Preview
FILED
DALLAS COUNTY
3/27/2015 1:14:18 PM
FELICIA PITRE
DISTRICT CLERK
CAUSE NO. DC-13-05400
JAMES F. MASON § IN THE DISTRICT COURT
and JOSEPH S. POSAVITZ, Individually §
and Derivatively on Behalf of APH §
DIAGNOSTIC SERVICES, INC., §
Plaintiffs, § 134th JUDICIAL DISTRICT
v. §
§
D. YALE SAGE and KIRK R. SHORT, §
Defendants. § DALLAS COUNTY, TEXAS
ORDER PRELIMINARILY APPROVING DERIVATIVE
SETTLEMENT AND PROVIDING FOR NOTICE
WHEREAS, the Settling Parties have made application for an order (i) preliminarily
approving the settlement (the “Settlement”) of derivative claims against D. Yale Sage and Kirk
R. Short, in accordance with a signed agreement of settlement fully executed on March 25, 2015,
(the “Agreement”), sets forth the terms and conditions for a proposed Settlement and dismissal
of this action with prejudice, upon the terms and conditions set forth therein; and (ii) approving
for distribution of the Notice of Proposed Settlement (“Notice”); and
WHEREAS, the Court having considered the Agreement and the annexed thereto and
relevant filings:
NOW THEREFORE, IT IS HEREBY ORDERED:
1. The Court does hereby preliminarily approve, subject to further consideration at
the Settlement Hearing described below, the Agreement and the Settlement set forth therein,
including the terms and conditions for settlement and dismissal with prejudice of the claims
against Sage and Short.
2. Effective as of the filing of the Unopposed Motion for Preliminary Approval of
Settlement, all proceedings, pending deadlines and discovery in the case are STAYED.
ORDER PRELIMINARILY APPROVING DERIVATIVE
SETTLEMENT AND PROVIDING FOR NOTICE 1
3. A hearing (the “Settlement Hearing”) shall be held before this Court on
_____________________________, 2015 at ____________ __.m., in the 134th District Court of
Dallas County, Texas, 600 Commerce Street, 6th Floor, Dallas, Texas 75202, to determine
whether the Settlement of the Action on the terms and conditions provided for in the Agreement
is fair, reasonable and adequate to the APHDS shareholders and to APHDS and should be
approved by the Court; whether a judgment as provided should be entered herein, and to award
attorneys’ fees and expenses to Plaintiffs’ Counsel.
4. The Court approves, as to form and content, the Notice annexed as Exhibit A
hereto, and finds that the distribution of the Notice substantially in the manner and form set forth
in this Order meets the requirements of Texas law and due process, and is the best notice
practicable under the circumstances and shall constitute due and sufficient notice to all Persons
entitled thereto.
5. Not later than three calendar days following entry of this Order, Notice shall be
issued in accordance with the Agreement.
6. At least seven calendar days prior to the Settlement Hearing, Plaintiff’s Counsel
shall file with the Court proof, by affidavit or declaration, of mailing of the Notice.
7. All APHDS shareholders shall be bound by all orders, determinations and
judgments in the derivative concerning the Settlement, whether favorable or unfavorable to the
current APHDS shareholders.
8. Pending final determination of whether the Settlement should be approved, no
current APH shareholder, either directly, representatively, or in any other capacity, shall
commence or prosecute against any of the Defendants, any action or proceeding in any court or
tribunal asserting any of the Released Claims.
ORDER PRELIMINARILY APPROVING DERIVATIVE
SETTLEMENT AND PROVIDING FOR NOTICE 2
9. All papers in support of the Settlement and the award of attorneys’ fees and
expenses shall be filed with the Court and served at least five calendar days prior to the
Settlement Hearing.
10. Any APHDS shareholder holding APHDS common stock prior to May 16, 2013,
(“APHDS Shareholder”) may appear and show cause, if he, she or ithas any reason why the
Settlement of the Action should not be approved as fair, reasonable and adequate, or why a
Judgment should not be entered thereon, or why the attorneys’ fees and expenses agreed upon by
the Settling Parties should not be awarded to Plaintiffs’ Counsel; provided, however, unless
otherwise ordered by the Court, no APHDS Shareholder or other person shall be heard or entitled
to contest the approval of the terms and conditions of the Settlement, or, if approved, the
Judgment to be entered thereon approving the same, or the attorneys’ fees and expenses to be
awarded to Plaintiffs’ Counsel unless that Person has, at least ten calendar days prior to the
Settlement Hearing, filed with the Clerk of the Court and served on the following counsel
(delivered by hand or first class U.S. Mail or express service) (a) a written and signed notice of
intention to appear which states the name, address and telephone number of the objector and, if
represented, his, her or its counsel; (b) appropriate proof of stock ownership in APHDS prior to
May 16, 2013, and (c) written detailed statement of the person’s objections to any matter before
the Court, and the specific ground therefore, or the reasons why such person desires to appear
and be heard, as well as all documents and writings which such person desires the Court to
consider, including any legal and evidentiary support thereof to the following counsel:
Mark L. Taylor
Meredith Mathews
Powers Taylor LLP
8150 North Central Expressway, Suite 1575
Dallas, Texas 75206
Counsel for Plaintiffs
ORDER PRELIMINARILY APPROVING DERIVATIVE
SETTLEMENT AND PROVIDING FOR NOTICE 3
D. Craig Brinker
LaToyia Watkins Pierce
Charity N. Moore
Wilson Elser Moskowitz Edelman & Dicker, LLP
901 Main Street, Suite 4800
Dallas, Texas 75202
Counsel for Defendants
The written objections and copies of any papers and briefs in support thereof to be filed in Court
shall be delivered by hand or sent by first class mail to:
134th District Court
George L. Allen, Sr. Courts Building
600 Commerce Street, 6th Floor
Dallas, Texas 75202
Any Current APHDS Shareholder or other person who does not make his, her or its objection in
the manner provided herein shall be deemed to have waived such objection and shall forever be
foreclosed from making any objection to the fairness, reasonableness or adequacy of the
Settlement as incorporated in the Agreement and to the award of attorneys’ fees and expenses to
Plaintiffs’ Counsel, unless otherwise ordered by the Court, but shall otherwise be bound by the
Judgment to be entered and the releases to be given.
11. Neither the Agreement nor the Settlement, nor any act performed or document
executed pursuant to or in furtherance of the Agreement or the Settlement: (a) is or may be
deemed to be or may be offered, attempted to be offered or used in any way by the Settling
Parties as a presumption, a concession or an admission of, or evidence of, any fault, wrongdoing
or liability of the Defendants or of the validity of any Released Claims; or (b) is intended by the
Settling Parties to be offered or received as evidence or used by any other person in any other
actions or proceedings, whether civil, criminal or administrative. The Released Persons may file
the Agreement and/or a Judgment in any action that may be brought against them in order to
ORDER PRELIMINARILY APPROVING DERIVATIVE
SETTLEMENT AND PROVIDING FOR NOTICE 4
support a defense or counterclaim based on principles of res judicata, collateral estoppel, full
faith and credit, release, good faith settlement, judgment bar or reduction or any other theory of
claim preclusion or issue preclusion or similar defense or counterclaim.
12. The Court reserves the right to adjourn the date of the Settlement Hearing or
modify any other dates set forth herein without further notice to the APHDS Shareholders, and
retains jurisdiction to consider all further applications arising out of or connected with the
Settlement. The Court may approve the Settlement, with such modifications as may be agreed to
by the Settling Parties, if appropriate, without further notice to the APHDS shareholders.
IT IS SO ORDERED on this the _____ day of __________ 2015.
____________________________________
THE HONORABLE DALE TILLERY
134th DISTRICT COURT
DALLAS COUNTY, TEXAS
ORDER PRELIMINARILY APPROVING DERIVATIVE
SETTLEMENT AND PROVIDING FOR NOTICE 5
CAUSE NO. 13-05400
JAMES F. MASON and JOSEPH § IN THE DISTRICT COURT
POSAVITZ, Individually and Derivatively on §
Behalf of APH DIAGNOSTIC SERVICES, INC. §
§
Plaintiffs, §
§
VS. § 134TH JUDICIAL DISTRICT
§
D. YALE SAGE and KIRK R. SHORT §
§
Defendants. § DALLAS COUNTY, TEXAS
NOTICE OF PROPOSED SETTLEMENT OF DERIVATIVE ACTION,
SETTLEMENT HEARING, AND RIGHT TO APPEAR
TO: ALL FORMER RECORD AND BENEFICIAL HOLDERS OF SHARES OF
COMMON STOCK OF APH DIAGNOSTIC SERVICES, INC (“APHDS” OR THE
“COMPANY”) AT THE CLOSE OF BUSINESS ON MAY 16, 2013 (THE “RECORD
DATE”).
The purpose of this Notice is to inform you about: (i) the pendency of the above-
captioned shareholder derivative action (the “Action”), which was brought by certain APHDS
stockholders on behalf of and for the benefit of APHDS in the 134th District Court, Dallas
County, TX (the “Court”); (ii) a proposed settlement of the Action (the “Settlement”), subject to
Court approval and subject to other conditions of the Settlement being satisfied, i.e., the Effective
Date occurs, as provided in a Settlement Agreement that was filed with the Court and is publicly
available for review as indicated below; (iii) the hearing that the Court will hold on __________
to determine whether to approve the Settlement and to consider Plaintiff’s Counsel’s application
for an award of attorneys’ fees and expenses; and (iv) current stockholders’ rights with respect to
the proposed Settlement.
PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY.
YOUR RIGHTS WILL BE AFFECTED BY THE ACTION.
The Settlement Agreement was entered into as of December 11, 2014, between and among:
James Mason and Joseph Posavitz, Plaintiffs in the Action (collectively, and acting on behalf of other
stockholders of APHDS that initiated derivative actions, the “Plaintiffs”) and (ii)defendants Yale
Sage and Kirk Short (the “Defendants”) (collectively with Plaintiffs and Defendants, the “Settling
Parties”), subject to the approval of the Court.
Because this Action was brought as a derivative action on behalf of and for the benefit of
APHDS, the benefits from the Settlement will go to Individual APHDS stockholders who will
receive direct payment from the Settlement on a prorata basis in accordance with the number of
shares owned as of December 31, 2011, after all attorney fees and expenses are paid.
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WHAT IS THE PURPOSE OF THIS NOTICE?
1. The purpose of this Notice is to inform you of your rights as an APHDS stockholder,
explain the Action, the terms of the proposed Settlement, and how the proposed Settlement affects
your legal rights.
2. In a derivative action, one or more people who were stockholders of a corporation sue on
behalf of and for the benefit of the corporation, seeking to enforce the corporation's legal rights.
3. There will be a Settlement Hearing, held before The Honorable Judge Dale Tillery on
___________, at ______ a.m., at the 134th Judicial District courtroom, Dallas County
Courthouse, George Allen Court Building, 600 Commerce Street, Dallas, TX 75202. At the
Settlement Hearing, the Court will (a) determine whether Plaintiffs’ counsel has adequately
represented the interests of APHDS and its stockholders; (b) determine whether the Settlement
should be approved by the Court as fair, reasonable, adequate, and in the best interests of
APHDS and its stockholders; (c) determine whether the Court should enter an Order and Final
Judgment dismissing the Action with prejudice, and releasing, barring, and enjoining
prosecution of any and all Released Claims against the Releasees; (d) consider the application by
Plaintiffs’ Counsel for an award of attorneys’ fees and expenses; (e) hear and determine any
objections to the Settlement or the application by Plaintiffs’ Counsel for an award of attorneys’
fees and expenses; and (1) rule on such other matters as the Court may deem appropriate. As
described more fully below, stockholders have the right to object to the proposed Settlement and
the application by Plaintiffs’ Counsel for an award of attorneys' fees and expenses.
4. The Court has reserved the right to adjourn or continue the Settlement Hearing, including
consideration of the application by Plaintiffs’ Counsel for attorneys' fees and expenses, without
further notice to you other than by announcement at the Settlement Hearing or any adjournment
thereof. The Court has further reserved the right to approve the Settlement, at or after the Settlement
Hearing, with such modifications as may be consented to by the Settling Parties and without further
notice of any kind.
WHAT IS THIS CASE ABOUT? WHAT HAS HAPPENED SO FAR?
THE FOLLOWING DESCRIPTION OF THE ACTION AND THE SETTLEMENT HAS
BEEN PREPARED BY COUNSEL FOR THE SETTLING PARTIES. THE COURT HAS
MADE NO FINDINGS WITH RESPECT TO SUCH MATTERS, AND THIS NOTICE IS
NOT AN EXPRESSION OR STATEMENT BY THE COURT OF FINDINGS OF FACT.
5. On May 16, 2013, a lawsuit was filed by James Mason and James Posavitz, individually
and derivatively on behalf of APHDS, against Yale Sage and Kirk Short, styled Cause No. DC-13-
05400; James F. Mason and Joseph S. Posavitz, Individually and Derivatively on Behalf of APH
Diagnostic Services, Inc. vs. D. Yale Sage & Kirk R. Short. The complaint challenged the
Company's use of investor funds, specifically alleging that Sage and Short breached fiduciary
duties they owed to the company and its shareholders.
6. The Parties attended mediation on January 27, 2014. This mediation was unsuccessful.
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7. On February 10, 2014, Plaintiffs filed a First Amended individual and shareholder
derivative complaint (the "First Amended Complaint").
8. On February 26, 2014, Defendants in the above-captioned action, reported to the Court that
they filed petitions in the United States Bankruptcy Court for the Northern District of Texas,
pursuant to Title 11, Chapter 7, United States Code, initiating bankruptcy case numbers 14-30938-7
for Dan Yale Sage and 14-30939-7 for Kirk Rodney Short. The Court stayed the action pending
Defendants’ bankruptcies.
9. In June 2014, the Court allowed Plaintiffs to pursue the claim to establish the liability of the
Defendants for purposes of recovering any amounts, to the extent of insurance coverage, if any,
available, under Health Care Organization Directors and Officers Liability Insurance Policy No.
0303-8281 issued by Darwin National Assurance Company to Sage Physician Partners Inc. d/b/a
American Physician Housecalls, Inc. (the “Policy”).
10. Defendants have at all times denied, and continue to deny, all of Plaintiffs' allegations
and assertions of wrongdoing, liability, and violation of any laws and the existence of any damages
asserted in or arising from the Action.
11. On December 11, 2014, the Parties mediated a second time. On this day, the parties reached
a tentative settlement and executed a memorandum of understanding reflecting the terms of their
agreement to settle the Action (the "MOU"). On ______________, the parties entered into the formal
Settlement Agreement setting forth the terms of the Settlement (the “Settlement Agreement”).
WHAT ARE THE TERMS OF THE SETTLEMENT?
12. As consideration for the Settlement:
(i) Within seven (7) business days of the Effective Date, Defendants or their representative shall
cause to be paid on Defendants' behalf the amount of $222,500 (the "Settlement Payment"), minus the
amount of any Fee Award, to the trust account of Powers Taylor, LLP, to be held in trust until the
Court approves the settlement. The Settlement Payment shall be paid from an escrow account created
for the benefit of Plaintiffs pursuant to an agreement reached at the December 11, 2014 mediation
session between Defendants, through their counsel, and Defendants' directors' and officers' liability
insurers for the payment of insurance proceeds, subject to a claims release, to help to resolve the
Action, which will be funded prior to the Settlement Hearing; and
(ii) Within thirty (30) calendar days of the date of entry of the Judgment by the Court, settlement
payment should be distributed to the APHDS stockholders.
WHAT ARE THE SETTLING PARTIES' REASONS FOR THE SETTLEMENT?
13. Plaintiffs and Counsel considered the expense and length of continued proceedings
necessary to pursue their claims against the Defendants through trial, as well as the uncertainty of
appeals. Plaintiffs and Counsel also considered the possibility that a Court may not be able to
order the specific relief achieved in the Settlement.
1892772v.1
14. In light of the monetary recovery and without the additional expense of further litigation and
protracted trial, Plaintiffs and Counsel have determined that the proposed Settlement is fair,
reasonable, adequate, and in the best interests of APHDS stockholders. The Settlement provides
substantial immediate benefits to APHDS stockholders without the risk that continued litigation could
result in obtaining similar or lesser relief for them after continued extensive and expensive litigation,
including trial and the appeals that were likely to follow.
15. Defendants, who believe they have substantial defenses to the claims alleged against them in
the First Amended Complaint, have denied and continue to deny the allegations of wrongdoing,
liability, and violation of any laws and the existence of any damages asserted in or arising from the
Action, but have nevertheless concluded that further litigation in connection with the Action would be
time consuming and expensive, and after weighing the costs and uncertainties of continued litigation,
have determined that the Action should be fully and finally settled in the manner and upon the terms
and conditions set forth in the Settlement Agreement, and that these terms and conditions are fair,
reasonable, and adequate to APHDS stockholders.
WHAT WILL HAPPEN IF THE SETTLEMENT IS APPROVED? WHAT CLAIMS
WILL THE SETTLEMENT RELEASE?
16. If the Settlement is approved, the Court will enter a judgment (the "Judgment") Upon entry
of the Judgment, the Action will be dismissed in its entirety and with prejudice and the following
releases will occur:
Release of Claims by Plaintiffs and APHDS: APHDS, Plaintiffs, and each and every
other APHDS shareholder, on behalf of themselves and any other person or entity who
could assert any of the Released Plaintiffs' Claims on their behalf, in such capacity only,
shall fully, finally, and forever release, settle, and discharge, and shall forever be enjoined
from prosecuting, the Released Plaintiffs' Claims against Defendants' Releasees.
"Released Plaintiffs' Claims" means all any and all manner of claims, demands, rights,
liabilities, losses, obligations, duties, damages, costs, debts, expenses, interest, penalties,
sanctions, fees, attorneys' fees, actions, potential actions, causes of action, suits, agreements,
judgments, decrees, matters, issues and controversies of any kind, nature, or description
whatsoever, whether known or unknown, disclosed or undisclosed, accrued or unaccrued,
apparent or not apparent, foreseen or unforeseen, matured or not matured, suspected or
unsuspected, liquidated or not liquidated, fixed or contingent, including Unknown Claims
(defined below), whether based on state, local, foreign, federal, statutory, regulatory, common, or
other law or rule, that are, have been, could have been, could now be, or in the future could, can,
or might be asserted, in the Action or in any other court, tribunal, or proceeding by Plaintiffs or
any other APHDS stockholder derivatively on behalf of APHDS, or by APHDS directly against
any of the Defendants' Releasees, which, now or hereafter, are based upon, arise out of, relate in
any way to, or involve, directly or indirectly, any of the actions, transactions, occurrences,
statements, representations, misrepresentations, omissions, allegations, facts, practices, events,
claims or any other matters, things or causes whatsoever, or any series thereof, that were alleged,
asserted, set forth, claimed, embraced, involved, or referred to in, or related to the First Amended
Complaint or the Action, except for claims relating to the enforcement of the Settlement.
Releasees, including any conduct of Defendants' Releasees after execution of the MOU.
1892772v.1
"Defendants' Releasees" means APHDS., Defendants, defendants in the Derivative Action, and
any other current or former officer or director of APHDS, and their respective past, present, or
future family members, spouses, heirs, trusts, trustees, executors, estates, administrators,
beneficiaries, distributees, foundations, agents, employees, fiduciaries, partners, partnerships,
general or limited partners or partnerships, joint ventures, member firms, limited liability
companies, corporations, parents, subsidiaries, divisions, affiliates, associated entities,
stockholders, principals, officers, directors, managing directors, members, managing members,
managing agents, predecessors, predecessors-in-interest, successors, successors-in-interest,
assigns, financial or investment advisors, advisors, consultants, investment bankers, entities
providing any fairness opinion, underwriters, brokers, dealers, lenders, commercial bankers,
attorneys, personal or legal representatives, accountants, insurers, co-insurers, reinsurers, and
associates.
Release of Claims by Defendants: Defendants and the other Defendants' Releasees, on behalf
of themselves and any other person or entity who could assert any of the Released Defendants'
Claims on their behalf, in such capacity only, shall fully, finally, and forever release, settle, and
discharge, and shall forever be enjoined from prosecuting, the Released Defendants' Claims
against Plaintiffs' Releasees.
"Released Defendants' Claims" means any and all manner of claims, demands, rights, liabilities,
losses, obligations, duties, damages, costs, debts, expenses, interest, penalties, sanctions, fees,
attorneys' fees, actions, potential actions, causes of action, suits, agreements, judgments,
decrees, matters, issues and controversies of any kind, nature, or description whatsoever,
whether known or unknown, disclosed or undisclosed, accrued or unaccrued, apparent or not
apparent, foreseen or unforeseen, matured or not matured, suspected or unsuspected, liquidated
or not liquidated, fixed or contingent, including Unknown Claims (defined below), whether
based on state, local, foreign, federal, statutory, regulatory, common, or other law or rule
(including claims within the exclusive jurisdiction of the federal courts), that arise out of or
relate in any way to the institution, prosecution, or settlement of the claims against Defendants
in the Action, except for claims relating to the enforcement of the Settlement.
"Plaintiffs' Releasees" means Plaintiffs, all other APHDS stockholders, and any current or
former officer or director of any of Plaintiffs or any other News Corp. stockholder, and their
respective past, present, or future family members, spouses, heirs, trusts, trustees, executors,
estates, administrators, beneficiaries, distributees, foundations, agents, employees, fiduciaries,
partners, partnerships, general or limited partners or partnerships, joint ventures, member
firms, limited liability companies, corporations, parents, subsidiaries, divisions, affiliates,
associated entities, stockholders, principals, officers, directors, managing directors, members,
managing members, managing agents, predecessors, predecessors-in-interest, successors,
successors-in-interest, assigns, financial or investment advisors, advisors, consultants,
investment bankers, entities providing any fairness opinion, underwriters, brokers, dealers,
lenders, commercial bankers, attorneys, personal or legal representatives, accountants, insurers,
co-insurers, reinsurers, and associates.
"Unknown Claims" means any Released Plaintiffs' Claims that APHDS, Plaintiffs or any other
former APHDS stockholder does not know or suspect to exist in his, her or its favor at the time
of the release of the Defendants' Releasees, and any Released Defendants' Claims that any of the
Defendants or any of the other Defendants' Releasees does not know or suspect to exist in his,
1892772v.1
her or its favor at the time of the release of the Plaintiffs' Releasees, which, if known by him,
her or it, might have affected his, her or itsdecision(s) with respect to the Settlement. With
respect to any and all Released Plaintiffs' Claims and Released Defendants' Claims, the Settling
Parties stipulate and agree that APHDS, Plaintiffs and each of the Defendants shall expressly
waive, and each of the other APHDS stockholders and each of the other Defendants' Releasees
shall be deemed to have waived, and by operation of the Judgment shall have expressly waived.
17. If the Settlement is approved and the Effective Date occurs, since APHDS will have released
the Released Plaintiffs' Claims described above against any of the other Defendants' Releasees, no
former APHDS stockholder will be able to bring another action asserting those claims against those
persons individually or on behalf of the Company.
18. Pending final determination of whether the Settlement should be approved, all proceedings in
the Action, other than such proceedings as may be necessary to carry out the terms and conditions of
the Settlement, have been stayed and suspended. Pending final determination of whether the
Settlement should be approved, Plaintiffs, all APHDS stockholders, Defendants, and the Company are
enjoined from filing, commencing, or prosecuting any Released Claims against the Releasees in the
Action or in any other lawsuit in any jurisdiction.
HOW WILL THE ATTORNEYS BE PAID?
19. Plaintiffs' Counsel has not received any payment for their services in pursuing
the claims asserted in their respective actions, nor have Plaintiffs' Counsel been reimbursed for their
out-of-pocket expenses. Plaintiffs' Counsel invested their own resources for pursuing the case on a
contingency basis, meaning they would only recover their expenses and be compensated for their
time if they created benefits through the action. In light of the risks undertaken in pursuing the
Action on a contingency basis and the benefits created for APHDS Stockholders through the
prosecution and Settlement of the Action, Counsel intends to petition the Court for an award of
attorneys' and litigation expenses to be paid from the Settlement Payment, and from no other source.
This amount approved by the Court will constitute Plaintiffs’ Counsel’s fee as well as reimbursable
expenses (the "Fee Award").
WHEN AND WHERE WILL THE SETTLEMENT HEARING BE HELD? DO I HAVE THE
RIGHT TO APPEAR AT THE SETTLEMENT HEARING?
20. The Court will consider the Settlement and all matters related to the Settlement at the
Settlement Hearing. The Settlement Hearing will be held before The Honorable Judge Dale Tillery on
______________, at _________ a.m., at the 134th Judicial District Court, George Allen Courthouse,
600 Commerce Street, Dallas, TX 75202.
21. Any person that owned APHDS. common stock prior to May 16, 2013, who objects to the
Settlement or the application for attorneys' fees and expenses by Plaintiffs’ Counsel, or who
otherwise wishes to be heard, may appear in person or through his, her, or itsattorney at the
Settlement Hearing and present any evidence or argument that may be proper and relevant;
provided, however, that no such person shall be heard, and no papers, briefs, pleadings, or other
documents submitted by any such person shall be received and considered by the Court unless, no
later than (10 Days before the hearing), such person files with the Register in Dallas County Court,
600 Commerce Street, Dallas, TX, 75202, the following: (a) a written and signed notice of
1892772v.1
intention to appear which states the name, address and telephone number of the objector and, if
represented, his, her or its counsel; (b) proof that the objector owned shares of APHDS stock prior
to May 16, 2013; and (c) a written detailed statement of the person's objections to any matter
before the Court, and the specific grounds therefor or the reasons why such person desires to
appear and to be heard, as well as all documents and writings which such person desires the Court
to consider, including any legal and evidentiary support. Any such filings with the Court must also
be served upon each of the following counsel (by hand, first class U.S. mail, or express service)
such that they are received no later than (10 Days before the hearing):
Plaintiffs’ Counsel:
Mark Taylor
Meredith Mathews
Powers Taylor LLP
Campbell Centre II
8150 N. Central Expressway, Suite 1575
Dallas, Texas 75206
toll free – 877.728.9607
t 214.239.8900 | f 214.239.8901
Counsel for Defendants:
Craig Brinker
LaToyia Watkins Pierce
Wilson Elser Moskowitz Edelman & Dicker, LLP
901 Main Street, Suite 4800
Dallas, Texas 75202
t 214.698.8000 | f 214.698.1101
22. Unless the Court otherwise directs, any person who fails to object in the manner
prescribed above shall be deemed to have waived his, her, or its right to object and shall be forever
barred from raising any objection to the Settlement or Plaintiffs’ Counsel's application for an award of
attorneys' and expenses, or any other matter related to the Settlement, in the Action or in any other
action or proceeding.
CAN I SEE THE COURT FILE? WHOM SHOULD I CONTACT IF I HAVE
QUESTIONS?
22. This Notice does not purport to be a comprehensive description of the
Action, the allegations related thereto, the terms of the Settlement, or the Settlement Hearing. For a
more detailed statement of the matters involved in the Action, you may inspect the pleadings, the
Settlement Agreement, the Orders entered by the Court, and other papers filed in the Action at the
Office of the Clerk in 134th Judicial District Court, Dallas County Courthouse, 600 Commerce
Street, Dallas, TX 75202, during regular business hours of each business day.
1892772v.1
DO NOT CALL OR WRITE THE COURT OR THE OFFICE OF THE DALLAS DISTRICT
COURT REGARDING THIS NOTICE.
If you have additional questions, you may contact Plaintiffs’ Counsel’s office:
Mark Taylor
Meredith Mathews
Powers Taylor LLP
Campbell Centre II
8150 N. Central Expressway, Suite 1575
Dallas, Texas 75206
toll free – 877.728.9607
t 214.239.8900 | f 214.239.8901
Dated: ___________________
BY ORDER OF THE COURT: ____________________________
Judge Presiding
1892772v.1
Preview
FILED DALLAS COUNTY 3/27/2015 1:14:18 PM FELICIA PITRE DISTRICT CLERK CAUSE NO. DC-13-05400 JAMES F. MASON § IN THE DISTRICT COURT and JOSEPH S. POSAVITZ, Individually § and Derivatively on Behalf of APH § DIAGNOSTIC SERVICES, INC., § Plaintiffs, § 134th JUDICIAL DISTRICT v. § § D. YALE SAGE and KIRK R. SHORT, § Defendants. § DALLAS COUNTY, TEXAS ORDER PRELIMINARILY APPROVING DERIVATIVE SETTLEMENT AND PROVIDING FOR NOTICE WHEREAS, the Settling Parties have made application for an order (i) preliminarily approving the settlement (the “Settlement”) of derivative claims against D. Yale Sage and Kirk R. Short, in accordance with a signed agreement of settlement fully executed on March 25, 2015, (the “Agreement”), sets forth the terms and conditions for a proposed Settlement and dismissal of this action with prejudice, upon the terms and conditions set forth therein; and (ii) approving for distribution of the Notice of Proposed Settlement (“Notice”); and WHEREAS, the Court having considered the Agreement and the annexed thereto and relevant filings: NOW THEREFORE, IT IS HEREBY ORDERED: 1. The Court does hereby preliminarily approve, subject to further consideration at the Settlement Hearing described below, the Agreement and the Settlement set forth therein, including the terms and conditions for settlement and dismissal with prejudice of the claims against Sage and Short. 2. Effective as of the filing of the Unopposed Motion for Preliminary Approval of Settlement, all proceedings, pending deadlines and discovery in the case are STAYED. ORDER PRELIMINARILY APPROVING DERIVATIVE SETTLEMENT AND PROVIDING FOR NOTICE 1 3. A hearing (the “Settlement Hearing”) shall be held before this Court on _____________________________, 2015 at ____________ __.m., in the 134th District Court of Dallas County, Texas, 600 Commerce Street, 6th Floor, Dallas, Texas 75202, to determine whether the Settlement of the Action on the terms and conditions provided for in the Agreement is fair, reasonable and adequate to the APHDS shareholders and to APHDS and should be approved by the Court; whether a judgment as provided should be entered herein, and to award attorneys’ fees and expenses to Plaintiffs’ Counsel. 4. The Court approves, as to form and content, the Notice annexed as Exhibit A hereto, and finds that the distribution of the Notice substantially in the manner and form set forth in this Order meets the requirements of Texas law and due process, and is the best notice practicable under the circumstances and shall constitute due and sufficient notice to all Persons entitled thereto. 5. Not later than three calendar days following entry of this Order, Notice shall be issued in accordance with the Agreement. 6. At least seven calendar days prior to the Settlement Hearing, Plaintiff’s Counsel shall file with the Court proof, by affidavit or declaration, of mailing of the Notice. 7. All APHDS shareholders shall be bound by all orders, determinations and judgments in the derivative concerning the Settlement, whether favorable or unfavorable to the current APHDS shareholders. 8. Pending final determination of whether the Settlement should be approved, no current APH shareholder, either directly, representatively, or in any other capacity, shall commence or prosecute against any of the Defendants, any action or proceeding in any court or tribunal asserting any of the Released Claims. ORDER PRELIMINARILY APPROVING DERIVATIVE SETTLEMENT AND PROVIDING FOR NOTICE 2 9. All papers in support of the Settlement and the award of attorneys’ fees and expenses shall be filed with the Court and served at least five calendar days prior to the Settlement Hearing. 10. Any APHDS shareholder holding APHDS common stock prior to May 16, 2013, (“APHDS Shareholder”) may appear and show cause, if he, she or ithas any reason why the Settlement of the Action should not be approved as fair, reasonable and adequate, or why a Judgment should not be entered thereon, or why the attorneys’ fees and expenses agreed upon by the Settling Parties should not be awarded to Plaintiffs’ Counsel; provided, however, unless otherwise ordered by the Court, no APHDS Shareholder or other person shall be heard or entitled to contest the approval of the terms and conditions of the Settlement, or, if approved, the Judgment to be entered thereon approving the same, or the attorneys’ fees and expenses to be awarded to Plaintiffs’ Counsel unless that Person has, at least ten calendar days prior to the Settlement Hearing, filed with the Clerk of the Court and served on the following counsel (delivered by hand or first class U.S. Mail or express service) (a) a written and signed notice of intention to appear which states the name, address and telephone number of the objector and, if represented, his, her or its counsel; (b) appropriate proof of stock ownership in APHDS prior to May 16, 2013, and (c) written detailed statement of the person’s objections to any matter before the Court, and the specific ground therefore, or the reasons why such person desires to appear and be heard, as well as all documents and writings which such person desires the Court to consider, including any legal and evidentiary support thereof to the following counsel: Mark L. Taylor Meredith Mathews Powers Taylor LLP 8150 North Central Expressway, Suite 1575 Dallas, Texas 75206 Counsel for Plaintiffs ORDER PRELIMINARILY APPROVING DERIVATIVE SETTLEMENT AND PROVIDING FOR NOTICE 3 D. Craig Brinker LaToyia Watkins Pierce Charity N. Moore Wilson Elser Moskowitz Edelman & Dicker, LLP 901 Main Street, Suite 4800 Dallas, Texas 75202 Counsel for Defendants The written objections and copies of any papers and briefs in support thereof to be filed in Court shall be delivered by hand or sent by first class mail to: 134th District Court George L. Allen, Sr. Courts Building 600 Commerce Street, 6th Floor Dallas, Texas 75202 Any Current APHDS Shareholder or other person who does not make his, her or its objection in the manner provided herein shall be deemed to have waived such objection and shall forever be foreclosed from making any objection to the fairness, reasonableness or adequacy of the Settlement as incorporated in the Agreement and to the award of attorneys’ fees and expenses to Plaintiffs’ Counsel, unless otherwise ordered by the Court, but shall otherwise be bound by the Judgment to be entered and the releases to be given. 11. Neither the Agreement nor the Settlement, nor any act performed or document executed pursuant to or in furtherance of the Agreement or the Settlement: (a) is or may be deemed to be or may be offered, attempted to be offered or used in any way by the Settling Parties as a presumption, a concession or an admission of, or evidence of, any fault, wrongdoing or liability of the Defendants or of the validity of any Released Claims; or (b) is intended by the Settling Parties to be offered or received as evidence or used by any other person in any other actions or proceedings, whether civil, criminal or administrative. The Released Persons may file the Agreement and/or a Judgment in any action that may be brought against them in order to ORDER PRELIMINARILY APPROVING DERIVATIVE SETTLEMENT AND PROVIDING FOR NOTICE 4 support a defense or counterclaim based on principles of res judicata, collateral estoppel, full faith and credit, release, good faith settlement, judgment bar or reduction or any other theory of claim preclusion or issue preclusion or similar defense or counterclaim. 12. The Court reserves the right to adjourn the date of the Settlement Hearing or modify any other dates set forth herein without further notice to the APHDS Shareholders, and retains jurisdiction to consider all further applications arising out of or connected with the Settlement. The Court may approve the Settlement, with such modifications as may be agreed to by the Settling Parties, if appropriate, without further notice to the APHDS shareholders. IT IS SO ORDERED on this the _____ day of __________ 2015. ____________________________________ THE HONORABLE DALE TILLERY 134th DISTRICT COURT DALLAS COUNTY, TEXAS ORDER PRELIMINARILY APPROVING DERIVATIVE SETTLEMENT AND PROVIDING FOR NOTICE 5 CAUSE NO. 13-05400 JAMES F. MASON and JOSEPH § IN THE DISTRICT COURT POSAVITZ, Individually and Derivatively on § Behalf of APH DIAGNOSTIC SERVICES, INC. § § Plaintiffs, § § VS. § 134TH JUDICIAL DISTRICT § D. YALE SAGE and KIRK R. SHORT § § Defendants. § DALLAS COUNTY, TEXAS NOTICE OF PROPOSED SETTLEMENT OF DERIVATIVE ACTION, SETTLEMENT HEARING, AND RIGHT TO APPEAR TO: ALL FORMER RECORD AND BENEFICIAL HOLDERS OF SHARES OF COMMON STOCK OF APH DIAGNOSTIC SERVICES, INC (“APHDS” OR THE “COMPANY”) AT THE CLOSE OF BUSINESS ON MAY 16, 2013 (THE “RECORD DATE”). The purpose of this Notice is to inform you about: (i) the pendency of the above- captioned shareholder derivative action (the “Action”), which was brought by certain APHDS stockholders on behalf of and for the benefit of APHDS in the 134th District Court, Dallas County, TX (the “Court”); (ii) a proposed settlement of the Action (the “Settlement”), subject to Court approval and subject to other conditions of the Settlement being satisfied, i.e., the Effective Date occurs, as provided in a Settlement Agreement that was filed with the Court and is publicly available for review as indicated below; (iii) the hearing that the Court will hold on __________ to determine whether to approve the Settlement and to consider Plaintiff’s Counsel’s application for an award of attorneys’ fees and expenses; and (iv) current stockholders’ rights with respect to the proposed Settlement. PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR RIGHTS WILL BE AFFECTED BY THE ACTION. The Settlement Agreement was entered into as of December 11, 2014, between and among: James Mason and Joseph Posavitz, Plaintiffs in the Action (collectively, and acting on behalf of other stockholders of APHDS that initiated derivative actions, the “Plaintiffs”) and (ii)defendants Yale Sage and Kirk Short (the “Defendants”) (collectively with Plaintiffs and Defendants, the “Settling Parties”), subject to the approval of the Court. Because this Action was brought as a derivative action on behalf of and for the benefit of APHDS, the benefits from the Settlement will go to Individual APHDS stockholders who will receive direct payment from the Settlement on a prorata basis in accordance with the number of shares owned as of December 31, 2011, after all attorney fees and expenses are paid. 1892772v.1 WHAT IS THE PURPOSE OF THIS NOTICE? 1. The purpose of this Notice is to inform you of your rights as an APHDS stockholder, explain the Action, the terms of the proposed Settlement, and how the proposed Settlement affects your legal rights. 2. In a derivative action, one or more people who were stockholders of a corporation sue on behalf of and for the benefit of the corporation, seeking to enforce the corporation's legal rights. 3. There will be a Settlement Hearing, held before The Honorable Judge Dale Tillery on ___________, at ______ a.m., at the 134th Judicial District courtroom, Dallas County Courthouse, George Allen Court Building, 600 Commerce Street, Dallas, TX 75202. At the Settlement Hearing, the Court will (a) determine whether Plaintiffs’ counsel has adequately represented the interests of APHDS and its stockholders; (b) determine whether the Settlement should be approved by the Court as fair, reasonable, adequate, and in the best interests of APHDS and its stockholders; (c) determine whether the Court should enter an Order and Final Judgment dismissing the Action with prejudice, and releasing, barring, and enjoining prosecution of any and all Released Claims against the Releasees; (d) consider the application by Plaintiffs’ Counsel for an award of attorneys’ fees and expenses; (e) hear and determine any objections to the Settlement or the application by Plaintiffs’ Counsel for an award of attorneys’ fees and expenses; and (1) rule on such other matters as the Court may deem appropriate. As described more fully below, stockholders have the right to object to the proposed Settlement and the application by Plaintiffs’ Counsel for an award of attorneys' fees and expenses. 4. The Court has reserved the right to adjourn or continue the Settlement Hearing, including consideration of the application by Plaintiffs’ Counsel for attorneys' fees and expenses, without further notice to you other than by announcement at the Settlement Hearing or any adjournment thereof. The Court has further reserved the right to approve the Settlement, at or after the Settlement Hearing, with such modifications as may be consented to by the Settling Parties and without further notice of any kind. WHAT IS THIS CASE ABOUT? WHAT HAS HAPPENED SO FAR? THE FOLLOWING DESCRIPTION OF THE ACTION AND THE SETTLEMENT HAS BEEN PREPARED BY COUNSEL FOR THE SETTLING PARTIES. THE COURT HAS MADE NO FINDINGS WITH RESPECT TO SUCH MATTERS, AND THIS NOTICE IS NOT AN EXPRESSION OR STATEMENT BY THE COURT OF FINDINGS OF FACT. 5. On May 16, 2013, a lawsuit was filed by James Mason and James Posavitz, individually and derivatively on behalf of APHDS, against Yale Sage and Kirk Short, styled Cause No. DC-13- 05400; James F. Mason and Joseph S. Posavitz, Individually and Derivatively on Behalf of APH Diagnostic Services, Inc. vs. D. Yale Sage & Kirk R. Short. The complaint challenged the Company's use of investor funds, specifically alleging that Sage and Short breached fiduciary duties they owed to the company and its shareholders. 6. The Parties attended mediation on January 27, 2014. This mediation was unsuccessful. 1892772v.1 7. On February 10, 2014, Plaintiffs filed a First Amended individual and shareholder derivative complaint (the "First Amended Complaint"). 8. On February 26, 2014, Defendants in the above-captioned action, reported to the Court that they filed petitions in the United States Bankruptcy Court for the Northern District of Texas, pursuant to Title 11, Chapter 7, United States Code, initiating bankruptcy case numbers 14-30938-7 for Dan Yale Sage and 14-30939-7 for Kirk Rodney Short. The Court stayed the action pending Defendants’ bankruptcies. 9. In June 2014, the Court allowed Plaintiffs to pursue the claim to establish the liability of the Defendants for purposes of recovering any amounts, to the extent of insurance coverage, if any, available, under Health Care Organization Directors and Officers Liability Insurance Policy No. 0303-8281 issued by Darwin National Assurance Company to Sage Physician Partners Inc. d/b/a American Physician Housecalls, Inc. (the “Policy”). 10. Defendants have at all times denied, and continue to deny, all of Plaintiffs' allegations and assertions of wrongdoing, liability, and violation of any laws and the existence of any damages asserted in or arising from the Action. 11. On December 11, 2014, the Parties mediated a second time. On this day, the parties reached a tentative settlement and executed a memorandum of understanding reflecting the terms of their agreement to settle the Action (the "MOU"). On ______________, the parties entered into the formal Settlement Agreement setting forth the terms of the Settlement (the “Settlement Agreement”). WHAT ARE THE TERMS OF THE SETTLEMENT? 12. As consideration for the Settlement: (i) Within seven (7) business days of the Effective Date, Defendants or their representative shall cause to be paid on Defendants' behalf the amount of $222,500 (the "Settlement Payment"), minus the amount of any Fee Award, to the trust account of Powers Taylor, LLP, to be held in trust until the Court approves the settlement. The Settlement Payment shall be paid from an escrow account created for the benefit of Plaintiffs pursuant to an agreement reached at the December 11, 2014 mediation session between Defendants, through their counsel, and Defendants' directors' and officers' liability insurers for the payment of insurance proceeds, subject to a claims release, to help to resolve the Action, which will be funded prior to the Settlement Hearing; and (ii) Within thirty (30) calendar days of the date of entry of the Judgment by the Court, settlement payment should be distributed to the APHDS stockholders. WHAT ARE THE SETTLING PARTIES' REASONS FOR THE SETTLEMENT? 13. Plaintiffs and Counsel considered the expense and length of continued proceedings necessary to pursue their claims against the Defendants through trial, as well as the uncertainty of appeals. Plaintiffs and Counsel also considered the possibility that a Court may not be able to order the specific relief achieved in the Settlement. 1892772v.1 14. In light of the monetary recovery and without the additional expense of further litigation and protracted trial, Plaintiffs and Counsel have determined that the proposed Settlement is fair, reasonable, adequate, and in the best interests of APHDS stockholders. The Settlement provides substantial immediate benefits to APHDS stockholders without the risk that continued litigation could result in obtaining similar or lesser relief for them after continued extensive and expensive litigation, including trial and the appeals that were likely to follow. 15. Defendants, who believe they have substantial defenses to the claims alleged against them in the First Amended Complaint, have denied and continue to deny the allegations of wrongdoing, liability, and violation of any laws and the existence of any damages asserted in or arising from the Action, but have nevertheless concluded that further litigation in connection with the Action would be time consuming and expensive, and after weighing the costs and uncertainties of continued litigation, have determined that the Action should be fully and finally settled in the manner and upon the terms and conditions set forth in the Settlement Agreement, and that these terms and conditions are fair, reasonable, and adequate to APHDS stockholders. WHAT WILL HAPPEN IF THE SETTLEMENT IS APPROVED? WHAT CLAIMS WILL THE SETTLEMENT RELEASE? 16. If the Settlement is approved, the Court will enter a judgment (the "Judgment") Upon entry of the Judgment, the Action will be dismissed in its entirety and with prejudice and the following releases will occur: Release of Claims by Plaintiffs and APHDS: APHDS, Plaintiffs, and each and every other APHDS shareholder, on behalf of themselves and any other person or entity who could assert any of the Released Plaintiffs' Claims on their behalf, in such capacity only, shall fully, finally, and forever release, settle, and discharge, and shall forever be enjoined from prosecuting, the Released Plaintiffs' Claims against Defendants' Releasees. "Released Plaintiffs' Claims" means all any and all manner of claims, demands, rights, liabilities, losses, obligations, duties, damages, costs, debts, expenses, interest, penalties, sanctions, fees, attorneys' fees, actions, potential actions, causes of action, suits, agreements, judgments, decrees, matters, issues and controversies of any kind, nature, or description whatsoever, whether known or unknown, disclosed or undisclosed, accrued or unaccrued, apparent or not apparent, foreseen or unforeseen, matured or not matured, suspected or unsuspected, liquidated or not liquidated, fixed or contingent, including Unknown Claims (defined below), whether based on state, local, foreign, federal, statutory, regulatory, common, or other law or rule, that are, have been, could have been, could now be, or in the future could, can, or might be asserted, in the Action or in any other court, tribunal, or proceeding by Plaintiffs or any other APHDS stockholder derivatively on behalf of APHDS, or by APHDS directly against any of the Defendants' Releasees, which, now or hereafter, are based upon, arise out of, relate in any way to, or involve, directly or indirectly, any of the actions, transactions, occurrences, statements, representations, misrepresentations, omissions, allegations, facts, practices, events, claims or any other matters, things or causes whatsoever, or any series thereof, that were alleged, asserted, set forth, claimed, embraced, involved, or referred to in, or related to the First Amended Complaint or the Action, except for claims relating to the enforcement of the Settlement. Releasees, including any conduct of Defendants' Releasees after execution of the MOU. 1892772v.1 "Defendants' Releasees" means APHDS., Defendants, defendants in the Derivative Action, and any other current or former officer or director of APHDS, and their respective past, present, or future family members, spouses, heirs, trusts, trustees, executors, estates, administrators, beneficiaries, distributees, foundations, agents, employees, fiduciaries, partners, partnerships, general or limited partners or partnerships, joint ventures, member firms, limited liability companies, corporations, parents, subsidiaries, divisions, affiliates, associated entities, stockholders, principals, officers, directors, managing directors, members, managing members, managing agents, predecessors, predecessors-in-interest, successors, successors-in-interest, assigns, financial or investment advisors, advisors, consultants, investment bankers, entities providing any fairness opinion, underwriters, brokers, dealers, lenders, commercial bankers, attorneys, personal or legal representatives, accountants, insurers, co-insurers, reinsurers, and associates. Release of Claims by Defendants: Defendants and the other Defendants' Releasees, on behalf of themselves and any other person or entity who could assert any of the Released Defendants' Claims on their behalf, in such capacity only, shall fully, finally, and forever release, settle, and discharge, and shall forever be enjoined from prosecuting, the Released Defendants' Claims against Plaintiffs' Releasees. "Released Defendants' Claims" means any and all manner of claims, demands, rights, liabilities, losses, obligations, duties, damages, costs, debts, expenses, interest, penalties, sanctions, fees, attorneys' fees, actions, potential actions, causes of action, suits, agreements, judgments, decrees, matters, issues and controversies of any kind, nature, or description whatsoever, whether known or unknown, disclosed or undisclosed, accrued or unaccrued, apparent or not apparent, foreseen or unforeseen, matured or not matured, suspected or unsuspected, liquidated or not liquidated, fixed or contingent, including Unknown Claims (defined below), whether based on state, local, foreign, federal, statutory, regulatory, common, or other law or rule (including claims within the exclusive jurisdiction of the federal courts), that arise out of or relate in any way to the institution, prosecution, or settlement of the claims against Defendants in the Action, except for claims relating to the enforcement of the Settlement. "Plaintiffs' Releasees" means Plaintiffs, all other APHDS stockholders, and any current or former officer or director of any of Plaintiffs or any other News Corp. stockholder, and their respective past, present, or future family members, spouses, heirs, trusts, trustees, executors, estates, administrators, beneficiaries, distributees, foundations, agents, employees, fiduciaries, partners, partnerships, general or limited partners or partnerships, joint ventures, member firms, limited liability companies, corporations, parents, subsidiaries, divisions, affiliates, associated entities, stockholders, principals, officers, directors, managing directors, members, managing members, managing agents, predecessors, predecessors-in-interest, successors, successors-in-interest, assigns, financial or investment advisors, advisors, consultants, investment bankers, entities providing any fairness opinion, underwriters, brokers, dealers, lenders, commercial bankers, attorneys, personal or legal representatives, accountants, insurers, co-insurers, reinsurers, and associates. "Unknown Claims" means any Released Plaintiffs' Claims that APHDS, Plaintiffs or any other former APHDS stockholder does not know or suspect to exist in his, her or its favor at the time of the release of the Defendants' Releasees, and any Released Defendants' Claims that any of the Defendants or any of the other Defendants' Releasees does not know or suspect to exist in his, 1892772v.1 her or its favor at the time of the release of the Plaintiffs' Releasees, which, if known by him, her or it, might have affected his, her or itsdecision(s) with respect to the Settlement. With respect to any and all Released Plaintiffs' Claims and Released Defendants' Claims, the Settling Parties stipulate and agree that APHDS, Plaintiffs and each of the Defendants shall expressly waive, and each of the other APHDS stockholders and each of the other Defendants' Releasees shall be deemed to have waived, and by operation of the Judgment shall have expressly waived. 17. If the Settlement is approved and the Effective Date occurs, since APHDS will have released the Released Plaintiffs' Claims described above against any of the other Defendants' Releasees, no former APHDS stockholder will be able to bring another action asserting those claims against those persons individually or on behalf of the Company. 18. Pending final determination of whether the Settlement should be approved, all proceedings in the Action, other than such proceedings as may be necessary to carry out the terms and conditions of the Settlement, have been stayed and suspended. Pending final determination of whether the Settlement should be approved, Plaintiffs, all APHDS stockholders, Defendants, and the Company are enjoined from filing, commencing, or prosecuting any Released Claims against the Releasees in the Action or in any other lawsuit in any jurisdiction. HOW WILL THE ATTORNEYS BE PAID? 19. Plaintiffs' Counsel has not received any payment for their services in pursuing the claims asserted in their respective actions, nor have Plaintiffs' Counsel been reimbursed for their out-of-pocket expenses. Plaintiffs' Counsel invested their own resources for pursuing the case on a contingency basis, meaning they would only recover their expenses and be compensated for their time if they created benefits through the action. In light of the risks undertaken in pursuing the Action on a contingency basis and the benefits created for APHDS Stockholders through the prosecution and Settlement of the Action, Counsel intends to petition the Court for an award of attorneys' and litigation expenses to be paid from the Settlement Payment, and from no other source. This amount approved by the Court will constitute Plaintiffs’ Counsel’s fee as well as reimbursable expenses (the "Fee Award"). WHEN AND WHERE WILL THE SETTLEMENT HEARING BE HELD? DO I HAVE THE RIGHT TO APPEAR AT THE SETTLEMENT HEARING? 20. The Court will consider the Settlement and all matters related to the Settlement at the Settlement Hearing. The Settlement Hearing will be held before The Honorable Judge Dale Tillery on ______________, at _________ a.m., at the 134th Judicial District Court, George Allen Courthouse, 600 Commerce Street, Dallas, TX 75202. 21. Any person that owned APHDS. common stock prior to May 16, 2013, who objects to the Settlement or the application for attorneys' fees and expenses by Plaintiffs’ Counsel, or who otherwise wishes to be heard, may appear in person or through his, her, or itsattorney at the Settlement Hearing and present any evidence or argument that may be proper and relevant; provided, however, that no such person shall be heard, and no papers, briefs, pleadings, or other documents submitted by any such person shall be received and considered by the Court unless, no later than (10 Days before the hearing), such person files with the Register in Dallas County Court, 600 Commerce Street, Dallas, TX, 75202, the following: (a) a written and signed notice of 1892772v.1 intention to appear which states the name, address and telephone number of the objector and, if represented, his, her or its counsel; (b) proof that the objector owned shares of APHDS stock prior to May 16, 2013; and (c) a written detailed statement of the person's objections to any matter before the Court, and the specific grounds therefor or the reasons why such person desires to appear and to be heard, as well as all documents and writings which such person desires the Court to consider, including any legal and evidentiary support. Any such filings with the Court must also be served upon each of the following counsel (by hand, first class U.S. mail, or express service) such that they are received no later than (10 Days before the hearing): Plaintiffs’ Counsel: Mark Taylor Meredith Mathews Powers Taylor LLP Campbell Centre II 8150 N. Central Expressway, Suite 1575 Dallas, Texas 75206 toll free – 877.728.9607 t 214.239.8900 | f 214.239.8901 Counsel for Defendants: Craig Brinker LaToyia Watkins Pierce Wilson Elser Moskowitz Edelman & Dicker, LLP 901 Main Street, Suite 4800 Dallas, Texas 75202 t 214.698.8000 | f 214.698.1101 22. Unless the Court otherwise directs, any person who fails to object in the manner prescribed above shall be deemed to have waived his, her, or its right to object and shall be forever barred from raising any objection to the Settlement or Plaintiffs’ Counsel's application for an award of attorneys' and expenses, or any other matter related to the Settlement, in the Action or in any other action or proceeding. CAN I SEE THE COURT FILE? WHOM SHOULD I CONTACT IF I HAVE QUESTIONS? 22. This Notice does not purport to be a comprehensive description of the Action, the allegations related thereto, the terms of the Settlement, or the Settlement Hearing. For a more detailed statement of the matters involved in the Action, you may inspect the pleadings, the Settlement Agreement, the Orders entered by the Court, and other papers filed in the Action at the Office of the Clerk in 134th Judicial District Court, Dallas County Courthouse, 600 Commerce Street, Dallas, TX 75202, during regular business hours of each business day. 1892772v.1 DO NOT CALL OR WRITE THE COURT OR THE OFFICE OF THE DALLAS DISTRICT COURT REGARDING THIS NOTICE. If you have additional questions, you may contact Plaintiffs’ Counsel’s office: Mark Taylor Meredith Mathews Powers Taylor LLP Campbell Centre II 8150 N. Central Expressway, Suite 1575 Dallas, Texas 75206 toll free – 877.728.9607 t 214.239.8900 | f 214.239.8901 Dated: ___________________ BY ORDER OF THE COURT: ____________________________ Judge Presiding 1892772v.1