Palomar Medical Technologies
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Palomar Medical Technologies Securities Settlement
The lawsuit was settled for additional disclosures in the proxy statement mailed to shareholders. The following is a summary of the proceedings in this lawsuit: ‘A. On March 18, 2013, Palomar announced that it had entered into an Agreement and Plan of Merger, dated as of March 17, 2013 (the Original Merger Agreement), with Cynosure, Inc. (Cynosure) and Commander Acquisition Corp. The parties amended and restated the Original Merger Agreement, pursuant to an Amended and Restated Merger Agreement, dated as of May 15, 2013 (as so amended and restated, the Merger Agreement), among the Company, Cynosure and Commander Acquisition, LLC, formerly known as Commander Acquisition Corp. (the Merger Subsidiary). Pursuant to the terms and conditions of the Merger Agreement, and subject to stockholder approval, Cynosure acquired Palomar through the merger (the Merger) of Palomar with and into the Merger Subsidiary, with the Merger Subsidiary surviving such merger, and each outstanding share of Palomar common stock converted into the right to receive, subject to adjustment and collar provisions described in the Merger Agreement, $6.825 in cash and $6.825 in Cynosure common stock. B. Shortly after the announcement of the execution of the Original Merger Agreement, three plaintiffs filed putative class action lawsuits in the State of Massachusetts (collectively, the Massachusetts State Plaintiffs), captioned Calin v. Palomar Medical Technologies, Inc. et al., No. 13-1051, Gusinsky Living Trust v. Palomar Medical Technologies, Inc. et al., No. 13-1328, and Saffer v. Palomar Medical Technologies Inc. et al., No. 13-1385 (collectively, the Massachusetts State Actions). These actions alleged breaches of fiduciary duties and sought, among other things, to enjoin the Palomar stockholders from voting on the Merger, or alternatively, in the event the Merger was consummated, rescinding it. C. On April 18, 2013, Gary Drabek filed a putative class action complaint, captioned Drabek v. Palomar Medical Technologies, Inc. et al., C.A. No. 8491-VCP (Del. Ch.), individually and on behalf of all others similarly situated, against Palomar, members of the Board of Directors of Palomar (collectively, the Palomar Defendants), and Cynosure (collectively with the Palomar Defendants, the Defendants) alleging breach of fiduciary duties and seeking, among other things, to enjoin the Palomar stockholders from voting on the Merger, or alternatively, in the event the Merger was consummated, rescinding it. In addition, the complaint included allegations that the Preliminary Form S-4 filed on April 12, 2013 with the Securities and Exchange Commission (the SEC) was deficient and failed to provide certain material information needed for Palomar stockholders to cast an informed vote on the Merger, including, among other things, the information disclosed in the Form 8-K referred to below. D. On April 23, 2013, the Massachusetts State Plaintiffs filed amended class action complaints in the Massachusetts State Actions, alleging breaches of fiduciary duties, and seeking among other things, to enjoin the Palomar stockholders from voting on the Merger, or alternatively, in the event the Merger was consummated, rescinding it. In addition, the complaint included allegations that the Preliminary Form S-4 filed on April 12, 2013 with the SEC was deficient and failed to provide certain material information. E. On May 1, 2013, Daniel Moore filed a putative class action complaint, captioned Moore v. Palomar Medical Technologies, Inc. et al., C.A. No. 8516-VCP (Del. Ch.). The complaint contained similar allegations to those in the Drabek complaint and sought similar relief. F. On May 17, 2013, the Massachusetts Superior Court ordered the Massachusetts State Actions stayed finding that there is no basis for concluding that the Palomar shareholders will not be well represented in the Delaware Cases, and the Massachusetts plaintiffs could, of course move to intervene in the Delaware Cases. There does not appear to be good reason to have duplicative proceedings with the associated increased litigation costs and risks of inconsistent rulings going forward in two jurisdictions simultaneously. On May 28, 2013, a sixth plaintiff (together with the Massachusetts State Plaintiffs, the Massachusetts Plaintiffs) filed a putative class action lawsuit in the United States District Court for the District of Massachusetts, captioned Melvin Lax v. Palomar Medical Technologies, Inc. et al., No. 13- 11276 (D. Mass.) (the Massachusetts Federal Action and together with the Massachusetts State Actions, the Massachusetts Actions). The complaint contained similar allegations to those in the Massachusetts State Actions and sought similar relief. G. On April 29, 2013, the plaintiff in the Drabek action moved to expedite the proceedings. On May 3, 2013, the plaintiff in the Moore action moved to expedite and moved for a preliminary injunction. On May 7, 2013, the plaintiffs in the Drabek and Moore actions jointly submitted a proposed order of consolidation as to their two cases, which the Court granted the same day (Delaware Actions). The consolidated action is captioned In re Palomar Medical Technologies Shareholder Litigation, C.A. No. 8491-VCP. On May 10, 2013, the parties in the Delaware Actions filed a stipulated preliminary injunction briefing schedule, which was approved by the Court on May 13, 2013. H. The parties to the Delaware Actions reached agreement to pursue expedited discovery. Beginning May 13, 2013, and continuing thereafter, Palomar began a production of documents, including certain minutes of the meetings of its Board of Directors and M&A Committee, documents provided to the Board of Directors and M&A Committee by Palomar management and financial advisor Canaccord Genuity Inc. (Canaccord), including presentations of Canaccord to the Palomar Board and M&A Committee, communications between Palomar and interested parties (including Cynosure) concerning the Merger, communications between Palomar and Canaccord regarding the negotiation of the Merger, and other documents relevant to Plaintiffs claims. I. On May 22, 24, and 28, the Plaintiffs deposed respectively a Canaccord representative knowledgeable about Canaccord work with respect to the Merger, the Chief Executive Officer of Palomar, and a member of the Palomar Board of Directors who also served as Chairman of the M&A Committee. J. On May 23, 2013, Cynosure filed with the SEC Amendment No. 2 to Cynosure Registration Statement on Form S-4 (File No. 333-187895) (as amended, the Registration Statement), the SEC declared the Registration Statement effective and Cynosure filed with the SEC a final prospectus under Rule 424(b)(3), dated May 23, 2013, and Palomar filed with the SEC a definitive proxy statement on Schedule 14A, dated May 23, 2013 (collectively, and together with the Forms 8-K described by this Stipulation, the Proxy Materials). K. Beginning on May 23, 2013, the parties to the Delaware Actions engaged in extensive and arm-length good faith negotiations regarding a potential settlement of the Delaware Actions. L. On June 3, 2013, the Plaintiffs filed their brief and declaration in support of a motion for preliminary injunction. Also on June 3, 2013, the parties to the Delaware Actions agreed to the principal terms of a settlement of the Delaware Actions. M. On June 7, 2013, the parties to the Delaware Actions entered into a Memorandum of Understanding (Delaware Memorandum) memorializing their agreement-in-principle for the settlement of the Delaware Actions, subject to Court approval. N. On June 10, 2013, Palomar filed with the SEC a Form 8-K containing certain supplemental disclosures as called for by the Delaware Memorandum, and made the information contained therein available on its website (the Delaware 8-K). A copy of the Delaware 8-K is appended hereto as Exhibit A. O. Beginning on June 7, 2013, the parties to the Massachusetts Actions engaged in arm-length good faith negotiations regarding a potential settlement of the Massachusetts Actions and the Massachusetts Plaintiffs demands that Palomar stockholders be provided with further disclosure prior to the stockholder vote on the Merger. P. On June 14, 2013, the parties to the Massachusetts Actions entered into a Memorandum of Understanding (Massachusetts Memorandum) memorializing their agreement-in-principle for the settlement of the Massachusetts Actions. A copy of the Massachusetts 8-K is appended hereto as Exhibit B. As far as counsel to this Action are aware, the Massachusetts Plaintiffs will not seek attorneys fees and expenses in connection with the Settlement. Separately, the Defendants and Massachusetts Plaintiffs have reached an agreement whereby the Massachusetts Plaintiffs will dismiss the Massachusetts Federal Action with prejudice and shall seek dismissal of the Massachusetts State Actions with prejudice. In connection with the settlement of the Massachusetts Actions, Defendants have agreed to pay Massachusetts Plaintiffs attorneys fees and expenses, separate and apart from the fees to be paid to Plaintiffs counsel in connection with the petition for attorneys fees to be filed in the Court as set forth herein. Q. On June 14, 2013, Palomar filed with the SEC a Form 8-K containing certain supplemental disclosures as called for by the Massachusetts Memorandum, and made the information contained therein available on its website (the Massachusetts 8-K). R. On May 1, 2014, counsel for the parties filed an executed copy of the Stipulation with the Court.’