SUPERIOR COURT OF CALIFORNIA COUNTY OF ALAMEDA (UNLIMITED JURISDICTION)

Steven C. Wolan (State Bar No. ) Andrea S. Carlise (State Bar No. ) Clariza C. Garcia (State Bar No. ) PATTON WOLAN CARLISE, LLP Harrison Street, Suite 0 Oakland, CA 1- Telephone: () -00 Facsimile: () - Attorneys for Defendant, VALLEYCARE HEALTH SYSTEM 1 0 1 SUPERIOR COURT OF CALIFORNIA COUNTY OF ALAMEDA (UNLIMITED JURISDICTION) MOHAMMED SHAGHAFI and LEONARD VAN DUSEN, on behalf of themselves and all others similarly situated, vs. Plaintiffs, VALLEYCARE HEALTH SYSTEM, VALLEYCARE MEDICAL CENTER LIVERMORE, VALLEYCARE MEDICAL CENTER - PLEASANTON, and DOES 1-, Defendants. Case No.: RG ASSIGNED FOR ALL PURPOSES TO: Hon. Wynne Carvill Department 1 STIPULATION OF CLASS ACTION SETTLEMENT Complaint Filed: February, 01 CLASS ACTION SETTLEMENT AGREEMENT This Stipulation of Class Action Settlement is entered into by and between Plaintiffs Mohammed Frank Shaghafi and Leonard Van Dusen, on behalf of themselves and as representatives of the Settlement Class described herein, and Defendant ValleyCare Health System, dba and erroneously sued herein as ValleyCare Medical Center Livermore and ValleyCare Medical Center Pleasanton, (hereinafter ValleyCare or Defendant ). This Stipulation is made for the sole purpose (Case No. RG) 1

1 0 1 of attempting to consummate settlement of this action on a class-wide basis. As detailed below, in the event that the Court does not execute and file the Order Granting Final Approval of Settlement or the conditions precedent are not met for any reason, this Stipulation shall be deemed null and void and shall be of no force or effect whatsoever. I. DEFINITIONS As used in this Stipulation, the following terms shall have the meanings specified below: 1.1 Alleged Claims means the claims that were alleged in the Second Amended Complaint (which superseded the First Amended Complaint filed April, 01 and the original Complaint filed February, 01) filed by the Class Representatives against Defendant on July, 01, including, but not limited to the following causes of action: (1) Failure to Provide Off-Duty Meal Periods and Rest Breaks; () Failure to Pay Straight Time Wages and Overtime; () Failure to Furnish Accurate Wage Statements; () Failure to Keep Accurate Payroll Records; () Waiting Time Penalties; () Unfair Business Practices; and () Private Attorneys General Act ( PAGA ) Penalties as provided in Section.. 1. Attorneys Fees shall have the meaning set forth in Section of this Stipulation. 1. Class and Class Members mean all persons employed by Defendant as Respiratory Therapists who worked at least one shift of more than three and one-half hours (.) at a ValleyCare facility in Pleasanton or Livermore at any time during the Class Period. 1. Class Counsel means: Richard A. Hoyer Ryan L. Hicks HOYER & ASSOCIATES Four Embarcadero Center, Ste. 00 San Francisco, CA 1 Tel: -- Fax: -- Email: rhoyer@hoyerlaw.com Email: rhicks@hoyerlaw.com 1. Class Period means the period from February, 00 to February, 01. (Case No. RG)

1 0 1 1. Class Representatives, Plaintiffs, Shaghafi and Van Dusen mean Plaintiffs Mohammed Frank Shaghafi and Leonard Van Dusen, their heirs and assigns and anyone acting on their behalf. 1. Compensable Shifts means the total number of shifts of more than three and one-half (.) hours each that an individual Class Member worked as a non-exempt employee in California during the Class Period. 1. Complaint means the operative complaint in this action, the Second Amended Complaint, filed July, 01. 1. Court means the Superior Court for the State of California, County of Alameda. 1. Date of Final Approval means the date the Court enters an order granting final approval of the Settlement. 1. Date of Preliminary Approval means the date the Court enters an order granting preliminary approval of the Settlement. 1.1 Day means calendar day, unless expressly stated otherwise. 1. Defendant and ValleyCare mean Defendant ValleyCare Health System, its parent, subsidiaries, affiliates, successors and assigns and anyone acting on their behalf. 1. Defendant s Counsel means: Steven C. Wolan Andrea S. Carlise Clariza C. Garcia PATTON WOLAN CARLISE, LLP Harrison Street, Suite 0 Oakland, CA 1- Tel: --00 Fax: -- Email: swolan@pwc-law.com Email: acarlise@pwc-law.com Email: cgarcia@pwc-law.com 1. Effective Date means the date on which the Court s order granting final approval of the Settlement ( Approval Order ) becomes final. For purposes of this paragraph, the Court s Final Approval Order becomes final upon the last to occur of the following: (a) if there are no objections to the Settlement, the date of entry of the Final Approval Order; (b) if there are objections to the (Case No. RG)

1 0 1 Settlement, and if an appeal, review or writ is not sought from the Approval Order, the th day after service of the Final Approval Order; or (c) if an appeal, review, or writ is sought from the Final Approval Order, the day after the Final Approval Order is affirmed or the appeal, review, or writ is dismissed or denied, and the Final Approval Order is no longer subject to further judicial review. 1. Exclusion Form means the exclusion form to be submitted by Class Members (substantially in the form attached hereto as Exhibit A) who wish to opt-out of and be excluded from this Settlement. 1. Final Approval Order means an Order Granting Final Approval of Settlement of the Complaint. 1. Last Known Address means the most recently recorded mailing address for a Class Member as such information is contained in the personnel records maintained by ValleyCare. 1. Lawsuit and Second Amended Complaint means the action entitled and operative complaint on file in Mohammed Shaghafi and Leonard Van Dusen v. ValleyCare Health System, ValleyCare Medical Center Livermore and ValleyCare Medical Center - Pleasanton, pending in the Superior Court for the State of California, County of Alameda. 1.0 Litigation Expenses means those expenses and costs of litigation incurred by Class Counsel and approved for reimbursement by the Court, excluding costs or fees of the Settlement Administrator. 1.1 Maximum Settlement Consideration means four hundred and sixty thousand dollars ($0,000.00). The Maximum Settlement Consideration is inclusive of all Settlement Payments, the PAGA Penalty Payment, Attorneys Fees, Litigation Expenses, Settlement Administration Costs, and any Service Payments to the Class Representatives. The Maximum Settlement Consideration does not include the employer s share of payroll taxes, such as FICA. 1. Net Settlement Consideration means the Maximum Settlement Consideration less Attorneys Fees, Litigation Expenses, Settlement Administration Costs, Service Payments to the Class Representatives, and the PAGA Penalty Payment. 1. Notice of Pendency of Class Action Settlement or Notice shall have the meaning set forth in Section.1 of this Stipulation. (A copy of the Parties proposed Notice is attached hereto (Case No. RG)

1 0 1 as Exhibit B). Each Class Members Notice of Pendency of Class Action Settlement will list, without limitation: (1) the dates of the Class Member s employment during the Class Period; () the number of compensable shifts based on Defendant s business records; () the Class Member s estimated Individual Settlement Payment; and () the Exclusion Deadline. The estimated Individual Settlement Payment listed on the Notice of Pendency of Class Action Settlement will be calculated based on the assumption that all Class Members are eligible for Individual Settlement Payments and that the Court approves the PAGA Penalty Payment, Attorneys Fees, Litigation Expenses, Settlement Administration Costs, and Service Payments to the Class Representatives as agreed to herein. 1. Notice Period shall have the meaning set forth in Section. of this Stipulation. 1. PAGA Penalty Payment means the ten thousand dollars ($,000.00) to be paid to settle any and all Alleged Claims for which penalties under California s Private Attorneys General Act ( PAGA ), California Labor Code Section, et seq., may be sought or are otherwise available based on the facts alleged in the Complaint. 1. Participating Class Member means each Class Member who does not submit a timely and valid Exclusion Form. 1. Parties mean the Class Representatives and ValleyCare, collectively. 1. Reasonable Address Verification Measure means the utilization of the process outlined in Section.. 1. Released Claims shall have the meaning set forth in Section 1 of this Stipulation. 1.0 Released Parties means ValleyCare and BETA Healthcare Group and each and all of their respective past and present parents, subsidiaries, affiliated companies and corporations, and each and all of their respective past and present directors, officers, managers, employees, general partners, limited partners, principals, agents, insurers, reinsurers, shareholders, attorneys, advisors, representatives, predecessors, successors, divisions, joint venturers, assigns, or related entities, and each and all of their respective executors, successors, assigns and legal representatives. 1.1 Service Payment shall have the meaning set forth in Section. of this Stipulation. 1. Settlement means the terms and conditions set forth in this Stipulation. (Case No. RG)

1 0 1 1. Settlement Administrator means the third-party settlement administration firm Rust Consulting, or any other third-party class-action settlement administrator agreed to by the Parties and approved by the Court for the purposes of administering this Settlement. The Parties each represent that they do not have any financial interest in the Settlement Administrator or otherwise have a relationship that could create a conflict of interest. 1. Settlement Administration Costs means costs and fees charged by the Settlement Administrator in the course of discharging its duties under this Stipulation. Rust Consulting provided to the Parties an estimate of approximately nine-thousand dollars ($,000) and the Parties have agreed to administration costs of up to ten-thousand dollars ($,000). 1. Settlement Class and Settlement Class Member mean all individuals who have not submitted a valid and timely Exclusion Form after Notice and who are therefore in the class that is certified for purposes of Settlement only, following the entry of an appropriate order by the Court. 1. Settlement Payment means the total, gross amount due to an individual Participating Class Member, which shall be calculated as described in Section. of this Stipulation. 1. Stipulation, Stipulation of Settlement and Agreement means this particular agreement entered into by the Parties to effectuate the terms of the Settlement. 1. Total Settlement Consideration means the total amount of four-hundred sixtythousand dollars ($0,000) Defendant has agreed to pay in consideration for settlement of the Lawsuit, including Settlement Payments, the PAGA Penalty Payment, Attorneys Fees, Litigation Expenses, Settlement Administration Costs, and Service Payments to the Class Representatives. 1. Unclaimed Amount shall have the meaning set forth in Section. of this Stipulation. 1.0 Updated Address means a mailing that was updated via Reasonable Address Verification measures or via an updated mailing address provided by the United States Postal Service or a Class Member. II. PROCEDURAL BACKGROUND.1 On February, 01, Class Representatives Shaghafi and Van Dusen filed the original Complaint, initiating a class action lawsuit against ValleyCare in the Alameda County Superior Court, (Case No. RG)

1 0 1 entitled Mohammed Shaghafi and Leonard Van Dusen v. ValleyCare Health System, Case No. RG.. The original Complaint alleged six class-wide causes of action under California law for (1) Failure to Provide Off-Duty Meal Periods; () Failure to Pay Straight Time Wages and Overtime; () Failure to Furnish Accurate Wage Statements; () Failure to Keep Accurate Payroll Records; () Waiting Time Penalties; and () Unfair Business Practices. The Complaint also sought pre-judgment interest and attorney s fees and costs.. On April, 01, the Class Representatives filed a First Amended Complaint alleging seven class-wide causes of action under California law for: (1) Failure to Provide Off-Duty Meal Periods; () Failure to Pay Straight Time Wages and Overtime; () Failure to Furnish Accurate Wage Statements; () Failure to Keep Accurate Payroll Records; () Waiting Time Penalties; () Unfair Business Practices; and () Private Attorneys General Act Penalties. The First Amended Complaint also sought pre-judgment interest and attorneys fees and costs. The Alleged Claims were brought on behalf of all Class Members. The Class Representatives are currently and formerly employed by ValleyCare as Respiratory Therapists in Pleasanton and Livermore, California, and were paid on an hourly, non-exempt basis.. The Class Representatives filed a Second Amended Complaint on July, 01, which includes the Alleged Class Claims for: (1) Failure to Provide Off-Duty Meal Periods and Rest Breaks; () Failure to Pay Straight Time Wages and Overtime; () Failure to Furnish Accurate Wage Statements; () Failure to Keep Accurate Payroll Records; () Waiting Time Penalties; () Unfair Business Practices; and () Private Attorneys General Act ( PAGA ) Penalties based on all of the alleged violations in the Second Amended Complaint.. On July, 0, the Parties participated in mediation before the Honorable Harry R. Sheppard, Retired, a respected neutral mediator.. With Judge Sheppard s assistance, the Parties reached the conditional agreement reflected in this Stipulation. At all times, the Parties negotiations were adversarial, non-collusive, and at an arms length. (Case No. RG)

1. Prior to the mediation and settlement discussions, the Parties engaged in both formal and informal discovery. ValleyCare responded to the Class Representatives Requests for Production of Documents, Requests for Admissions, Form Interrogatories and Special Interrogatories and produced thousands of pages of documents, including time keeping and payroll records. ValleyCare also produced documents relating to its applicable policies and procedures. The Plaintiffs took the deposition of ValleyCare s person most qualified corporate designee on a number of topics as well as the depositions of three other ValleyCare employees, including the current Manager of the Respiratory Therapy Department, the Director of that Department, and ValleyCare s Human Resources Manager. ValleyCare took the deposition of Class Representatives Shaghafi and Van Dusen.. Shaghafi has voluntarily dismissed his individual (non-class) claims against ValleyCare pursuant to a settlement agreement separate and apart from this Stipulation. III. ADDITIONAL RECITALS.1 The Parties are sufficiently familiar with the facts of the Lawsuit and the applicable law 0 1 so as to warrant settlement at this time.. The Parties are represented by competent counsel and have had the opportunity to consult with counsel prior to the submission of this Stipulation to the Court. Pursuant to California Rules of Evidence, this Stipulation and any related documents filed or created in connection with it shall be inadmissible as evidence in any proceeding, except as necessary to approve, interpret or enforce this Stipulation.. ValleyCare denies any liability or wrongdoing of any kind associated with the Alleged Claims, and further denies that, for purposes other than the settling of this Lawsuit, any part of this Lawsuit is appropriate for class treatment. ValleyCare has denied and continues to deny each and every material factual allegation and alleged claim asserted in the Lawsuit. Nothing herein shall constitute an admission by ValleyCare of wrongdoing or liability or of the truth of any factual allegations in the Lawsuit. Nothing herein shall constitute an admission by ValleyCare that the Lawsuit is properly brought on a class or representative basis other than for settlement purposes. To this end, the settlement of the Lawsuit, the negotiation and execution of this Agreement, and all acts (Case No. RG)

1 0 1 performed or documents executed pursuant to or in furtherance of the Settlement: (i) are not, shall not be deemed to be, and may not be used as, an admission or evidence of any wrongdoing or liability on the part of ValleyCare or of the truth of any of the factual allegations in the Lawsuit; (ii) are not, shall not be deemed to be, and may not be used as, an admission or evidence of any fault or omission on the part of ValleyCare in any civil, criminal or administrative proceeding in any court, administrative agency or other tribunal; and (iii) are not, shall not be deemed to be, and may not be used as, an admission or evidence of the appropriateness of these or similar claims for class certification. Nonetheless, ValleyCare has concluded that further litigation would be protracted and expensive, and would also divert management and employee time. ValleyCare has taken into account the uncertainty and risk inherent in litigation. ValleyCare has therefore concluded that it is desirable that the Lawsuit be fully and finally settled in the manner and upon the terms and conditions set forth in this Stipulation.. The Class Representatives and Class Counsel believe that the claims asserted in this lawsuit have merit. Class Counsel is also mindful of the challenges of obtaining class certification and the problems of proving liability and damages and possible defenses to the Alleged Claims. Class Counsel has performed a thorough study of the law and facts relating to the Alleged Claims and has concluded, based upon this investigation and pre-mediation discovery, the sharply contested issues, the expense and time necessary to pursue the action through trial, the risks and costs of further prosecution of the Lawsuit, the uncertainties of complex litigation, and the substantial benefits to the members of the Settlement Class, that a settlement with Defendant on the terms set forth herein is fair, reasonable, adequate and in the best interests of the Settlement Class. Both Class Counsel and the Class Representatives do not believe that the Total Settlement Consideration constitutes the full value of the class s claims against ValleyCare, but for the reasons set forth in this paragraph, believe that the settlement set forth in this Stipulation confers substantial benefits upon the Settlement Class and each of the Class Members. In the event that Plaintiffs declare this agreement null and void pursuant to the introductory paragraph of this Stipulation, Plaintiffs will pursue the full value of their claims, which they believe exceeds the Total Settlement Consideration. (Case No. RG)

. The Class Representatives are entitled to a Service Payment for their risk and service on behalf of the Settlement Class, which includes: (1) Class Representatives Shaghafi and Van Dusen participating in two full days of deposition each, including additional time to prepare for the deposition; () reviewing documents and related discovery; () attending strategy sessions and meetings with Class Counsel; () providing a full general release that is much broader than the Released Claims ; () accepting the potential risk of being liable for the opposing party s costs and/or attorneys fees if Class Counsel was unsuccessful in this lawsuit, and () risking the potential stigma of being the Class Representatives in a class action labor dispute which could affect their future employability in this industry. 1 IV. CONDITIONS PRECEDENT TO EFFECTIVENESS OF STIPULATION.1 The Parties enter into this Stipulation and the Settlement on a conditional basis. This Stipulation and Settlement will become final and effective only upon the occurrence of all of the following events: (A) (B) The Court enters an order granting preliminary approval of the Settlement; The Maximum Settlement Consideration is deposited into an escrow account with the Settlement Administrator after the Court grants preliminary approval; (C) (D) (E) The Court enters an order granting final approval of the Settlement; The Lawsuit is dismissed with prejudice; and The Effective Date occurs, and any challenge to the Settlement, whether by 0 1 objections or appeal, is resolved in favor of enforcement of the Settlement.. Unless the Court orders otherwise or agreed to in writing by the Parties, this Stipulation shall be deemed null and void ab initio upon the failure of any of these five () conditions to occur. V. CONDITIONAL CLASS CERTIFICATION.1 The Parties conditionally stipulate to class certification for purposes of the Settlement only. If the Court does not grant preliminary or final approval of this Settlement or, if appealed, the Settlement is not affirmed, the Parties agree that class certification will automatically be deemed revoked. The Parties will take any other steps necessary to decertify the class. In the event that the (Case No. RG)

class certification for settlement purposes is deemed revoked, then that class certification shall have no precedential value and it shall not be introduced into evidence or used for any other purpose.. For the purposes of the Settlement only, the parties agree that the proposed class meets all requirements for conditional certification of a class for the purposes of settlement. VI. SETTLEMENT CONSIDERATION.1 Payment of the Maximum Settlement Consideration ValleyCare will cause the Maximum Settlement Consideration to be paid in full and final settlement of the lawsuit. The Maximum Settlement Consideration will constitute adequate consideration for this Settlement and will be made in full and final settlement of: (A) (B) The Released Claims during the Class Period; Class Counsel s claim for Attorneys Fees, Litigation Expenses and Settlement 1 Administration Costs; and (C) Any other obligation of the Parties under this Stipulation with the limited 0 1 exception of employer payroll taxes as set forth in Sections... PAGA Penalties From the Maximum Settlement Consideration, ValleyCare will pay ten thousand dollars and no cents ($,000.00) for settlement of any and all Alleged Claims for which penalties under PAGA, Labor Code Section et seq., may be sought or are otherwise available based on the facts alleged in the Complaint. The Class Representatives agree that they have timely exhausted their administrative PAGA remedies. They notified the California Labor Workforce Development Agency ( LWDA ) via certified mail of their PAGA claims and the PAGA claims of the putative class. Pursuant to California Labor Code Section.(a)(), the LWDA notified the Class Representative within thirty (0) days of the postmark date of the Class Representatives notice, that it did not intend to investigate the alleged violation, or no notice was received from the LWDA within thirty-three () calendar days of the postmark date of the Class Representatives notice. The Class Representatives agree they promptly filed a Second Amended Complaint pursuant to Labor Code Section.(a)()(C). Pursuant to the express requirements of Labor Code Section (i), the PAGA Penalty Payment shall be allocated as follows: $,00 (%) to the LWDA for the enforcement of labor laws (Case No. RG)

1 0 1 and education of employers, and $,00 (%) to the Participating Class Members on a pro rata basis. The PAGA Penalty Payments to Participating Class Member are not wages. During the Class Period, ValleyCare contends that its policies with respect to meal periods, rest breaks and timekeeping practices were in full compliance with the California Labor Code and applicable Wage Order. Consequently, ValleyCare contends that no claim for PAGA penalties of any nature is valid. The PAGA claims were at issue and were resolved as a part of the overall settlement of the case.. Payment to Participating Class Members Each Participating Class Member shall receive a Settlement Payment, which is a share of the Net Settlement Consideration based on the number of Compensable Shifts worked by the Participating Class Member during the Class Period. The Settlement Payment for each individual Participating Class Member shall be calculated by dividing the Net Settlement Consideration by the total number of Compensable Shifts worked by all Class Members during the Class Period, and then multiplying that number by the total number of Compensable Shifts worked by the individual Class Member. By way of example only, if the total number of Compensable Shifts worked by all Class Members combined is 1,00 and if the Net Settlement Consideration is $00,000, and if the individual Participating Class Member worked 0 Compensable Shifts (i.e., an employee working days per week for approximately one year), then the Participating Class Member in this example would receive: $,01.0 (i.e., $00,000 divided by 1,00 = $., multiplied by 0). The Parties recognize and agree that the claims raised by the Lawsuit, including specifically the claims for missed meal and rest periods are extremely difficult to determine with any certainty for any given time period, or at all. ValleyCare denies any liability for the Alleged Claims. The Alleged Claims are subject to different calculations and formulae. The Parties also recognize and agree that it would be burdensome and costly to discern exactly which individuals were not provided meal periods or subjected to other alleged Labor Code violations. The Parties hereby agree that the formula for allocating the settlement payments to Participating Class Members provided herein is reasonable and that the settlement payments provided herein are designed to provide a fair settlement to the Class, despite the uncertainties associated with the amounts alleged to be owed. (Case No. RG) 1

1 0 1 Each Participating Class Member shall also receive his or her pro rata share of the $,00 portion of the PAGA Penalty Payment to be distributed to Participating Class Members.. Service Payment to the Class Representatives ValleyCare agrees to pay a Service Payment of fifteen thousand dollars ($,000) to Class Representative Shaghafi and fifteen thousand dollars ($,000) to Class Representative Van Dusen. The additional amounts paid to Shaghafi and Van Dusen are in consideration of their length of time as Class Representatives, their participation in two-day depositions, their contributions to discovery, and their prosecution of this action on behalf of the Class. The Service Payments are to be paid upon Class Counsel s application and the Court s approval. The Class Representatives shall be issued an Internal Revenue Service Form for any Service Payment. The Class Representatives hereby acknowledge that they have obtained no tax advice from ValleyCare and that neither ValleyCare nor its attorneys have made any representation concerning the tax consequences, if any, of the Service Payment. The Class Representatives agree that they are solely responsible for the tax consequences of the Service Payment.. IRS Circular 0 Disclaimer - Each party to this Settlement acknowledges and agrees that (1) no provision of this Settlement, and no written communication or disclosure between or among the Parties or their attorneys and other advisors, is or was intended to be, nor shall any such communication or disclosure constitute or be construed or be relied upon as, tax advice within the meaning of the United States Treasury Department Circular 0 (1 CFR Part, as amended); () the Class Representatives (A) have relied exclusively upon their own, independent legal and tax counsel for advice (including tax advice) in connection with this agreement, (B) have not entered into this Settlement based upon the recommendation of any other party or any attorney or advisor to any other party, and (C) are not entitled to rely upon any communication or disclosure by any attorney or advisor to any other party; and () no attorney or advisor to any other party has imposed any limitation that protects the confidentiality of any such attorney s or advisor s tax strategies (regardless of whether such limitation is legally binding) upon disclosure by the Class Representatives of the tax treatment or tax structure of any transaction, including any transaction contemplated by the Settlement.. For the purpose of calculating applicable taxes for the payments to Participating Class Members (including any payments to the Class Representatives exclusive of their Service Payment), (Case No. RG)

1 0 1 the Parties agree that seventy-five percent (%) of each Settlement Payment constitutes wages in the form of back-pay (and each Participating Class Member will be issued an Internal Revenue Service Form W- for such payment to him or her), and twenty-five percent (%) of each Settlement Payment constitutes interest, penalties and other non-wage payments (and each Participating Class Member will be issued an Internal Revenue Service Form for such payment to him or her). Tax documents will be issued by the Settlement Administrator. ValleyCare shall not be responsible for payroll tax payments on any portion of the Settlement Consideration that is attributable to Attorneys Fees, Litigation Expenses, Settlement Administration Costs, PAGA Penalty Payment, penalties, interest or any Service Payment to a Class Representative. The Parties further understand that the Class Representative and any Participating Class Member who receives any Settlement Payment pursuant to this Stipulation shall be solely responsible for any and all tax obligations associated with such receipt, except as set forth in this section. ValleyCare understands and agrees that it shall be responsible for paying the employer s share of any applicable payroll taxes, including those collected under the authority of the Federal Insurance Contributions Act ( FICA ), separate and apart from, and in addition to, the Maximum Settlement Consideration.. ValleyCare will not use the Settlement Payments to calculate any additional benefits including, for example (but without limitation), vacation, holiday pay, pension, or 01(k) plan contributions. ValleyCare contends that the Settlement Payments do not represent any modification of previously credited hours of service or other eligibility criteria under any employee pension or employee welfare benefit plan sponsored by ValleyCare. Nor does ValleyCare consider the Settlement Payments compensation for purposes of determining eligibility for, or benefit accrual within, an employee pension benefit plan, an employee welfare benefit plan, or other plan sponsored by ValleyCare or its predecessors, subsidiaries, or successors.. Creation of the Settlement Escrow Fund - No later than ten () days following entry of an order granting preliminary approval of the Settlement, ValleyCare will cause the Maximum Settlement Consideration to be deposited in the name of and on behalf of all Class Members and Class Counsel in an interest bearing escrow account established at a bank to be selected by the Settlement Administrator from which all payments to be made under the terms of this Stipulation shall be drawn. (Case No. RG)

1 The Settlement Administrator shall be the only entity authorized to make withdrawals or payments from the Settlement Fund Account. The Settlement Administrator will: (a) acknowledge that it has fiduciary obligations to the Parties, and will attest that it will not allow any disbursements to be made from the Settlement Fund except as expressly authorized by this Stipulation; (b) agree that it will receive no disbursement or fees from the Settlement Fund Account for actions undertaken or expenses incurred without prior approval by Defendant s Counsel and Class Counsel; and (c) acknowledge its obligations to remit the entire Settlement Fund in accordance with the terms of the escrow agreement, in the event that this Stipulation: (i) does not receive final approval of the Court; (ii) is modified or reversed on appeal and/or (iii) is otherwise rendered null and void.. Court Retains Jurisdiction Over Settlement Fund All funds held by the Settlement Administrator shall be deemed and considered to be in custodia legis of the Court, and shall remain subject to the jurisdiction of the Court until such time as such funds shall be distributed pursuant to this Stipulation and/or further order(s) of the Court. VII. ATTORNEYS FEES AND COSTS OF CLASS COUNSEL.1 Class Counsel will submit an application for: (a) an award of Attorneys Fees of no 0 1 more than $00,000 which they estimate to be approximately equal to their lodestar; and (b) an award of actual Litigation Expenses. The amounts set forth in this section will constitute complete consideration for all work performed and expenses incurred to date and for all work to be performed and expenses to be incurred through the completion of the litigation and its settlement. ValleyCare will not oppose a motion for approval of Class Representatives Attorneys Fees and Litigation Expenses consistent with this Section.. The Attorneys Fees and Litigation Expenses shall be paid according to Section. of this Stipulation. VIII. COSTS OF SETTLEMENT ADMINISTRATION.1 Settlement Administration Costs shall include all costs and expenses due to the Settlement Administrator in connection with its administration of the claims including, but not limited to, providing Notice, locating Class Members, processing Exclusion Forms and Settlement Claim (Case No. RG)

Certification Forms, and administering and distributing Settlement Payments to the Settlement Class Members.. The Settlement Administration Costs are to be paid from the Total Settlement Consideration and are not to exceed $,000. IX. NOTICE PROCEDURE.1 Notice to Class Members Within ten () calendar days after preliminary approval of this Settlement Agreement, 1 Defendant will provide to the Settlement Administrator all of the following information about each Class Member in a format requested by the Settlement Administrator: (1) Full Name, () Last Known Address, () Social Security Number, and () the number of Compensable Shifts the employee worked. Not later than fifteen () calendar days following the Date of Preliminary Approval, the Settlement Administrator shall send, via U.S. Mail, to each of the Class Members a Notice of Pendency of Class Action Settlement (hereafter, Notice, Exhibit B), and an Exclusion Form (Exhibit A). The Settlement Administrator shall send each mailing to the Last Known Address of each Class Member.. Updating Last Known Address of Class Members Prior to mailing the Class Notice to each Class Member, the Settlement Administrator shall undertake a Reasonable Address Verification Measure to ascertain the current accuracy of the Last Known Address for each Class Member. The Settlement Administrator will: 0 (A) receive the last-known addresses and social security numbers of Settlement 1 Class Members from ValleyCare; (B) run that list through the United States Postal Service s National Change of Address database; and (C) if necessary, perform address searches using public and proprietary electronic resources that collect data from sources such as utility records, property tax records, motor vehicle records (where permitted), and credit bureaus.. Date of Mailing and Re-Mailing of Notice (Case No. RG)

1 Unless the Settlement Administrator receives a Notice returned from the United States Postal Service, that Notice shall be deemed mailed on the date the Settlement Administrator places the Notice with the United States Postal Service for mailing. In the event that, subsequent to the first mailing and at least seven () days prior to the end of the Notice Period, the Notice is returned by the United States Postal Service to the Settlement Administrator with a forwarding address for the recipient, the Settlement Administrator shall re-mail the Notice to that address no later than the last day of the Notice Period, and the forwarding address will be deemed the Updated Address for that Class Member. In the event that subsequent to the first mailing and at least seven () days prior to the end of the Notice Period the Notice is returned by the United States Postal Service to the Settlement Administrator without a forwarding address (i.e., the address is no longer valid and the envelope is marked Return to Sender ), the Settlement Administrator shall complete a standard skip trace in an effort to ascertain the current address of the particular Class Member in question and, if such address is ascertained, the Settlement Administrator will re-send the Notice no later than the last day of the Notice Period. If no Updated Address is ascertained for that Class Member, the Settlement Administrator will re-send the Notice to the Last Known Address no later than the last day of the Notice Period. For those Class Members who are re-sent the Notice under this Section, the Notice Period shall be extended another fourteen () days beyond the initial Notice Period.. Request for Exclusion Procedure (A) Subject to Court Approval, Class Members shall have sixty (0) days from the 0 1 date that the Settlement Administrator mails the Notice to them (referred to hereafter as the Notice Period ) to properly complete the Exclusion Form and to return it by mail to the Settlement Administrator. The date of mailing of the Exclusion Form is deemed to be the date the form is deposited in the U.S. Mail, postage prepaid, as evidenced by the post-mark. If the last day of the Notice Period falls on a Sunday or legal holiday, the Notice Period shall be deemed to extend through the next business day. Class Members who do not properly and/or timely submit the Exclusion Form become Settlement Class Members and shall be subject to the Settlement and Final Order from the Court. (Case No. RG)

(B) Within five () business days after the expiration of the Notice Period the Settlement Administrator shall notify Class Counsel and Defendant s counsel of (i) the Class Members who have timely requested exclusion from this Settlement. The Settlement Administrator shall identify these Class Members by employee identification number, and provide the estimated settlement payment included in each employee s Notice. (C) In the event that twenty-five percent (%) or more of all Class Members timely 1 0 1 request exclusion (Opt-Out) from the Settlement Class by submitting Exclusion Forms, or Class Members possessing, in the aggregate, claims of twenty-five percent (%) or more of the Net Settlement Consideration, submit timely Exclusion Forms, ValleyCare shall have the absolute right in its sole discretion to revoke and terminate this Agreement in its entirety. If the option to revoke and terminate is exercised pursuant to this paragraph, ValleyCare shall be solely responsible for the Settlement Administration Costs incurred up to the date that ValleyCare revokes and terminates the Agreement.. Objections Any Class Member who wishes to object to the proposed settlement may do so in writing. Class Members may also object at the Final Approval Hearing, either in person or through an attorney at their own expense, provided that the Class Member notifies the Court of his or her intent to do so. All written objections, supporting papers and/or notices of intent to appear at the Final Approval Hearing must (a) clearly identify the case name and number (Shaghafi v. ValleyCare Health System, Case No. RG), (b) be submitted to the Court either by mailing the document(s) to: Clerk of Court, Superior Court of California, County of Alameda, Rene C. Davidson Alameda County Courthouse, Fallon Street, Oakland, California 1 or by filing in person at any location of the Superior Court, County of Alameda that includes a facility for civil filings, (c) also be mailed to Class Counsel and Defense Counsel and (d) be filed or postmarked on or before the date sixty (0) days from the date that the Notice is mailed to them. X. PAYMENT OF CLAIMS.1 ValleyCare s records will be presumed determinative with respect to whether (Case No. RG)

1 0 1 each Class Member is a qualified Class Member, i.e., persons employed by Defendant as Respiratory Therapists who worked at least one shift of three and one-half hours (.) at a ValleyCare Facility in Pleasanton or Livermore during the Class Period. The personnel and payroll records of ValleyCare shall also be presumed correct for determining the number of Compensable Shifts. If for any reason a Class Member disagrees with ValleyCare s records, he or she shall be provided the opportunity to submit any objections along with any supporting documentation to the Settlement Administrator along with his or her Settlement Claim Certification Form. The Settlement Administrator shall have the authority, based on ValleyCare s records and the information provided by the Class Member, to issue a final non-appealable decision with regard to the total Settlement Payment due.. As a condition of receiving any Settlement Payment under this Stipulation, Participating Class Members must not request exclusion from the Settlement and must release the Released Claims. Each Participating Class Member shall be entitled to a payment equal to the sum of the Settlement Payment, less the required taxes and withholdings, plus a pro rata share of the portion of the PAGA Penalty Payment distributed to Participating Class Members. The amount of the Settlement Payment and the pro rata share of the PAGA Penalty Payment shall be determined by the Settlement Administrator. The Settlement Administrator will determine the pro rata share of the PAGA Penalty Payment consistent with Section. of this Stipulation.. Within ten () business days of notice by the Settlement Administrator of the Class Members who have requested exclusion from the Settlement, in accordance with Section., the Settlement Administrator will notify ValleyCare s counsel and Class Counsel of the estimated Settlement Payments owed to each Participating Class Member pending the Court s ruling on the Attorney s Fees, PAGA Payments, Litigation Expenses and Service Payments.. The Settlement Administrator shall be responsible for mailing payments to the Settlement Class Members, as well as issuing payment of any Service Payment, Attorneys Fees and Litigation Expenses. Any Service Payment, Attorneys Fees and Litigation Expenses shall be paid not later than ten () days following the Effective Date, or as otherwise Ordered by the Court.. Not later than ten () days following the Effective Date, the Settlement Administrator shall mail to each Settlement Class Member a check in the amount(s) calculated pursuant to Sections (Case No. RG)

and.1 of this Stipulation. The Settlement Administrator shall be responsible for making any applicable employee payroll or other deductions from the Settlement Payments.. Any checks issued to Participating Class Members shall remain negotiable for a period of at least one hundred eighty (0) days from the date of mailing. The Unclaimed Amount of funds associated with any checks which are not timely negotiated shall be provided as a cy pres award to the Legal Aid Society Employment Law Center (www.las-elc.org), a San Francisco Bay Area non-profit organization dedicated to the protection of the employee rights of Bay Area residents. Participating Class Members who fail to negotiate their check(s) in a timely fashion shall, like all Settlement Class Members, remain subject to the terms of the Settlement and Final Approval Order from the Court. XI. DISMISSAL WITH PREJUDICE.1 After the Settlement Payments have been made as previously detailed herein, the 1 Parties agree to jointly request that the Court immediately enter an order dismissing the Lawsuit with prejudice and to take whatever steps may be necessary to obtain such dismissal with prejudice. XII. RELEASED CLAIMS 1.1 Class Release The Settlement Class Members, on behalf of themselves, and each of their heirs, 0 1 representatives, successors, assigns, and attorneys, hereby compromise, release, resolve, relinquish, discharge and settle each and all of the Released Parties from each of the Released Claims that exist in their favor through the Date of Preliminary Approval. The Settlement Class Members further agree that they will not institute any action or cause of action (in law, in equity or administratively), suits, debts, liens, or claims, known or unknown, fixed or contingent, which they may have or claim to have in state or federal court, or with any state, federal or local government agency (except the Equal Employment Opportunity Commission ( EEOC )) or with any administrative or advisory body, arising from or reasonably attributable to the Released Claims. The Participating Class Members shall specifically agree to the provisions of this Section in the Settlement Claim Certification Form. Released Claims means claims or causes of action that are based on or could have been brought based on the factual allegations in the Second Amended Complaint, including the alleged nonpayment of compensation for meal and rest period violations, and claims arising from that alleged (Case No. RG) 0

1 0 1 nonpayment of compensation for meal and rest period violations, including the alleged nonpayment of wages based on the alleged meal and rest period violations, the alleged failure to pay all wages due at termination based on the alleged meal and rest period violations; the alleged inaccurate wage statements based on these alleged meal and rest violations; the alleged unfair or unlawful business practices based on these alleged meal and rest period violations (including under Business & Professions Code Sections 00 et seq.); the alleged penalties under PAGA (Labor Code, et seq.) based on these alleged meal and rest period violations; and any premiums, penalties, interest, punitive damages, costs, attorneys fees, injunctive relief, declaratory relief, or accounting based on or related to the alleged meal and rest period violations. The Settlement Class Members acknowledge that all rights under California Civil Code Section are hereby waived by them with respect to the Released Claims that they may have against the Released Parties. Section provides: A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor. As such, the Settlement Class Members understand and agree that they are providing the Released Parties with a full and complete release for all known and unknown claims with respect to the Released Claims. 1. Class Representatives Individual Release The Class Representatives agree that the consideration set forth in this Stipulation represents full settlement of all claims that were or could have been raised in the Lawsuit against Released Parties by the Class Representatives. The Class Representatives, on behalf of themselves, and each of their heirs, representatives, successors, assigns, and attorneys, hereby compromise, release, resolve, relinquish, discharge and settle each and all of the Released Parties from any and all claims they have or may have had against any of them arising from and relating to their employment with ValleyCare including, but not limited to the claims alleged in the Lawsuit and any claims for severance, benefits, attorneys fees, breach of contract, breach of the covenant of good faith and fair dealing, violation of public policy, infliction of emotional distress, misrepresentation, fraud, negligent retention/ (Case No. RG) 1

1 0 1 supervision, assault/battery, claims under Title VII of the Civil Rights Act, under the Age Discrimination in Employment Act, under the California Fair Employment and Housing Act, under the Federal Family Medical Leave Act, under the California Family Rights Act, under the California Business and Professions Code, under the Employment Retirement Income and Security Act, under the California Constitution, and any other statutory or common law claims relating to employment. The Class Representatives agree that they will not institute any such action or cause of action (in law, in equity or administratively), suits, debts, liens, or claims, known or unknown, fixed or contingent, which they may have had or claim to have had in state or federal court, or with any state, federal or local government agency, or with any administrative or advisory body arising from or attributable to the Released Parties. The Class Representatives specifically acknowledge that they are aware of and familiar with the provisions of California Civil Code Section, which provides as follows: A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor. The Class Representatives, being aware of this section, hereby expressly waive and relinquish all rights and benefits they may have under this section as well as any other statutes or common law principles of a similar effect. The Class Representatives may hereafter discover facts in addition to or different from those which they now know or believe to be true with respect to the subject matter of the Released Claims, but stipulate and agree that, upon the Effective Date, the Class Representatives shall and hereby do fully, finally and forever settle and release any and all claims against the Released Parties, known or unknown, suspected or unsuspected, contingent or non-contingent, which now exist, or heretofore have existed upon any theory of law or equity and without regard to the subsequent discovery or existence of such different or additional facts. The Class Representatives also agree that, to the extent permitted by law, if a claim is prosecuted in their name against Released Parties before any court or administrative agency, other than the Workers Compensation Appeals Board or EEOC, they waive, and agree not to take, any award of money or other damages from such proceeding based on conduct which occurred prior to the Effective (Case No. RG)