Document:

EX-10.1 Stipulation of Settlement

 

Exhibit 10.1

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

FORT LAUDERDALE DIVISION

CASE NO. 07-61241-CIV-COHN/SELTZER

JACOB SCHWARTZ, Derivatively on Behalf

of PEDIATRIX MEDICAL GROUP, INC.,

          Plaintiff,

v.

ROGER J. MEDEL, CESAR L. ALVAREZ,

LAWRENCE M. MULLEN, JOSEPH M.

CALABRO, KARL B. WAGNER, THOMAS

W. HAWKINS, KRISTEN BRATBERG,

WALDEMAR A. CARLO, MICHAEL B.

FERNANDEZ, ROGER K. FREEMAN,

PAUL G. GABOS, ENRIQUE J. SOSA, and

PASCAL J. GOLDSCHMIDT,

          Defendants,

 - and -

PEDIATRIX MEDICAL GROUP, INC.,

a Florida corporation,

          Nominal Defendant.

 

STIPULATION OF SETTLEMENT

     This Stipulation of Settlement (“Stipulation”) is made and entered into as of this 16th day of
January, 2008, subject to the approval of the Court, by and between: (i) Plaintiff Jacob Schwartz
(“Plaintiff”) who has brought suit derivatively for and on behalf of Nominal Defendant Pediatrix
Medical Group, Inc. (“Pediatrix” or the “Company”); (ii) Defendants Roger J. Medel, Cesar L.
Alvarez, Lawrence M. Mullen, Joseph M. Calabro, Karl B. Wagner, Thomas W. Hawkins, Kristen
Bratberg, Waldemar A. Carlo, Michael B. Fernandez, Roger K. Freeman, Paul G. Gabos, Enrique J.
Sosa, and Pascal J. Goldschmidt (the “Individual Defendants”); and (iii)
Pediatrix (Plaintiff, the Individual Defendants and Pediatrix shall be referred to
collectively as the “Parties”).

 

     WHEREAS:

     A. In June 2006, in response to an informal shareholder inquiry, the Company began an informal
limited review of its past stock option granting practices. In early August 2006, after reviewing
the Company’s initial findings, the Audit Committee (the “Audit Committee”) of the Board of
Directors (the “Board”) began conducting a comprehensive review of the Company’s stock option
granting practices and retained independent counsel and forensic accounting experts to assist in
the review.

     B. On August 26, 2006, the independent members of the Board appointed the two members of the
Audit Committee who were conducting the review, Paul G. Gabos and Enrique J. Sosa, pursuant to
Section 607.07401, Florida Statutes, to serve as a Special Committee (the “Special Committee”) for
the purpose of considering and investigating a demand regarding the Company’s stock option granting
practices received from a Pediatrix shareholder. The Special Committee retained the independent
counsel and experts who were already assisting the Audit Committee. As used herein, the term
“Committee” refers to the Audit Committee and/or the Special Committee acting in this matter, each
of which for this purpose consisted of Messrs. Gabos and Sosa.

     C. On May 30, 2007, Plaintiff served a written demand on the Board demanding that the Board
immediately investigate and bring legal action concerning improper backdating of stock options.
The Board also presented Plaintiff’s demand letter to the Committee.

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     D. The Committee’s year-long investigation and review covered all of Pediatrix’s stock option
grants from the date of the initial public offering in September 1995 through
Pediatrix’s options issuances in June 2006. The Committee reviewed the facts and
circumstances surrounding the options to purchase approximately 20,000,000 shares of common stock,
as well as approximately 700,000 shares of restricted stock, granted pursuant to more than 1,300
grants on 114 dates. The Committee and its attorneys and consultants reviewed more than 32,000,000
physical and electronic documents and conducted 35 interviews with more than a dozen current and
former directors, officers, and employees.

     E. As a result of its investigation, the Committee determined that fifty-six (56) stock option
grants made on seven (7) dates between April 1997 and August 2000 were backdated. The Committee
also identified other option grants in which applicable accounting principles were misapplied
and/or process deficiencies or administrative errors occurred resulting in the application of
inappropriate measurement dates to option grants. The Committee found no evidence that the Board,
any committee of the Board, or any non-executive director participated in backdating or was aware
of backdating at the time. The Committee further found no evidence establishing intentional
misconduct by any of the Company’s current executive officers. The Committee, however, determined
that certain members of current senior management did not adequately ensure that the stock option
grant processes and systems were administered properly.

     F. In connection with the Committee’s investigation, and in response to Plaintiff’s demand,
certain remedial actions and measures have been undertaken. A description of the monetary payments
and remedial measures is set forth in Section VI, below.

     G. Plaintiff’s demand on the Board was a significant contributing factor in the Company’s
adoption of the remedial measures described herein.

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     H. On August 30, 2007, Plaintiff filed this shareholder derivative action on behalf of
Pediatrix against certain of Pediatrix’s present and former officers and directors Roger J. Medel,
Cesar L. Alvarez, Lawrence M. Mullen, Joseph M. Calabro, Karl B. Wagner, Thomas W. Hawkins,
Kristin Bratberg, Waldemar A. Carlo, Michael B. Fernandez, Roger K. Freeman, Paul G. Gabos, Enrique
J. Sosa and Pascal Goldschmidt alleging, inter alia, that from 1996 to 2007, the Company and
certain of the Individual Defendants engaged in improper backdating of stock options and
disseminated materially false proxy statements to shareholders of Pediatrix (the “Action”).

     I. The Action asserts claims under Section 14(a) of the Securities Exchange Act of 1934 and
Securities and Exchange Commission (“SEC”) Rule 14a-9, and asserts claims for accounting, breaches
of fiduciary duty and or aiding and abetting, abuse of control, gross mismanagement, constructive
fraud, corporate waste, unjust enrichment, rescission, and breach of fiduciary duty for insider
selling and misappropriation of information.

     J. After several weeks of extensive arms-length negotiations, counsel for the Parties have
reached an agreement (as set forth herein) concerning the settlement of the Action (the
“Settlement”). The Parties’ agreement has been reached after repeated discussions among counsel.
Counsel for the Parties have concluded that the terms contained in this Stipulation are fair,
reasonable and adequate to Pediatrix and its shareholders and that it is fair and reasonable to
settle the Action based upon the procedures outlined herein and the substantial benefits and
protections described below.

     K. The Company, the Individual Defendants, the Committee, and Plaintiff have considered the
terms of this Stipulation and believe that the Settlement, subject to the terms herein, is
desirable and in the best interest of the Company and its shareholders.

     L. The Company and the Individual Defendants have denied, and continue to deny, any liability
or wrongdoing with respect to any and all claims alleged in the Action, or otherwise.
Without conceding their defenses, the Company and the Individual Defendants nevertheless
consider the dismissal of the Action, subject to the terms and conditions herein, desirable
because, among other things, this Stipulation and the Settlement will eliminate the substantial
burden, expense, inconvenience, and distraction of litigation.

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     M. Nothing in this Stipulation shall be construed as an admission or a presumption, or
concession by the Company or the Individual Defendants of any breach of duty, fault, liability or
wrongdoing as to any fact or claim alleged or asserted in the Actions or any other civil, criminal,
or administrative actions or proceedings.

     NOW, THEREFORE, IT IS STIPULATED AND AGREED, pursuant to Federal Rule of Civil Procedure 23.1
(“Rule 23.1”), and subject to approval of the Court, that the Action be finally and fully
compromised, settled, released, discharged and dismissed with prejudice as to Pediatrix and the
Individual Defendants (collectively, the “Defendants”) on the following terms and conditions:

I. RELEASE OF CLAIMS

     1. Upon Final Approval (as defined below), all of the Released Claims (as defined below) are
completely, fully, finally and forever discharged, extinguished, and dismissed with prejudice,
subject to the terms and conditions set forth in this Stipulation.

     2. For the purposes of this Stipulation:

          (a) “Final Approval” shall be considered to have occurred after the following: (i) approval
of the Stipulation by the Board; (ii) entry of the Order and Final Judgment approving the
Settlement in the form attached hereto as Exhibit A, and the expiration of any applicable appeals
period for the appeal of the Order and Final Judgment without an appeal being filed or, if an
appeal is taken, upon entry of an order affirming the Order and Final Judgment appealed from
(or dismissing the appeal) and the expiration of any applicable period for the
reconsideration, rehearing or appeal of such affirmance (or dismissal) without any motion for
reconsideration or rehearing or further appeal having been filed. An appeal only with respect to
the award of attorneys’ fees shall not affect Final Approval or the finality of the Settlement.

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          (b) “Released Persons” means: (i) Pediatrix and its predecessors, associates, past and present
subsidiaries, and affiliated professional corporations, associations and general or limited
partnerships, limited liability companies and each and all of their respective past or present
officers, members, directors, shareholders, boards, agents, representatives, employees, attorneys,
financial or investment advisors, advisors, consultants, auditors, accountants, commercial bankers,
trustees, insurers, co-insurers, excess insurers, underwriters, and reinsurers (except to the
extent claims against insurance carriers are specifically reserved herein); (ii) all persons who
are or were Defendants in the Action, including the Individual Defendants, and each of their
respective heirs, successors, executors, assigns, trustees, trusts, general or limited
partnerships, members, spouses, immediate family members, representatives, attorneys, advisors,
consultants, accountants, agents, and administrators, whether or not they were served with process
or otherwise appeared in the Action; and (iii) the Committee and their counsel and consultants, the
Compensation Committee of the Board, and any and all other committees of the Board.

          (c) “Released Claims” means any and all statutory or common law claims (including Unknown
Claims, as defined below), rights, demands, suits, matters, actions or causes of action,
liabilities, damages, losses, obligations, judgments, fees, expenses, costs, matters, and issues,
of any kind, whether known or unknown or suspected to exist, whether fixed or contingent, accrued
or un-accrued, liquidated or un-liquidated, matured or un-matured, at law or

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in equity, that have been, could have been, or in the future can or might have been, asserted
in the Action or in any court, any other adjudicatory tribunal or proceeding, by or on behalf of
Plaintiff, whether in a derivative, direct, representative or in any other capacity, by any past or
present shareholder of the Company (whether in a derivative, direct, representative or in any other
capacity), by the Company, or by their or its predecessors, successors or assigns (or any person(s)
claiming by, through, in the right of, or on behalf of them or the Company by assignment or
otherwise except to the extent claims against insurance carriers are specifically reserved herein),
which have arisen, arise now or hereafter arise out of or relate in any manner to the allegations,
facts, events, practices, conduct, transactions, matters, acts, occurrences, statements,
representations, alleged misrepresentations or omissions, or any other matter, thing, or cause
whatsoever, involved, referred to, or otherwise related directly or indirectly, in any way to the
Action or the subject matter of the Action, including, without limitation, any claims in any way
related to: (i) the fiduciary obligations of the Individual Defendants or any other Released
Persons relating to or in connection with the allegations made in the complaint in the Action or
the investigation of such allegations; (ii) any disclosures or alleged misrepresentations or
omissions allegedly made or not made by any of the Released Persons regarding the subject matter of
the Action; (iii) any filings made regarding the subject matter of the Action; (iv) the stock
option granting practices of the Company, the actions of the Committee, the Compensation Committee
and any other committee of the Board, and any and all disclosures made in connection with any of
the foregoing; and (v) the Settlement and this Stipulation or any other matters described or
alleged in this Stipulation, excepting only claims for enforcement of the terms or conditions of
this Stipulation.

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     3. The releases contemplated by this Stipulation extend to claims that any party granting a
release (“Releasing Parties”) does not know or suspect to exist at the time of the release, which
if known might have affected that party’s decision to enter into the release (the “Unknown
Claims”). With respect to any and all Released Claims, the Parties stipulate and agree that each
of the Releasing Parties shall be deemed to have, and by operation of the Order and Final 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 SETTLEMENT WITH THE DEBTOR.

     The Releasing Parties acknowledge that they may discover facts in addition to or different
from those now known or believed to be true with respect to the Released Claims, but that it is the
intent of the Releasing Parties to hereby completely, fully, finally and forever compromise,
settle, release, discharge and extinguish any and all Released Claims, known or unknown, suspected
or unsuspected, which now exist, or heretofore existed, or may hereafter exist, and without regard
to the existence or subsequent discovery of additional or different facts. The Parties acknowledge
that the inclusion of Unknown Claims in the definition of Released Claims was separately bargained
for and a material element of the Stipulation.

     4. Notwithstanding any other provision of this Stipulation or anything contained in any
Exhibit to this Stipulation, nothing in this Stipulation or its Exhibits shall be construed to: (a)
release, discharge, extinguish or otherwise compromise any claims that Pediatrix or any person who
is or was a Defendant in the Action may have under or relating to any policy of liability or any
other insurance policy; or (b) release any insurer, co-insurer, excess insurer or reinsurer from
any obligation owed to Pediatrix or any person who is or was a Defendant in the Action for
indemnity or coverage under or relating to any policy of liability or other insurance policy.

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II. SUBMISSION AND APPLICATION TO THE COURT

     1. As soon as practicable after execution of this Stipulation, the Parties shall jointly apply
to the Court for an order in the form attached hereto as Exhibit B (the “Preliminary Approval and
Scheduling Order”), which shall provide:

          (a) that a settlement hearing (the “Settlement Hearing”) be held to determine whether the
Court should: (i) approve the Settlement pursuant to Rule 23.1 as fair, reasonable, adequate and
in the best interest of Pediatrix and its shareholders; (ii) enter an Order and Final Judgment
dismissing the Action with prejudice, with each party to bear its, his or her own costs, and
release and enjoin prosecution of any and all Released Claims; (iii) consider the application of
Plaintiff’s counsel for an award of attorneys’ fees and expenses; and (iv) hear such other matters
as the Court may deem necessary and appropriate;

          (b) that a copy of the Notice of Hearing and Proposed Settlement of Derivative Action (the
“Notice”), substantially in the form attached hereto as Exhibit C, shall be sent to all
shareholders of record of the Company as of the date of the Preliminary Approval and Scheduling
Order and further that the distribution of the Notice, substantially in the manner set forth in the
Preliminary Approval and Scheduling Order, constitutes the best notice practicable under the
circumstances, meets the requirements of applicable law and due process, is sufficient notice of
all matters relating to the Settlement and fully satisfies the requirements of due process and of
Rule 23.1;

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          (c) a Court finding that the Settlement appears to be the product of serious, informed,
extensive arms-length negotiations, has no obvious deficiencies, provides value to the Company and,
therefore, merits further consideration.

          (d) a grant of preliminary approval of the Settlement and a preliminary finding that the
Settlement is fair, reasonable, adequate and in the best interests of the Company and its
shareholders; and

          (e) a stay of the Action except for the purposes of effecting the Notice and implementing the
Settlement described herein.

     2. All costs incurred in providing the Notice, including printing and copying, as set forth in
the Preliminary Approval and Scheduling Order, shall be paid by the Company.

III. ORDER AND FINAL JUDGMENT

     1. Upon approval of the Settlement (including any modification thereto made with the consent
of Plaintiff, the Company and the Individual Defendants as provided for herein) by the Court, the
Court shall enter an Order and Final Judgment, substantially in the form attached hereto as Exhibit
A, which among other things:

          (a) approves the Settlement, adjudges the terms thereof to be fair, reasonable, adequate and
in the best interests of the Company and its shareholders, and directs consummation of the
Settlement in accordance with the terms and conditions of this Stipulation;

          (b) determines that the requirements of Rule 23.1 and due process have been satisfied in
connection with the Notice to the Company’s shareholders; and dismisses the Action with prejudice
as to Plaintiff, the Company, the Company’s shareholders and all of the Individual Defendants,
extinguishing, discharging and releasing any and all Released Claims against the Company and the
Individual Defendants, with said dismissal subject only to compliance by the

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Company and the Individual Defendants with the terms of this Stipulation and any order of the
Court concerning this Stipulation; and permanently enjoining Plaintiff, the Company’s past or
present shareholders, and any one claiming through or for the benefit of any of them from
asserting, commencing, prosecuting, assisting, instigating or in any way participating in the
commencement or prosecution of any action or other proceeding, in any forum, asserting any Released
Claims, whether in a derivative, direct, representative or in any other capacity, against any
Released Person.

     IV. RES JUDICATA / COLLATERAL ESTOPPEL

     1. The Released Persons may file this Stipulation and/or the Order and Final Judgment in any
action that may be brought against them in order to support an injunction barring the action, a
defense or counterclaim based on principles of res judicata, collateral estoppel, release, good
faith settlement, judgment bar or reduction or any other theory of claim preclusion or issue
preclusion or similar defense or counterclaim.

V. RIGHT TO WITHDRAW FROM SETTLEMENT

     1. Plaintiff, the Company and each of the Individual Defendants shall have the separate option
to withdraw from the Settlement in the event that: (a) the Order and Final Judgment referred to
above are not entered substantially in the form specified herein, including such modifications as
may be agreed upon by all the Parties; or (b) the Settlement does not receive Final Approval, or
the Court approves the Settlement but such approval is reversed or vacated or substantially
modified on appeal, reconsideration or otherwise, provided, however, that the entry by the Court,
in the Order and Final Judgment, or otherwise, of an award of attorneys’ fees and costs that is
less than that sought by Plaintiff’s counsel or less than the amount the Company and/or its
insurance carrier(s) have agreed to pay shall not be a basis for withdrawal from the Settlement.

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     2. In the event that the Settlement does not receive Final Approval, then the Settlement and
any actions taken in connection therewith shall be vacated and terminated and shall become null and
void for all purposes, and all negotiations, transactions, and proceedings connected with it: (a)
shall be without prejudice to the rights of any party hereto; (b) shall not be deemed to be or
construed as evidence of, or an admission by any party of, any fact, matter, or thing; and (c)
shall not be admissible in evidence or be used for any purpose in any subsequent proceedings in the
Action or any other action or proceeding. The Parties to this Stipulation shall be deemed to have
reverted to their respective status in the Actions as of the date and time immediately prior to the
execution of this Stipulation, and, except as otherwise expressly provided, the Parties shall
proceed in all respects as if this Stipulation and any related orders had not been entered.

     3. To exercise its option to withdraw from and terminate this Settlement, such Party must
provide, within ten (10) days after the event giving rise to such option, written notice of such
withdrawal and the grounds therefor to all signatories to this Stipulation.

VI. MONETARY PAYMENTS AND REMEDIAL MEASURES

     1. The Plaintiff’s May 30, 2007 demand letter was a significant contributing factor in
Pediatrix’s decision to accept the monetary payments set forth in subsection “(a)” below and to
implement the therapeutic remedies set forth in subsection “(b)” below:

          (a)
Monetary Payments: In connection with the Committee’s investigation, Pediatrix received certain monetary payments, including payments from Joseph M. Calabro in the
amount of $144,950, Karl B. Wagner in the amount of $154,975, and Virginia Turnier, M.D. in the
amount of $519,000, which sums represented the amounts by which the proceeds they received from
their exercises of backdated options to the extent that they exceeded
the amounts they would have received based on the revised options measurement dates. Those
payments have been paid to and accepted by Pediatrix.

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          (b) Therapeutic Remedies. The Board has adopted corporate governance and internal
control measures, including a detailed written policies governing stock option grants, which are
designed to prevent backdating and ensure proper documentation and accounting of options. These
measures include the following:

               • All grants of stock options, stock appreciation rights, restricted stock, deferred stock,
bonus stock, awards payable in stock or any other stock-based award (individually, an “Equity
Award” and collectively, “Equity Awards”) must be approved by the Compensation Committee of the
Board or the Board. Notwithstanding any authority to the contrary under any equity compensation
plan, resolution of the Board or otherwise, no person, including any officer of the Company, shall
be authorized to exercise any authority to grant Equity Awards.

               • All grants of Equity Awards must be made in accordance with applicable state law, the
charter of the Compensation Committee, these policies and procedures and the terms of the
applicable equity compensation plan.

               • All grants of Equity Awards must be made during an in-person or telephonic meeting of the
Compensation Committee or the Board or by the unanimous written consent executed by all members of
the Compensation Committee or the Board, it being understood that no Equity Award granted pursuant
to any such written consent may have an effective date earlier than the date that all executed
counterparts of such unanimous written consent are delivered to the General Counsel of the Company.

               • In advance of a meeting, the Compensation Committee or the Board shall be provided in
writing with a list prepared by the General Counsel that sets forth the name of each employee to
whom the Equity Award is to be made and, in the case of a prospective employee not yet hired, the
anticipated commencement date of employment (i.e., the first date such person will begin to provide
services to the Company and accrue compensation under the Company’s payroll system), the type of
Equity Award to be made, the number of shares underlying the Equity Award, and the terms and
conditions relating to the vesting of the Equity Award.

               • The Compensation Committee or the Board may approve such list as submitted or with such
changes as it deems appropriate. Following approval by the Compensation Committee or the Board, no
subsequent changes may be made to the list of approved grants, except by the Compensation Committee
or the Board with the advice of the General Counsel and Chief Financial Officer.

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               • The exercise price for any Equity Award, the value of which is based upon a grant date value
of the Company’s common stock, will be the closing sales price for a share of the Company’s common
stock as reported on the New York Stock Exchange on the effective day of the grant as approved by
the Compensation Committee or the Board, which day may not be prior to either the date such grant
was approved by the Compensation Committee or the commencement date of employment of the employee
to whom the Equity Award is being made.

               • Subject to these policies and procedures, the Compensation Committee or the Board may
approve grants of Equity Awards at any time. However, grants to employees other than newly hired
employees or prospective employees not yet hired may be effective only on a date within a “trading
window” as defined by the Company’s Policy Statement on Inside Information and Insider Trading
(effective February 2004), as amended from time to time. For example, a grant approved by the
Compensation Committee during a “black-out” period (as defined in such policy) shall be on a date
during a “trading window” as determined by the Compensation Committee or the Board on the date such
grant is approved.

               • The form of the agreement applicable to each Equity Award must be approved by the
Compensation Committee or the Board in advance of the grant.

               • Any modification to the terms of an Equity Award following its grant must be approved by the
Compensation Committee or the Board with the advice of the General Counsel and Chief Financial
Officer in accordance with these policies and procedures.

               • Grants of Equity Awards to Officers and Directors must be made and reported in accordance
with the requirements of Section 16 of the Securities Exchange Act of 1934, as amended.

               • As soon as practicable, following each meeting of the Compensation Committee or the Board,
at which an Equity Award has been approved in accordance with these policies and procedures,
minutes shall be prepared to preserve an accurate and official record of the proceedings of such
meeting.

               • The Chief Financial Officer or the General Counsel shall periodically (but no less
frequently than once per fiscal quarter) provide the Compensation Committee with a summary of the
number of shares reserved and available for issuance under each equity compensation plan.

               • All company personnel responsible for any matter relating to the granting of Equity Awards,
administration of the Company’s equity compensation plans, or financial accounting for Equity
Awards will be provided with a copy of the policies.

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VII. STIPULATION IS NOT AN ADMISSION

     1. The provisions contained in this Stipulation and all negotiations, statements and
proceedings leading up to and in connection therewith are not, shall not be argued to be, and
shall not be deemed to be, a presumption, concession or admission by any of the Defendants of
any breach of duty, fault, liability or wrongdoing as to any fact or claim alleged or asserted in
the Actions or any other civil, criminal, or administrative actions or proceedings and shall not be
interpreted, construed, deemed, invoked, offered or received in evidence, or otherwise used by any
person in these or any other action or proceeding, whether civil, criminal or administrative,
except in a proceeding to enforce the terms or conditions of this Stipulation. The Parties may,
however, file this Stipulation or any judgment or order relating thereto in any action that may be
brought against them to support an injunction barring the action, a defense or a counterclaim based
on principles of res judicata, collateral estoppel, release, good faith settlement, judgment bar or
reduction or any other theory of claim preclusion or issue preclusion or similar defense or
counterclaim. Nothing contained herein shall prevent Defendants from complying with any disclosure
obligation under federal, state or other law, or from otherwise referring to the Settlement or the
releases contained in this Stipulation.

VIII. DENIAL OF LIABILITY

     1. Each Defendant specifically denies any liability whatsoever relating to any of the Released
Claims, expressly denies having engaged in any breach of duty, violations of law or wrongful or
illegal activity, or having failed to act in any matter required by law or rule, or having
violated, or threatened to violate, any law or regulation or duty, and expressly denies that any
person or entity has suffered harm. Each Defendant is entering into the Settlement and this
Stipulation solely to avoid the uncertainty, harm, distraction, burden and expense occasioned by
litigation. Each Defendant believes that it or he acted, at all times, in the best interests of
the Company and its shareholders. The Court has made no finding that any Defendant has engaged
in any wrongdoing or wrongful conduct or otherwise acted improperly or in violation of any law
or regulation or duty in any respect.

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IX. STANDSTILL AGREEMENT

     1. Pending entry of the Order and Final Judgment based on the Settlement provided for in this
Stipulation, Plaintiff is barred and enjoined from commencing, prosecuting, instigating, or in any
way participating in the commencement or prosecution of any action asserting any Released Claims,
whether in a derivative, direct, representative or in any other capacity, against any Released
Person. Plaintiff also agrees to assent to any motion to dismiss any other proceeding(s) to the
extent any Released Claims are asserted or continue to be asserted in any court prior to or after
the entry of a judgment based on the Settlement in the Action.

X. ATTORNEYS’ FEES AND EXPENSES

     1. Counsel for Plaintiff will apply to the Court for an award of attorneys’ fees and expenses
(including costs and disbursements) in the total amount of $1,500,000. Defendants agree not to
oppose such fee and expense award. No other counsel will be entitled to any other award of
attorneys’ fees or expenses.

     2. Pediatrix and/or its insurers and/or their respective successors-in-interest shall pay to
Plaintiff’s counsel attorneys’ fees (including costs and disbursements) in an aggregate amount of
$1,500,000 (the “Fees and Expenses”). The Fees and Expenses shall be paid to Coughlin, Stoia,
Geller, Rudman & Robbins, LLP, within ten (10) business days after the date on which the Court
enters the Order and Final Judgment approving the Fees and Expenses, provided that the payment
shall be maintained in an interest bearing escrow account until such time as the Final Approval,
and subject to Plaintiff’s counsel’s obligation to make appropriate refunds or repayments plus
accrued interest if, as a result of any appeal and/or further proceedings on

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remand, or successful collateral attack, the amount of Fees and Expenses is reduced or
reversed. Except as expressly provided herein, Plaintiff and Plaintiff’s counsel shall bear their
own fees, costs and expenses and no Defendant shall assert any claim for expenses, costs and fees
against the Plaintiff or Plaintiff’s counsel. Nothing contained herein shall be deemed to
prejudice the rights of Defendants to seek reimbursement under any insurance policy of the Fees and
Expenses awarded by the Court.

     3. The allowance or disallowance by the Court of any award of attorneys’ fees and/or expenses
will be considered by the Court following approval of this Stipulation and separately from the
Court’s consideration of the fairness, reasonableness and adequacy of the Settlement. Any order,
or proceeding, relating to the application by Plaintiff’s counsel for an award of Fees and
Expenses, or any appeal from any order relating thereto or reversal or modification thereof, shall
have no effect on the Settlement and shall not operate to terminate or cancel this Stipulation or
affect the finality of the Order and Final Judgment approving this Stipulation.

XI. GENERAL PROVISIONS

     1. The Parties: (a) acknowledge that it is their intent to consummate the Settlement; and (b)
agree to cooperate to the extent reasonably necessary to effectuate and implement all terms and
conditions of this Stipulation and to exercise their reasonable efforts to accomplish the foregoing
terms and conditions of this Stipulation. The Parties shall seek the Court’s approval of the
Preliminary Order and, when appropriate, the Final Order and Judgment.

     2. The Parties acknowledge, represent and warrant to each other that the terms of the
Settlement are such that each of the Parties is to receive adequate consideration for the
consideration given.

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     3. Plaintiff and Plaintiff’s counsel represent and warrant that Plaintiff has continuously
owned shares of Pediatrix common stock throughout the pendency of the Action, and none of the
claims, rights or causes of action that were asserted, could or might have been asserted in, in
connection with, under or arising out of any of the claims in the Action, including any Released
Claims, has been assigned, encumbered or in any manner transferred in whole or in part.

     4. All agreements made during the course of the negotiations relating to the confidentiality
of information shall survive the Stipulation and the Settlement.

     5. Except as otherwise expressly provided herein, the Parties shall bear their own costs and
expenses.

     6. This Stipulation, together with its Exhibits, constitutes the entire agreement between the
Parties with respect to the Settlement of the Action and supersedes any and all prior negotiations,
discussions, agreements or undertakings, whether oral or written, with respect to the Settlement of
the Action and no representations, warranties or inducements have been made by any party hereto
concerning this Stipulation other than those contained and memorialized herein.

     7. The Exhibits hereto are incorporated in and constitute an integral part of this
Stipulation.

     8. This Stipulation may be executed in one or more counterparts and all such counterparts
together shall be deemed to be one and the same instrument.

     9. This Stipulation shall be binding upon, and inure to the benefit of the Parties hereto and
their respective heirs, executors, administrators, successors, transferees, and assigns. This
Stipulation is not intended, and shall not be construed, to create rights in other persons,
confer benefits on any other persons, and make any other persons third party beneficiaries
hereto, except as expressly provided hereby with respect to such aforementioned persons who are not
Parties hereto.

18

 

     10. The Court shall retain jurisdiction with respect to the implementation and enforcement of
the terms of the Stipulation and the Settlement, and the Parties submit to the jurisdiction of the
Court for purposes of implementing and enforcing the terms of the Stipulation and Settlement.

     11. This Stipulation shall be governed by the laws of the State of Florida, without regard to
conflict of laws principles that would cause the law of another jurisdiction to apply.

     12. Each counsel or person executing this Stipulation or any of the related documents on
behalf of any Party hereto hereby warrants that such person has the full authority to do so.

     13. The Parties may not waive or vary any right hereunder except by an express written waiver
or verification. The waiver by one Party of any breach of this Stipulation by another Party shall
not be deemed a waiver of any other prior or subsequent breach of this Stipulation.

     14. This Stipulation shall not be construed more strictly against one Party than another
merely by virtue of the fact that it, or any part of it, may have been prepared by counsel for one
of the Parties, it being recognized that it is the result of arm’s length negotiations between the
Parties and counsel for all Parties have contributed substantially and materially to the
preparation of this Stipulation.

     15. Any signature to this Stipulation, to the extent signed and delivered by means of a
facsimile machine or electronic mail, shall be treated in all manner and respects as an original
signature and shall be considered to have the same binding legal effect as if it were the original

19

 

signed version thereof delivered in person. At the request of a Party to this Stipulation,
any other Party to this Stipulation so executing and delivering this document by means of a
facsimile machine or electronic mail shall re-execute original forms thereof and deliver them to
the requesting Party. No Party to this Stipulation shall raise the use of a facsimile machine or
electronic mail to deliver a signature or the fact that any signature or agreement was transmitted
or communicated through the use of a facsimile machine or electronic mail as a defense to the
formation or the enforceability of this Stipulation and each such person forever waives any such
defense.

     16. Without further order of the Court, the Parties hereto may agree in writing to reasonable
extensions of time to carry out any of the provisions of this Stipulation.

[Signatures below]

20

 

     The Parties have caused this Stipulation to be duly executed and delivered by their counsel of
record:

	 	 	 	 	 
	 	 	 
	DATED:  January 15, 2008 	/s/ Douglas Wilens
 	 
	 	Paul J. Geller, Esq.
Florida Bar No. 984795

David George, Esq.

Florida Bar No. 0898570

Douglas Wilens, Esq.

Florida Bar No. 0079987

Coughlin Stoia Geller Rudman

 & Robbins LLP

120 East Palmetto Park Road, Suite 500

Boca Raton, FL 33432

Telephone: (561) 750-3000

Facsimile: (561) 750-3364

E mail: PGeller@csgrr.com

E mail: DGeorge@csgrr.com

E mail: DWilens@csgrr.com

Darren J. Robbins, Esq.

Travis E. Downs, III, Esq.

Coughlin Stoia Geller Rudman

 & Robbins LLP

655 West Broadway, Suite 1900

San Diego, CA 92101

Telephone: (619) 231-1058

Facsimile: (619) 231-7423

Eduard Korsinsky

Levi & Korsinsky LLP

39 Broadway, Suite 1601

New York, NY 10006

Telephone: (212) 363-7500

Facsimile: (212) 363-7171

Counsel for Plaintiff

                          	 
	 	 	 
	 

[and]

21

 

	 	 	 	 	 
	 	 	 
	DATED:  January 15, 2008 	/s/ Joseph C. Coates
 	 
	 	Bradford D. Kaufman, Esq.
Florida Bar No. 655465

Joseph C. Coates, Esq.

Florida Bar No. 772860

Greenberg Traurig, P.A.

777 South Flagler Drive

Suite 300 East

West Palm Beach, FL 33401

Telephone: (561) 650-7900

Facsimile: (561) 655-6222

E mail: kaufmanb@gtlaw.com

E mail: coatesj@gtlaw.com

Counsel for Defendants Cesar L. Alvarez, Waldemar

A. Carlo, Michael B. Fernandez, Roger K. Freeman,

Paul G. Gabos, Enrique J. Sosa, Pascal J.

Goldschmidt and Nominal Defendant Pediatrix

Medical Group, Inc.
                                	 
	 	 	 
	 

	 	 	 	 	 
	 	 	 
	DATED:  January 15, 2008 	/s/ David A. Gordon
 	 
	 	Roberto Martinez, Esq.
Florida Bar No. 305996

Colson Hicks Eidson

255 Aragon Avenue, 2nd Floor

Coral Gables, FL 33134-2351

Telephone: (305) 476-7400

Facsimile: (305) 476-7444

E mail: bob@colson.com

and

Walter C. Carlson, Esq.

David A. Gordon, Esq.

Jennifer Peltz, Esq.

Sidley Austin Llp

One South Dearborn

Chicago, Illinois 60603

Telephone: (312) 853-7000

Facsimile: (312) 853-7036

Counsel for Defendants Roger J. Medel, Joseph M.

Calabro, Karl B. Wagner, and Thomas W. Hawkins
                                   	 
	 	 	 
	 

[and]

22

 

	 	 	 	 	 
	 	 	 
	DATED:  January 16, 2008 	/s/ Terence M. Mullen
 	 
	 	Lewis N. Brown, Esq.
Florida Bar No. 270008

Terence M. Mullen, Esq.

Florida Bar No. 191957

Gilbride Heller & Brown

One Biscayne Tower — 15th Floor

Two South Biscayne Blvd.

Miami, FL 33431

Telephone: (305) 358-3580

Facsimile: (305) 374-1756

E mail: lbrown@ghblaw.com

E mail: tmullen@ghblaw.com

Counsel for Defendant Kristen Bratberg
                              	 
	 	 	 
	 

	 	 	 	 	 
	 	 	 
	DATED:  January 15, 2008 	/s/ Morris Weinberg, Jr.
 	 
	 	Morris Weinberg, Jr., Esq.
Florida Bar No. 486401

Nathan M. Berman, Esq.

Florida Bar No. 329230

Zuckerman Spaeder, LLP

101 East Kennedy Blvd.

Tampa, FL 33602

Telephone: (813) 221-1010

Facsimile: (813) 223-7961

E mail: sweinberg@zuckerman.com

E mail: nberman@zuckerman.com

Counsel for Defendant, Lawrence Mullen
                        	 
	 	 	 
	 

23EX-4.6

 

Exhibit 4.6

	 	 	 
	

	 	

Michael J. Utsler

BPXA Senior Vice President

Greater Prudhoe Bay

BP Exploration (Alaska) Inc.

900 E. Benson Boulevard

Anchorage, Alaska 99508

VIA OVERNIGHT MAIL &

AS A SCANNED ATTACHMENT TO E-MAIL

December 21, 2007

Ms. Ming J. Ryan, Vice President

The Bank of New York

101 Barclay Street

New York, NY 10286

    Re: BP Prudhoe Bay Royalty Trust

Dear Ms. Ryan:

The purpose of this letter is to follow up on our e-mail to Richard Bourgerie last week advising
that the
Alaska legislature during its special session this past October and November passed “SCS CSHB
2001(FIN) am S” (the “Act”) which amends Alaska’s oil and gas properties production tax under AS
43.55 (the “Tax”), and to discuss with The Bank of New York (“Bank”) how those amendments should
be reflected in payments to the overriding royalty interest (“ORRI”) held by the Prudhoe Bay
Royalty
Trust (the “Trust”). On December 19, 2007 Governor Sarah Palin signed the Act. The law becomes
effective the day after Governor Palin signed the Act, or December 20,2007. The State of Alaska
website to access the Act is:

http://www.legis.state.ak.us/PDF/25/Bills/HB200 IZ.PDF.

While the Act is very complex and some of the final elements are unknown at this time, we believe
the
Act’s amendments do not change the fundamental character of the Tax in the sense that it continues
to be based on the spot price of Alaskan crude oil on the U.S. West Coast, minus transportation
costs from the North Slope to the West Coast, and minus further the direct, ordinary and necessary
costs of exploring for, developing, and producing oil and gas deposits in Alaska, including those
to which the Trust’s ORRI pertains. Consequently, we believe the agreement (the “Agreement”) set
out in our letter of October 11, 2006 to the Bank, to which the Bank executed its concurrence on
October 13, 2006, can and should remain the basic agreement for calculating the amount of Tax
properly attributable to the
Trust’s ORRI, with only limited modifications to reflect specific amendments in this new Act.

 

 

Ms. Ming J. Ryan, Vice President

The Bank of New York

December 21, 2007

Page 2

Based on the Act, there is one immediate modification to be made to the Agreement. It is possible
that
an additional modification may need to be made once the Department of Revenue issues regulations
under the Act sometime next year, as discussed below. First, the Agreement should be amended to
reflect the changes under the Act to the basic and “progressivity” rates for the Tax. Section 15 of
the
Act (p. 11 line 24 — p. 12 line 2) changes the basic rate from 22.5% to 25%, while Section 17 of
the Act
(p. 12 line 26 — p. 13 line 10) changes the calculation of the “progressivity” rate. The change in
base
rate to 25% would be reflected by simply changing the 22.5% figure in
Consensus Principle l.c) on
page
2 of the Agreement to 25 percent. The changes to the calculation of the “progressivity” rate would
involve replacing Consensus Principle l.b) on page 2 of the Agreement to reflect Section 17 of the
Act.
We believe the following accurately reflects Section 17 of the Act and propose it to replace
Consensus
Principle l.b):

	 	b)	 	The tax rate for the “progressivity” portion of the
New Tax under section 011(g), as
amended, in chapter 55 of Title 43 of the Alaska Statutes2 equals

	 	(i)	 	zero if the simple average of the daily taxable values per barrel under “a)”
above for a calendar month is not greater than $30 per barrel;
	 
	 	(ii)	 	0.4 percentage points times the amount by which the simple average of the
taxable values per barrel under “a)” above for a calendar month exceeds $30
per barrel, if that average is greater than $30 per barrel and not greater than
$92.50 per barrel; and
	 
	 	(iii)	 	the sum of 25 percentage points plus 0.1 percentage points times the amount by
which the simple average of the taxable values per barrel under “a)” above for a
calendar month exceeds $92.50, if that average is greater than $92.50 per
barrel, provided that the sum under this subparagraph may not exceed 50
percentage points.

	 	 	 	The $30 figure in (i) — (iii) of this paragraph is not subject to adjustment over time.

Footnote
number 2 would not change from what it currently is under the Agreement. We propose the
Bank, as Trustee, agree to modify and replace Consensus Principle l.b) as set forth in the October
11,
2006 letter, with the above language. Should the Bank wish to discuss this further, we would be
happy
to do so and can arrange a conference call to accomplish that.

As mentioned above, an additional modification of the Agreement mayor may not be necessary,
depending on regulations to be adopted by the Alaska Department of Revenue to interpret and apply
the
amendments to AS 43.55.150 under Section 54 (p. 39 line 19 — p. 40 line 27) of the Act, and to AS
43.55.165(a) under Section 58 (p. 44 line 12 — p. 45 line 3) of the Act. The amendments to section
150
of the Tax allow DOR to limit deductible transportation costs for
transportation by a regulated
pipeline
to something less than the tariff actually paid, while the amendments to section 165(a) of the Tax
allow
DOR to exclude by regulation certain categories of otherwise deductible lease expenditures, or a
fixed
percentage of them, from being deductible in determining the taxable value under the Tax. Depending
on what those new regulations specifically provide, it may become necessary to modify Consensus
Principle l.a) of the Agreement so that something less than the full amount of Chargeable Costs
under
Section 4.4 of the Conveyance is to be deducted in determining the “taxable value per barrel” under
that
Consensus Principle. Because of the uncertainty of what the new regulations may provide on this
aspect
of the Tax, we want the Bank to be aware of this issue and the potential for further modification
of the
Agreement.

 

 

Ms. Ming J. Ryan, Vice President

The Bank of New York

December 21, 2007

Page 3

We shall keep the Bank informed about the status of those regulations as the Department of Revenue
develops them and initiates the formal procedure to adopt them. At this time, however, there is
nothing
to justify a modification to Consensus Principle 1.a), and we will continue to operate under the
current
language of that principle,

Under the Act the changes described above to the basic and “progressivity” rates will be
retroactive to
July 1, 2007 once the Act becomes law. This puts us in a situation similar to the one we were in
last
year when Governor Murkowski signed the law in August but the changes in Tax under that legislation
were retroactive to April 1, 2006. We believe the same considerations that led at that time to the
prospective application of the rate changes for purposes of the
amount of Tax chargeable against the
Trust’s ORRI apply equally well now. Accordingly, the changes in the basic and “progressivity”
rates
of the Tax apply for Trust purposes to its ORRI production on and after December 20, 2007.

We are signing and mailing to you two counterpart originals of this letter. If the proposed
modification
to Consensus Principle 1.b), appearing on p 2 of this letter is acceptable to the Bank, please have
a duly
authorized officer of the Bank execute the “AGREEMENT AND APPROVAL” appearing below on
behalf of the Bank in each counterpart, and then kindly send one fully executed counterpart
original
back to me for BPXA’s records. The other will be for the Bank’s records. As an interim confirmation
pending my receipt of the original counterpart, I would ask you to email a scanned copy of it to
Greg Youngmun, BPXA Senior Attorney.

While the modification to Consensus Principle l.b) addresses the changes to the basic and
progressivity
rate raised by the new Act, it is recognized there may be issues outside the matters contained in
this
letter affecting the Trust Unit holders’ and BPXA’s interests. This letter and the modification to
Consensus Principle l.b) is not intended to waive any other rights, obligations or remedies
available to
the Bank, as Trustee or BPXA under law or the BP Prudhoe Bay Trust. Further, in the event of future
amendments or changes to Alaska’s oil and gas production tax laws, or should the understanding of
and
agreement to the consensus principles on p. 2 be invalidated by operation of law or by a court of
competent jurisdiction, BPXA and the Bank, as Trustee, expressly agree to reserve all rights,
powers and remedies, they may have available to them under law or the BP Prudhoe Bay Royalty Trust.

Very truly yours,

BP EXPLORATION (ALASKA) INC.

/s/ Michael J. Utsler

Michael J. Utsler

BPXA Senior Vice President

Greater Prudhoe Bay

 

 

Ms. Ming J. Ryan, Vice President

The Bank of New York

December 21, 2007

Page 4

AGREEMENT AND APPROVAL I, the undersigned, certify that I am an officer of The Bank of New York (“Bank”) duly authorized to execute this AGREEMENT AND APPROVAL, and in such
capacity, I hereby acknowledge the accuracy of Consensus Principle l.b), as set forth on page 2 of
the foregoing letter, and do agree to and approve that that principle on behalf of the Bank, as
Trustee of the BP Prudhoe Bay Royalty Trust.

	 	 	 	 	 
	 	 	THE BANK OF NEW YORK, TRUSTEE OF THE BP

PRUDHOE BAY ROYALTY TRUST
	 
	 	 	 	 
	 

	 	By	 	/s/ Ming J. Ryan
	 

	 	 	 	 
	 

	 	Name	 	Ming J. Ryan
	 

	 	 	 	 
	 

	 	Title	 	Vice President
	 

	 	 	 	 
	 

	 	Date	 	January 11, 2008

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