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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF ILLINOIS
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`Case No.: 16-CV-10632
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`PUBLIC EMPLOYEES’ RETIREMENT
`SYSTEM OF MISSISSIPPI, Individually and
`On Behalf of All Others Similarly Situated,
`
` Plaintiff,
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` v.
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`TREEHOUSE FOODS, INC., SAM K.
`REED, DENNIS F. RIORDAN and
`CHRISTOPHER D. SLIVA,
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` Defendants.
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`STIPULATION OF SETTLEMENT
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`This Stipulation of Settlement, dated as of July 13, 2021 (the “Stipulation”), is made and
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`entered into by and among: (i) Lead Plaintiff, The Public Employees’ Retirement System of
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`Mississippi ( “Lead Plaintiff”) (on behalf of itself and each of the Class Members),1 by and
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`through its counsel of record in the Litigation; and (ii) TreeHouse Foods, Inc. (“TreeHouse” or
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`the “Company”), Sam K. Reed, Dennis F. Riordan, and Christopher D. Sliva (together,
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`“Defendants”). Lead Plaintiff, the Class, and Defendants are collectively referred to herein as
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`the “Parties” or the “Settling Parties.” This Stipulation is intended to fully, finally, and forever
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`resolve, discharge, and settle the Released Claims, subject to the approval of the Court and the
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`terms and conditions set forth in this Stipulation.
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`1 All undefined terms with initial caps are defined below in Section IV(1).
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`1
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`Case: 1:16-cv-10632 Document #: 173 Filed: 07/14/21 Page 2 of 38 PageID #:3452
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`I.
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`THE LITIGATION
`This Litigation is pending in the United States District Court for the Northern District
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`of Illinois (the “Court”). The initial complaint in this action was filed on November 1 6 , 2016.
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`Dkt No. 1. On January 25, 2017, the Court appointed Lead Plaintiff and Lead Counsel. Dkt.
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`No. 42. On March 24, 2017, Lead Plaintiff filed an Amended Consolidated Complaint. Dkt.
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`No. 45.
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`Lead Plaintiff brought this securities fraud class action on behalf of all persons and
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`entities who purchased TreeHouse common stock on the open market between January 20,
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`2016, and November 2, 2016, inclusive, and who were damaged thereby. Plaintiff alleges
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`that Defendants violated Sections 10(b) and 20(a) of the Exchange Act, 15 U.S.C. §§78j(b)
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`and 78t(a), and Securities and Exchange Commission (“SEC”) Rule 10b-5 promulgated
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`thereunder, 17 C.F.R. §240.10b-5 (“Rule 10b-5”).
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`Defendant TreeHouse manufactures private label or “store brand” food products for
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`grocery stores, warehouse chains, and other retailers. TreeHouse’s strategy for market
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`growth turned in part on acquiring and integrating other private label food companies, and
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`TreeHouse had purchased twelve companies between 2006 and 2015. In 2014, TreeHouse
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`purchased Flagstone Foods for more than $850 million in its then-largest acquisition to date.
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`Lead Plaintiff alleges that Defendants misrepresented to investors and analysts that
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`Flagstone was being smoothly integrated into TreeHouse.
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`In 2015, TreeHouse purchased the “Private Brands” business from ConAgra Foods,
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`Inc. for more than $2.7 billion. TreeHouse’s acquisitions of Flagstone and Private Brands
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`nearly tripled its size. Lead Plaintiff alleges that TreeHouse continued to misrepresent to the
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`market that its recent large acquisitions were successful.
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`2
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`Case: 1:16-cv-10632 Document #: 173 Filed: 07/14/21 Page 3 of 38 PageID #:3453
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`Lead Plaintiff contends that TreeHouse’s stock traded at an inflated level because of
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`Defendants’ alleged wrongful acts and omissions. On November 3, 2016, TreeHouse
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`disclosed that third quarter earnings would be below expectations, and Company shares fell
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`roughly 20%. It is alleged that the Company’s November 3, 2016 public statements
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`constituted corrective disclosures about TreeHouse’s integration of Flagstone and Private
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`Brands, resulting in Lead Plaintiff and the other Class Members suffering loss and damages.
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`Defendants have denied and continue to deny all of Plaintiffs’ allegations.
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`Defendants have denied and continue to deny any wrongdoing whatsoever or that they have
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`committed any act or omission giving rise to any liability or violation of law, including the
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`U.S. securities laws. Defendants have denied and continue to deny each and every one of
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`the claims that was alleged or could have been alleged in the Litigation, including all claims
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`in the Complaint, as well as any allegations that Lead Plaintiff or any member of the Class
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`has suffered damages or was otherwise harmed by the conduct alleged in the Litigation.
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`Defendants believe that the claims asserted against them in the Litigation are without merit.
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`On May 26, 2017, Defendants filed a motion to dismiss. Dkt. No. 58. In a
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`Memorandum Opinion and Order entered on February 12, 2018, the Court denied
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`Defendants’ motion to dismiss. Dkt. No. 75.
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`The Parties served initial disclosures on May 25, 2018. Starting on June 1, 2018, the
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`Parties began serving document requests and interrogatories. After serving objections and
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`responses to the various discovery requests, the Parties began producing documents after
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`meeting and conferring multiple times and agreeing upon search terms. Defendants
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`eventually produced more than 50,000 documents, comprising over 200,000 pages.
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`3
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`Case: 1:16-cv-10632 Document #: 173 Filed: 07/14/21 Page 4 of 38 PageID #:3454
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`Lead Plaintiff also served 14 third party subpoenas. Lead Plaintiff’s counsel had
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`multiple meet and confer conferences with each of these subpoenaed third parties to define
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`and narrow the scope of their respective productions of documents. Approximately 4,000
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`documents were produced by these third parties.
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`During the course of discovery, Defendants deposed two representatives of Lead
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`Plaintiff: Special Assistant Attorney General George Neville and Lorrie Tingle. Defendants
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`also deposed Lead Plaintiff’s class certification expert, Chad W. Coffman of Global
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`Economics Group. Lead Plaintiff deposed Defendants’ class certification expert, Dr. Paul
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`Zurek of Cornerstone.
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`On July 13, 2018, Lead Plaintiff moved to certify a class consisting of all persons and
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`entities who purchased TreeHouse common stock on the open market between January 20,
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`2016, and November 2, 2016, inclusive, and who were damaged thereby. Dkt. No. 93. After
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`Lead Plaintiff filed its opening class certification brief, and Defendants filed their opposition
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`to the class certification motion on October 8, 2018 (Dkt. No. 106), the Parties agreed to
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`attempt to resolve the Litigation through mediation and stayed the Litigation. Dkt. No. 108.
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`On March 19, 2019, the Parties participated in a full-day mediation before Michelle Yoshida
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`of Phillips ADR, which proved unsuccessful.
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`After the mediation, the Parties completed class certification discovery and briefing.
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`On February 26, 2020, the Court issued an order granting the class certification motion and
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`certifying Lead Plaintiff as class representative. Dkt. No. 152. On March 11, 2020,
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`Defendants filed a Rule 23(f) interlocutory appeal petition with the Seventh Circuit Court of
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`Appeals with respect to the class certification order. On May 4, 2020, after full briefing
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`requested by the Seventh Circuit, the petition was denied.
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`4
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`Case: 1:16-cv-10632 Document #: 173 Filed: 07/14/21 Page 5 of 38 PageID #:3455
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`On March 10, 2020, the Court again stayed proceedings to allow the Parties to
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`recommence mediation proceedings before a different mediator. See Dkt. 153. The Parties
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`engaged the services of Gregory P. Lindstrom of Phillips ADR, a nationally recognized
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`mediator (the “Mediator”). Because of the restrictions on travel and in-person gatherings
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`imposed by COVID-19, the Parties conducted the mediation process entirely remotely. The
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`Parties engaged with the Mediator on Zoom and telephonic meetings, exchanged mediation
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`statements and reply mediation statements, and provided additional memoranda and other
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`documents as requested by the Mediator. On February 4, 2021, after an extended mediation
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`process that spanned nearly 11 months, the Parties mutually agreed in principle to accept the
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`Mediator’s written proposal to settle the Litigation, subject to various conditions, definitive
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`documentation and Court approval. The agreement included, among other things, the Settling
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`Parties’ agreement to settle and release all claims that were or could have been asserted in the
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`Litigation in return for a cash payment of $27,000,000, for the benefit of the Class, subject to various
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`conditions including the negotiation of the terms of a Stipulation of Settlement and approval by the
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`Court. This Stipulation (together with the Exhibits hereto) reflects the final and binding agreement
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`among the Settling Parties.
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`II.
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`DEFENDANTS’ DENIALS OF WRONGDOING, LIABILITY & THE MERITS
`OF PLAINTIFF’S CLAIMS
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`Throughout this Litigation, Defendants have denied, and continue to deny, any and all
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`allegations of fault, liability, wrongdoing, or damages whatsoever. Defendants expressly have
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`denied, and continue to deny, that they have committed any act or omission giving rise to any
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`liability under Sections 10(b) or 20(a) of the Securities Exchange Act of 1934 or Rule 10b-5 or
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`otherwise.
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`5
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`Case: 1:16-cv-10632 Document #: 173 Filed: 07/14/21 Page 6 of 38 PageID #:3456
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`As set forth below, neither the Settlement nor any of the terms of this Stipulation shall be
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`deemed or construed to be evidence of or constitute an admission, concession, or finding of any
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`fault, liability, wrongdoing, or damage whatsoever, which, to the contrary, are expressly denied, or
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`any infirmity in the defenses that Defendants have, or could have, asserted. Defendants believe
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`Plaintiff’s claims are without merit and that none of the evidence developed to date, or that would
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`be developed if the case was litigated, supports or would support Plaintiff’s claims.
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`Nonetheless, Defendants have concluded that further conduct of the Litigation would be
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`protracted and expensive, and that it is desirable that the Litigation be fully and finally settled in
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`the manner and upon the terms and conditions set forth in this Stipulation. Defendants also have
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`taken into account the uncertainty and risks inherent in any litigation, especially in complex cases
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`like the Litigation. Defendants have, therefore, determined that it is desirable and beneficial that
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`the Litigation be settled in the manner and upon the terms and conditions set forth in this
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`Stipulation.
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`III.
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` LEAD PLAINTIFF’S CLAIMS AND THE BENEFITS OF SETTLEMENT
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`Lead Plaintiff believes that the claims asserted in the Litigation have merit and that the
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`evidence developed to date supports its claims. However, Lead Plaintiff and its counsel
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`recognize and acknowledge the expense and length of continued proceedings necessary to
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`prosecute the Litigation against Defendants through trial and through appeals. Lead Plaintiff
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`and its counsel also have taken into account the uncertain outcome and the risk of any litigation,
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`especially in complex actions such as this Litigation, as well as the difficulties and delays inherent
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`in such litigation. Lead Plaintiff and its counsel also are mindful of the inherent problems of
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`proof under and possible defenses to the securities law violations asserted in the Litigation.
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`Lead Plaintiff believes that the Settlement set forth in this Stipulation confers substantial benefits
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`6
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`Case: 1:16-cv-10632 Document #: 173 Filed: 07/14/21 Page 7 of 38 PageID #:3457
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`upon the Class. Based on their evaluation, Lead Plaintiff and its counsel have determined that
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`the Settlement set forth in this Stipulation is in the best interests of Lead Plaintiff and the Class.
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`IV.
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`TERMS OF THE STIPULATION AND AGREEMENT OF SETTLEMENT
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`NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among
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`Lead Plaintiff, the Class, and Defendants, by and through their counsel or attorneys of record,
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`that, subject to the approval of the Court pursuant to Rule 23(e) of the Federal Rules of Civil
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`Procedure, the Litigation and
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`the Released Claims shall be finally, fully and forever
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`compromised, settled, and released, and the Litigation shall be dismissed with prejudice, as to all
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`Settling Parties, upon and subject to the terms and conditions of this Stipulation, as follows:
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`1.
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`Definitions
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`As used in this Stipulation the following terms have the meanings specified below:
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`1.1
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`“Authorized Claimant” means any Class Member whose claim for recovery has
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`been allowed pursuant to the terms of this Stipulation.
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`1.2
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`1.3
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`“Claims Administrator” means the firm of A.B. Data, Ltd..
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`“Class” means all Persons who purchased TreeHouse common stock on the open
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`market during the Class Period and who were damaged thereby. Excluded from the Class are:
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`Defendants (TreeHouse, Sam K. Reed, Dennis F. Riordan, and Christopher B.
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`Sliva), the officers and directors of TreeHouse, members of their Immediate Families and their
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`legal representatives, heirs, successors or assigns, and any entity in which Defendants have or
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`had a controlling interest. Also excluded from the Class is any Person who satisfies the criteria for
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`being a member of the Class but validly and timely requests exclusion in accordance with the
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`requirements set by the Court.
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`7
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`Case: 1:16-cv-10632 Document #: 173 Filed: 07/14/21 Page 8 of 38 PageID #:3458
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`1.4
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`“Class Member” means a Person who falls within the definition of the Class as set
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`forth in ¶1.3 above.
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`1.5
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`“Class Period” means the period from January 20, 2016 to November 2, 2016,
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`inclusive.
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`1.6
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`“Defendants” means TreeHouse, Sam K. Reed, Dennis F. Riordan, and Christopher
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`D. Sliva.
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`1.7
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`“Effective Date,” or the date upon which this Settlement becomes “effective,”
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`means the first date by which all of the events and conditions specified in ¶ 8 . 1 of the Stipulation
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`have been met and have occurred or have been waived.
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`1.8
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`1.9
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`“Escrow Agent” means Huntington National Bank or its agents.
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`“Final” means when the last of the following with respect to the Judgment
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`approving this Stipulation, substantially in the form of Exhibit B attached hereto, shall occur:
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`(i) the expiration of the time to file a motion to alter or amend the Judgment under Federal Rule of
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`Civil Procedure 59(e) without any such motion having been filed; (ii) the expiration of the time
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`for the filing or noticing of any appeal from the Judgment without any appeal having been taken;
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`and (iii) if a motion to alter or amend is filed or if an appeal is taken, immediately after the final
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`determination of that motion or appeal such that no further judicial review or appeal is permitted,
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`whether by reason of affirmance by a court of last resort, lapse of time, voluntary dismissal of the
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`appeal or otherwise in such a manner as to permit the consummation of the Settlement,
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`substantially in accordance with the terms and conditions of this Stipulation. For purposes of this
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`paragraph, an “appeal” shall include any request for leave to appeal, petition for a writ of
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`certiorari or other writ that may be filed in connection with approval or disapproval of this
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`Settlement. Any appeal or proceeding seeking subsequent judicial review pertaining solely to an
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`8
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`Case: 1:16-cv-10632 Document #: 173 Filed: 07/14/21 Page 9 of 38 PageID #:3459
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`order issued with respect to (i) attorneys’ fees, costs, or expenses, (ii) the Plan of Allocation (as
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`submitted or subsequently modified), or (iii) the procedures for determining Authorized
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`Claimants’ recognized claims, shall not in any way delay, affect, or preclude the time set forth
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`above for the Judgment to become Final, or otherwise preclude the Judgment from becoming
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`Final.
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`1.10
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`“Immediate Family” means any spouse, parent, step-parent, grandparent, child,
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`step-child, grandchild, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-
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`in-law, or sister-in-law. As used in this paragraph, “spouse” shall mean a husband, a wife, or
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`a partner in a state-recognized domestic relationship or civil union.
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`1.11
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`“Judgment” means the Order and Final Judgment to be rendered by the Court,
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`substantially in the form attached hereto as Exhibit B.
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`1.12
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`“Lead Counsel” means the law firm of Wolf Popper LLP.
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`1.13
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`“Lead Plaintiff” means the Public Employees’ Retirement System of Mississippi,
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`also referred to herein variously as “Plaintiff.”
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`1.14
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`“Litigation” means the action captioned Public Employees’ Retirement System of
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`Mississippi v. TreeHouse Foods, Inc., Case No. 16-CV-10632.
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`1.15
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`“Net Settlement Fund” means the Settlement Fund less: (i) any Court-awarded
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`attorneys’ fees, expenses, and interest thereon; (ii) Notice and Administration Expenses; (iii)
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`Taxes and Tax Expenses; and (iv) other Court-approved deductions.
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`1.16
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`“Person” means an individual, corporation, limited liability corporation,
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`professional corporation, partnership, limited partnership, limited liability partnership, limited
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`liability company, association, joint stock company, estate, legal representative, trust,
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`unincorporated association, government or any political subdivision or agency thereof, and
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`9
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`Case: 1:16-cv-10632 Document #: 173 Filed: 07/14/21 Page 10 of 38 PageID #:3460
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`other entity, business, legal or otherwise, and all of their respective spouses, heirs, beneficiaries,
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`executors, administrators, predecessors, successors, representatives, or assignees.
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`1.17
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`“Plan of Allocation” means a plan or formula of allocation of the Net Settlement
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`Fund whereby the Net Settlement Fund shall be distributed to Authorized Claimants. Any Plan
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`of Allocation is not part of this Stipulation and neither Defendants nor their Related Parties shall
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`have any responsibility or liability with respect thereto.
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`1.18
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`“Proof of Claim and Release” means the Proof of Claim and Release form for
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`submitting a claim, which, subject to approval of the Court, shall be substantially in the form
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`attached hereto as Exhibit C-2, which a Class Member must complete and submit should that Class
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`Member seek to share in a distribution of the Net Settlement Fund.
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`1.19
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`“Related Parties” means each Defendant’s respective former, present or future
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`parent companies, controlling shareholders, subsidiaries, divisions and affiliates and the
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`respective present and former employees, members, managers, partners, principals, officers,
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`directors, controlling shareholders, agents, attorneys, advisors, accountants, auditors, and insurers
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`and reinsurers of each of them; and the predecessors, successors, estates, Immediate Family
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`members, spouses, heirs, executors, trusts, trustees, administrators, agents, legal or personal
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`representatives, assigns, and assignees of each of them.
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`1.20
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`“Released Claims” means any and all claims, causes of action, demands, rights,
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`potential actions, liabilities, duties, damages, losses, diminutions in value, obligations, agreements,
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`suits, fees, attorneys’ fees, expert or consulting fees, debts, expenses, fines, costs, penalties and
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`sanctions of every nature and description whatsoever, including both known claims and Unknown
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`Claims, whether arising under federal, state, common, statutory, administrative, or foreign law, or
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`any other law, rule or regulation, at law or in equity, whether class or individual (but not
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`10
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`Case: 1:16-cv-10632 Document #: 173 Filed: 07/14/21 Page 11 of 38 PageID #:3461
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`derivative) in nature, that Plaintiff or any other Class Member asserted in the Litigation or could
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`have asserted, or could in the future assert, whether known or unknown, contingent or absolute,
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`liquidated or not liquidated, accrued or unaccrued, suspected or unsuspected, disclosed or
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`undisclosed, foreseen or unforeseen, in any forum that arise out of or are based upon or related in
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`any way to (a) the purchase of TreeHouse common stock during the Class Period, and (b) the
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`subject matter, allegations, transactions, acts, facts, matters, occurrences, representations,
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`statements, or omissions involved, set forth, or referred to in the Litigation. “Released Claims”
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`includes “Unknown Claims” as defined in ¶ 1.29 hereof.
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`1.21
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`“Released Defendants’ Claims” means any and all claims and causes of action of
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`every nature and description whatsoever, including both known claims and Unknown Claims,
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`whether arising under federal, state, local, common, statutory, administrative, or foreign law, or
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`any other law, rule or regulation, at law or in equity, that arise out of or relate in any way to the
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`institution, prosecution, or settlement of the claims in the Litigation, except for claims relating to
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`the enforcement of the Settlement.
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`1.22
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`1.23
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`“Released Persons” means each and all of the Defendants and their Related Parties.
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`“Settlement” means the resolution of the Litigation in accordance with the terms
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`and provisions of this Stipulation.
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`1.24
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`“Settlement Amount” means Twenty-Seven Million Dollars ($27,000,000) in cash
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`to be paid by check or wire transfer to the Escrow Agent pursuant to ¶2.1 of this Stipulation.
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`1.25
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`“Settlement Fund” means the Settlement Amount plus all interest and accretions
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`thereto.
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`1.26
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`“Settlement Hearing” means the hearing set by the Court under Rule 23(e)(2) of
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`the Federal Rules of Civil Procedure to consider final approval of the Settlement.
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`11
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`1.27
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`1.28
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`“Settling Parties” means, collectively, Defendants, Plaintiff, and the Class.
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`“Tax” or “Taxes” mean any and all taxes, fees, levies, duties, tariffs, imposts, and
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`other charges of any kind (together with any and all interest, penalties, additions to tax and
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`additional amounts imposed with respect thereto) imposed by any governmental authority,
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`including, but not limited to, any local, state, and federal taxes.
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`1.29
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`“Unknown Claims” means (a) any and all Released Claims which Plaintiff, Lead
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`Counsel, or any Class Member does not know or suspect to exist in their favor at the time of the
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`release of the Released Persons, which, if known by him, her, or it, might have affected their
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`settlement with and release of the Released Persons, or might have affected their decision(s) with
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`respect to the Settlement, including, but not limited to, whether or not to object to this Settlement
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`or seek exclusion from the Class; and (b) any and all Released Defendants’ Claims that the
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`Released Persons do not know or suspect to exist in their favor at the time of the release of the
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`Plaintiff, Lead Counsel, or any Class Members, which, if known by him, her, or it, might have
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`affected their settlement and release of Plaintiff, Lead Counsel, or Class Members. With respect
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`to any and all Released Claims and Released Defendants’ Claims, the Settling Parties stipulate
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`and agree that, upon the Effective Date, the Settling Parties shall expressly waive and each of the
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`Settling Parties shall be deemed to have, and by operation of the Judgment shall have, expressly
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`waived the provisions, rights, and benefits of California Civil Code §1542, which provides:
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`A general release does not extend to claims that the creditor or releasing party does
`not know or suspect to exist in his or her favor at the time of executing the release
`and that, if known by him or her, would have materially affected his or her settlement
`with the debtor or released party.
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`The Settling Parties shall expressly waive and, more specifically, each of the Class Members shall
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`be deemed to have, and by operation of the Judgment shall have, expressly waived any and all
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`provisions, rights, and benefits conferred by any law of any state or territory of the United States,
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`12
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`or principle of common law, which is similar, comparable, or equivalent to California Civil
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`Code §1542. The Settling Parties acknowledge that they may hereafter discover facts in addition
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`to, or different from, those that they or their counsel now knows or believes to be true with
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`respect to the subject matter of the Released Claims or Released Defendants’ Claims, but the
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`Settling Parties expressly settle and release, and, specifically, each Class Member, upon the
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`Effective Date, shall be deemed to have, and by operation of the Judgment shall have, fully,
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`finally, and forever settled and released any and all Released Claims and Released Defendants’
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`Claims, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or
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`not concealed or hidden, which now exist, or heretofore have existed, upon any theory of law or
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`equity now existing or coming into existence in the future, including, but not limited to, conduct
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`which is negligent, intentional, with or without malice, or a breach of any duty, law or rule,
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`without regard to the subsequent discovery or existence of such different or additional facts. The
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`Settling Parties acknowledge, and the Class Members shall be deemed by operation of the
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`Judgment to have acknowledged, that the foregoing waiver was separately bargained for and is
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`a key element of the Settlement of which this release is a part.
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`2.
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`The Settlement
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`a.
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`The Settlement Amount
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`2.1
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`In consideration of the terms of this Stipulation, TreeHouse shall cause the
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`Settlement Amount to be paid into the Escrow Agent by check or wire transfer in accordance
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`with instructions to be provided by the Escrow Agent, on or before the later of: (i) twenty-one
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`(21) calendar days after the entry of the Preliminary Approval Order, as defined in ¶3.1
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`herein, or (ii) t e n ( 1 0 ) b u s i n e s s d a y s a f t e r the provision to Defendants of all information
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`necessary to effectuate a transfer of funds, including, but not limited to, the bank name and ABA
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`13
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`Case: 1:16-cv-10632 Document #: 173 Filed: 07/14/21 Page 14 of 38 PageID #:3464
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`routing number, account name and number, and a signed W-9 reflecting the taxpayer
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`identification number for the Settlement Fund. The Escrow Agent shall deposit the Settlement
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`Amount plus any accrued interest in a segregated escrow account (the “Escrow Account”)
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`maintained by the Escrow Agent invested as set forth in ¶2.4, below.
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`2.2
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`If the entire Settlement Amount is not timely paid to the Escrow Agent, Lead
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`Counsel in its discretion may exercise all rights under this Stipulation or terminate the
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`Settlement but only if: (i) Lead Counsel has notified Defendants’ counsel in writing of Lead
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`Counsel’s intention to terminate the Settlement, and the entire Settlement Amount is not
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`transferred to the Escrow Account within five (5) business days after Lead Counsel has provided
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`such written notice.
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`2.3
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`Other than the obligation to pay or cause to be paid the Settlement Amount into the
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`Escrow Account set forth in ¶2.1 herein, Defendants shall have no obligation to make any other
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`payment, into the Settlement Fund or otherwise, pursuant to this Stipulation, and shall have no
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`responsibility, obligation, or liability with respect to the Escrow Account or the monies maintained
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`in the Escrow Account or the administration of the Settlement, including, without limitation, any
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`responsibility or liability related to any fees, Taxes, investment decisions, maintenance,
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`supervision or distribution of any portion of the Settlement Amount.
`
`
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`b.
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`The Escrow Agent
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`2.4
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`The Escrow Agent shall invest the Settlement Amount deposited pursuant to ¶2.1
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`hereof in United States Agency or Treasury Securities or other instruments backed by the Full
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`Faith & Credit of the United States Government or an Agency thereof, or fully insured by the
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`United States Government or an Agency thereof and shall reinvest the proceeds of these
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`instruments as they mature in similar instruments at their then-current market rates. All risks
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`related to the investment of the Settlement Fund in accordance with the investment guidelines set
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`14
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`forth in this paragraph shall be borne by the Settlement Fund, and the Released Persons shall have
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`no responsibility for, interest in, or liability whatsoever with respect to investment decisions or the
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`actions of the Escrow Agent, or any transactions executed by the Escrow Agent, except their
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`reversionary interest in the Settlement Fund to the extent the Effective Date does not occur pursuant
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`to ¶2.11, below.
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`2.5
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`The Escrow Agent shall not disburse the Settlement Fund except as provided in this
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`Stipulation, by an order of the Court, or with the prior written agreement of Defendants’ counsel.
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`2.6
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`Subject to further order(s) and/or directions as may be made by the Court, or as
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`provided in this Stipulation, the Escrow Agent is authorized to execute such transactions as are
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`consistent with the terms of this Stipulation. The Released Persons shall have no responsibility
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`for, interest in, or liability whatsoever with respect to the actions of the Escrow Agent, or any
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`transaction executed by the Escrow Agent, except their reversionary interest in the Settlement
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`Funds to the extent the Effective Date does not occur pursuant to ¶2.11, below.
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`2.7
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`All funds held by the Escrow Agent shall be deemed and considered to be in
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`custodia legis of the Court, and shall remain subject to the jurisdiction of the Court, until such time
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`as such funds shall be distributed pursuant to this Stipulation and/or further order(s) of the Court.
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`2.8
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`After the Court issues the Preliminary Approval Order, and notwithstanding the
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`fact that the Effective Date of the Settlement has not yet occurred, Lead Counsel may pay
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`from the Settlement Fund, without further approval and/or order of the Court, reasonable costs
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`and expenses actually incurred in connection with providing notice of the Settlement to the
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`Class by mail, publication, and other means, locating Class Members, administering the
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`Settlement, and paying escrow fees and costs, if any, and, after the Effective Date, assisting with
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`the submission of claims, processing Proof of Claim and Release forms (“Notice and
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`
`
`15
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`Administration Expenses”). The Released Persons shall have no responsibility for or liability
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`whatsoever with respect to the Notice and Administration Expenses, nor shall they have any
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`responsibility or liability whatsoever for any claims with respect thereto.
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`
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`2.9
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`c.
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`(a)
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`Taxes
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`The Settling Parties and the Escrow Agent agree to treat the Settlement
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`Fund as being at all times a “qualified settlement fund” within the meaning of Treas. Reg.
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`§1.4688-1. The Settling Parties and the Escrow Agent further agree that the Settlement Fund
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`shall be established pursuant to the Court’s subject matter jurisdiction within the meaning of
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`Treas. Reg. §1.4688-1(c)(1). In addition, the Escrow Agent shall timely make such elections as
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`necessary or advisable to carry out the provisions of this ¶2.8, including the “relation-back
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`election” (as defined in Treas. Reg. §1.4688-1) back to the earliest permitted date. Such
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`elections shall be made in compliance with the procedures and requirements contained in such
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`regulations. It shall be the responsibility of the Escrow Agent to timely and properly prepare
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`and deliver the necessary documentation for signature by all necessary parties, and thereafter to
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`cause the appropriate filing to occur.
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`(b)
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`For the purpose of §1.468B of the Internal Revenue Code of 1986, as
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`amended, and the regulations promulgated thereunder, the “administrator” (as defined in Treas.
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`Reg. §1.468B-2(k)(3)) shall be the Escrow Agent. The Escrow Agent shall timely and properly
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`file all informational and other federal, state, or local tax returns necessary or advisable with
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`respect to the earnings on the Settlement Fund (including, without limitation, the returns described
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`in Treas. Reg. §1.468B-2(k)). Such returns (as well as the elections described in ¶ 2 . 9 (a) hereof)
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`shall be consistent with this ¶ 2 . 9 and in all events shall reflect that all Taxes (including any
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`estimated Taxes, int