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Herbert CHEN and Derek Sheeler, individually and on..., 2016 WL 4162918...

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2016 WL 4162918 (Del.Ch.) (Trial Motion, Memorandum and Affidavit)Chancery Court of Delaware.

Herbert CHEN and Derek Sheeler, individually and on behalf of all others similarly situated, Plaintiffs,v.

Robert HOWARD-ANDERSON, Steven Krausz, Robert Abbott, Robert Bylin, Thomas Pardun,Brian Strom, Albert Moyer, Jeanne Seeley and Wilson Sonsini Goodrich & Rosati, PC, Defendants.

No. 5878-VCL.July 29, 2016.

Plaintiffs and the Class' Opening Brief in Support of Settlement, Class Counsel's Application for Attorneys'Fees and Expenses, and Derek Sheeler's Application for an Incentive Fee and Reimbursement of Expenses

Smith, Katzenstein & Jenkins LLP, Robert J. Katzenstein (No. 378), David A. Jenkins (No. 932), Kathleen M. Miller(No. 2898), 1000 West Street, Suite 1501, Wilmington, DE 19801, (302) 652-8400, Counsel for Plaintiffs and the Class.

Of Counsel: Levi & Korsinsky, LLP, Joseph Levi, Michael H. Rosner, Nicholas I. Porritt, 30 Broad Street, 24th Floor,New York, NY 10004, (212) 363-7500.

TABLE OF CONTENTSI. Nature and stage of the Proceedings ............................................................................................... 1II. The Litigation ................................................................................................................................ 4A. The Expedited Phase ...................................................................................................................... 4B. The Class Is Certified ..................................................................................................................... 6C. Plaintiffs file a Second Amended Complaint .................................................................................. 8D. Plaintiffs defeat the Occam Defendants' motion for summary judgment on the sale process claimsagainst Howard-Anderson and Seeley and on the disclosure claims against all Occam Defendants .....

8

1. The Sale Process Claims ................................................................................................................. 92. The Disclosure Claims .................................................................................................................... 11a. The 2012 Projections ....................................................................................................................... 11b. Inaccuracy of Disclosure of the 2011 Projections ........................................................................... 12c. False Statement in the Jefferies Fairness Opinion ........................................................................... 12d. Misleading description of the sales process ..................................................................................... 13e. The Court rejected the Board's argument that the exculpation provision bars recovery on thedisclosure claims ..................................................................................................................................

14

E. Plaintiffs file a Motion to Compel against the Occam Defendants and Jefferies and for Sanctionsagainst the Occam Defendants ............................................................................................................

16

F. Wilson Sonsini is added as a defendant ......................................................................................... 19III. Argument ...................................................................................................................................... 23A. The Proposed Settlement is Fair and Reasonable and should be Approved ................................... 231. The Benefit Obtained ...................................................................................................................... 252. Nature of the Claim/Defenses and the Decision to Settle ............................................................... 25a. Claims Against the Occam Defendants ........................................................................................... 25b. The Sales Process Claims ................................................................................................................ 25c. The Disclosure Claims .................................................................................................................... 29d. Damages ......................................................................................................................................... 34e. Claims against Wilson Sonsini ........................................................................................................ 37f. The aiding and abetting claim ......................................................................................................... 37g. The fee shifting claim ...................................................................................................................... 39h. Scope of the Releases ...................................................................................................................... 42B. The Application for Attorneys' Fees and Expenses is Fair and Reasonable and should be Granted 441. Overview of the Application ........................................................................................................... 44



2. Standard of Review ......................................................................................................................... 45a. The Benefits Achieved ..................................................................................................................... 48b. The Requested Award is within the Range of Fees this Court has Awarded in Cases which endedwith Trial ............................................................................................................................................

48

c. The Efforts of Counsel .................................................................................................................... 50d. The Complexities of the Case ......................................................................................................... 52e. The Contingent Nature of the Fee .................................................................................................. 53f. The Standing and Ability of Counsel .............................................................................................. 54C. The Application of Mr. Sheeler is Fair and Reasonable and Should be Approved ......................... 54IV. Conclusion .................................................................................................................................... 57

TABLE OF AUTHORITIESCasesAmericas Mining Corp. v. Theriault, Del. Supr., 51 A.3d 1213(2012) ...........................................................................................

45, 47, 48

Arnold v. Soc'y for Sav. Bancorp, Del. Supr., 650 A.2d 1270(1994) ...........................................................................................

30

Brinckerhoff v. Texas E. Prods. Pipeline Co., Del. Ch., 986 A.2d370 (2010) ....................................................................................

24, 48, 50, 53

C&J Energy Servs., Inc. v. City of Miami Gen. Emps., Del. Supr.,107 A.3d 1049 (2014) ...................................................................

27

Chen v. Howard-Anderson, Del. Ch., 87 A.3d 648 (2014) .............. passimFlax v. Pet360, Inc., C.A. No. 10123-VCL (Del. Ch., June 30,2016) (TRANSCRIPT) ................................................................

50

Forsythe v. ESC Fund Mgmt. Co., 2012 WL 1655538 (Del. Ch.May 9, 2012) ................................................................................

passim

Franklin Balance Sheet Inv. Fund v. Crowley, 2007 WL 2495018(Del. Ch. Aug. 30, 2007) ..............................................................

46, 53

Gatz v. Ponsoldt, 2009 WL 1743760 (Del. Ch. June 12, 2009) ....... 49Goodrich v. E.F. Hutton Grp., Inc., Del. Supr., 681 A.2d 1039(1996) ...........................................................................................

45

In re Chaparral Res., Inc. S'holders Litig., C.A. No. 2633-VCL, at17 (Del. Ch. Mar. 13, 2008) (TRANSCRIPT) .............................

49

In re Dollar Thrifty S'holder Litig., Del. Ch., 14 A.3d 573 (2010) .. 26, 28In re Emerson Radio S'holder Derivative Litig., 2011 WL 1135006(Del. Ch. Mar. 28, 2011) ..............................................................

passim

In re Fuqua Indus., Inc. S'holder Litig., 2006 WL 2640967 (Del.Ch. Sept. 7, 2006) ........................................................................

54

In re Jefferies Group, Inc. S'holders Litig., 2015 WL 3540662 (Del.Ch. June 5, 2015) .........................................................................

52

In re Orchard Enterprises Stockholder Litig., 2014 WL 4181912(Del. Ch. Aug. 22, 2014) ..............................................................

25

In re Rural Metro Corp. Stockholders Litig., Del. Ch., 88 A.3d 54(2014) ...........................................................................................

37, 39

In re TIBCO Software Inc. Stockholders Litig., 2015 WL 6155894(Del. Ch. Oct. 20, 2015) ...............................................................

37

In re Trados Inc. S'holder Litig., Del. Ch., 73 A.3d 17 (2013) ........ 26In re Tyson Foods, Inc., Del. Ch., 919 A.2d 563 (2007) ................. 31In re Walt Disney Co. Derivative Litig., Del. Supr., 906 A.2d 27(2006) ...........................................................................................

31

Johnson v. Shapiro, 2002 WL 31438477 (Del. Ch. Oct. 18, 2002) .. 30, 31Johnston v. Arbitrium (Cayman Islands) Handels AG, Del. Supr.,720 A.2d 542 (1998) .....................................................................

40

Kaung v. Cole Nat'l Corp., 2004 WL1921249 (Del. Ch. Aug. 27,2004), aff'd in part, rev'd in part on other grounds, Del. Supr., 884A.2d 500 (2005) ............................................................................

40

Malone v. Brincat, Del. Supr., 722 A.2d 5 (1988) ......................... 29



Marie Raymond Revocable Trust v. MAT Five LLC, Del. Ch., 980A.2d 388 (2008) ............................................................................

23

Matthew v. Laudamiel, 2015 WL 5723985 (Del. Ch. Sept. 28,2015) .............................................................................................

38

Nottingham Partners v. Dana, Del. Supr., 564 A.2d 1089 (1989) ... 23Oliver v. Boston Univ., 2009 WL 1515607 (Del. Ch. May 29, 2009)......................................................................................................

49

Orman v. Cullman, Del. Ch., 794 A.2d 5 (2002) ........................... 28Paramount Commc'ns Inc. v. QVC Network Inc., Del. Supr., 637A.2d 34 (1994) .............................................................................

26

Polk v. Good, Del. Supr., 507 A.2d 531 (1986) ............................. 24Raider v. Sunderland, 2006 WL 75310 (Del. Ch. Jan. 5, 2006) ....... 55RBC Capital Mkts., LLC v. Jervis, Del. Supr., 129 A.3d 816(2015) ...........................................................................................

40

Reis v. Hazelett Strip-Casting Corp., 2011 WL 644875 (Del. Ch.Feb. 22, 2011) (Trial Order) .........................................................

49

Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., Del. Supr.,506 A.2d 173 (1986) .....................................................................

25

Rome v. Archer, Del. Supr., 197 A.2d 49 (1964) ........................... 23Ryan v. Gifford, Del. Ch., 918 A.2d 341 (2007) ............................ 31Seinfeld v. Coker, Del. Ch., 847 A.2d 330 (2000) .......................... 48, 53Shell Petroleum, Inc. v. Smith, Del. Supr., 606 A.2d 112 (1992) .... 30Sugarland Indus., Inc. v. Thomas, Del. Supr., 420 A.2d 142 (1980) 47Zirn v. VLI Corp., Del. Supr., 681 A.2d 1050 (1996) .................... 30Other AuthoritiesCourt of Chancery Rule 23 .......................................................... 6, 7Donald J. Wolfe, Jr. and Michael A. Pittenger, Corporate andCommercial Practice in the Delaware Court of Chancery § 9.05(2016) ...........................................................................................

45, 46

R. Franklin Balotti and Jesse A. Finkelstein, The Delaware Lawof Corporations and Business Organizations, § 4.13 (2016 Supp.) ...

3 0

I. Nature and stage of the Proceedings

This class action, filed in October 2010, arises out of the merger of Occam Networks, Inc. (“Occam” or the “Company”)and Calix, Inc. (“Calix”), announced on September 16, 2010, pursuant to which Calix acquired each outstanding shareof Occam stock for $3.8337 in cash and 0.2925 shares of Calix (the “Merger”). Plaintiffs were successful in having theMerger enjoined pending supplemental and corrective disclosures. After the disclosures were made, the Merger wasapproved and it closed on February 22, 2011.

In the post-closing phase of the case, plaintiffs pressed their sales process and disclosure claims. Plaintiffs asserted thatthe Occam Defendants (defined below) breached their fiduciary duties in conducting a flawed sales process that includedfavoring Calix over a potentially higher bidder, Adtran, Inc. (“Adtran”), conducting an unreasonable market check, andplacing an unreasonable 24-hour ultimatum on Adtran.

Plaintiffs also asserted that the Occam Defendants breached their fiduciary duties by failing to make balanced, truthful,and materially complete disclosures in connection with the Merger, including falsely painting Calix as a bidder that firstcame onto the scene late in the sales process, failing to disclose Occam's 2012 projections, and presenting the stockholderswith a false fairness opinion issued by Jefferies & Co. Inc. (“Jefferies”) that represented that the Company had notprepared projections beyond 2011.

From the outset, the case was plagued with discovery problems. Occam, Wilson Sonsini Goodrich & Rosati, P.C.(“Wilson Sonsini”) - the Occam Defendants' counsel until late 2014, - and Jefferies all had multiple copies of the Occam2012 projections in their possession. In the expedited phase, Wilson Sonsini, on behalf of the Occam Defendants,



produced none of them. Jefferies produced one page that contained Occam 2012 projections, after the Court approvedthe corrective and supplemental disclosures. In the expedited phase, the Occam and Jefferies' witnesses all denied theexistence of 2012 projections.

In September 2014, in response to plaintiffs' motion to compel, the Court ordered additional discovery from Occam andJefferies, and required a further detailed affidavit from Wilson Sonsini explaining its discovery collection and reviewprocess. Through that investigation, the full extent of the discovery problems was revealed. As described below, not onlydid Wilson Sonsini not produce the 2012 projections in the expedited phase, it did not advise the Court, prior to theclosing of the Merger, that it had strong evidence that its previous statement that these projections did not exist was nottrue. Many additional responsive documents were never produced by Wilson Sonsini and were only produced after thatfirm was replaced by Latham & Watkins as counsel for the individual defendants.

As a result of the additional discovery, plaintiffs filed an amended complaint in July 2015, asserting an aiding and abettingclaim against Wilson Sonsini.

Based on the extensive discovery problems and defendants' changing their position throughout the litigation, especiallywith respect to the existence of the 2012 projections, plaintiffs sought class-wide fee shifting against the defendants.

After a failed mediation (over two sessions) in 2015, the parties completed discovery and prepared for trial. Post-closing,defendants produced over 1 million pages of documents (including many in 2016), and plaintiffs took 45 depositions anddefended 4 (including experts). The parties filed substantial pre-trial briefs and fully briefed the Occam Defendants' twomotions in limine (which were denied). A two week trial was scheduled to begin on April 11, 2016.

On March 30, plaintiffs and Wilson Sonsini participated in a mediation with former Chief Justice E. Norman Veasey,which resulted in a settlement of the claims against Wilson Sonsini.

Plaintiffs proceeded to trial against the Occam Defendants. After three days of trial, the parties participated in amediation on April 14, again with Chief Justice Veasey, which resulted in a settlement of the claims against the OccamDefendants.

The settlements created a settlement fund of $35 million, which represents approximately $2.31 - $2.67 per share 1 beforeany award of fees and expenses.

On June 2, 2016, the parties filed a Stipulation of Settlement (Trans. 59085568). On June 6, 2016, the Court entered ascheduling order (Trans. 59098176) setting a hearing for August 26, 2016 to consider approving: (a) the settlement, (2)class counsel's application for an award of attorneys' fees and expenses, and (3) class representatives' applications for anincentive award and reimbursement of expenses. The Court also approved a form of notice to advise the class of their

right to object to the proposed settlement, the fee application, and representative plaintiffs' applications. 2

II. The Litigation

A. The Expedited Phase

Plaintiffs Michael Steinhardt, Herbert Chen, Derek Sheeler, Steinhardt Overseas Management, L.P. and Ilex Partners,L.L.C. filed this action on October 6, 2010, alleging that Occam's board of directors - Robert Howard-Anderson, StevenKrausz, Robert Abbott, Robert Bylin, Thomas Pardun, Brian Strom and Albert Moyer (the “Board”) - breached theirfiduciary duties to get the highest price available for Occam by, among other things, pushing away Adtran, anotherserious suitor (Trans. 33668126). On November 24, 2010, plaintiffs filed an Amended Complaint (Trans. 34524753),which added a claim for disclosure violations in Occam's Preliminary Proxy filed with the SEC on November 2, 2010.



On December 15, 2010, Occam filed its Schedule 14A Definitive Proxy with the SEC (the “Proxy”), which did not curethe disclosure deficiencies identified in the Amended Complaint.

In pursuing their request for an injunction, plaintiffs' counsel deposed defendants Robert Howard-Anderson (President,CEO, and a director of Occam), Steven Krausz (Chairman of the Board of Occam), and Jeffrey Snyder, who wasdesignated as Jefferies' 30(b)(6) witness.

In the expedited phase, Krausz testified repeatedly that projections for 2012 did not exist, as did Howard-Anderson.Chen v. Howard-Anderson, Del. Ch., 87 A.3d 648, 693 (2014) (“SJOp.”). Jefferies' 30(b)(6) witness also testified that ithad not been given 2012 projections. Id. In addition, in their answering brief in opposition to the motion for preliminaryinjunction, filed on January 18, 2011, the Occam Defendants stated: “But plaintiffs do not and cannot dispute thatOccam 10285:10337126.DOCX.9 5 has not prepared projections for 2012 because there were too many uncertainties.”Id. Plaintiffs later learned these statements were not accurate.

At the hearing on January 24, 2011, this Court enjoined the stockholder vote on the Merger until after Occam filed anamended Proxy making corrective and supplemental disclosures. The Court also ordered Jefferies to produce a seniorbanker for deposition, due to Snyder's lack of knowledge about the transaction, and ordered that it be defended bysomeone other than counsel who defended the first deposition, due to that counsel's obstructionist behavior. On February22, 2011, after the second Jefferies 30(b)(6) deposition and the additional disclosures, Occam stockholders approved theMerger by a slim margin.

On September 22, 2011, the Court awarded counsel fees and expenses of $1 million for the benefit Class Counsel obtainedby the corrective and supplemental disclosures (Trans. 39979266).

B. The Class Is Certified

In the post-closing phase, plaintiffs Chen and Sheeler (“Plaintiffs”) filed a motion for class certification under Court of

Chancery Rule 23(b)(1) and 23(b)(2). 3 Defendants opposed certification under Rule 23(b)(2) and argued that Chen wasnot a proper representative plaintiff.

On January 6, 2012, the Court entered an Order certifying the class under Rule 23(b)(1) and (b)(2), consisting of allrecord and beneficial owners of Occam common stock whose shares were extinguished by the Merger, with the exceptionof Michael Steinhardt, Steinhardt Overseas Management, L.P., and Ilex Partners, L.L.C., plus defendants and theiraffiliates (the “Class”) (Trans. 41724942). Smith, Katzenstein & Jenkins LLP (“SKJ”) and Levi & Korsinsky, LLP(“L&K”) were appointed Class Counsel. Overruling defendants' challenge to Chen's qualifications as a representativeplaintiff, the Court appointed Chen and Sheeler class representatives.

On February 4, 2012, the Court entered an Order which, among other things, granted Defendants' Motion for Sanctionswith respect to Steinhardt and his affiliates and required them to disgorge $534,071.45, to be held in an escrow accountestablished by Class Counsel for the benefit of the Class (the “Escrowed Funds”). L&K has maintained the Escrowed

Funds 4 during this litigation for the benefit of the Class, and those funds will be distributed to the Class along with thenet proceeds from this settlement (assuming it is approved by the Court).

C. Plaintiffs file a Second Amended Complaint

After the Merger closed, Plaintiffs continued to prosecute their claims and continued to receive and review documents

produced by defendants and third-parties. 5 By mid-2013, Plaintiffs had taken an additional 20 depositions. As a resultof this discovery, Plaintiffs filed a Second Amended Complaint to: assert additional facts to support their claim that the



Board breached their fiduciary duties in selling Occam to Calix; add a new claim concerning disclosure violations; andadd Occam's chief financial officer Jeanne Seeley, who was “running the deal,” as a defendant (Seeley with the Board,the “Occam Defendants”).

D. Plaintiffs defeat the Occam Defendants' motion for summary judgment on the sale process claimsagainst Howard-Anderson and Seeley and on the disclosure claims against all Occam Defendants

When the Occam Defendants moved for summary judgment in July 2013, Plaintiffs had developed evidence that theybreached their duties by (i) significantly tilting the field in favor of Calix at the expense of getting the best price forthe Company; (ii) failing to share management's internal projections with bidders; (iii) giving Adtran a 24-hour bidultimatum; and (iv) relying on an unnecessarily rushed and abbreviated 24-hour market check ordered by the Board.

With respect to the disclosure claim, Plaintiffs had developed evidence that the Proxy was false and misleading by: (i)stating that Occam had not prepared, and had not shown to Jefferies, 2012 projections; (ii) misleadingly and incompletelydescribing the early contacts with Calix; (iii) mischaracterizing Adtran's interest; and (iv) misrepresenting that the Proxyprojections did not contemplate the expectation of the Merger, and failing to disclose that they reflected an anticipatedloss of business resulting from the Merger. The parties submitted extensive briefing (including post-hearing supplementalsubmissions) which the Court described as “effectively post-trial briefs replete with extensive evidentiary citations.”SJOp. at 653. The Court issued its Memorandum Opinion on April 8, 2014, granting the motion in part and denyingit in part.

1. The Sale Process Claims

Applying an enhanced scrutiny standard of review to the sale process claims, the Court found that “the record support[ed]an inference that certain decisions fell outside the range of reasonableness.” SJOp. at 652. The Court noted: “Whenevaluated as a whole, the record supports a reasonable inference that the Board favored Calix at the expense of generatinggreater value through a competitive bidding process or by remaining a stand-alone company and pursuing acquisitions.”Id. at 674. This inference was supported by Occam's interaction with Calix versus its interactions with Adtran, whichwas contemplating making (and did make) an all cash offer at an 11% premium over Calix's bid. Id.

The Court also ruled that the 24-hour July 4 th market-check fell outside the range of reasonableness. Despite the “marketcheck” e-mails being sent on July 1, several potential bidders expressed interest but stated that the imposed deadline wastoo short. Occam never followed up with any of these potential bidders.

Similarly, the Court ruled that the record supported an inference that the 24-hour ultimatum placed on Adtran to makeanother bid was unreasonable. SJOp. at 675.

Because Plaintiffs could not present sufficient evidence to create a dispute of material fact as to the outside directors'good faith in their pursuit of achieving the best value reasonably available, the Court concluded that those directorswere protected from liability because Occam's certificate of incorporation included a Section 102(b)(7) clause. SJOp. at686. Therefore, the Court granted summary judgment on the sale process claims against the outside Occam directors(Krausz, Abbott, Bylin, Pardun, Strom, and Moyer).

Howard-Anderson was not protected by Section 102(b)(7) because he was found to have been interested in the Merger.SJOp. at 686. In addition, the Court ruled that Plaintiffs presented sufficient evidence to support claims against Howard-Anderson and Seeley as officers, who are not protected by Section 102(b)(7). Therefore, summary judgment was deniedwith respect to them on the sale process claims.



2. The Disclosure Claims

a. The 2012 Projections

Between April and August 2010, at the direction of Seeley, Occam developed a series of projections for 2010, 2011, and2012. The projections were reviewed by at least Howard-Anderson and there was evidence that they were shared with theBoard. Only the 2010 and 2011 projections, however, were disclosed in the Proxy. The Occam Defendants argued thatthey were entitled to summary judgment because the 2012 projections were unreliable and therefore no disclosure wasrequired (this was a material change from their prior position, in the expedited phase, that no such projections existed).The Occam Defendants also asserted that the 2012 projections were sent to Jefferies by mistake. SJOp. at 690.

Plaintiffs presented evidence that suggested that the projections “were carefully created and vetted by management andthat the [projections] were adjusted for ‘reasonableness.’ ” SJOp. at 688. In addition, Jefferies relied on the 2010 and 2011projections that “were created side-by-side with the 2012 projections and that Jefferies was, in fact, provided projectionsfor 2012, but later told to disregard them.” Id.

Denying summary judgment, the Court ruled that “[v]iewing the facts in favor of the plaintiffs, the court cannot determineas a matter of law that the 2012 projections were unreliable and, thus, immaterial.” Id. at 689.

b. Inaccuracy of Disclosure of the 2011 Projections

The Proxy stated that the “ ‘[t]he internal financial projections represent Occam's evaluation of its future financialperformance on a stand-alone basis, and without reference to whether the proposed merger transaction will beconsummated.’ ” Id. Plaintiffs presented evidence that suggested that the projections in the Proxy reflected the loss of akey Occam account that would likely occur if the Merger was consummated. Id. The Court ruled that it could not findas a matter of law that the disclosure of the 2011 projections was accurate and denied summary judgment on this claim.

c. False Statement in the Jefferies Fairness Opinion

The Jefferies fairness opinion, which was incorporated into the Proxy, stated that Jefferies reviewed “ ‘certain informationfurnished to [it] by the Company's management, including financial forecasts for calendar years 2010 and 2011 only,having been advised by management of the Company that it did not prepare any financial forecasts beyond such period....”SJOp. at 690.

In the summary judgment opinion, the Court wrote:

There is no explanation in the record for the italicized language, which is contrary to the evidence.The April Projections, June Projections, and August Projections all included financial forecasts for2012. Jefferies was provided with the August Projections, which included financial forecasts for 2012.Howard-Anderson reviewed the April Projections and the June Projections. Seeley reviewed all threesets of projections.

Id. at 664.

Thus, the Court denied summary judgment on this claim. Id.



d. Misleading description of the sales process

The Occam Defendants argued that all material information had been disclosed with respect to the background ofthe Merger. Plaintiffs, focusing on three aspects of that background - the early contacts with Calix, the description ofAdtran's responsiveness, and the 24-hour market check - presented strong evidence that the Proxy was misleading.

With respect to the early contacts with Calix, the Proxy portrayed the history of Occam's interactions with Calix and itsCEO, Carl Russo, as starting with a casual, happenstance meeting in March 2009. The March meeting between Russoand Krausz (which occurred 23 days prior to the date stated in the Proxy) was anything but happenstance. The meetinghad been planned in advance and resulted in two special meetings of the Board to discuss and “evaluate the operationaland financial opportunities presented by the potential transaction” with Calix. SJOp. at 655. The Proxy also failed todisclose that this March meeting was not the first interaction with Calix regarding a possible transaction.

Plaintiffs presented evidence that Adtran: (1) was a serious and responsive suitor; (2) characterized Occam's ultimatumas a “24 hour gun to our head”; and (3) responded to the ultimatum that it “[d]eclined to pursue on suggested timetable.”SJOp. at 661. In contrast, the Proxy misleadingly stated that Adtran “declined to continue discussions with Occam”and misleadingly referenced Adtran's purported “determination to discontinue further discussions after over a year ofsporadic communications on the topic.” (JX1406 at 84, 91).

Showing that the Board was merely going through the motions with other potential bidders, Plaintiffs presented evidencethat on June 30, 2010, the Board directed a 24-hour market check the next day--the Thursday before the 4th of Julyholiday weekend.

In denying summary judgment as to each of these disclosure claims, the Court wrote:

The plaintiffs have amassed extensive evidence indicating that the background section more closelyresembled a sales document than a fair and balanced factual description of the events leading up to theMerger Agreement. The evidence suggesting a slanted and misleading approach to the backgroundsection is particularly troubling because the defendants asked the court to take judicial notice of thecontents of the Proxy Statement and rely on its factual accuracy both for purposes of a motion todismiss and in connection with the preliminary injunction hearing.

SJOp. at 690.

e. The Court rejected the Board's argument that the exculpation provision bars recovery on the disclosure claims

As with the sale process claim, the Board attempted to invoke Section 102(b)(7) protection on the disclosure claims.Plaintiffs presented evidence that (1) the directors knew that the 2012 projections were not disclosed and that the Jefferiesfairness opinion falsely stated that projections beyond 2011 were not prepared by the Company, (2) the Board was ina position to correct the Proxy's “relatively breezy and high-level” background description, and (3) some informationwas omitted from the Proxy or was wrong.

In rejecting the Board's argument, the Court stated that the “[p]roblems that occurred in discovery have caused thecourt to be skeptical about the [Board's] arguments regarding their disclosures.” SJOp. at 692. The Court noted that:



(1) despite undertaking to produce relevant documents, the Occam Defendants “did not produce any documentsreferring to projections for the year 2012 until after the Merger was consummated. Two years later, ... [they] producedan additional 103 spreadsheets and emails chronicling the development of the projections;” (2) the Occam witnessesrepeatedly testified that 2012 projections did not exist; (3) Jefferies “withheld spreadsheets and emails referring to theprojections;” (4) Jefferies' witness testified that Jefferies had not been given projections for 2012; and (5) the OccamDefendants previously represented to the Court that “...Occam has not prepared projections for 2012 because there weretoo many uncertainties.” Id. at 692-93.

Due to the “confounding evidence” and discovery problems, the Court rejected the Board's request for a finding of goodfaith and denied summary judgment. Id. at 693.

E. Plaintiffs file a Motion to Compel against the Occam Defendantsand Jefferies and for Sanctions against the Occam Defendants

Plaintiffs learned in post-closing discovery that the Occam Defendants' and Jefferies' statements that 2012 projections didnot exist were false. Despite their obligation to do so, the Occam Defendants did not produce any documents containingor mentioning the 2012 forecast during the expedited phase (or during the next two years). The projections for 2010 and2011 that the Occam Defendants had produced as of the end of 2012 were from and after August 23, 2010, the date afterwhich 2012 was deleted from the projections.

It also appeared that defendants coordinated with Jefferies to ensure that Jefferies would withhold 2012 projections as

well (as it did). 6 Jefferies, which produced documents containing the forecast for 2010 and 2011, failed to produce anye-mails or spreadsheets containing or referencing the forecast for 2012. Jefferies did produce, on February 11, 2011,an internal presentation to its fairness opinion committee and related materials, which included a slide that presentedOccam's 2012 projections alongside its 2010/2011 projections. As of June 2014, Jefferies still had not produced any e-mails or spreadsheets containing or referencing the 2012 projections.

After the summary judgment opinion, which noted that “the defendants engaged in questionable conduct duringdiscovery sufficient to support an inference that they sought to conceal evidence about potential disclosure issues untilafter the Merger closed” (SJOp. at 653), Plaintiffs again sought an explanation of how and why these discovery problemsoccurred, and also sought the production of responsive documents which had not yet been produced. Jefferies failed torespond to Plaintiffs' inquiries. The Occam Defendants took the position that the 2012 projections were non-responsiveand therefore not produced.

Unable to resolve the dispute, on June 12, 2014, Plaintiffs filed a Motion to Compel against the Occam Defendants andJefferies and for Sanctions against the Occam Defendants (Trans. 55582509) (the “Motion to Compel”). The OccamDefendants, describing the Motion to Compel as a “stunningly reckless motion,” claimed that “all of the documents atissue were produced in response to expanded document requests” and Plaintiffs suffered no prejudice. (Trans. 55785983at 1-2). The Occam Defendants also claimed that the projection documents fell outside the agreed scope of discovery,a position they later abandoned.

To support their opposition to the Motion to Compel, the Occam Defendants submitted a 22-page Affidavit of WilsonSonsini partner Gregory L. Watts. (JX1718). The Court later described this affidavit as “a lot of words, but they're high-level words. They're basically, ‘Hey, we did it,’ but there is no backup.” (Trans. 56015864 at 75).

At the hearing on September 4, 2014, on the Motion to Compel, the Court ordered Wilson Sonsini to conduct afurther investigation into the processes and decisions which led to its failure to produce the 2012 projections during theexpedited phase (the “Investigation”). (Trans. 56015864). The Court also ordered Wilson Sonsini to submit a “detailedand thorough” affidavit addressing these issues. (Id.). The Court explained that it wanted “plaintiffs to be able to



understand what was done during the document collection process with specific focus on the 2012 projections” andstated a neutral vendor should be retained to conduct searches of Wilson Sonsini's files. (Id. at 75-76). The Court furtherordered that all Wilson Sonsini communications with Jefferies were to be produced. After the document production wascomplete and the affidavit filed, Plaintiffs were entitled to take additional depositions.

Shortly after this hearing, Wilson Sonsini withdrew as counsel for the Occam Defendants and Latham & Watkins enteredits appearance on their behalf.

In the course of the Investigation, a dispute arose over whether certain Jefferies documents were privileged. After theCourt's in camera review of over 80 documents, on March 9, 2015, the Court ordered the production in their entiretyof all but one document.

F. Wilson Sonsini is added as a defendant

On November 12, 2014, Wilson Sonsini filed affidavits of Gregory L. Watts and Philip Hoare, Wilson Sonsini's ChiefInformation Officer, purporting to explain why the failure to produce the 2012 projections was a result of embarrassingnegligence and coincidence rather than conscious discovery abuse. Wilson Sonsini also produced approximately 25,000

pages of documents around this time. Plaintiff then deposed five Wilson Sonsini lawyers. 7 During the course of theInvestigation and after Wilson Sonsini became a party to the litigation, it produced approximately 600,000 more pagesof documents.

The Investigation revealed that even though several Wilson Sonsini lawyers had seen the 2012 projections prior to theclosing of the Merger, they were never produced. Moreover, as of February 10, 2011, Wilson Sonsini knew of the existenceof a Jefferies fairness committee memorandum reflecting 2012 projections sourced to “Management Guidance” (whichwas included in a Jefferies supplemental production to plaintiffs). Wilson Sonsini lawyers e-mailed Seeley that dayregarding those projections, an e-mail the Court later described as “suggest[ing] to Ms. Seeley how she should interpretthese documents.” (Trans. ID 57017273 at 66). Even after Jefferies confirmed a few days later that the 2012 projectionscame from Seeley, Wilson Sonsini decided not to inform the Court of the existence of these documents, but rather decidedto “leave this alone for now.”

The Investigation also revealed “several issues” with searches that “impacted their effectiveness.” For example, WilsonSonsini used faulty search terms for Jefferies, resulting in a high number of “hits.” Rather than (a) reviewing all of thosehits, or (b) determining why such a high number of hits had occurred, Wilson Sonsini removed all of these documentsfrom the database of documents to be reviewed. As a result, relevant documents sent to or from Jefferies were notproduced by defendants during the expedited phase. In addition, a file containing over 15,000 documents from Seeleywas never loaded into the database and Bylin and Howard-Anderson's handwritten notes were not produced by WilsonSonsini despite being in its possession since 2010.

In addition, key documents were produced for the first time only after Latham & Watkins assumed the defense of theOccam Defendants. For example, after (1) advising the Court in 2011 that 2012 projections did not exist, (2) tellingPlaintiffs in November 2012 that “To the extent they exist, plaintiffs have all documents or communications regardingOccam's 2011 or 2012 forecasts, projections or models received by, sent to, or generated by ... Occam's executivemanagement team”, and (3) changing their story in summary judgment briefing to state that the 2012 projections weremistakenly sent to Jefferies, an e-mail chain between Seeley and her subordinate (Imelda Farrell) was produced in 2015,showing that, on August 18, 2010, Seeley told Farrell to send the 2012 projections to Jefferies. While the bottom e-mail in this chain had previously been produced, the additional four e-mails in the chain (the “Top-4 e-mails”) were notproduced until February 2015, after the five Wilson Sonsini depositions.



Based on the additional information Plaintiffs learned during the Investigation, on February 13, 2015, Plaintiffs filed amotion seeking leave to file a third amended complaint to add Wilson Sonsini and Jefferies as defendants and assert anaiding and abetting claim against them (Trans. 56786972) (the “Motion to Amend”). At the hearing on the Motion to

Amend on March 23, 2015, the Court vacated the April 2015 trial date and took the motion to amend under advisement. 8

While the Motion to Amend was pending, on May 1, 2015, the Court granted the parties' request to stay the case whilethey participated in mediation. The mediation was held on June 8 and 29, 2015, in California; the case did not settle.

After mediation, Wilson Sonsini dropped its opposition to the Motion to Amend. By order dated July 16, 2015, theCourt granted the Motion to Amend as to Wilson Sonsini and denied the motion as to Jefferies. The Third AmendedComplaint was filed on July 22, 2015 (Trans. 57593547).

After Wilson Sonsini was added to the case, defendants continued to produce documents, some as late as February 2016.Plaintiffs took an additional 15 depositions.

A two week trial was set to begin on April 11, 2016. The parties filed substantial pre-trial briefs. Plaintiffs also respondedto the Occam Defendants' two motions in limine, which the Court denied at the pre-trial conference.

On March 30, 2016, Plaintiffs and Wilson Sonsini mediated their dispute before the Honorable E. Norman Veasey. Thismediation was successful.

On April 6, 2016, the Court entered an order severing Plaintiffs' claims against Wilson Sonsini from Plaintiffs' claimsagainst the Occam Defendants and staying Plaintiffs' claims against Wilson Sonsini pending final disposition of a motionto approve the settlement between them.

Trial began on April 11, 2016. During the first three days of trial, the Court heard testimony from Howard-Andersonand Seeley. On April 14, 2016, Plaintiffs and the Occam Defendants, and Wilson Sonsini and the Occam Defendants,mediated their disputes before Chief Justice Veasey. The parties resolved those disputes and entered into a GlobalMemorandum of Understanding.

On June 2, 2016, the parties filed a Stipulation and Agreement of Compromise and Settlement (the “Settlement”). TheCourt set a hearing for August 26, 2016, to consider approval of the Settlement, Class Counsel's request for an award offees and expenses, and the representative Plaintiffs' request for an incentive award and reimbursement of expenses.

III. Argument

A. The Proposed Settlement is Fair and Reasonable and should be Approved

Delaware law favors the voluntary settlement of contested claims. Nottingham Partners v. Dana, Del. Supr., 564 A.2d1089, 1102 (1989); Rome v. Archer, Del. Supr., 197 A.2d 49, 53 (1964); Forsythe v. ESC Fund Mgmt. Co., 2012 WL1655538, at *2 (Del. Ch. May 9, 2012). Settlements are encouraged because they promote judicial economy and becauselitigants are in the best position to evaluate the strengths and weaknesses of their claims. Marie Raymond RevocableTrust v. MAT Five LLC, Del. Ch., 980 A.2d 388, 402 (2008).

“ ‘The Court of Chancery plays a special role when asked to approve the settlement of a class ... action.’ ” Forsythe,2012 WL 1655538, at *2 (citation omitted). “ ‘It must balance the policy preference for settlement against the need toinsure that the interests of the class have been fairly represented.’ ” Id. at *2; Brinckerhoff v. Texas E. Prods. Pipeline Co.,Del. Ch., 986 A.2d 370, 384 (2010) (same). In assessing fairness, the Court will not make “a definitive evaluation of thecase on its merits,” but will instead consider the nature of the claims asserted, possible defenses and the circumstances of



the case, and then apply its judgment to decide whether the settlement is reasonable. Forsythe, 2012 WL 1655538, at *3(citing Polk v. Good, Del. Supr., 507 A.2d 531, 535 (1986)); Brinckerhoff, 986 A.2d at 384. “The Court must especiallybalance the value of all the claims being compromised against the value of the benefit to be conferred [on the Class] bythe settlement.” Forsythe, 2012 WL 1655538, at *3 (citation omitted); Brinckerhoff, 986 A.2d at 384. The Court mayalso consider the opinion of experienced counsel and their clients in determining whether a settlement is fair. Polk, 507A.2d at 536.

Here, the reasonableness of the proposed Settlement is supported by the following: (1) the Settlement provides asubstantial monetary benefit to the Class; (2) it was achieved after many years of litigation; (3) it is the result of substantialnegotiations using (eventually) a retired Chief Justice as the mediator; (4) there are risks inherent in Plaintiffs' futureefforts to recover in this matter; and (5) without the Settlement, this lengthy litigation will continue as the parties willbe forced to litigate and participate in a likely appeal.

1. The Benefit Obtained

The proposed Settlement creates a $35 million recovery for the Class. This is approximately $2.31 - $2.67 per share (or25-28% of the Merger consideration), before attorneys' fees and expenses, an “obvious and self-pricing benefit.” In reOrchard Enterprises Stockholder Litig., 2014 WL 4181912, at *5 (Del. Ch. Aug. 22, 2014).

2. Nature of the Claim/Defenses and the Decision to Settle

a. Claims Against the Occam Defendants

The proposed Settlement follows over five years of litigation that involved review of over one million pages of documentsand 49 depositions in the post-closing phase. While Plaintiffs felt they had strong claims against the Occam Defendants,there were still litigation risks.

b. The Sales Process Claims

In this last-stage transaction, the officers and directors were required to exercise their fiduciary duties to get the highestvalue for the sale of Occam. See Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., Del. Supr., 506 A.2d 173, 182(1986). “[B]ecause of the potential conflicts of interest that fiduciaries must confront” in the sale context, courts apply“a more searching standard of review” to the directors' conduct:

The heightened scrutiny that applies in the Revlon (and Unocal) contexts are, in large measure, rootedin a concern that the board might harbor personal motivations in the sale context that differ fromwhat is best for the corporation and its stockholders. Most traditionally, there is the danger that topcorporate managers will resist a sale that might cost them their managerial posts, or prefer a sale toone industry rival rather than another for reasons having more to do with personal ego than withwhat is best for stockholders.

In re Trados Inc. S'holder Litig., Del. Ch., 73 A.3d 17, 21 (2013) (quoting In re Dollar Thrifty S'holder Litig., Del. Ch.,14 A.3d 573, 597 (2010)). The enhanced scrutiny required in the sale context involves “(a) a judicial determinationregarding the adequacy of the decisionmaking process employed by the [fiduciaries], including the information on whichthe [fiduciaries] based their decision; and (b) a judicial examination of the reasonableness of the [fiduciaries'] action in



light of the circumstances then existing.” Paramount Commc'ns Inc. v. QVC Network Inc., Del. Supr., 637 A.2d 34, 45(1994); see also SJOp. at 672-73.

Because the surviving sales process claims are against Howard-Anderson and Seeley, who, as officers of Occam, arenot protected by Section 102(b)(7), Plaintiffs and the Class can recover whether the officers' breach is a care or loyaltyviolation. Plaintiffs were prepared to present evidence of breaches of both of these duties by Howard-Anderson andSeeley. Howard-Anderson received more than $840,000 in benefits from the Merger that were not shared with otherstockholders, including $272,803 in a cash severance payment. SJOp. at 670. Seeley received a cash severance paymentof $256,863 plus other change of control benefits. The Board increased the amounts due under the severance agreementsto Howard-Anderson and Seeley on the same day that it approved the Merger. SJOp. at 670. Plaintiffs were prepared topresent evidence that these payments were material to Howard-Anderson and Seeley.

Although the sale process claim was dismissed against the other Occam Defendants, whether those directors breachedtheir duty of care would have been an issue at trial to determine liability on the aiding and abetting claim.

At trial, Plaintiffs were focusing on certain decisions by the Occam Defendants: (i) a significant tilting of the field infavor of Calix at the expense of getting the best price for the Company; (ii) the failure to share management's internalprojections with bidders; (iii) the decision to give Adtran a 24-hour bid ultimatum; and (iv) reliance on an unnecessarilyrushed and abbreviated 24-hour market check ordered by the Board. Throughout the process, the Occam Defendantsshowed a commitment to a transaction with Calix. This commitment and the decisions made to ensure the Merger withCalix proceeded over any other alternative presented “material barriers that would have prevented a rival bidder frommaking a superior offer.” C&J Energy Servs., Inc. v. City of Miami Gen. Emps., Del. Supr., 107 A.3d 1049, 1070 (2014).

In response, the Occam Defendants argued that the Court should be reluctant to second-guess the Board's decisionswhen directors “had a motivation to seek the highest price, because they would personally gain from a deal at a highprice.” In re Dollar Thrifty, 14 A.3d at 600. This is because the directors are “more likely to have interests that are alignedwith the other shareholders of [the] corporation as it is in his best interest, as a shareholder, to negotiate a transactionthat will result in the largest return for all shareholders.” Orman v. Cullman, Del. Ch., 794 A.2d 5, 27 n.56 (2002).

Due to their stock/options holdings, for each dollar increase in the merger price, Howard-Anderson would have received$393,438 and Seeley would have received $138,600. Thus, the Occam Defendants argued, these officers were motivatedto get the highest price for Occam and this potential outweighed the severance payments.

Similarly, the outside directors collectively (with their affiliated funds) owned approximately 25% of the outstandingstock, so they too arguably were motivated to get the highest price for Occam.

The Occam Defendants presented evidence at trial, through Howard-Anderson and Seeley, the Occam fiduciaries mostinvolved in the sales process, that they did not favor Calix over Adtran, but rather tried numerous times to get Adtran tobid. See Tr. at 241-44, 249, 266, 275, 280, 293. These defendants also argued that Adtran's offer was less attractive thanCalix's offer due to the constraints Adtran requested to put on Occam during due diligence and the lack of definitenessof the offer. Tr. at 305-07.

Further, Howard-Anderson and Seeley testified that the Board relied on Jefferies to conduct an appropriate marketcheck and Jefferies never suggested that Adtran (or any other potential bidder) needed more time to make a bid. Tr. at325-331, 605-06. In addition, Jefferies reported that Adtran was “going in a different direction.” Tr. at 325-327; 603-04.

While Plaintiffs felt that the evidence supported a conclusion that the Occam Defendants' actions were unreasonable,Plaintiffs were mindful that the Court could have determined that there were reasonable justifications for the Occam



Defendants' actions. See SJOp. at 675 (“It is worth stressing that there is competing evidence that supports thereasonableness of the Board's decisions” with respect to the sales process).

c. The Disclosure Claims

“Directors are required to provide shareholders with all information that is material to the action being requested andto provide a balanced, truthful account of all matters disclosed in the communications with shareholders.” Malone v.Brincat, Del. Supr., 722 A.2d 5, 12 (1988). “A fact is considered material if there is a ‘substantial likelihood that thedisclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘totalmix’ of information made available.' ” Shell Petroleum, Inc. v. Smith, Del. Supr., 606 A.2d 112, 114 (1992) (citationomitted).

“In addition to the traditional duty to disclose all facts material to the proffered transaction, directors are undera fiduciary obligation to avoid misleading partial disclosures... ‘[O]nce defendants travel[] down the road of partialdisclosure ... they ... [have] an obligation to provide the stockholders with an accurate, full, and fair characterizationof those historic events.’ ” Zirn v. VLI Corp., Del. Supr., 681 A.2d 1050, 1056 (1996) (citing Arnold v. Soc'y for Sav.Bancorp, Del. Supr., 650 A.2d 1270, 1280 (1994)). Thus, even if information is not “material” in the traditional sense, itmust be disclosed if needed to prevent the previously disclosed information from being misleading. Johnson v. Shapiro,2002 WL 31438477, at *4 (Del. Ch. Oct. 18, 2002).

Because Occam's officers do not have 102(b)(7) protection, they can be liable for material misstatements and omissionsin the Proxy even if these resulted only from a breach of their duty of care. SJOp. at 686; R. Franklin Balotti and JesseA. Finkelstein, The Delaware Law of Corporations and Business Organizations, § 4.13[B] at 4-101 (2016 Supp.). While adisclosure claim against the directors asserting only a breach of the duty of care would be barred by Section 102(b)(7),where they knowingly withheld material information from the company's shareholders, the duty of loyalty is implicatedand immunity under Section 102(b)(7) is not available. See Shapiro, 2002 WL 31438477, at *8; In re Tyson Foods, Inc.,Del. Ch., 919 A.2d 563, 597-98 (2007) (“where there is reason to believe that the board lacked good faith in approvinga disclosure, the violation implicates the duty of loyalty”).

Whether directors are guilty of bad faith is very fact-dependent. As explained by the Delaware Supreme Court in Inre Walt Disney Co. Derivative Litig., Del. Supr., 906 A.2d 27 (2006), examples of bad faith conduct may include: (1)subjective bad faith where a fiduciary is motivated by an actual intent to do harm, and (2) ‘”[an] intentional dereliction ofduty, a conscious disregard for one's responsibilities,’ ” or a “ ‘we don't care about the risks' attitude...’ ” 906 A.2d at 62.The second category of conduct falls in between conduct motivated by subjective bad intent and conduct resulting fromgross negligence and captures those cases where corporate directors have not engaged in classic disloyalty (i.e., pursuitof their own self-interest), but have engaged in conduct that is qualitatively more culpable than gross negligence (suchas inattention or failure to be informed of all material facts). Id. at 66. This Court has described bad faith as “any actionthat demonstrates a faithlessness or lack of true devotion to the interests of the corporation and its shareholders,” Ryanv. Gifford, Del. Ch., 918 A.2d 341, 357 (2007).

The Occam Defendants strenuously contested the reliability of the 2012 projections and therefore asserted that there wasno duty to disclose these projections. Howard-Anderson testified at trial that the 2012 projections were never adopted orapproved by the Board. Tr. at 358-59. Seeley testified at trial that she was not comfortable with Jefferies using the 2012projections for the fairness opinion because there were “significant open items” in the model. Tr. at 643-44. Even thoughshe directed that the 2012 projections be sent to Jefferies just before it was convening its fairness opinion committeemeeting, Seeley was not concerned because she had previously told Jefferies not to rely on them. Tr. at 662.

On cross, Seeley admitted that the projections were prepared by her subordinate at Seeley's request and that she instructedher subordinate to adjust the projections for “reasonableness.” Tr. at 755. The projections, including the 2012 projections,



were sent to a bank in Occam's effort to obtain financing for a potential third-party acquisition. Tr. at 756-59, 768-70. Theprojections were also given to Howard-Anderson to comment on them. Tr. at 650-51. Moreover, the 2012 projectionswere presented to the Board in November 2010, prior to issuing the Proxy. See Tr. at 368-69.

Despite all of this, Seeley testified that she had no concern with the language in the Jefferies fairness opinion that Occamhad not prepared projections beyond 2011. Tr. at 675-76. See also Tr. at 351-52 (Howard-Anderson testifying that thelanguage in the Jefferies fairness opinion was true).

With respect to the background of the Merger, Howard-Anderson admitted that the meetings between Krausz and Russoin early March 2009 led to two Board meetings regarding a possible strategic transaction with Calix (Tr. at 431, 435),which was not disclosed in the Proxy. There were many other previous discussions with Calix. (See Tr. at 431, 434, 437).

Testimony from the three days of trial strongly supported the conclusion that the background of the Proxy was falseand that the Jefferies fairness opinion was false. Plaintiffs also felt that they presented strong evidence that the 2012projections were reliable. There was a risk, however, that the Court would rule that the projections were not reliable. SeeSJOp. at 688 (citing evidence that supported the contention that the 2012 projections were unreliable).

Assuming the Court found a disclosure violation, to recover damages from the Board, Plaintiffs would have had to provethat the violation was the result of a breach of the duty of loyalty. Because of the lack of self-interest on the part of theBoard, this would have required a showing that they acted in bad faith. To make such a showing Plaintiffs would havehad to present evidence of motive. While none of the outside directors had yet testified at trial, based on the documentsand their deposition testimony, there was a substantial risk that the Court would find there was insufficient evidenceto support a finding of bad faith. Without a finding of breach of loyalty, the Board would be protected from liabilityunder Section 102(b)(7).

d. Damages

By the time the Merger closed, the Merger consideration of $9.23 represented a 92% premium over the trading priceimmediate before the deal was announced. Plaintiffs' expert (Ms. Taylor) calculated the fair value of Occam as ofFebruary 22, 2011-the date of its merger with Calix, basing most of her valuation conclusion upon her comparable

companies analysis 9 because she found a set of reliable comparables: Calix, Adtran and Zhone. 10 Ms. Taylor applied50% weighting to Calix while Adtran and Zhone each had a 25% weighting. Adjusting her comparable companies analysisfor a control premium (35%), Ms. Taylor concluded that the Basic Fair Value of Occam at the Merger date was in therange of $16.93 to $17.0 (JX1729 at 91-98). After subtracting the Merger consideration, Plaintiffs' expert valued thedamages between $7.77 and $9.65 per share.

Plaintiffs also sought rescissory damages. Ms. Taylor calculated these damages, basing them “on the highest interveningvalue of Calix in the post-merger period” (JX1729 at 117). Using the Basic Fair Value, rescissory damages were $4.45per share, thus increasing the total damages to $12.23 to $14.59 per share.

The Occam Defendants argued that Plaintiffs' damages theory would result in a nearly 400% premium over the tradingprice prior to announcement of the Merger, which they argued was seven times higher than the highest premium in anytechnology deal in the preceding six months. Thus, according to the Occam Defendants, the market price was appropriatefair value. The Occam Defendants also argued that the Class was not entitled to rescissory damages as a matter of lawbecause the entire fairness test (a requirement for such damages to be awarded) does not apply and Plaintiffs could notshow a breach of the duty of loyalty (another requirement for such damages to be awarded).

If Plaintiffs were unable to convince the Court that the Board's disclosure violation resulted from a breach of loyalty, theoutside directors would be protected on the disclosure claim, just as they were on the sale process claim. If that occurred,



the Court may have been less inclined to award significant damages against the officers -- Howard-Anderson and Seeley-- on either the sale process claims or the disclosure claims (assuming a finding of liability against them).

Having already settled with Wilson Sonsini (discussed below), Plaintiffs settled their claims against the OccamDefendants through mediation with Chief Justice Veasey. See Forsythe, 2012 WL 1655538, at *3 (negotiation ofsettlement with benefit of experienced and respected mediator, on eve of trial, and following series of rulings byCourt (which helped parties evaluate the strength of the claims and defenses), were significant factors in support ofreasonableness of settlement).

In addition to the litigation risks discussed above, there were also questions of collectability if Plaintiffs were successfulon their claims against the Occam Defendants without a finding of aiding and abetting against Wilson Sonsini. Calixhad certain indemnification obligations relating to the Occam Defendants. It was publically reporting that it expected “aconsiderable portion of [the] remaining defense costs, including costs of the trial, along with any liability imposed uponthe [Calix] following trial, [would] exceed its remaining available Directors & Officers liability insurance coverage.” Calix

12/31/15 10-K at 63-64. 11 Calix also reported that if Plaintiffs were successful in securing damages in the amount theysought, it “could have a material adverse effect on the Company's business, operating results or financial condition.” Id.at 64. If Calix was unable to satisfy the judgment, Plaintiff would have had to collect against the Occam Defendants'

personal assets. 12 With these risks, and considering the settlement already reached with Wilson Sonsini, Plaintiffs andClass Counsel felt it was in the best interest of the Class to agree to the settlement with the Occam Defendants.

e. Claims against Wilson Sonsini

Plaintiffs sought two forms of damages from Wilson Sonsini - damages for aiding and abetting the Occam Defendants'breach of fiduciary duty and class-wide fee shifting as a result of the extensive discovery deficiencies (many of whichWilson Sonsini admitted occurred).

f The aiding and abetting claim

A claim for aiding and abetting has four elements: (i) the existence of a fiduciary relationship, (ii) a breach of thefiduciary's duty, (iii) knowing participation in the breach by the non-fiduciary defendants, and (iv) damages proximatelycaused by the breach. In re Rural Metro Corp. Stockholders Litig., Del. Ch., 88 A.3d 54, 80 (2014). “The requirement ofparticipation can be established if the alleged aider and abettor ‘participated in the board's decisions, conspired with [the]board, or otherwise caused the board to make the decisions at issue.’ ” In re TIBCO Software Inc. Stockholders Litig.,2015 WL 6155894, at *24 (Del. Ch. Oct. 20, 2015) (citation omitted). Knowledge can be inferred when the “conduct isparticularly suspect” and “a figurative smoking gun” is not required. Matthew v. Laudamiel, 2015 WL 5723985, at *13(Del. Ch. Sept. 28, 2015) (“Knowing participation requires a showing ‘that the nonfiduciary act[ed] with the knowledgethat the conduct advocated or assisted constitutes a breach’ ”) (citation omitted).

As a result of the Court-ordered Investigation into Wilson Sonsini's discovery processes and decisions, Plaintiffs believethey uncovered compelling evidence that Wilson Sonsini aided and abetted the Occam Defendants' breaches of theirfiduciary duties, whether of loyalty or care.

Plaintiffs were prepared to present evidence that Wilson Sonsini knew of the existence of the 2012 projections in theexpedited phase of this litigation, but did not disclose them. Instead, it told the Court that these projections did notexist. Plaintiffs also were prepared to present evidence of Wilson Sonsini's actions between February 10 and February 14,2011, after it reviewed Jefferies' supplemental production that included the “Management Guidance” 2012 projectionsand Jefferies confirmed that the projections were provided by Seeley.



In addition, Wilson Sonsini was the primary drafter of the Proxy and was aware of the long history of contacts betweenCalix and Occam regarding a possible strategic transaction. Thus, it knew the Proxy was not accurate.

Wilson Sonsini vehemently denied that it aided and abetted any breach. It asserted that while discovery mistakes causedthe projections not to be produced, Wilson Sonsini never intentionally withheld documents. Indeed, it argued, its internale-mails reflected an approach to produce everything related to the Merger that was responsive. Wilson Sonsini did notknow of the discovery mistakes until 2014 when it conducted the Court-ordered Investigation.

Again pointing to its internal e-mails, Wilson Sonsini argued that the projections in the Jefferies supplemental productionwere a surprise to the litigators, thus showing that there was no scienter. Even if Wilson Sonsini's action amounted togross negligence, it argued, that was insufficient to establish the scienter required for an aiding and abetting claim.

Especially in light of the events between February 10 and 14, 2011, Plaintiffs felt they had a strong case against WilsonSonsini on the aiding and abetting claim. To be successful on this claim, Plaintiffs would have had to show that theOccam Defendants breached their duties (either care or loyalty) and that Wilson Sonsini acted with scienter. See In reRural Metro, 88 A.3d at 97. Plaintiffs recognized that even under the strong facts developed through discovery, scienteris a high standard to meet and there was some risk that the Court could find that Plaintiffs had not satisfied their burdenof proof.

g. The fee shifting claim

“Under the American Rule [] each party is normally obliged to pay only his or her own attorneys' fees, whatever theoutcome of the litigation.” Johnston v. Arbitrium (Cayman Islands) Handels AG, Del. Supr., 720 A.2d 542, 545 (1998).“This court rarely invokes the bad faith exception to the American rule but will do so when there is clear evidence that...a party has acted with bad faith during the course of the litigation.” Kaung v. Cole Nat'l Corp., 2004 WL1921249, at*6 (Del. Ch. Aug. 27, 2004), aff'd in part, rev'd in part on other grounds, Del. Supr., 884 A.2d 500 (2005). “Our courtshave not settled on a singular definition of bad faith litigation conduct, but ‘have found bad faith where parties haveunnecessarily prolonged or delayed litigation, falsified records[,] or knowingly asserted frivolous claims' ... [or] ‘mis[led]the court, alter[ed] testimony, or chang[ed] position on an issue.’ ” RBC Capital Mkts., LLC v. Jervis, Del. Supr., 129A.3d 816, 877 (2015) (internal quotations omitted).

It is undisputed that there were extensive discovery failures in this case. Plaintiffs developed evidence that WilsonSonsini attorneys, including partners, reviewed the 2012 projections during the expedited phase. Each time, WilsonSonsini ignored these forecasts, marked them as non-responsive, or decided not to disclose them. Many other responsivedocuments also were not produced by Wilson Sonsini.

In addition, despite repeated requests for handwritten notes of Board meetings, Wilson Sonsini failed to produce thenotes of directors, although Wilson Sonsini had collected these notes and had them in its possession since 2010. Therewas also evidence of inappropriate deposition coaching.

Finally, Plaintiffs had strong evidence that Wilson Sonsini continued to change its litigation position regarding the 2012projections. First telling the Court (on the motion for a preliminary injunction), “But plaintiffs do not and cannot disputethat Occam has not prepared revenue projections for 2012 because there are too many uncertainties.” Then, on summaryjudgment, the firm took the position that the 2012 projections were sent to Jefferies by mistake. The truth (that Occamintentionally sent the 2012 projections to Jefferies) came out only after Wilson Sonsini withdrew from the case.

As a result of the discovery problems, Plaintiffs had to file the Motion to Compel, participate in the Investigation, anddepose witnesses for a second, third or fourth time. Plaintiffs felt they had a very strong fee shifting claim against Wilson

Sonsini. 13 Indeed, at the hearing on the Motion to Amend, the Court stated even if “the defendants [] prevail at trial,



it seems to me that this would be one of those situations where there would still be some quantum to which you wouldbe entitled for having had to go on this wild goose chase.” (Trans. 57017273 at 36).

Plaintiffs and Class Counsel felt it was in the best interest of the Class to settle the aiding and abetting claim and thefee shifting claim against Wilson Sonsini.

h. Scope of the Releases

In exchange for the Settlement, Plaintiffs agreed for themselves and the Class, subject to Court approval, to release:

Claims which are based upon, arise out of, result from, relate to, or involve or previously werebased upon, arose out of, resulted from, related to or involved, directly or indirectly, any ofthe actual, alleged or attempted actions, transactions, occurrences, statements, representations,misrepresentations, omissions, allegations, facts, practices, events, claims or any other matters, thingsor causes whatsoever, or any series thereof, that (i) were alleged, asserted, set forth, or claimed in theAction against the [Wilson Sonsini Released Parties and the Occam Defendants Released Parties]; (ii)are related to the subject matter of the claims that were alleged, asserted, set forth, or claimed in theAction against the [Wilson Sonsini Released Parties and the Occam Defendants Released Parties];or (iii) could have been alleged, asserted, set forth or claimed in the Action or in any other action,court (whether state or federal), tribunal, forum or proceeding by Plaintiffs or any or all of the otherClass Members, including, but not limited to, claims for malpractice or breach of fiduciary duty orunder any and all federal or state securities laws (including those within the exclusive jurisdiction ofthe federal courts) which arise out of the Class Members' status as Occam stockholders, and whichare based upon, arise out of, result from, relate in any way to, or involve, directly or indirectly, (a) the[Merger] or any element, term, condition or circumstance of the [Merger], the sale process leading upto the [Merger], or this or any other legal action related to the [Merger]; (b) any actions, deliberations,negotiations, discussions, offers, inquiries, solicitations of interest, indications of interest, bids, duediligence or any act or omission in connection with the review of strategic alternatives available toOccam or the [Merger], including the process of deliberation or negotiation by Calix, Occam, the[Occam Defendants, Wilson Sonsini], Jefferies, and any of their respective officers, directors, advisorsor agents; (c) any act, omission, advice or services provided by [Wilson Sonsini] or its representativesin connection with or related to the [Merger]; (d) any act, omission, advice or services provided by[Wilson Sonsini] or its representatives in connection with or related to the Action during any timeprior or subsequent to the Closing, including, but not limited to, any act, omission, advice or servicesin connection with or related to discovery in the Action; (e) the consideration received by Plaintiffsand the Class; (f) the Preliminary Proxy and any amendments thereto, the Definitive Proxy andany amendments thereto, or any other disclosures, SEC filings, public filings, periodic reports, pressreleases, proxy statements or other statements issued, made available, or filed or otherwise disclosedor communicated relating, directly or indirectly, to the [Merger]; (g) the February 22, 2011 vote ofOccam stockholders approving the [Merger]; (h) proxy solicitation efforts in connection with the voteof Occam stockholders on the [Merger]; (i) any fiduciary obligations of the Occam Defendants; (j) thesetting of the record date for the [Merger] and the mailing of the Proxy; or (k) the fees, expenses orcosts incurred in prosecuting, defending, or settling the Action, except to the extent of any [fee and/or expense awarded by the Court from the Settlement Fund]; provided, however, that the ReleasedPlaintiffs' Claims shall not include the right to enforce the Stipulation.



(Trans. 59085568).

While the scope of the releases is broad, Plaintiffs and Class Counsel investigated (including massive documentproduction and over 50 depositions) potential claims against the Occam Defendants and Wilson Sonsini relating to orarising out of the Merger. The releases do not impact the Class member's rights as stockholders of Calix. Plaintiffs andClass Counsel believe that the releases are appropriate.

B. The Application for Attorneys' Fees and Expenses is Fair and Reasonable and should be Granted

1. Overview of the Application

Class Counsel have applied for an award of expenses of $1,957,464.04 to be paid from the $35 million fund (the “GrossSettlement Amount”). Class Counsel also have applied for an award of attorneys' fees of 30% of the Gross SettlementAmount, after deducting Class Counsel's expenses and any incentive fees and expenses awarded to Messrs. Chen and

Sheeler (the “Net Settlement Amount”). 14

The Fee Application covers only the work done after February 22, 2011 (the closing of the Merger) and does not includeany time/expenses incurred relating to obtaining the Interim Fee Application or any work done in connection withthe Settlement after the material terms of the settlement were reached with each of Wilson Sonsini and the OccamDefendants.

2. Standard of Review

“The common fund doctrine is a well-established basis for awarding attorneys' fees in the Court of Chancery.” SeeAmericas Mining Corp. v. Theriault, Del. Supr., 51 A.3d 1213, 1252-53 (2012) (citing Goodrich v. E.F. Hutton Grp., Inc.,Del. Supr., 681 A.2d 1039, 1044 (1996)). It “is founded on the equitable principle that those who have profited fromlitigation should share its costs.” Americas Mining Corp., 51 A.3d at 1253 (citation omitted). See also Donald J. Wolfe, Jr.and Michael A. Pittenger, Corporate and Commercial Practice in the Delaware Court of Chancery § 9.05[a] (2016) (“Wolfe& Pittenger”). Under this doctrine, a litigant or lawyer who recovers a fund for the benefit of persons other than himselfor his client “is entitled to an allowance for reasonable attorney's fees and expenses for services rendered in connectionwith the litigation to be paid from the fund... created ... as a result of the litigant's efforts.” Wolfe & Pittenger, at § 9.05[a]at 9-246. See also Americas Mining, 51 A.3d at 1253; Goodrich, 681 A.2d at 1044; Forsythe, 2012 WL 1655538, at *7; Inre Emerson Radio S'holder Derivative Litig., 2011 WL 1135006, at *2 (Del. Ch. Mar. 28, 2011). “Otherwise, ‘persons whoobtain the benefit of a lawsuit without contributing to its cost [freeriders] are unjustly enriched at the successful litigant'sexpense.’ ” Goodrich, 681 A.2d at 1044 (alteration in original, citation omitted).

An award of fees and expenses under the common fund doctrine “is appropriate not only if a final judgment on the meritsresults in the creation of a fund ..., but also if that result is achieved by a compromise intended to settle the litigation.”Wolfe & Pittenger, § 9.05[d] at 9-265. To qualify for an award under the common-fund doctrine where an action hasbeen settled, an applicant must show that (1) the action was meritorious when filed, (2) an ascertainable class received abenefit, and (3) a causal connection exists between the action and the benefit. See, e.g., id.; Franklin Balance Sheet Inv.Fund v. Crowley, 2007 WL 2495018, at *7 (Del. Ch. Aug. 30, 2007) (citation omitted). Once the first two elements aresatisfied, the Court presumes the existence of a causal relationship between the plaintiffs efforts and the benefit, and theburden shifts to opponents of a fee award to rebut that presumption. Franklin Balance Sheet, 2007 WL 2495018, at *7;Wolfe & Pittenger, § 9.05[d][2] at 9-271.

All the elements are met here. First, an action is meritorious when filed “ ‘if it can withstand a motion to dismiss on thepleading, [and] if, at the same time, the plaintiff possesses knowledge of provable facts which hold out some reasonable



likelihood of success.’ ” Wolfe & Pittenger, § 9.05 [d][1] at 9-268 (citation omitted). The Court's decision on the OccamDefendants' motion for summary satisfies this standard. The Court denied the motion on the sales process claim as tothe Occam officers and on the disclosure claim as to all of the Occam Defendants. Even though the Court granted themotion with respect to the sale process claim for the Occam Board, it did so based on the exculpatory provision underSection 102(b)(7) and only after finding that there was sufficient evidence to support an inference that the sales processwas unreasonable. See SJOp. at 686. The claim against Wilson Sonsini also satisfies this requirement. Wilson Sonsini'sopposition to the Motion to Amend was, in essence, a motion to dismiss.

Second, the Class is receiving a substantial benefit-defendants have agreed to make a $35 million payment on behalf ofthe Class. That payment is the direct result of Plaintiffs' and Class Counsel's pursuit of this action (thus satisfying thethird requirement).

The amount of a common fund fee award is within the sound discretion of the Court. Americas Mining, 51 A.3d at 1255;Emerson, 2011 WL 1135006, at *3. While there is no set method or fixed formula to assess an application for attorneys'fees, the Court uses the factors set forth in Sugarland Indus., Inc. v. Thomas, Del. Supr., 420 A.2d 142, 149-150 (1980),to guide its analysis in arriving at a reasonable fee award: (1) the benefit achieved by the litigation (including whethercounsel can claim all the credit for the benefit conferred); (2) the stage at which the litigation ended; (3) the efforts ofcounsel and the time spent in connection with the case; (4) the contingent nature of the fee; (5) the complexity of thelitigation; and (6) the standing and ability of counsel involved. Americas Mining, 51 A.3d at 1254; Seinfeld v. Coker, Del.Ch., 847 A.2d 330, 336 (2000); Forsythe, 2012 WL 1655538, at *7; Emerson, 2011 WL 1135006, at *2.

a. The Benefits Achieved

In determining an appropriate fee, this Court accords the most weight to the benefits counsel obtained for thestockholders in the litigation. Seinfeld, 847 A.2d at 336; Forsythe, 2012 WL 1655538, at *7.

Class Counsel achieved a benefit of $35 million, or approximately $2.31 - $2.67 per share for the Class (before anyfee or expense awards). The benefit was achieved after many years of litigation in which the defendants consistentlymaintained that they had no risk of liability. The monetary benefit obtained through the Settlement is the sole result ofClass Counsel's and Plaintiffs' continued efforts in pursuing the action; without those efforts, the Class would not havereceived anything other than the Merger consideration.

b. The Requested Award is within the Range of Fees this Court has Awarded in Cases which ended with Trial

Class Counsel seek an award of fees and expenses of 30% of the Net Settlement Amount. The Wilson Sonsini settlementwas reached on the eve of trial (12 days before trial was to start) and the Occam Defendants' settlement was reached afterthree days of trial. The stage at which this litigation ended supports the requested award. See Brinckerhoff, 986 A.2d at396 (“ ‘I could see holding out the full measure of 33 to maybe 35 percent [so] that there's a promise actually if you goto trial, it will be at the highest end of the range’ ”) (citation omitted); Forsythe, 2012 WL 1655538, at *7 (“ ‘When acase settles after the plaintiffs have engaged in meaningful litigation efforts, typically including multiple depositions andsome level of motion practice, fee awards range from 15-25% of the monetary benefits conferred.... ‘[H]igher percentagesare warranted when cases progress further ...’ ”) (citation omitted); Emerson Radio, 2011 WL 1135006, at *3 (same). Seealso Reis v. Hazelett Strip-Casting Corp., 2011 WL 644875 (Del. Ch. Feb. 22, 2011) (Trial Order) (after trial, awardingfee equal to one-third of recovery, plus expenses); Gatz v. Ponsoldt, 2009 WL 1743760, at *2 (Del. Ch. June 12, 2009)(awarding fees equal to thirty-three percent of benefit in case litigated extensively, plus expenses); Oliver v. Boston Univ.,2009 WL 1515607, at *3 (Del. Ch. May 29, 2009) (awarding fees equal to thirty-three percent of the common fundrecovered for the class, plus expenses); In re Chaparral Res., Inc. S'holders Litig., C.A. No. 2633-VCL, at 17 (Del. Ch.Mar. 13, 2008) (TRANSCRIPT) (awarding thirty-three percent of the total recovery in a post-trial cash settlement, plus



over $1 million in expenses, and reasoning: “It's a performance by counsel that deserves to be awarded at the very top endof the range, for any number of reasons ... [T]he case was diligently litigated by expert counsel. It was litigated hard.....without the efforts of counsel, nothing would have been achieved. The class would have gotten zero”) (attached as Ex.1); Flax v. Pet360, Inc., C.A. No. 10123-VCL, at 93 (Del. Ch., June 30, 2016) (TRANSCRIPT) (“but those types ofhigh-20s [percentage of settlement fund] or that around-30 [percent], that's for people when you're at or on the vergeof trial.”) (attached as Ex.2 ).

c. The Efforts of Counsel

The time and effort spent by counsel serves as a cross check on the reasonableness of a fee award and “guard[s] againstwindfalls.” Emerson, 2011 WL 1135006, at *2, 6. See also Brinckerhoff, 986 A.2d at 396. Class Counsel litigated the actionsince February 2011. SKJ expended 4,170 hours (worth $1,983,146.50) and incurred $234,128.37 in expenses (Affidavitof Robert J. Katzenstein (“Katzenstein Aff.”) attached as Ex.3), broken down as follows:

Staff overtime

$11,157.22

Teleconference services

$1,425.67

Photocopies (in-house & vendor (including trial binders))

$49,234.76

Deliveries

$3,350.66

Travel

$29,791.4015

Computer Research

$14,943.20

Filing/File&ServXpress

$25,674. 15

Process server fees

$230.00

Meals

$719.96

Transcripts

$28,023.97

IT Vendor

$30,164.88

Mediator's fees

$39,412.50

L&K expended 11,315.54 hours (worth $8,097,788.45) and incurred $1,723,335.67 in expenses (Affidavit of Michael H.Rosner (“Rosner Aff”) attached as Ex. 4), broken down as follows:

Photocopies

$27,136.03

Deliveries

$4,641.03

Travel

$80,319.20 16

Computer Research

$124.33

Meals

$12,076.20



Transcripts

$83,060.36

Mediator's fees

$22,250.00

Experts

$1,493,728.52

These figures exclude all time and expenses incurred after February 2011 relating to the Interim Fee Application andafter the parties reached an agreement-in-principle at each of the mediations. See In re Jefferies Group, Inc. S'holdersLitig., 2015 WL 3540662, at *4 n. 12 (Del. Ch. June 5, 2015).

During the period covered by this application, Class Counsel (1) took 45 depositions (many in California) and defendedfour depositions, (2) defeated the opposition to class certification, (3) defeated a motion for summary judgment on thedisclosure claim and partially defeated the motion on the sale process claim, (4) served many discovery requests, (5)reviewed more than 1 million pages of documents, (6) filed a motion to compel which resulted in the Investigation, (7)filed a motion to amend the complaint to add Wilson Sonsini and Jefferies as defendants, (8) filed extensive pre-trialbriefs, (9) defeated two motions in limine to exclude Plaintiffs' experts, (10) prepared for a two-week trial and participatedin three days of trial, and (11) prepared for and participated in four days of mediation.

d. The Complexities of the Case

This case was plagued by discovery problems from the outset, with the 2012 projections not being produced in theexpedited phase and incorrect factual statements made to the Court regarding the existence of those projections. ClassCounsel pressed for discovery in the post-closing phase and only through successfully prosecuting the Motion to Compeldid we learn the full extent of the discovery problems and the volume of documents that had not been produced.

Class Counsel also needed to assess a potential claim against former defense counsel and then sought to amend thecomplaint to add that firm to the case.

e. The Contingent Nature of the Fee

Class Counsel agreed to represent the Class on a contingent basis. This required that Class Counsel prosecute this action,and advance significant expenses, without any guarantee that they would be compensated for their efforts. The contingentnature of this class action weighs in favor of awarding an attorneys' fee; indeed, fees in such cases are often substantiallylarger than contractual rates in a non-contingent case. See Seinfeld, 847 A.2d at 337 (contingent representation justifiesboth a risk premium and an incentive premium on top of counsel's hourly rates). See also Brinckerhoff, 986 A.2d at396 (noting that effective hourly rate of $1,000 “accounts for the degree of contingent risk the plaintiffs undertook...”);Franklin Balance Sheet, 2007 WL 2495018, at * 13-14 (noting that effective hourly rate of $4,023, while high, “amplyrewards Plaintiffs' counsel for undertaking this litigation on a fully contingent basis”).

Under the lodestar analysis, Class Counsel's fees would total $10,080,934.95. Assuming that Class Counsel's award isthirty percent of the balance after expenses and incentive fee awards, Class Counsel will receive less than $9,906,318

($35,000,000 - $1,957,463.90 - $21,473). 17

f. The Standing and Ability of Counsel

Class Counsel are experienced firms and have been successful in prosecuting stockholder class and derivative actions.SKJ's qualifications are described in the firm resume, attached as Ex. A to the Katzenstein Affidavit. L&K's qualificationsare described in its firm resume, attached as Ex. A to the Rosner Affidavit.



C. The Application of Mr. Sheeler is Fair and Reasonable and Should be Approved

Mr. Sheeler requests an incentive fee in an amount to be awarded by the Court and requests reimbursement of his

expenses. 18 Delaware law permits the Court to award a “plaintiffs award,” or an incentive fee, to a class representativewhere: “(1) lead plaintiff makes unusually significant efforts monitoring the litigation; (2) the efforts resulted in a directbenefit to the class; (3) the lead plaintiff owns so few shares that she stands to gain only a small pro-rata recovery as amember of the class; and (4) notice is provided to the class.” In re Fuqua Indus., Inc. S'holder Litig., 2006 WL 2640967,at *2 (Del. Ch. Sept. 7, 2006) (citing Raider v. Sunderland, 2006 WL 75310, at *2 (Del. Ch. Jan. 5, 2006)). Mr. Sheelermeets this standard.

Mr. Sheeler is a highly experience investor who holds an MBA and CFA charter. He has held the positions of InvestmentDirector, Chief Investment Officer and Portfolio Manager of multi-billion dollar funds and has held significantinvestments in communications and communications technology companies. (Unsworn Declaration of Derek Sheeler(“Sheeler Dec.”) attached as Ex. 5). With this financial background and Mr. Sheeler's extensive knowledge of Occam andits market, he was very helpful to Class Counsel on valuation issues, financial information, and market information. Mr.Sheeler communicated with Class Counsel throughout the case on these issues, participating in many teleconferenceswith Class Counsel (many of them in the middle of his night).

At various times during the case, there were strong and divergent views on the value of the case and the proper strategy tofollow. Mr. Sheeler was very instrumental in mending fractures in the team when they existed. In addition, Mr. Sheeler'sreasoned judgment during the negotiations that led to the Settlement was essential.

Further, Mr. Sheeler: (i) was deposed in New York (requiring travel from his home in Dubai), (ii) read each of thedeposition transcripts (sometimes more than once), (iii) reviewed thousands of documents produced in discovery, (iv)reviewed each of the amended complaints, (v) reviewed the various motions filed during the case and conferred withClass Counsel on those issues, (vi) met with Class Counsel on several occasions to discuss the case, (vii) attended themediations in California and Delaware, and (viii) attended trial. Mr. Sheeler estimates that he spent between 800 and

1,100 hours over the last five years on this case. (Sheeler Dec. ¶ 28). 19

Sheeler incurred out-of-pocket expenses, including airfare, hotel, and other travel-related expenses in connection withattending his deposition, mediations and trial. Mr. Sheeler traveled from Dubai, where he resides, to: New York for hisdeposition in June 2011; New York and then California for mediation in June 2015; and New York and then Delawarefor trial. Mr. Sheeler seeks reimbursement of $21,473 for airfare, meals, transportation and the cost of the webcast ofthe January 24, 2011, preliminary injunction hearing. (Sheeler Dec., Ex. A). Mr. Sheeler incurred all of these expensesin pursuit of this action, and that effort and expense helped produce the Gross Settlement Amount.

For this reason, we request that the Court award Mr. Sheeler an incentive fee in an amount the Court thinks to beappropriate and reimbursement of $21,473 in expenses from the Gross Settlement Amount.

IV. Conclusion

We request that: (i) the Settlement be approved, (ii) Class Counsel receive an award of attorneys' fee representing 30%of the Net Settlement Amount and reimbursement of expense, (iii) Mr. Sheeler be awarded an incentive fee and bereimbursed for his expenses; (iv) and any other relief the Court deems just and equitable.

July 29, 2016 SMITH,



SMITH, KATZENSTEIN & JENKINS LLP

/s/ David A. Jenkins

Robert J. Katzenstein (No. 378)

David A. Jenkins (No. 932)

Kathleen M. Miller (No. 2898)

1000 West Street, Suite 1501

Wilmington, DE 19801

(302) 652-8400

Counsel for Plaintiffs and the Class

OF COUNSEL:

LEVI & KORSINSKY, LLP

Joseph Levi

Michael H. Rosner

Nicholas I. Porritt

30 Broad Street, 24th Floor

New York, NY 10004

(212) 363-7500

Footnotes1 Calix's 10-K reports that the Class holds approximately 15,147,085 shares. We believe that this number still includes some

of the share owned by Mr. Steinhardt and his entities, which have been excluded from the Class. Thus, we believe the Classholds approximately 13.1 million shares. The per share value of the settlement fund set forth above assumes there are between13,100,000 and 15,147,085 shares in the Class.

2 Plaintiff Herbert Chen is filing a separate application and affidavit seeking an award of an incentive fee.

3 Prior to Plaintiffs seeking class certification, Michael Steinhardt and his entities agreed to step-down as representativeplaintiffs. On February 4, 2012, the Court entered an order dismissing them from the case with prejudice (Trans. 42314643).

4 Class Counsel did not create this benefit for the Class and thus the fee request does not include any portion of the EscrowedFunds.

5 Plaintiffs' discovery of the existence of the 2012 projections is discussed below.

6 The notion that the Occam Defendants participated in Jefferies' decision to withhold documents was supported by an affidavitsubmitted by Jefferies' then-counsel, who stated: “I was told by Wilson Sonsini that the agreement between it, on behalf ofOccam, and Mr. Rosner covered Jefferies and its production in response to the Subpoena. I understood the agreement betweenWilson Sonsini and Mr. Rosner to limit the scope of production by Jefferies to only those documents received from Occam



or third parties that were relied upon by Jefferies in developing work product that was delivered to the Board of Directorsor executive management of Occam.” (JX1723).

7 During the pendency of the Investigation, in December 2014 Plaintiffs took the deposition of the Occam Defendants' threeexperts and defended the depositions of Plaintiffs' two experts.

8 Prior to this hearing, due to the additional documents produced relating to projections, Krausz and Howard-Anderson wereeach deposed for a third time.

9 While the Ms. Taylor believed that the management projections for 2011 and 2012 provided an insufficient basis to perform areliable DCF analysis (because they covered only 22 months after the transaction), she did perform a DCF as a reasonablenesscheck. Using this imperfect approach, Ms. Taylor calculated a DCF value of $15.81. Ms. Taylor did not use a comparabletransactions analysis because of the lack of suitable transactions.FN10. In addition to relying upon her own financial analysis of potentially comparable companies, Ms. Taylor also relied onher colleague Steven Turner, who analyzed these companies from a product, technological, and customer perspective.

11 https://www.sec.gov/Archives/edgar/data/1406666/000140666616000041/calx-20151231x10k.htm.FN12. The venture capital funds may have had indemnification obligations to Krausz and Abbott, but the extent of suchobligations was not clear to Plaintiffs.

13 Plaintiffs also sought fee shifting against the Occam Defendants for, among other things, presenting false testimony in theexpedited phase relating to the existence of 2012 projections.

14 In the Notice to the Class, Class Counsel stated that they would be seeking a fee of $10.5 million (30% of $35 million). Ifthe request above as to how to deduct expenses and fees from the Gross Settlement Amount is accepted by the Court, ClassCounsel will receive less than $10.5 million.

15 $2,592.47 of this amount was for Mr. Chen's hotel expense for trial.

16 Travel expenses include approximately $11,533.50 in expenses for Mr. Chen to attend depositions, mediations and trial.10285:10337126.DOCX.9 51

17 Mr. Sheeler is seeking reimbursement of expenses of $21,473. Class Counsel's fee award will be lower if Messrs. Chan andSheeler are awarded Incentive fees.

18 Mr. Chen also is seeking an Incentive Fee, on which he is filing separately.

19 Mr. Sheeler owned 556,570 share at the time of the Merger. While significant, his contributions outweighed the recovery heexpects to obtain from the Settlement.

End of Document © 2019 Thomson Reuters. No claim to original U.S. Government Works.

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