have been filed
at the time they are actually received by Plaintiffs' Co-Lead Counsel or the
Escrow Agent.
12. Upon the entry of the Order for Final Judgment in form and
substance substantially identical to the order submitted by the parties as
Exhibit B to the Stipulation, after the Settlement Hearing, all Settlement Class
Members, whether or not they have filed a Proof of Claim within the time
provided, shall be permanently barred and enjoined from commencing, instituting,
or prosecuting
5
<PAGE> 33
any action or other proceeding or asserting any claims constituting or arising
from Released Claims against Defendant in any court of law or equity,
arbitration tribunal or administrative or other forum, and that all Settlement
Class Members conclusively shall otherwise be bound by all of the terms of this
Stipulation, including without limitation, the terms of any judgment entered,
and shall be deemed to have released any and all such claims.
13. The Stipulation of Settlement, and any and all exhibits or
documents referred to therein, and terms, conditions or representations therein,
or any action taken to carry out this Stipulation or this Settlement, may not be
construed as or used as an admission by or against Defendants of any fault,
wrongdoing or liability whatsoever. Defendants have denied and expressly
continue to deny all of Plaintiffs' claims. Pursuant to Federal Rule of Evidence
408, the Rules of Evidence of the various states and the Rules of Evidence
followed by any quasi-judicial bodies, including regulatory and self-regulatory
organizations, the fact of entering into or carrying out the Stipulation, the
exhibits hereto, and any negotiations and proceedings related hereto, shall not
be construed as, offered into evidence as, or deemed to be evidence of, an
admission or concession of liability by or an estoppel against any of the
parties, and shall not be offered or received into evidence, or considered, in
any action or proceeding against any party to the Litigation in any judicial,
quasi-judicial, administrative agency, regulatory or self--regulatory
organization, or other tribunal, or proceeding for any purpose whatsoever, other
than to enforce the provisions of this Stipulation or the provisions of any
related agreement, release, or exhibit hereto, or in the case of any subsequent
action against Defendants, Named Plaintiffs and any Plaintiffs' Counsel or the
Class on any or all of the Released Claims, in order to support a defense of res
judicata, collateral estoppel, accord and satisfaction, release or other theory
of claim or issue preclusion or similar defense.
14. Upon the entry of the Order for Final Judgment after the Settlement
Hearing, and upon the Effective Date of the final judgment, which will occur on
the date upon which the judgment in the Litigation becomes not subject to
further appeal or review, only persons who are Authorized
6
<PAGE> 34
Claimants shall have rights in the distribution of the Net Class Settlement Fund
created by the Proposed Settlement.
15. Pending final determination of whether the settlement contained in
the Stipulation shall be approved, neither the Named Plaintiffs nor any other
Settlement Class Member, either directly, representatively or in any other
capacity, shall continue, commence or prosecute the Litigation.
16. The capitalized terms used herein shall have the meaning assigned
to them in the Stipulation.
BY THE COURT:
Dated: October 2, 2000. /s/ James M. Rosenbaum
---------------- ---------------------------------------
The Honorable James M. Rosenbaum
United States District Judge
7
<PAGE> 35
EXHIBIT B
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
FOURTH DIVISION
- - - - - - - - - - - - - - - - - - - - - - - - - - -
In re Summit Medical Systems, Inc.
Securities Litigation Civ. No. 97-558 JMR/FLN
- - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - - -
Teachers' Retirement System of Louisiana
5. Civ. No. 97-921 JMR/FLN
Summit Medical Systems, Inc., et al.
- - - - - - - - - - - - - - - - - - - - - - - - - - -
ORDER FOR FINAL JUDGMENT
WHEREAS, the parties to the above-described class action litigation
(the "Litigation") entered into a Stipulation of Settlement effective as of
September 1, 2000 (the "Stipulation" or "Settlement"), which Stipulation and its
Exhibits are hereby incorporated into and made a part of this Order:
WHEREAS, on _______________ 2000, the Court entered an Order
Preliminarily Approving Settlement and Approving a Conditional Settlement Class,
which, inter alia: (1) preliminarily approved the Settlement including the Plan
of Allocation; (2) approved the forms of notice of the Settlement to members of
the Settlement Class ("Settlement Class Members"); (3) directed that appropriate
notice of the Settlement be given to the Settlement Class; and (4) set a hearing
date for final approval of the Settlement;
WHEREAS, notice of the Proposed Settlement and other matters was mailed
to Settlement Class Members on _________________, 2000, and a summary notice of
the Proposed Settlement
<PAGE> 36
was published in the USA Today and in the Minneapolis Start Tribune on
_________________, 2000;
WHEREAS, on _____________, 2000, at ________ __.m., at the United
States District Court, District of Minnesota, Courtroom 15E, Minneapolis,
Minnesota 55415, the Court held a hearing on whether the Settlement was fair,
reasonable, adequate and in the best interests of the Settlement Class
("Settlement Hearing"); and
WHEREAS, based on the foregoing, having heard the statements of counsel
at the Settlement Hearing, having considered all of the files, records, and
proceedings in the Litigation, and being fully advised of the premises;
THE COURT HEREBY FINDS AND CONCLUDES THAT:
1. This Court has jurisdiction over the subject matter of the
Litigation.
2. The form, content and method of dissemination of the notice given to
the Settlement Class, including both published notice and individual notice to
all Settlement Class Members who could be identified through reasonable effort,
were adequate and reasonable and constituted the best notice practicable under
the circumstances.
3. The notice, as given, complied with the requirements of Rule 23 of
the Federal Rules of Civil Procedure, satisfied the requirements of due process
and constituted due and sufficient notice of the matters set forth therein.
4. The Settlement set forth in the Stipulation is fair, reasonable,
adequate and in the best interests of the Settlement Class.
5. The Settlement Class as defined herein meets all of the requirements
for class certification set forth in Federal Rule of Civil Procedure 23(a) and
23(b)(3). The Named Plaintiffs and Plaintiffs' Counsel fairly and adequately
represent the interests of the Settlement Class Members in connection with the
Settlement.
2
<PAGE> 37
6. The Named Plaintiffs and the Settlement Class Members, and all and
each of them, are hereby bound by the terms of the Settlement set forth in the
Stipulation.
7. The provisions of the Stipulation, including definitions of the
terms used therein, are hereby incorporated by reference as though fully set
forth herein. The meaning of the terms used herein shall have the meaning
assigned to them in the Stipulation.
NOW, THEREFORE, IT IS HEREBY ORDERED AS FOLLOWS:
1. The Litigation should proceed as a class action pursuant to Rules
23(a) and 23(b)(3) of the Federal Rules of Civil Procedure and the following
Settlement Class is certified: all persons or entities who purchased or acquired
shares of Summit during the period August 4, 1995 through March 3, 1997,
inclusive on behalf of themselves and their heirs, executors, administrators,
beneficiaries, predecessors, successors, assigns, and any of their former and
present employees, directors, officers, accountants, agents, attorneys,
representatives, affiliates and subsidiaries. Excluded from the Settlement Class
are the Defendants, subsidiaries, affiliates, officers and directors of Summit,
the heirs and members of the immediate families of the individual defendants,
the legal representatives, heirs, successors and assigns of any defendant, and
any entity in which any defendant has or had a controlling interest.
2. The Settlement set forth in the Stipulation is fair, reasonable,
adequate and in the best interests of the Settlement Class, and it shall be
consummated in accordance with the terms and provisions of the Stipulation.
3. Judgment shall be, and hereby is, entered dismissing the Litigation
with prejudice, on the merits against Defendants, not including Ernst & Young
LLP, and without costs to any party as against any other.
4. From and after the Effective Date, the Named Plaintiffs and all
members of the Settlement Class (except for those persons who properly excluded
themselves from the Class and whose names appear on Exhibit 1) on behalf of
themselves and their heirs, executors, administrators,
3
<PAGE> 38
beneficiaries, predecessors, successors, assigns and each of them, and any of
their former and present employees, directors, officers, accountants, agents,
attorneys, representatives, affiliates and subsidiaries have released any and
all claims which the Settlement Class Members, or any of them, had or have
against Defendants, arising out of, based upon, or otherwise related to, the
Released Claims, whether in litigation, arbitration, or any other forum.
5. The Stipulation of Settlement, and any and all exhibits or documents
referred to therein, or any terms, conditions or representations therein, or any
action taken to carry out the Stipulation or this Settlement, may not be
construed as or used as an admission by or against the Defendants of any fault,
wrongdoing or liability whatsoever. Pursuant to Federal Rule of Evidence 408,
the Rules of Evidence of the various states and the Rules of Evidence followed
by any quasi-judicial bodies, including regulatory and self-regulatory
organizations, the fact of entering into or carrying out the Stipulation, the
exhibits hereto, and any negotiations and proceedings related hereto, shall not
be construed as, offered into evidence as, or deemed to be evidence of, an
admission or concession of liability by or an estoppel against any of the
parties. Likewise, such acts shall not be offered or received into evidence, or
considered, in any action or proceeding against any party to the Litigation in
any judicial, quasijudicial, administrative agency, regulatory or
self-regulatory organization, or other tribunal, or proceeding for any purpose
whatsoever, other than to enforce the provisions of this Stipulation or the
provisions of any related agreement, release, or exhibit hereto, or in the case
of any subsequent action against the Defendants, Named Plaintiffs, and
Plaintiffs' Counsel, or the Class on any or all of the Released Claims, in order
to support a defense of res judicata, collateral estoppel, accord and
satisfaction, release or other theory of claim or issue preclusion or similar
defense.
6. Each Settlement Class Member, on behalf of themselves and their
heirs, executors, administrators, beneficiaries, predecessors, successors,
assigns and any of their former and present employees, directors, officers,
accountants, agents, attorneys, representatives, affiliates and
4
<PAGE> 39
subsidiaries, releases and forever discharges any and all manner of actions,
causes of action, suits, obligations, claims, debts, demands, agreements,
promises, liabilities, controversies, costs, expenses, and attorneys' fees
whatsoever, whether in law or equity and whether based on federal law, state
law, common law, or foreign law, right of action or otherwise, foreseen or
unforeseen, matured or unmatured, known or unknown, accrued or not accrued,
which they or any of them, either individually or as a Settlement Class Member,
ever had, now have, or can have, or shall or may hereafter have against
Defendants (as defined in Paragraph V.A.4) or any of them, for, based on, by
reason of or arising from or in any way relating to the Released Claims. Each
Settling Class Member releases and forever discharges Defendants whether or not
such Settling Class Member executes and delivers the Proof of Claim and Release.
7. The Settlement Class Members shall be forever barred and enjoined
from commencing, instituting or prosecuting any action or other proceeding in
any court of law or equity, arbitration tribunal or administrative forum,
directly, representatively or derivatively, that asserts against Defendants any
claims that relate to or constitute any of the Released Claims.
8. All Persons shall be barred and permanently enjoined from
initiating, asserting or prosecuting any and all future claims for contribution
arising out of or relating to the overstatement of revenues that gave rise to
the underlying action.
9. All Persons or entities whose names appear on Exhibit 1, which is
attached and incorporated, who have duly and timely requested exclusion from the
Settlement Class are excluded from the Settlement Class, not bound by this Order
and Final Judgment, and may not under the circumstances make any claim or
receive any benefit from the Settlement. Each Settlement Class Member not
appearing on Exhibit 1 is bound by this Order and Final Judgment, and will
remain forever bound, regardless of whether such member ever files a Proof of
Claim and Release.
10. Plaintiffs' Co-Lead Counsel and counsel for the plaintiffs are
hereby awarded ________________________ from the Class Settlement Fund with
interest, as reasonable attorneys'
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fees, expert fees, costs, and expenses which shall be paid from the Class
Settlement Fund to Plaintiffs' Co-Lead Counsel for Plaintiffs' Co-Lead Counsel
to allocate among plaintiffs' counsel, which amount shall bear interest until it
is paid at the same rate as that earned by the Settlement Fund.
11. The Defendants and their counsel and agents shall have no
responsibility or liability whatsoever with respect to and no person shall have
any claim against the Defendants and their counsel and agents with respect to
the investment or disbursement of the Class Settlement Fund by the Escrow Agent,
or the determination, administration, calculation or payment of claims, or
withholding of taxes, or any losses incurred in connection therewith, or with
respect to any other matter relating to the processing of claims.
12. The Court hereby retains and reserves jurisdiction over (a)
implementation of the Settlement and any distribution to Authorized Claimants
under the terms and conditions of the Stipulation and pursuant to further orders
of this Court; (b) disposition of the Class Settlement Fund, (c) the Litigation,
until (i) the Effective Date contemplated by paragraph V.A.5 of the Stipulation,
which will occur on the date upon which this judgment is no longer subject to
further appeal or review, and (ii) each and every act agreed to be performed by
the parties shall have been performed pursuant to the terms and conditions of
the Stipulation, including the exhibits annexed thereto: (d) the Litigation, for
the purpose of implementing distribution to shareholders in accordance with the
notice; and (e) all parties, for the purpose of enforcing and administering the
Stipulation and this Settlement.
13. There is no just reason for delay in the entry of judgment pursuant
to Rule 54(b) of the Federal Rules of Civil Procedure, and the Clerk is hereby
directed to enter judgment in accordance with this Order and Final Judgment.
14. Entry of final judgment and final approval of the Settlement
settles all claims that have been asserted or could have been asserted in this
Litigation.
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<PAGE> 41
15. Certification under Rule 54(b) will not result in unnecessary
appellate review, nor will review of the adjudicated claims moot any further
developments in the Litigation. Even if appeals are subsequently filed, the
nature of these claims are such that the appellate Court would not have to
decide the same issue more than once. The reservation of jurisdiction by this
Court pursuant to paragraph 9 shall not affect in any way the finality of this
Order and Final Judgment.
16. Any and all objections to the Settlement, the Plan of Allocation
and the application for attorneys' fees, expense fees, costs and expenses are
hereby denied.
LET JUDGMENT BE ENTERED ACCORDINGLY.
BY THE COURT:
Dated: , 2000.
---------------------- --------------------------------------
The Honorable James M. Rosenbaum
United States District Judge
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EXHIBIT C
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
FOURTH DIVISION
- - - - - - - - - - - - - - - - - - - - - - - - - - -
In re Summit Medical Systems, Inc.
Securities Litigation Civ. No. 97-558 JMR/FLN
- - - - - - - - - - - - - - - - - - - - - - - - - - -
NOTICE OF PENDENCY OF CLASS ACTION,
SETTLEMENT AND FAIRNESS HEARING
TO: ALL PERSONS WHO PURCHASED OR OTHERWISE ACQUIRED SHARES IN SUMMIT
MEDICAL SYSTEMS, INC. SECURITIES ("SUMMIT") DURING THE PERIOD AUGUST 4,
1995 THROUGH MARCH 3, 1997, INCLUSIVE (THE "CLASS PERIOD").
SPECIAL NOTE
THIS NOTICE MAY AFFECT YOUR RIGHTS. YOU ARE URGED TO READ IT CAREFULLY. PLEASE
NOTE THAT THOSE PERSONS WHO PURCHASED OR OTHERWISE ACQUIRED SUMMIT SHARES DURING
THE PERIOD AUGUST 4, 1995 THROUGH MARCH 3, 1997, INCLUSIVE, MAY BE SETTLEMENT
CLASS MEMBERS AND MAY BE ENTITLED TO SHARE IN THE PROCEEDS OF THE PROPOSED CLASS
ACTION SETTLEMENT DESCRIBED IN THIS NOTICE.
SETTLEMENT SUMMARY
STATEMENT OF CLASS RECOVERY
The proposed settlement creates a fund in the amount of $750,000 in
cash, 100,000 shares of Celeris Corp. common stock and 500,000 warrants in
Celeris Corp. common stock (the "Settlement Fund"). The total value of the
settlement is approximately $2,000,000 based on the Celeris Corp. stock price as
of September 14, 2000. Based on plaintiffs' counsel estimate of the number of
shares entitled to participate in the settlement, the average recovery per share
before deduction of any Court awarded attorneys' fees and expenses, would be
approximately $.30, depending on, among other things, the number of valid claims
submitted by Settlement Class
<PAGE> 43
Members, the actual prices paid for Summit common stock, and when such shares
were purchased and sold during the Class Period. The total value of the
settlement is based upon current market prices and there is a potential that
when the distribution is made, the actual recovery may be greater or less based
upon a change in the market value of the Celeris Corp. common stock.
Defendants deny any liability to plaintiffs and, as a result, believe
there should be no damages. The parties also do not agree on the average amount
of damages per share that would be recoverable if plaintiffs were to have
prevailed on each claim asserted. The issues on which the parties disagree
include: (1) the appropriate economic model for determining the amount by which
Summit common stock was allegedly artificially inflated (if at all) during the
Class Period; (2) the amount by which Summit common stock was allegedly
artificially inflated (if at all) during the Class Period; (3) the effect of
various market forces influencing the trading price of Summit common stock at
various times during the Class Period; (4) the extent to which external factors,
such as general market conditions, influenced the trading price of Summit common
stock at various times during the Class Period; (5) the extent to which the
various matters that Plaintiffs alleged were materially false or misleading
influenced (if at all) the trading price of Summit common stock at various times
during the Class Period; (6) the extent to which the various allegedly adverse
material facts that Plaintiffs alleged were omitted influenced (if at all) the
trading price of Summit common stock at various times during the Class Period;
and (7) whether the statements made of facts allegedly omitted were false,
material or otherwise actionable under the federal securities laws.
STATEMENT OF ATTORNEYS' FEES AND COSTS SOUGHT
Plaintiffs' Counsel intend to apply to the Court for an award of
attorneys' fees not to exceed 33-1/3% of the Settlement Fund plus expert fees
and other costs and expenses.
IDENTIFICATION OF PLAINTIFFS REPRESENTATIVES Persons with questions may contact:
Richard A. Lockridge Stanley M. Grossman
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<PAGE> 44
Gregg M. Fishbein Patrick V. Dahlstrom
Lockridge Grindal Nauen P.L.L.P. Pomerantz Haudek Block & Grossman
100 Washington Avenue South #2200 100 Park Avenue, 26th Floor
Minneapolis, MN 55401 New York, NY 10017
Karen L. Morris
Patrick F. Morris
1105 North Market Street, Suite 1600
Wilmington, DE 19801
REASONS FOR SETTLEMENT
Plaintiffs' Counsel have carefully weighed the benefits to the
Settlement Class of the settlement of the Litigation for the consideration
offered by the Defendants against the significant costs, risks of recovery, and
delay that continued prosecution of the Litigation would involve. Plaintiffs'
Counsel recognize the expense and length of continued proceedings necessary to
continue the Litigation against the Defendants through trial and appeals and
have considered the problems of proof, and believe that the certainty and amount
of this recovery outweigh the risks of proceeding further with the Litigation.
The Defendants, while denying any wrongdoing or liability relating to matters
alleged, have concluded that further conduct of the Litigation would be unduly
expensive, burdensome and protracted. They have devoted, and unless this
settlement is finalized, will continue to devote substantial amounts of time,
energy and resources to the defense of the claims asserted by the Named
Plaintiffs in the Litigation. The Defendants have determined that it is in their
best interests to settle the Litigation in the manner and upon the terms and
conditions set forth in this Stipulation to eliminate the burden and the expense
of further protracted litigation.
3
<PAGE> 45
PURPOSE OF THIS NOTICE
This Notice is given to you pursuant to Rule 23 of the Federal Rules of
Civil Procedure and pursuant to an Order of the United States District Court for
the District of Minnesota (the "Court") entered on October 4, 2000, in the
above-entitled class action (the "Litigation"), as described more fully below.
A proposed settlement of $750,000 in cash, 100,000 shares of Celeris
common stock and 500,000 Celeris warrants has been reached in the Litigation and
preliminarily approved by the Court. The total settlement value is approximately
$2,000,000 based on the price of Celeris stock as of September 14, 2000.This
proposed settlement was reached as a result of extensive negotiations between
counsel for the plaintiffs ("Named Plaintiffs") and counsel for the Defendants.
The purpose of this Notice is to advise you of this proposed settlement, the
terms of which are summarized herein and are fully contained in documents filed
with the Court and which are available for your inspection at the offices of the
Clerk of Court for the United States District Court for the District of
Minnesota, Room 202, 300 South Fourth Street, Minneapolis, Minnesota 55415,
during regular business hours; or a complete set of settlement documents will be
made available to you upon request which may be obtained by writing to Richard
Lockridge and Gregg Fishbein, Lockridge Grindal Nauen P.L.L.P., 100 Washington
Avenue South, Suite 2200, Minneapolis, MN 55401; to notify you of a hearing to
be held by the Court at 9:00 a.m. on January 5, 2001, in Courtroom 15E, United
States District Court, District of Minnesota. U.S. Courthouse, 300 South Fourth
Street, Minneapolis, Minnesota 55415, with regard to final approval of the
proposed settlement and award of attorneys' fees and expenses; to advise you of
your right to file written objections to or exclude yourself from the proposed
settlement and to appear at the hearing; and to advise you of the need to timely
file a Proof of Claim and Release Form in order to share in the proceeds to be
distributed pursuant to the settlement.
4
<PAGE> 46
IF THE PROPOSED SETTLEMENT IS APPROVED BY THE COURT, YOU WILL BE BOUND
BY THE TERMS OF THE PROPOSED SETTLEMENT AND BY THE FINAL JUDGMENT AND ORDER OF
DISMISSAL CONTEMPLATED THEREUNDER EVEN IF YOU FAIL TO SUBMIT A PROOF OF CLAIM
AND RELEASE FORM. ALL CLAIMS WILL BE DEEMED RELEASED UNLESS YOU SEEK EXCLUSION
IN ACCORDANCE WITH PARAGRAPH 3 OF THIS NOTICE. CERTAIN PROVISIONS OF THE
PROPOSED SETTLEMENT ARE DESCRIBED 1N THIS NOTICE, BUT THE DOCUMENTS ON FILE WITH
THE COURT MORE FULLY SET FORTH THE PROPOSED SETTLEMENT AND GOVERN ITS TERMS.
BACKGROUND AND DESCRIPTION OF THE LITIGATION
Plaintiffs commenced this class action pursuant to Section 10(b) and
20(a) of the Securities Exchange Act of 1934, and Sections 11 and 15 of the
Securities Act of 1933 on behalf of a class of persons who purchased or
otherwise acquired shares of Summit Medical Systems, Inc. stock between August
4, 1995, the date of Summit's initial public offering, and March 3, 1997, the
date Summit announced that its financial statements had overstated its revenues
since 1994. The original defendants were Summit and certain individual officers
and directors of Summit and Ernst & Young, the accounting firm which served as
an "expert" in connection with Summit's IPO. The Teachers' Retirement System of
Louisiana brought an individual action against Summit and the same individual
defendants. Ernst & Young was dismissed as a defendant in this action and a
separate suit was later commenced against them. The remaining parties in this
action and the Teachers' Retirement System of Louisiana have now reached a
settlement. Defendants deny all allegations that they violated the securities
laws.
5
<PAGE> 47
STIPULATION OF SETTLEMENT
1. All of the parties to the Litigation have entered into a Stipulation
of Settlement (the "Stipulation"), which has been preliminarily approved by the
Court. The Stipulation fully sets forth the terms of the proposed settlement of
the Litigation and is available for inspection as herein provided. Certain terms
are defined in the Stipulation, and if used in this Notice have the meaning
assigned to them in the Stipulation.
THE COURT HAS NOT DECIDED ANY OF THE SUBSTANTIVE CONTENTIONS OF THE
PARTIES, AS PLED BY THE COMPLAINT, AND, THEREFORE, NO INFERENCES REGARDING THE
MERITS OF THE LITIGATION SHOULD BE DRAWN FROM THE SENDING OF THIS NOTICE. THE
GIVING OF THIS NOTICE IS NOT MEANT TO IMPLY THAT THERE HAVE BEEN ANY VIOLATIONS
OF THE LAW OR THAT RECOVERY AFTER TRIAL COULD OR COULD NOT BE HAD IF THE
LITIGATION HAD NOT SETTLED.
CLASS ACTION DETERMINATION; EXCLUSION
2. Pursuant to the Court's Order Preliminarily Approving Settlement
dated October 4, 2000, the Court certified a Settlement Class of all persons or
entities who purchased or otherwise acquired shares of Summit during the period
August 4, 1995 through March 3, 1997, inclusive on behalf of themselves and
their heirs, executors, administrators, beneficiaries, predecessors, successors,
assigns, and any of their former and present employees, directors, officers,
accountants, agents, attorneys, representatives, affiliates and subsidiaries.
Excluded from the Settlement Class are the Defendants, subsidiaries, affiliates,
officers and directors of Summit, the heirs and members of the immediate
families of the individual defendants, the legal representatives, heirs,
successors and assigns of any defendant, and any entity in which any defendant
has or had a controlling interest.
3. You may request to be excluded from the Settlement Class by filing a
written request for exclusion on or before December 22, 2000, with the Clerk of
the United States District Court for the District of Minnesota, by mail
addressed to the Clerk of United States District Court, Room 202,
6
<PAGE> 48
300 South Fourth Street, Minneapolis, Minnesota 55415. Such request must be
filed in an envelope marked, "Request for Exclusion," must refer to the action
IN RE SUMMIT MEDICAL SYSTEMS, INC. SECURITIES LITIGATION, Civ. No. 97-558
JMR/FLN, and must include a statement that such Settlement Class Member wishes
to be excluded from participation in the proposed settlement. The request for
exclusion also must provide the quantity (I.E., the number of shares) of Summit
purchased, the dates of such purchases, the price paid or consideration given
for the shares purchased, the dates such shares were sold, and the amount of the
proceeds of such sale. If you submit a timely request for exclusion as specified
in this paragraph, you will not be bound by the settlement as set forth in the
Stipulation and described in this Notice, and will not be entitled to receive
any proceeds from the settlement or to participate in any other benefits of the
settlement. Copies of such requests for exclusion must also be served by first
class mail or by hand on and received by the following counsel on or before the
date those requests are filed with the Clerk of Court:
Richard A. Lockridge Stanley M. Grossman
Gregg M. Fishbein Patrick V. Dahlstrom
Lockridge Grindal Nauen P.L.L.P. Pomerantz Haudek Block & Grossman
100 Washington Avenue South #2200 100 Park Avenue, 26th Floor
Minneapolis, MN 55401 New York, NY 10017
Karen L. Morris
Patrick F. Morris
1105 North Market Street, Suite 1600
Wilmington, DE 19801
Attorneys for Plaintiffs and the Settlement Class
- and-
Peter W. Carter
Dorsey & Whitney LLP
Pillsbury Center South
220 South Sixth Street
Minneapolis, MN 55402
Attorneys on behalf of the Defendants
7
<PAGE> 49
PLEASE NOTE: If you want to participate in this settlement and if you do not
intend to pursue your own action against Defendants, you should not request to
be excluded from this class. If you do intend to pursue your own action against
Defendants, you should consult your attorney promptly because the applicable
statutes of limitations may bar your claims.
4. If you are a member of the Settlement Class, you may, but are not
required to, enter an appearance through counsel of your own choosing at your
own expense. If you do not do so, and if you do not request exclusion from the
Settlement Class, you will be represented, without additional cost to you, by
Plaintiffs Co-Lead Counsel:
Richard A. Lockridge Stanley M. Grossman
Gregg M. Fishbein Patrick V. Dahlstrom
Lockridge Grindal Nauen P.L.L.P. Pomerantz Haudek Block & Grossman
100 Washington Avenue South #2200 100 Park Avenue, 26th Floor
Minneapolis, MN 55401 New York, NY 10017
Karen L. Morris
Patrick F. Morris
1105 North Market Street, Suite 1600
Wilmington, DE 19801
SUMMARY OF THE PROPOSED SETTLEMENT
5. The proposed settlement calls for a Class Settlement Fund to be
created consisting of a payment in the sum of $750,000 in cash, 100,000 shares
of Celeris Corp. common stock and 500,000 warrants for Celeris Corp. stock with
an exercise price of $4.00 per share and an expiration date of September, 1
2005. The total value of the Class Settlement Fund is approximately $2,000,000
based on Celeris Corp. stock price as of September 14, 2000. The Class
Settlement Fund, including interest earned thereon, will be distributed to
Settlement Class Members after a deduction of such amounts as are awarded by the
Court to Plaintiffs' counsel for attorneys' fees, experts' fees, costs and
expenses ("Net Settlement Fund"). It is anticipated that some or all of the
Celeris Corp. common stock will be sold prior to distribution to Settlement
Class Members. The
8
<PAGE> 50
proceeds from such stock sales will be included in the money distributed to the
Settlement Class Members. At this time, it is anticipated that the average per
share recovery is approximately $.30.
6. Each Settlement Class Member who submits a Proof of Claim and
Release Form ("Claimant") will be awarded a pro rata share of the Net Settlement
Fund which will be determined by the ratio that each Authorized Claimant's loss
bears to the recognized losses of all other Authorized Claimants. If a member of
the Settlement Class sold its, his or her Summit shares at a price higher than
its, his or her purchase price for such shares, there is no Recognized Loss and
in such event the member of the Settlement Class is not entitled to receive any
proceeds of the Class Settlement Fund with respect to such transactions.
7. The proposed settlement contains the following release terms:
Each Settlement Class Member, on behalf of themselves and their
heirs, executors, administrators, beneficiaries, predecessors,
successors, assigns, and any of their former and present employees,
directors, officers, accountants, agents, attorneys,
representatives, affiliates and subsidiaries, releases and forever
discharges any and all manner of actions, causes of action, suits,
obligations, claims, debts, demands, agreements, promises,
liabilities, controversies, costs, expenses, and attorneys' fees
whatsoever, whether in law or in equity and whether based on federal
law, state law, common law, or foreign law right of action or
otherwise, foreseen or unforeseen, matured or unmatured, known or
unknown, accrued or not accrued, which they or any of them, either
individually or as a Settlement Class Member, ever had, now have, or
can have, or shall or may hereafter have against Defendants or any
of them, for, based on, by reason of or arising from or in any way
relating to the Released Claims.
The Settlement Class Members shall be forever barred and enjoined
from commencing, instituting or prosecuting any action or other
proceeding in any court of law or equity, arbitration tribunal or
administrative forum, directly, representatively or derivatively,
that asserts against Defendants any claims that relate to or
constitute any of the Released Claims.
All persons shall be forever barred and permanently enjoined from
instituting, asserting or prosecuting any and all future claims for
contribution arising out of or relating to the overstatement of
revenues that gave rise to the underlying litigation.
9
<PAGE> 51
8. The proposed settlement also requires the full and final dismissal
of the Litigation with prejudice and on the merits in favor of the Defendants
and against all Settlement Class Members, without costs to any party as against
any other, except as provided in the Stipulation.
9. The proposed settlement is subject to the approval of the Court.
Further, the Named Plaintiffs and the Defendants may withdraw from the proposed
settlement under certain other circumstances described in the Stipulation in
which event the Stipulation will be terminated. If the Stipulation is
terminated, then the Class Settlement Fund will be returned to the Defendants.
Any reasonable and necessary amounts actually incurred in connection with the
Costs of Notice and Settlement Administration, up to a maximum of $50,000, will
not be refunded.
10. If the Court does not approve the proposed settlement, or if the
proposed settlement or Stipulation is voided, terminated or canceled according
to its terms, then the parties and the Litigation shall revert to their
respective positions as of the date and time prior to the execution of the
Stipulation and the Litigation shall proceed in all respects as if no
Stipulation had occurred.
APPLICATION FOR ATTORNEYS FEES,
EXPERTS' FEES, COSTS AND EXPENSES
11. Plaintiffs' Counsel will jointly apply to the Court for an award of
attorneys' fees not to exceed one-third of the Class Settlement Fund. In
addition, Plaintiffs' Counsel will seek reimbursement of experts' fees, costs
and expenses to be paid out of the Class Settlement Fund. The amounts to be
awarded to the Plaintiffs' Counsel, if any, will be decided by the Court.
THE SETTLEMENT HEARING
12. A hearing will be held before the Honorable James M. Rosenbaum,
United States District Judge, in Courtroom 15E, United States District Court,
District of Minnesota, 300 South Fourth Street, Minneapolis, Minnesota 55415 on
January 5, 200, at 9:00 a.m. (the "Settlement Hearing") to determine: (a)
whether the proposed settlement should be approved as fair, reasonable, adequate
and in the best interests of the Settlement Class; (b) whether the Plan of
Allocation should
10
<PAGE> 52
be approved; (c) whether a final judgment should be entered dismissing the
Litigation with prejudice as required by the Stipulation; and (d) disposition of
the Plaintiffs' Counsels' application for an award of attorneys' fees, experts'
fees, costs and expenses to be paid from the Class Settlement Fund.
13. Although the issue of approval or disapproval of the settlement and
the application for an award of attorneys' fees, experts' fees, costs and
expenses may be decided at the same time, whether the proposed settlement is
approved and consummated will not depend upon whether an award of attorneys'
fees, experts' fees, costs and expenses is approved.
14. The hearing on the proposed Settlement may be adjourned by the
Court from time to time, without further notice. The Court reserves the right to
act upon any or all of the matters set forth in Paragraph 13 without further
notice of any kind and to consider any other matter related to the proposed
settlement.
RIGHT TO APPEAR
15. At the Settlement Hearing, any member of the Settlement Class may
appear in person or by counsel and show cause, if any, why the proposed
settlement should not be approved as fair, reasonable, adequate and in the best
interests of the Settlement Class; why the proposed allocation of settlement
proceeds among Settlement Class Members should not be approved; why final
judgment should not be entered; or why the Court should not award the requested
attorneys' fees, experts' fees, costs and expenses to the Plaintiffs' Counsel.
However, no person will be heard at the Settlement Hearing unless the following
materials are served and filed by such person as described herein: (a) a notice
of intention to appear; (b) with respect to each transaction in Summit made by
such person during the Settlement Class Period, a statement setting forth the
date, type of transaction, price and amount of shares involved; (c) a detailed
statement of such person's specific objection to any matter before the Court,
the grounds therefor and the reasons for such person's desiring to appear and to
be heard; and (d) all documents and writings which such person desires the Court
to consider. Such materials must be FILED with and RECEIVED by the Clerk of
Court, United States District Court for the
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<PAGE> 53
District of Minnesota, by a filing at Room 202, 300 South Fourth Street,
Minneapolis, Minnesota 55415 by December 22, 2000. Copies of such materials must
also be sent to and RECEIVED by the following counsel ON OR BEFORE THAT SAME
DATE:
Richard A. Lockridge
Gregg M. Fishbein
Lockridge Grindal Nauen P.L.L.P.
100 Washington Avenue South #2200
Minneapolis, MN 55401
Attorneys for Plaintiffs and the Settlement Class
- and-
Peter W. Carter
Dorsey & Whitney LLP
Pillsbury Center South
220 South Sixth Street
Minneapolis, MN 55402
Attorneys on behalf of the Defendants.
All such notices, statements, documents and writings must refer to the action IN
RE SUMMIT MEDICAL SYSTEMS, INC. SECURITIES LITIGATION, Civ. No. 97-558 JMR/FLN.
16. No member of the Settlement Class shall be entitled to object to
the proposed settlement, to the proposed allocation of settlement proceeds, to
the final judgment to be entered in the Litigation or to any award of attorneys
fees', experts' fees, costs and expenses to the Plaintiffs' Counsel, or
otherwise to be heard, except by serving and filing a written notice of
intention to appear and written objections as described above. Any person who
fails to object in the manner and by the date described above shall be deemed to
have waived any objections and shall be barred forever from raising such
objections in this or any other action or proceeding.
17. If you are satisfied with the proposed settlement and do not wish
to be heard with respect to its terms, with respect to allocation of settlement
proceeds, with respect to the entry of judgment or with respect to the payment
of attorneys fees', experts fees', costs and expenses to the plaintiffs'
counsel, you need not appear at the Settlement Hearing.
12
<PAGE> 54
NOTICE TO BANKS, BROKERS AND OTHER NOMINEES
18. Pursuant to an order of this Court, each bank, brokerage firm and
other nominee for a beneficial owner who purchased Summit during the Settlement
Class Period is directed promptly to forward to all such persons a copy of this
Notice and the Proof of Claim and Release Form enclosed herewith. Upon request
by any such nominee, additional copies of this Notice and the Proof of Claim and
Release Form may be obtained without charge by written request to the following:
Claims Administrator
Summit Medical Litigation
P.O. Box 2370
Minneapolis, Minnesota 55402-0370
Upon the receipt of a list of names and addresses of persons for whom
nominees purchased Summit during the Settlement Class Period, Plaintiffs'
Counsel shall cause a copy of this Notice and the Proof of Claim and Release
Form to be sent to each person so named. Plaintiffs' Counsel shall reimburse any
nominee for reasonable expenses incurred by the nominee either in mailing copies
of this Notice directly or in identifying beneficial owners.
PROOF OF CLAIM AND RELEASE
19. A Settlement Class Member who wishes to share in the proceeds of
the proposed settlement described above must submit the Proof of Claim and
Release Form enclosed herewith no later than December 15, 2000. Whether or not
such Settlement Class Member has filed and served any objections pursuant to
Paragraph 15 of this Notice, any Settlement Class Member who fails timely to
submit a completed Proof of Claim and Release Form will be barred from sharing
in the distribution of proceeds of the proposed settlement and will be bound by
any settlement approved and any judgments entered by the Court in the
Litigation, whether favorable or unfavorable.
20. A Proof of Claim and Release Form sent by mail shall be deemed to
have been filed when postmarked if mailed by first class, registered or
certified mail, postage prepaid, and ADDRESSED IN
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<PAGE> 55
ACCORDANCE WITH THE INSTRUCTIONS GIVEN ON THE PROOF OF CLAIM AND RELEASE FORM.
All other Proof of Claim and Release Forms shall be deemed to have been filed at
the time they are actually received.
21. If you did not receive a Proof of Claim and Release Form in the
mail with this Notice, you may obtain such a form by a written request addressed
to the following:
Claims Administrator
Summit Medical Litigation
P.O. Box _2370
Minneapolis, Minnesota 55402-0370
In your written request, you must include your name and your current address.
SCOPE OF THIS NOTICE; EXAMINATION OF PAPERS
22. The foregoing statements concerning the Settlement Hearing, the
Litigation, the terms of the proposed settlement and other matters described
herein do not purport to be comprehensive. For full details, members of the
Settlement Class are referred to the Stipulation, to the documents referred to
herein and to the pleadings and other papers filed with the Court in the
Litigation, which documents may be examined by you or your attorney during
regular business hours on any business day at the offices of the Clerk of Court
for the United States District Court for the District of Minnesota, Room 202,
300 South Fourth Street, Minneapolis, Minnesota 55415. If you have questions
concerning any of the above or would like a copy of the settlement documents,
you may contact Richard Lockridge or Gregg Fishbein, Lockridge Grindal Nauen
P.L.L.P., 100 Washington Avenue South, Suite 2200, Minneapolis, MN 55401. You
also may call the Claims Administrator at 1-800-XXX-XXXX. PLEASE DO NOT CALL THE
COURT OR THE CLERK OF THIS COURT TO ANSWER YOUR QUESTIONS.
BY THE COURT:
Dated: , 2000.
-------------------------- -------------------------------------
The Honorable James M. Rosenbaum
United States District Judge
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EXHIBIT D
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
FOURTH DIVISION
- - - - - - - - - - - - - - - - - - - - - - - - - - -
In re Summit Medical Systems, Inc.
Securities Litigation Civ. No. 97-558 JMR/FLN
- - - - - - - - - - - - - - - - - - - - - - - - - - -
SUMMARY NOTICE OF CLASS ACTION,
SETTLEMENT AND FAIRNESS HEARING
TO: ALL PERSONS WHO PURCHASED OR OTHERWISE ACQUIRED SHARES IN SUMMIT
MEDICAL SYSTEMS, INC. SECURITIES ("SUMMIT") DURING THE PERIOD AUGUST 4,
1995 THROUGH MARCH 3, 1997:
This Notice is given pursuant to Rule 23 of the Federal Rules of Civil
procedure and the October 4, 2000 Order of the United States District Court for
the District of Minnesota, Fourth Division. The purpose of this Notice is to
inform you that the consolidated action brought in the Court as a class action
on behalf of purchasers of Summit during the period August 4, 1995 through March
3, 1997, inclusive, has concluded in a proposed settlement of $750,000 in cash,
100,000 shares of Celeris Corp. common stock and 500,000 warrants of Celeris
Corp. The total value of the settlement is approximately $2 million before any
award of attorneys' fees and costs. The action alleged violations of the federal
securities laws. IF YOU PURCHASED OR OTHERWISE ACQUIRED SUMMIT SHARES DURING THE
PERIOD AUGUST 4, 1995 THROUGH MARCH 3, 1997, INCLUSIVE, YOU MAY BE ELIGIBLE TO
SHARE IN THE SETTLEMENT, AND YOUR RIGHTS WILL BE AFFECTED BY THE PROPOSED
SETTLEMENT.
On October 16, 2000, a Notice, including a Proof of Claim and Release,
was mailed to potential class members. That Notice contains important
information regarding the rights of class members and a form that must be
completed to share in the settlement. If you believe you are a member of the
class as defined above, and if you have not received a copy of the Notice by
mail, you may request a copy free of charge by mailing your request to: CLAIMS
ADMINISTRATOR, SUMMIT MEDICAL LITIGATION, P.O. BOX 2370, MINNEAPOLIS, MN
55402-0370.
o PROOF OF CLAIM AND RELEASE FORMS MUST BE FILED BY CLASS MEMBERS BY
DECEMBER 15, 2000.
o OBJECTIONS TO THE PROPOSED SETTLEMENT MUST BE FILED WITH THE COURT BY
DECEMBER 22, 2000 AND SENT TO COUNSEL BY DECEMBER 22, 2000.
<PAGE> 57
o REQUESTS FOR EXCLUSION FROM THE CLASS MUST BE RECEIVED BY LEAD COUNSEL
NO LATER THAN DECEMBER 15, 2000.
Lead Counsel for the Plaintiff Class in this matter are Lockridge
Grindal Nauen P.L.L.P., 100 Washington Avenue South, Suite 2200, Minneapolis, MN
55401; Pomerantz Haudek Block & Grossman, 26th Floor, 100 Park Avenue, New York,
NY, 10017; and Morris and Morris, Suite 1600, 1105 North Market Street,
Wilmington, DE 19801.
A HEARING ON THE FAIRNESS OF THE SETTLEMENT AND CLASS COUNSEL'S REQUEST
FOR ATTORNEYS' FEES AND EXPENSES WILL BE HELD ON JANUARY 5, 2001 AT THE UNITED
STATES COURTHOUSE, COURTROOM 15E, 300 SOUTH FOURTH STREET, MINNEAPOLIS,
MINNESOTA 55415.
For more information, please contact the Claims Administrator, in
writing, at the address listed above or at the telephone number 1-800-XXX-XXXX.
DO NOT TELEPHONE THE CLERK OF COURT REGARDING THIS NOTICE.
Dated: _______________________ BY ORDER OF THE COURT
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
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EXHIBIT E
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
FOURTH DIVISION
- - - - - - - - - - - - - - - - - - - - - - - - - - -
In re Summit Medical Systems, Inc.
Securities Litigation Civ. No. 97-558 JMR/FLN
- - - - - - - - - - - - - - - - - - - - - - - - - - -
PROOF OF CLAIM AND RELEASE
NOTICE TO ALL PERSONS WHO PURCHASED OR OTHERWISE ACQUIRED SHARES IN
SUMMIT MEDICAL SYSTEMS, INC. SECURITIES LITIGATION ("SUMMIT") DURING THE PERIOD
AUGUST 4, 1995 THROUGH MARCH 3, 1997, INCLUSIVE: By Notice of Pendency of Class
Action, Settlement and Fairness Hearing (the "Notice"), enclosed with this Proof
of Claim and Release, you have been notified that, subject to approval by the
United States District Court for the District of Minnesota (the "Court"), the
above-described action (the "Litigation") has been settled, and that the
settlement, if approved by the Court, will result in a fund to be distributed to
authorized Settlement Class Members under the supervision of the Court.
Only members of the Settlement Class who submit the attached Proof of
Claim and Release Form and who have an Allowed Claim (as described in the
Notice) are entitled to share in the Class Settlement Fund. You are not entitled
to share therein if you exercise the option set forth in the Notice to exclude
yourself from participation in the Settlement Class. You must have a Recognized
Loss in order to share in the distribution of net settlement proceeds. If you
have no loss, you will not be entitled to participate in the Class Settlement
Fund but will be bound by the terms of the settlement.
<PAGE> 59
The Settlement Class consists of all persons or entities who purchased
or otherwise acquired shares of Summit Medical Systems, Inc. ("Summit") during
the period August 4, 1995 through March 3, 1997, inclusive, on behalf of
themselves and their heirs, executors, administrators, beneficiaries,
predecessors, successors, assigns, and any of their former and present
employees, directors, officers, accountants, agents, attorneys, representatives,
affiliates and subsidiaries ("the Settlement Class"). Excluded from the
Settlement Class are the Defendants, subsidiaries, affiliates, officers and
directors of Summit, the heirs and members of the immediate families of the
individual defendants, the legal representatives, heirs, successors and assigns
of any defendant, and any entity in which any defendant has or had a controlling
interest.
If you think you are a member of the Settlement Class by virtue of the
purchase of Summit stock, you must submit the attached Proof of Claim and
Release Form to obtain a recovery in this Litigation.
NOTICE TO BROKERS AND OTHER NOMINEES: If you purchased or acquired
Summit stock during the Settlement Class Period for another person or are acting
as administrator or executor for one who owned Summit stock purchased during the
Class Period, you are required to inform the beneficial owners of such stock, or
any heirs or other persons who might assert a claim for losses sustained on such
stock, of their right to file a Proof of Claim. You may obtain additional copies
of this Proof of Claim and Release Form from: Claims Administrator, Summit
Medical Litigation, P.O. Box 2370, Minneapolis, Minnesota 55402-0370.
Plaintiffs' Co-Lead Counsel shall reimburse you for reasonable expenses incurred
by the nominee either in mailing copies of this Notice directly or in
identifying beneficial owners.
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INSTRUCTIONS ON MAKING A CLAIM:
TO RECEIVE ANY PAYMENTS FROM THIS SETTLEMENT, YOU MUST SIGN THIS PROOF OF CLAIM
AND RELEASE FORM.
1. Distribution of the proceeds of the settlement is subject to court
approval.
2. This Proof of Claim and Release Form must be received on or before
December 15, 2000 and mailed to:
Claims Administrator
Summit Medical Litigation
P.O. Box 2370
Minneapolis, Minnesota 55402-0370
3. Neither the Clerk of Court, Named Plaintiffs or Plaintiffs' Counsel
will be responsible if your Proof of Claim and Release Form is not timely
received. You may, therefore, wish to use a return receipt mail service to
protect your claim, though it is not required.
4. The Proof of Claim must be filed in the name or names of the actual
beneficial owner or owners of the stock upon which the claim is based. All joint
owners must sign the Proof of Claim and Release Form. Executors, administrators,
guardians and trustees may complete and sign the form on behalf of the persons
represented by them, but must identify the beneficial owners. Proof of their
authority need not accompany the Proof of Claim and Release Form, but their
titles or capacities must be stated.
5. Your Proof of Claim and Release Form must be signed.
6. Do not submit more than one Proof of Claim and Release Form for all
of your claims. Do not submit any duplicate claims. If, subsequent to filing a
claim, you discover additional claims or documentation, write to the address
given above, identify your original claim, and ask that it be supplemented.
7. You will recover a pro rata amount of your losses based upon the
total losses ("Recognized Loss") sustained by all members of the Settlement
Class. You need not compute your
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Recognized Loss. If a member of the Settlement Class sold Summit shares at a
price higher than the purchase price for such shares, there is no Recognized
Loss and in such event that member of the Settlement Class is not entitled to
receive any proceeds of the Class Settlement Fund with respect to such
transactions.
PROOF OF CLAIM AND RELEASE FORM
The undersigned says that the following is true, correct and complete
to the best of its, his or her knowledge, information and belief:
I. IDENTITY OF CLAIMANT
A. Claimant's name, mailing address and telephone number are as follows
(include beneficial owner):
Name:
------------------------------------
Address:
---------------------------------
---------------------------------
Beneficial Owner:
Name:
------------------------------------
Address:
---------------------------------
---------------------------------
Telephone: (day) ___________________________ (evening) _________________________
B. Claimant is (check one):
<TABLE>
<CAPTION>
<S> <C> <C> <C>
______An Individual ______Partnership ______Trustee
______Two or more ______Corporation ______IRA, Keogh or
persons holding Executor or other type of
securities jointly ______Administrator retirement account
______Government ______ QRP or Qualified
Settlement Plan
______Other (specify):
</TABLE>
C. Beneficial owner's taxpayer I.D. (Social Security or Employer
Identification) number is:
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(Note: failure to supply a taxpayer I.D. number may result in the denial of your
claim.)
D. TRANSACTIONS IN SUMMIT SHARES
1. At the close of business on August 3, 1995, I owned
_________ shares of Summit Medical Systems, Inc.
common stock.
2. I made the following purchases or other acquisitions
of Summit Medical Systems, Inc. common stock during
the period August 4, 1995 through and including March
3, 1997, inclusive:
<TABLE>
<CAPTION>
Date of Number of Purchase Price Aggregate Cost (including
Purchase Shares Purchased Per Share Commission, Taxes and Fees
-------- ---------------- --------- --------------------------
<S> <C> <C> <C>
----------- ------------ $-------------- $---------------------------
----------- ------------ $-------------- $---------------------------
----------- ------------ $-------------- $---------------------------
----------- ------------ $-------------- $---------------------------
----------- ------------ $-------------- $---------------------------
----------- ------------ $-------------- $---------------------------
</TABLE>
3. I made the following sales of Summit Medical Systems,
Inc. common stock during the period August 4, 1995
through and including March 3, 1997, inclusive:
<TABLE>
<CAPTION>
Date of Number of Purchase Price Aggregate Cost (including
Purchase Shares Purchased Per Share Commission, Taxes and Fees
-------- ---------------- --------- --------------------------
<S> <C> <C> <C>
----------- ------------ $-------------- $---------------------------
----------- ------------ $-------------- $---------------------------
----------- ------------ $-------------- $---------------------------
----------- ------------ $-------------- $---------------------------
----------- ------------ $-------------- $---------------------------
----------- ------------ $-------------- $---------------------------
</TABLE>
4. At the close of business on March 3, 1997, I still
owned ___________ shares of Summit Medical Systems,
Inc. common stock.
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II. CLAIMANT'S ACKNOWLEDGMENTS, REPRESENTATIONS AND RELEASE
1. By submitting this Proof of Claim and Release, I state that I
believe in good faith that: (a) I am a Class Member as defined in the Notice, or
am acting for such person; (b) I have read and understood the contents of the
Notice; (c) I have not previously filed a request to be excluded from the Class;
(d) I am entitled to receive a share of the Net Settlement Fund; and (e) I
desire to participate in the proposed Settlement described in the Notice.
2. I understand that the information in this Proof of Claim and Release
is subject to such verification as the Court may direct and I agree to cooperate
in any such verification. I further agree and understand that if the proposed
Settlement is approved by the Court and becomes effective, all claims against
Defendants which have been or could have been asserted relating to the
Litigation will be satisfied, discharged and extinguished forever.
3. RELEASE: My signature below constitutes a full and complete release
by me or, if I am submitting this Proof of Claim and Release on behalf of a
corporation, partnership, estate or one or more other persons by it, him, her or
them, or by my, its, his, her or their heirs, executors, administrators,
beneficiaries, predecessors, successors, assigns, and by any of my, its, his,
her or their former and present employees, directors, officers, accountants,
agents, attorneys, affiliates and subsidiaries, and each of them, of Defendants
and all and each of their predecessors, successors, assigns, direct and indirect
subsidiaries, divisions, parents, affiliates, and related entities, and all and
each of their respective predecessors, successors, and assigns and all and each
of their former and present partners, principals, employees, directors,
officers, agents, attorneys, insurers, investment bankers, affiliates,
subsidiaries, and each of their respective assigns, successors, agents, heirs,
and executors (the "Released Defendant Group"), of and from any and all manner
of actions, causes of action, suits, obligations, claims, debts, demands,
agreements, promises, liabilities, controversies, costs, expenses, and
attorneys' fees whatsoever, whether in law or in equity and whether based on any
federal law, state law, common law, foreign law right of action or otherwise,
foreseen or
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unforeseen, matured or unmatured, known or unknown, accrued or not accrued,
which I or any of them, ever had, now have, or can have, or shall or may
hereafter have, either individually, or as a member of a class, for, based on,
by reason of or arising from or in any way relating to the conduct alleged in
the Litigation, or any action which could either have been consolidated or
coordinated with the Litigation, or any action arising from or in any way
related to the conduct alleged in the Litigation which could have been brought
in any other forum including, but not limited to the Released Claims, except
that nothing here releases any claim arising out of the violation or breach of
the Stipulation of Settlement.
4. My signature below also constitutes a covenant and agreement not to
sue any of the Released Defendant Group or otherwise assert, either directly or
indirectly, any of the Released Claims against the Released Defendant Group.
5. My signature below acknowledges that I may have sustained Released
Claims which are presently unknown and unsuspected, and that such Released
Claims may give rise to additional damages, expenses and losses in the future
which are not now anticipated. My signature below acknowledges that this
Settlement and the Releases in it have been negotiated and agreed upon in light
of this realization and, being fully advised, I expressly waive any and all
rights that may exist under any statute or common law principle which would
limit the effect of the foregoing release to those claims actually known or
suspected to exist at the time of the execution of this Proof of Claim and
Release.
6. I, or the person I represent, agree to submit to the jurisdiction of
the United States District Court for the District of Minnesota Fourth Division
and be bound by the Federal Rules of Civil Procedure concerning the Proof of
Claim and Release, and agree to be bound and subject to the terms of the Order
and Final Judgment of the Court in the Litigation, and to furnish such
reasonable additional information or proof about this Proof of Claim and Release
as the Claims Administrator and the parties or the Court shall require.
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7. I have read and am familiar with the contents of the instructions of
the Notice accompanying this Proof of Claim and Release, and understand that
references made in this Proof of Claim and Release are to the Notice for the
matters described and the terms defined in that Notice.
I declare under penalty of perjury of the laws of the United States
that the foregoing information supplied by the undersigned is true and correct,
and that this Proof of Claim and Release Form was executed this day of
_________________________, 2000, in ______________________________________
(city, state, country).
------------------------------ -----------------------------------
(Sign your name here) (Sign your name here)
------------------------------ -----------------------------------
(Type or print your name here) (Type or print your name here)
----------------------------------- -----------------------------------
(Capacity of persons signing, e.g., (Capacity of persons signing, e.g.,
beneficial purchaser, executor beneficial purchaser, executor
or administrator) or administrator)
8
