Saxena White prosecuted a derivative litigation on behalf of nominal defendant Abaxis, Inc. and against the Company’s senior officers and directors for breaches of fiduciary duty and violations of the federal securities laws. Saxena White commenced the litigation by filing a stockholder class and derivative complaint on October 1, 2012. The complaint alleged that certain of the Defendants wrongfully caused and allowed the Company to issue excessive and improper shares of Abaxis common stock in settlement of restricted stock units granted to Company employees, including certain of the Company’s senior executives, in violation of the Abaxis 2005 Equity Incentive Plan and at the expense of the Company and its shareholders.
Also on October 1, 2012, Saxena White filed a motion for a preliminary injunction, seeking to enjoin the annual meeting of shareholders that was scheduled for October 24, 2012. The basis for the request sought in the motion was that Defendants had filed with the Securities and Exchange Commission a false and misleading Form DEF 14A proxy statement in connection with the Annual Meeting in which Defendants failed to disclose material information regarding a proposed shareholder vote that was set to take place at the Annual Meeting. On October 23, 2012, the Court granted, in part, Plaintiff’s motion for preliminary injunction, enjoining the shareholder vote on a proposed amendment to the 2005 Plan to eliminate the Restricted Stock Limit and ordering the Company to file and issue a supplement to the 2012 Proxy to make additional disclosures required by the Court.
Thereafter, the parties fully briefed Defendants’ motions to dismiss and argued said motion before Judge Gonzalez Rogers of the United States District Court for the Northern District of California. After the hearing, Plaintiff, Defendants and Abaxis agreed that it would serve the interest of all parties and judicial economy to defer ruling on Defendants’ motions pending the parties’ discussions regarding a potential resolution of the action. Following the exchange of numerous proposals and counter proposals, and related negotiations, the parties reached an agreement in principle to settle the action. As part of the settlement, the Company and its Board of Directors agreed to adopt extensive corporate governance reforms addressing the issues raised in the litigation. The parties submitted the settlement to the Court, and on April 15, 2014, the Court granted preliminary approval of the settlement. A final approval hearing on was held on June 17, 2014, in which the Court granted final approval of the settlement as fair, adequate and reasonable.