Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_06-cv-00354/USCOURTS-azd-4_06-cv-00354-0/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:78m(a) Securities Exchange Act

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

GEORGE WOOD, on behalf of himself

and all others similarly situated,

Plaintiff,

vs.

IONATRON, INC., et al.,

Defendants. 

RAYMOND DEEDON, individually and

on behalf of all others similarly situated, 

Plaintiff,

vs.

IONATRON, INC., et al., 

Defendants. 

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

No. CV 06-354-TUC-CKJ

 CV 06-377-TUC-CKJ

ORDER

Pending before the Court are Lead Plaintiffs’ Motion for Final Approval of

Settlement, Application for Award to Lead Plaintiff, and Application for Award of

Attorneys’ Fees [Doc. # 154]. The Court conducted a Fairness Hearing on September 24,

2009, at which time the Court advised the parties that it would accept the settlement and

issue a formal order.

Factual and Procedural Background

Ionatron, Inc. (“Ionatron”) became a public company through a reverse merger

Case 4:06-cv-00354-CKJ Document 159 Filed 09/28/09 Page 1 of 19
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 1

Hylton S. Petit, Jr., and Claire Silverman are the lead plaintiffs.

- 2 -

with U.S. Home and Garden in March 2004. At the time of the IPO, Robert Howard and

Thomas C. Dearmin owned 49.7% of the Company’s outstanding shares. Ionatron’s

primary business is developing and marketing Directed Energy Weapon technology

products, including the Joint IED Neutralizer weapon (“JIN”). The JIN grew out of

Ionatron’s Laser Induced Plasma Channel (“LIPC”) technology as a way of directing

electricity at a target. Specifically, the JIN was designed to assist the U.S. military in

destroying IEDs. 

On March 11, 2005, the Mississippi Business Journal published an article

announcing that Ionatron had entered into a $1.7 million contract with the U.S. Air Force

for the “prototyping and deployment” of a counter roadside/ improvised explosive device

(IED) system. On May 4, 2005, the beginning of the Class Period, Defendants issued a

press release announcing that the JIN had been featured the previous evening on the NBC

Nightly News. The Plaintiffs alleged that starting with this press release through the

eventual announcement on May 10, 2006, that the government had determined the JIN

vehicle platform required further changes, Defendants engaged in a number of

misrepresentations and/or omissions about the readiness of the JIN in an effort to mislead

the public and artificially inflate Ionatron’s stock price. 

Plaintiffs filed this proposed class action individually and on behalf of all persons

who purchased the publicly traded common stock of Ionatron from May 4, 2005 to May

10, 2006 (“Class Period”).1

 Plaintiffs alleged (1) securities fraud under Section 10(b) of

the Exchange Act of 1934 and Rule 10b-5, (2) control person liability under Section 20(a)

of the ‘34 Act. The essence of Plaintiffs’ claim is that the Defendants committed

securities fraud by making material misrepresentations about the operational capabilities

and field readiness of the JIN. 

On July 31, 2009, Plaintiffs filed a Motion for Preliminary Approval of Class

Action Settlement [Doc. # 147], docketing the motion as a Notice of Settlement, and a

Case 4:06-cv-00354-CKJ Document 159 Filed 09/28/09 Page 2 of 19
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 3 -

Stipulation regarding the Notice of Settlement [Doc. # 149]. On August 6, 2009, the

Court issued an Order in which:

1. The Court found, for the purposes of the Settlement only, that the

prerequisites for a class action under Fed.R.Civ.P. 23(a) and (b)(3) were satisfied

in that: (a) the number of Class Members is so numerous that joinder of all

members thereof is impracticable; (b) there are questions of law and fact common

to the Class; (c) the claims of the named representatives are typical of the claims

of the Class they seek to represent; (d) the Lead Plaintiffs will fairly and

adequately represent the interests of the Class; (e) the questions of law and fact

common to the members of the Class predominate over any questions affecting

only individual members of the Class; and (f) a class action is superior to other

available methods for the fair and efficient adjudication of the controversy.

2. The Court approved the form of Publication Notice and directed Plaintiffs’

Lead Counsel to cause the Publication Notice to be published in The Wall Street

Journal. 

3. The Court ordered that she would only consider comments and/or objections

to the Settlement, the Plan of Allocation, or the award of attorneys’ fees and

reimbursement of expenses only if such comments or objections and any

supporting papers were filed in writing with the Clerk of the Court, United States

District Court for the District of Arizona, on or before the 9th day of September,

2009. 

See August 6, 2009, Order [Doc. # 150].

On September 24, 2009, the Court conducted a final fairness hearing in open court.

Various counsel appeared in person and telephonically. No class members appeared and

no objections to the Settlement Agreement were expressed. The hearing was held to

determine: (1) whether the terms and conditions of the Stipulation and Agreement of

Settlement are fair, reasonable and adequate for the settlement of all claims asserted by

the Class against the Defendants in the Complaint now pending in this Court under the

Case 4:06-cv-00354-CKJ Document 159 Filed 09/28/09 Page 3 of 19
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 4 -

above caption, including the release of the Defendants and the Released Parties, and

should be approved; (2) whether judgment should be entered dismissing the Complaint

on the merits and with prejudice in favor of the Defendants only and as against all persons

or entities who are members of the Class herein who have not requested exclusion

therefrom; (3) whether to approve the Plan of Allocation as a fair and reasonable method

to allocate the settlement proceeds among the members of the Class; and (4) whether and

in what amount to award Plaintiffs’ Counsel fees and reimbursement of expenses. 

Review of Settlement Agreement

The Court has considered the proposed Settlement Agreement, the record in this

matter, including the written and oral arguments of counsel. The Court finds the

Settlement Agreement is fair, reasonable, and adequate and, therefore, the Court approves

the Settlement Agreement as discussed herein.

Summary of Terms of Settlement Agreement

The Settlement Agreement requires Defendants or their D&O Insurers to pay or

cause to be paid $5.3 million (“Cash Settlement Amount”) into escrow in an interestbearing account established by and for the benefit of Lead Plaintiffs and the Class. The

Settlement Agreement also requires Defendants to provide the amount of Applied

Energetics shares sufficient to equal a total value of $1.2 million (as determined by the

average closing price per share of Applied Energetics stock for the 10 trading days

immediately prior to the final fairness hearing held in this action) up to a cap of four (4)

million shares. See Stipulation, ¶4(a).

Legal Standard for Approving Settlement Agreement

In the context of a class action, “the extraordinary amount of judicial and private

resources consumed by massive class action litigation elevates the general policy of

encouraging settlements to ‘an overriding public interest.’” Austin v. Pennsylvania

Case 4:06-cv-00354-CKJ Document 159 Filed 09/28/09 Page 4 of 19
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 5 -

Department of Corrections, 876 F.Supp. 1437, 1455 (E.D.Pa.1995), quoting Cotton v.

Hinton, 559 F.2d 1326, 1331 (5th Cir.1977). Due to their representative nature, class

actions are susceptible to abuse by named plaintiffs or their counsel. Id. The Federal

Rules of Civil Procedure sets forth the procedural requirements of a class action

settlement:

(e) Settlement, Voluntary Dismissal, or Compromise. The claims, issues, or

defenses of a certified class may be settled, voluntarily dismissed, or compromised

only with the court's approval. The following procedures apply to a proposed

settlement, voluntary dismissal, or compromise:

(1) The court must direct notice in a reasonable manner to all class members

who would be bound by the proposal. 

(2) If the proposal would bind class members, the court may approve it only

after a hearing and on finding that it is fair, reasonable, and adequate. 

(3) The parties seeking approval must file a statement identifying any

agreement made in connection with the proposal. 

(4) If the class action was previously certified under Rule 23(b)(3), the

court may refuse to approve a settlement unless it affords a new opportunity

to request exclusion to individual class members who had an earlier

opportunity to request exclusion but did not do so. 

(5) Any class member may object to the proposal if it requires court

approval under this subdivision (e); the objection may be withdrawn only

with the court's approval. 

Fed.R.Civ.P. 23. The parties have previously filed “a statement identifying any

agreement made in connection with the proposal.” Fed.R.Civ.P. 23(e)(3). It appears that

a notice of the hearing substantially in the form approved by the Court was mailed to all

persons or entities reasonably identifiable, who purchased the publicly traded securities

of Ionatron during the Class Period between May 4, 2005 and May 10, 2006, except those

persons or entities excluded from the definition of the Class, as shown by the records of

Ionatron’s transfer agent, at the respective addresses set forth in such records, and that

a summary notice of the hearing substantially in the form approved by the Court was

published in The Wall Street Journal pursuant to the specifications of the Court.

Fed.R.Civ.P. 23(e)(1). The Court invited objections from class members and conducted

a fairness hearing to consider whether the Settlement Agreement is “fair, reasonable, and

Case 4:06-cv-00354-CKJ Document 159 Filed 09/28/09 Page 5 of 19
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 6 -

adequate.” Fed.R.Civ.P. 23(e)(2).

Fair, Reasonable, and Adequate Settlement Agreement

In determining whether a proposed agreement is fair, reasonable, and adequate, the

Court must consider the settlement as a whole, rather than individual provisions, for

overall fairness. Staton v. Boeing Company, 327 F.3d 938, 952 (9th Cir.2003), citing

Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir.1998). In making this

determination, a court may consider the following factors:

the strength of the plaintiff's case; the risk, expense, complexity, and likely

duration of further litigation; the risk of maintaining class action throughout trial;

the amount offered in settlement; the extent of discovery completed, and the stage

of the proceedings; the experience and views of counsel; the presence of a

governmental participant; and the reaction of the class members to the proposed

settlement.

Molski v. Gleich, 318 F.3d 937 (9th Cir.2003), quoting Linney v. Cellular Alaska

Partnership, 151 F.3d 1234, 1242 (9th Cir.1998). The Court need not only consider those

factors which are relevant to the case before it “[b]ecause the settlement evaluation

factors are non-exclusive.” Churchill Village, L.L.C. v. General Electric, 361 F.3d 566,

576 n. 7 (9th Cir.2004). The Court must consider the relevant factors but need not “reach

any ultimate conclusions on the contested issues of law and fact which underlie the merits

of the dispute, for it is the very uncertainty of the outcome of litigation and avoidance of

wasteful and expensive litigation that induce consensual settlements.” Officers for

Justice v. Civil Serv. Comm'n., 688 F.2d 615, 625 (9th Cir.1982); Hanlon, 150 F.3d at

1026.

Strengths of Plaintiffs’ Case

The Settlement is fair and reasonable in light of the hurdles Lead Plaintiffs would

have to overcome to defeat summary judgment and ultimately to prove liability and

damages. Liability under the Exchange Act requires Lead Plaintiffs to prove that

Case 4:06-cv-00354-CKJ Document 159 Filed 09/28/09 Page 6 of 19
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 7 -

Defendants made materially false or misleading representations, Defendants acted

knowingly or recklessly, that the Class’ losses were caused by Defendants

misrepresentations, and Lead Plaintiffs and the Class Members suffered damages. Failure

to prove just one of these elements would prevent any recovery. The parties dispute

whether the statements made by Defendants were false and misleading. Additionally,

Lead Plaintiffs assert the facts provided by the confidential witnesses establish scienter;

however, Defendants assert that it is illogical to believe that Defendants knew the JIN

was not suitable for deployment and that the minor portions of stock sales made by

Defendants do not support an inference of scienter. Lead Plaintiffs believe expert

testimony would establish loss causation despite Defendants’ claims that the drop in stock

price was not statistically significant. The parties dispute whether Lead Plaintiffs can

show that the alleged misrepresentations inflated the stock price because the stock price

repeatedly declined. Lead Plaintiffs’ ability to establish damages would require

additional discovery and expert testimony. 

Risk, Expense, and Likely Duration of Further Litigation

Lead Plaintiffs assert that extensive discovery remains to establish liability and

damages and recognize that permissible discovery in light of national security interests

would result in lengthy and expensive litigation. The likelihood and expense of

continued litigation weighs in favor of approving the Settlement Agreement. In light of

the number of named Plaintiffs, the size of the proposed class, the significant cost of

continued litigation, the mandates of Fed.R.Civ.P. 1 (encouraging the “just, speedy, and

inexpensive determination of every action.”) favor approval of the Settlement Agreement.

Additionally, the “compromise of complex litigation is encouraged by the courts and

favored by public policy.” Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96 (2nd

Cir.2005).

Extent of Discovery and the Stage of the Proceedings

Case 4:06-cv-00354-CKJ Document 159 Filed 09/28/09 Page 7 of 19
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 8 -

Lead Plaintiffs have not yet engaged in extensive discovery but have received

extensive factual presentations by Defendants during mediation. Again, Lead Plaintiffs

acknowledge the discovery concerns in light of national security interests. Plaintiffs’

counsel assert they have consulted with experts and assert they have sufficient

information to make an informed decision as to the reasonableness of the settlement.

Amount of the Settlement

The proposed $6.5 million Settlement – or approximately $0.44 per share –

provides members of the Settlement Class with a substantial recovery that is well in

excess of typical recoveries, as the Settlement represents approximately 17 percent of

Lead Plaintiffs’ “best case” damages estimate of approximately $2.65 per share.

Significantly, Lead Plaintiffs’ “best case” damages estimate is based upon the assumption

that, among other concerns, Plaintiffs’ Counsel would be able to convince the Court and

the jury that Lead Plaintiffs are entitled to prevail on every theory and for every claimed

drop in Ionatron’s stock price.

Experience and Views of Counsel

Another relevant factor is the experience of counsel who determined that

settlement was appropriate in this matter. Many of the law firms involved in this case

have considerable experience in the applicable area of law and in handling similar

actions. Izard Nobel LLP engages in class action litigation on behalf of investors alleging

misrepresentations in connection with the purchase of securities and have been formally

appointed by many courts as lead counsel or co-lead counsel for investors in securities

class actions. See Joint Declaration, Document # 156, Exhibit D. Scott + Scott LLP is

nationally recognized for recovery of money for individuals and institutional investors

through securities class actions. Id. Bonnett, Fairbourn, Friedman & Balant, P.C., has

represented consumers and investors in major class action cases in federal and state

courts; it has extensive experience in plaintiffs’ class action securities cases in and out

Case 4:06-cv-00354-CKJ Document 159 Filed 09/28/09 Page 8 of 19
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 9 -

of the state of Arizona. Id.

Where, as here, settlement is reached through arms’-length negotiations between

experienced counsel, and there is no evidence of collusion or bad faith, the judgment of

counsel concerning the adequacy of the settlement is entitled to deference. Plaintiffs’

Counsel, who have a great deal of experience in securities class action litigation, have

weighed the factors and have concluded that the Settlement is a favorable result which

is in the best interests of the Settlement Class. The experience and view of Plaintiffs’

counsel favors approval of the settlement.

Reaction of Class Members to the Proposed Settlement

The reaction of Settlement Class Members to the proposed Settlement supports

final approval. Approximately 8,360 copies of the Notice were mailed to Settlement

Class Members or their representatives, the Notice was published on a dedicated internet

website, and a Summary Notice was published in The Wall Street Journal. Although the

Notice provided that Settlement Class Members could object to the proposed Settlement

by September 9, 2009, no objections to the Settlement were submitted and only one Class

Member requested exclusion. 

Absence of Evidence of Collusion

The Ninth Circuit has that “[b]efore approving a class action settlement, the district

court must reach a reasoned judgment that the proposed agreement is not the product of

fraud or overreaching by, or collusion among, the negotiating parties . . .” Ficalora v.

Lockheed Cal. Co., 751 F.2d 995, 997 (9th Cir. 1985). In this case, the settlement

negotiations were conducted at arms length with the assistance of a mediator. See e.g.

Wal-Mart Stores, Inc., 396 F .3d at 116-117 (stating that “a presumption of fairness,

adequacy, and reasonableness may attach to a class settlement reached in arms-length

negotiations between experienced, capable counsel after meaningful discovery”),

citations omitted. The arms length negotiations that occurred in this matter took place

Case 4:06-cv-00354-CKJ Document 159 Filed 09/28/09 Page 9 of 19
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 10 -

with a second mediator after initial efforts with a different mediator failed. There is no

evidence of collusion in this case.

Attorneys’ Fees

Plaintiffs’ Counsel request attorneys’ fees in an amount equal to 30% of the

settlement fund (they seek cash and stock in the same ratio as recovered for the class).

Generally, attorneys' fees provisions included in settlement agreements are subject to the

determination of whether the agreement is “fair, adequate, and reasonable.” Fed.R.Civ.P.

23(e). The assumption in scrutinizing a class action settlement agreement is that the class

members have an interest in assuring that the fees to be paid class counsel are not

unreasonably high. Thus, the “‘[district] court must exercise its inherent authority to

assure that the amount and mode of payment of attorneys' fees are fair and proper.’“

Staton v. Boeing Co., 327 F.3d 938, 964 (9th Cir. 2003). The Ninth Circuit has instructed

that because the amount of fees is often open to dispute and because the parties are

compromising to avoid further disputes, the district court need not inquire into the

reasonableness of fees with the same level of scrutiny as when the amount of fees is

litigated. Staton, 327 F.3d at 966. The district court, however, must conduct some inquiry

into the hours expended and the billing rate.

Here, the proposed settlement provided that Lead Plaintiffs’ counsel would seek

an award not to exceed 33 1/3 % of the settlement fund, along with reimbursement of outof-pocket expenses, including expert fees, in an amount not to exceed $235,000.00.

Notice of this potential award was provided to the settlement class members and no

objections have been made. Lead Plaintiffs’ counsel have expended considerable time

(almost 3000 hours) and effort in the expectation that if they were successful in obtaining

a recovery fo the class they would be paid from such recovery. The 30% of the settlement

fund ($1,950,000) requested by counsel is well within the range routinely approved in

such cases. The requested award of $1,950,000 is fair, reasonable, and proper. Zucker

v. Occidental Petroleum Corp., 192 F.3d 1323, 1328-29 (9th Cir. 1999).

Case 4:06-cv-00354-CKJ Document 159 Filed 09/28/09 Page 10 of 19
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

All capitalized terms used herein having the meanings as set forth and defined in the

Stipulation.

- 11 -

Summary

The Court finds the terms of the Settlement Agreement are fair, adequate and

reasonable. The terms of the Settlement Agreement address Plaintiffs’ grievances as set

forth in the Complaint. There is no evidence of collusion among the parties or that

counsel brought this action solely for personal financial gain. Rather, Plaintiffs' counsel

have sacrificed the potential for earning a greater award of attorneys’ fees and costs in

the interest of settling this matter for the benefit of the class members. After a thorough

review of the record in this matter, considering all the relevant factors, considering and

determining the fairness and reasonableness of the award of attorneys’ fees and expenses

requested, and the absence of any objections to the Settlement Agreement, the Court

approves the Settlement Agreement and makes the following orders.2

Accordingly, IT IS ORDERED:

1. The Court has jurisdiction over the subject matter of the Action, the Lead

Plaintiffs, all Class Members, and the Defendants.

2. The Court finds that the prerequisites for a class action under Federal Rule

of Civil Procedure 23 (a) and (b)(3) have been satisfied in that: (a) the number of Class

Members is so numerous that joinder of all members thereof is impracticable; (b) there

are questions of law and fact common to the Class; (c) the claims of the Class

Representatives are typical of the claims of the Class they seek to represent; (d) the Class

Representatives have and will fairly and adequately represent the interests of the Class;

(e) the questions of law and fact common to the members of the Class predominate over

any questions affecting only individual members of the Class; and (f) a class action is

superior to other available methods for the fair and efficient adjudication of the

controversy.

Case 4:06-cv-00354-CKJ Document 159 Filed 09/28/09 Page 11 of 19
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 12 -

3. Pursuant to Fed.R.Civ.P. 23, this Court hereby finally certifies this Action,

for purposes of this Settlement only, as a class action on behalf of all persons who

purchased the publicly traded securities of Ionatron during the period between May 4,

2005 and May 10, 2006, inclusive. Excluded from the Class are the Defendants, the

officers, directors and affiliates of Ionatron at all relevant times, members of their

immediate families and their legal representatives, heirs, successors or assigns, and any

entity in which Defendants have or had a controlling interest, and all shares of Ionatron

stock owned or acquired, directly or indirectly, by any of them. For purposes of this

Settlement, the term “controlling interest” shall include any interest of 5% or more of the

common stock of any entity. Also excluded from the Class are the persons and/or

entities who requested exclusion from the Class as listed on Exhibit 1 annexed hereto.

4. Notice of the pendency of this Action as a class action and of the proposed

Settlement was given to all Class Members who could be identified with reasonable

effort. The form and method of notifying the Class of the pendency of the action as a class

action and of the terms and conditions of the proposed Settlement met the requirements

of Fed.R.Civ.P. 23, Section 21D(a)(7) of the Securities Exchange Act of 1934, 15 U.S.C.

78u-4(a)(7) as amended by the Private Securities Litigation Reform Act of 1995 (the

“PSLRA”), due process, and any other applicable law, constituted the best notice

practicable under the circumstances, and constituted due and sufficient notice to all

persons and entities entitled thereto.

5. The Settlement is approved as fair, reasonable and adequate, and the Class

Members and the parties are directed to consummate the Settlement in accordance with

the terms and provisions of the Stipulation. 

6. The Complaint, which the Court finds was filed on a good faith basis in

accordance with the PSLRA and Fed.R.Civ.P. 11 based upon all publicly available

information, is hereby dismissed with prejudice and without costs, except as provided in

the Stipulation, as against the Defendants.

7. Members of the Class and the successors and assigns of any of them, are

Case 4:06-cv-00354-CKJ Document 159 Filed 09/28/09 Page 12 of 19
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 13 -

hereby permanently barred and enjoined from instituting, commencing or prosecuting,

either directly, derivatively, as a class representative, or in any other capacity, any and

all claims, rights or causes of action or liabilities whatsoever, (including, but not limited

to, any claims for damages, injunctive relief, interest, attorneys’ fees, expert or consulting

fees, and any other costs, expenses or liability whatsoever), whether based on United

States federal, state, local, statutory or common law or any other law, rule or regulation,

whether foreign or domestic, fixed or contingent, accrued or unaccrued, liquidated or

unliquidated, at law or in equity, matured or unmatured, foreseen or unforeseen, whether

class, derivative, or individual in nature, including both known claims and Unknown

Claims, that have been asserted in the Action by the Class Members or any of them

against any of the Released Parties (whether pleaded in the Complaint or not), or (ii) that

could have been asserted in the Action or in any forum by the Class Members or any of

them against any of the Released Parties, and which also arise out of, relate to, or are

based on any of the claims, allegations, activities, press releases or public statements set

forth in the Complaint and relate to the purchase, sale, transfer or acquisition of the

publicly traded securities of Ionatron during the Class Period, or any actions,

representations or omissions that were alleged or might have been alleged to affect the

price of any publicly traded securities of Ionatron during the Class Period. “Released

Parties” means Defendants and any and all of their past or present partners, principals,

employees, predecessors, successors, affiliates, officers, directors, attorneys, agents,

insurers and assigns.

8. “Unknown Claims” means any and all Settled Claims which any Lead

Plaintiff or Class Member does not know or suspect to exist in his, her or its favor at the

time of the release of the Released Parties, and any Settled Defendants’ Claims which any

Defendant does not know or suspect to exist in his, her or its favor, which if known by

him, her or it might have affected his, her or its decision(s) with respect to the Settlement.

With respect to any and all Settled Claims and Settled Defendants’ Claims, the parties

stipulate and agree that upon the Effective Date, the Lead Plaintiffs and the Defendants

Case 4:06-cv-00354-CKJ Document 159 Filed 09/28/09 Page 13 of 19
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 14 -

shall expressly waive, and each Class Member shall be deemed to have waived, and by

operation of the Judgment shall have expressly waived, any and all provisions, rights and

benefits conferred by any law of any state or territory of the United States, or principle

of common law, which is similar, comparable, or equivalent to Cal. Civ. Code § 1542,

which provides:

A general release does not extend to claims which the creditor does not know or

suspect to exist in his or her favor at the time of executing the release, which if

known by him or her must have materially affected his or her settlement with the

debtor.

Lead Plaintiffs and Defendants acknowledge, and Class Members by operation of law

shall be deemed to have acknowledged, that the inclusion of “Unknown Claims” in the

definition of Settled Claims and Settled Defendants’ Claims was separately bargained for

and was a key element of the Settlement.

9. The Defendants and the successors and assigns of any of them, are hereby

permanently barred and enjoined from instituting, commencing or prosecuting, either

directly or in any other capacity, any and all claims, rights or causes of action or

liabilities whatsoever, whether based on United States federal, state, local, statutory or

common law or any other law, rule or regulation, including both known claims and

Unknown Claims, that have been or could have been asserted in the Action or any forum

by the Defendants or any of them or the successors and assigns of any of them against any

of the Lead Plaintiffs, Class Members or their attorneys, which arise out of or relate in

any way to the institution, prosecution, or settlement of the Action (except for claims to

enforce the Settlement) (the “Settled Defendants’ Claims”) against any of the Lead

Plaintiffs, Class Members or their attorneys. The Settled Defendants’ Claims of all the

Released Parties are hereby compromised, settled, released, discharged and dismissed on

the merits and with prejudice by virtue of the proceedings herein and this Order and Final

Judgment.

10. Pursuant to the PSLRA, the Released Parties are hereby discharged from all

claims for contribution or equitable indemnity, by any person or entity, whether arising

Case 4:06-cv-00354-CKJ Document 159 Filed 09/28/09 Page 14 of 19
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 15 -

under United States federal, state, local, statutory or common law or any other law, based

upon, arising out of, relating to, or in connection with the claims of the Class or any Class

Member in the Action. Accordingly, to the maximum extent permissible under the

PSLRA, the Court hereby bars and enjoins all such claims for contribution or equitable

indemnity: (a) by any person or entity against any Released Party; and (b) by any

Released Party against any person or entity other than a person or entity whose liability

to the Class has been extinguished pursuant to the Stipulation and Agreement of

Settlement and this Order and Final Judgment. 

11. Neither this Order and Final Judgment, the Stipulation, nor any of its terms

and provisions, nor any of the negotiations or proceedings connected with it, nor any of

the documents or statements referred to therein shall be:

(a) offered or received against the Defendants as evidence of or

construed as or deemed to be evidence of any presumption, concession, or

admission by any of the Defendants with respect to the truth of any fact alleged by

any of the plaintiffs or the validity of any claim that has been or could have been

asserted in the Action or in any litigation, or the deficiency of any defense that has

been or could have been asserted in the Action or in any litigation, or of any

liability, negligence, fault, or wrongdoing of the Defendants;

(b) offered or received against the Defendants as evidence of a

presumption, concession or admission of any fault, misrepresentation or omission

with respect to any statement or written document approved or made by any

Defendant;

(c) offered or received against the Defendants as evidence of a

presumption, concession or admission with respect to any liability, negligence,

fault or wrongdoing, or in any way referred to for any other reason as against any

of the Defendants, in any other civil, criminal or administrative action or

proceeding, other than such proceedings as may be necessary to effectuate the

provisions of this Stipulation; provided, however, that if this Stipulation is

Case 4:06-cv-00354-CKJ Document 159 Filed 09/28/09 Page 15 of 19
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 16 -

approved by the Court, Defendants may refer to it to effectuate the liability

protection granted them hereunder;

(d) construed against the Defendants as an admission or concession that

the consideration to be given hereunder represents the amount which could be or

would have been recovered after trial; or

(e) construed as or received in evidence as an admission, concession or

presumption against Lead Plaintiffs or any of the Class Members that any of their

claims are without merit, or that any defenses asserted by the Defendants have any

merit, or that damages recoverable under the Complaint would not have exceeded

the Gross Settlement Fund.

12. The Plan of Allocation is approved as fair and reasonable, and Plaintiffs’

Counsel and the Claims Administrator are directed to administer the Stipulation in

accordance with its terms and provisions.

13. The Court finds that all parties and their counsel have complied with each

requirement of Rule 11 of the Federal Rules of Civil Procedure as to all proceedings

herein.

14. Plaintiffs’ Counsel are hereby awarded 30 % of the Cash Settlement Amount

and the Stock Settlement Amount, respectively, in fees, which sum the Court finds to be

fair and reasonable, and $ 198,972.37 in reimbursement of expenses, which expenses

shall be paid to Plaintiffs’ Lead Counsel from the Cash Settlement Amount with interest

from the date such the Settlement was funded to the date of payment at the same net rate

that the Settlement fund earns such interest. The award of attorneys’ fees shall be

allocated among Plaintiffs’ Counsel in a fashion which, in the opinion of Plaintiffs’ Lead

Counsel, fairly compensates Plaintiffs’ Counsel for their respective contributions in the

prosecution of the Action.

15. Plaintiff Hylton S. Petit, Jr., is hereby awarded $ 2,500; and Plaintiff Claire

Silverman is hereby awarded $ 2,500. Such awards are for reimbursement of these Lead

Plaintiffs’ reasonable costs and expenses directly related to their representation of the

Case 4:06-cv-00354-CKJ Document 159 Filed 09/28/09 Page 16 of 19
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 17 -

Class under the PSLRA.

16. In making this award of attorneys’ fees and reimbursement of expenses to

be paid from the Gross Settlement Fund, the Court has considered and found that:

(a) the settlement has created a fund of $6.5 million in cash and stock

that is available to the Class, plus interest thereon as applicable and that numerous

Class Members who submit acceptable Proofs of Claim will benefit from the

Settlement created by Plaintiffs’ Counsel;

(b) Approximately 8,360 copies of the Notice were disseminated to

putative Class Members indicating that Plaintiffs’ Counsel were moving for

attorneys’ fees in the amount of up to 33 1/3% of the Gross Settlement Fund and

for reimbursement of expenses in an amount not to exceed $235,000 and no

objections were filed against the terms of the proposed Settlement or the ceiling

on the fees and expenses requested by Plaintiffs’ Counsel contained in the Notice;

(c) Plaintiffs’ Counsel have conducted the litigation and achieved the

Settlement with skill, perseverance and diligent advocacy;

(d) Defendants have denied and continue to deny liability and have

vigorously defended against the claims asserted in the action;

(e) The action involves complex factual and legal issues and was

actively prosecuted over two years and, in the absence of a settlement, would

involve further lengthy proceedings with uncertain resolution of the complex

factual and legal issues;

(f) Had Plaintiffs’ Counsel not achieved the Settlement there would

remain a significant risk that Lead Plaintiffs and the Class may have recovered less

or nothing from the Defendants;

(g) Plaintiffs’ Counsel have devoted nearly 3000 hours, with a lodestar

value of $1,428,580.50, to achieve the Settlement; and

(h) The amount of attorneys’ fees awarded and expenses reimbursed

from the Settlement Fund are consistent with awards in similar cases.

Case 4:06-cv-00354-CKJ Document 159 Filed 09/28/09 Page 17 of 19
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 18 -

17. Exclusive jurisdiction is hereby retained over the parties and the Class

Members for all matters relating to this Action, including the administration,

interpretation, effectuation or enforcement of the Stipulation and this Order and Final

Judgment, and including any application for fees and expenses incurred in connection

with administering and distributing the settlement proceeds to the members of the Class.

18. Without further order of the Court, the parties may agree to reasonable

extensions of time to carry out any of the provisions of the Stipulation.

19. The Clerk of the Court shall enter judgment and shall then close its file in

this matter.

DATED this 28th day of September, 2009.

Case 4:06-cv-00354-CKJ Document 159 Filed 09/28/09 Page 18 of 19
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 19 -

EXHIBIT 1

ENTITIES REQUESTING EXCLUSION FROM THE SETTLEMENT CLASS

1. J. Giordano Securities LLC (n/k/a/ NewOak Capital Markets LLC).

Case 4:06-cv-00354-CKJ Document 159 Filed 09/28/09 Page 19 of 19