In re Zoran Corporation Derivative Litigation
On June 11, 2008, United States District Judge William Alsup granted preliminary approval of the Stipulation of Settlement in In Re Zoran Corp. Derivative Litigation, a shareholder derivative action in which Lead Plaintiff asserts claims under Section 10(b), Section 14(a) and Section 20(a) of the Securities Exchange Act of 1934, as well as claims under state law for breach of fiduciary duty, constructive fraud, abuse of control, corporate waste, gross mismanagement, unjust enrichment, and rescission. The Complaint alleges, among other things, that from at least 1997 through 2005, the Individual Defendants engaged in unlawful or improper practices related to Zoran’s granting and accounting for stock options (including, but not limited to, “backdating” or otherwise misdating or improperly timing option grants, and not complying with the Company’s option plans); this conduct allegedly resulted in false or misleading financial statements, other false or misleading statements and proxies, improper and/or additional compensation expenses and tax liabilities, and other expenses, including but not limited to those relating to the Special Committee’s investigation and April 20, 2007 restated financials. In addition, Lead Plaintiff has subsequently alleged that certain practices and option grants not specifically asserted in the Consolidated Complaint violated the Company’s stock option plans or are otherwise actionable.
The following is a summary of the terms of the Stipulation of Settlement:
Under the proposed Settlement, the Company has agreed to implement and/or continue various corporate governance measures, including measures related to the granting and administration of stock option grants. These measures are described in the Stipulation of Settlement and represent multi-tiered and comprehensive corporate governance practices involving stock option and other compensation and related disclosure and accounting policies. As additional consideration for this Settlement, a number of the measures previously adopted and the additional measures, identified in Attachment A to the Stipulation of Settlement, shall continue for a period of at least three years.
In addition, (1) the Individual Defendants shall cause to be paid the amount of $3,395,000 in cash to Zoran, of which $296,250 will be paid by Levy Gerzberg, $98,750 will be paid by Karl Schneider, and the remainder will be paid to the Company through applicable insurance; (2) Defendants Gerzberg, Schneider and Stabenow, under no obligation to do so but in order to facilitate this Settlement, have agreed to reprice 101,438 options to the adjusted exercise price reflected in the Company’s April 20, 2007 restatement of financials; and (3) Defendant Gerzberg has voluntarily agreed to cancel certain fully vested options, as calculated in the Stipulation of Settlement using the Black-Scholes methodology with the variable inputs set forth in Exhibit A to the Stipulation.
On August 18, 2008, the Court will hold a Settlement Hearing, for the purpose of considering: (i) whether the Settlement is fair, reasonable, adequate, and in the best interests of the parties, and should be approved by the Court; (ii) whether to enter a Judgment giving final approval to the Settlement (“Judgment”), dismissing the Action with prejudice, and effectuating the releases described below; (iii) whether the Lead Plaintiff’s counsel’s application for attorneys’ fees and expenses should be granted if the Court approves the Settlement; and (iv) such other necessary and proper matters. It is not necessary that any Zoran shareholder appear at the Settlement Hearing.
The Court-approved NOTICE OF PROPOSED SETTLEMENT OF DERIVATIVE ACTION AND OF SETTLEMENT HEARING was mailed to all Zoran shareholders on June 23, 2008. If you are a current Zoran shareholder and have not received a copy of the Notice, you may view or print it by clicking on the link below. For additional details regarding the Derivative Litigation and proposed Settlement, please refer to the following links:
- Stipulation of Settlement as Amended by Court Order
- Proposed Judgment Submitted to the Court Motion for Final Approval of Settlement and Fee Petition
For additional information regarding the Derivative Litigation, please see the case documents toggle on the bottom of the page.
How to Object to a Settlement if You Wish to do So
Zoran shareholders who comply with the procedures set forth in the Notice of Proposed Settlement for objecting or making an appearance (personally or through counsel) may be heard to the extent allowed by the Court regarding the fairness, reasonableness, and adequacy of the Settlement at the Settlement Hearing to be held before the Honorable William H. Alsup on August 18, 2008, at 2:00 p.m., at the courthouse of the United States District Court of Northern District of California, 450 Golden Gate Avenue, San Francisco, California, CA 94102. You are not required to retain your own counsel, but if you choose to do so it will be at your own expense. A shareholder wishing to assert an objection to the Settlement must, by August 4, 2008, fourteen (14) days prior to the Settlement Hearing:
(1) file with the Clerk of the Court proof of ownership of Zoran common stock, including the number of shares of Zoran Common Stock held and the date of purchase, and provide a statement that indicates the nature of such objection, any legal support and/or evidence that such shareholder wishes to bring to the Court’s attention or introduce in support of such objection, and any documentation in support of any objection; and
(2) simultaneously serve copies of such notice, proof, statement and documentation, together with copies of any other papers or briefs such shareholder files with the Court, in person or by mail, upon counsel listed below, provided that if service is made by mail, electronic mail and facsimile service shall be made on counsel listed in the Notice of Proposed Settlement no later than August 4, 2008, fourteen (14) days before the date of the Fairness Hearing.
The Notice of Proposed Settlement gives specific instructions, which must be followed.
For more information please contact attorney Juli E. Farris at 800-360-8904.
- Stipulation of Settlement as Amended by Court Order (6/11/2008)
- Order Preliminarily Approving Settlement (6/11/2008)
- Notice of Proposed Settlement of Derivative Action and of Settlement Hearing (6/20/2008)
- Proposed Final Order Submitted to the Court (7/18/2008)
- Proposed Judgment Submitted to the Court (6/11/2008)
- Stipulation and Order re Notice of Proposed Settlement (6/20/2008)
- Order Approving Notice of Proposed Settlement Subject to Stated Condition (6:12:2008)
- Memorandum of Nominal Defendant Zoran Corporation in Support of Preliminary Approval of Derivative Settlement (5:30:2008)
- Declaration of Steven S. Kaufhold in Support of Preliminary Approval of Derivative Settlement (5:30:2008)
- Declaration of Philip M. Young in Support of Preliminary Approval of Derivative Settlement (5:30:2008)
- Lead Plaintiff’s Motion for Preliminary Approval of Proposed Settlement (5/29/2008)
- Declaration of Juli E. Farris in Support of Lead Plaintiff’s Motion for Preliminary Approval of Proposed Settlement (5:29:2008)
- Affidavit of Chris W. Johnson (5:30:2008)
- Motion for Final Approval of Settlement and Fee Petition (7:18:2008)
- Declaration of Juli E. Farris in Support of Motion for Final Approval and Fee Petition (7:18:2008)
- Order Granting in Part and Denying in Part Motion to Strike and Granting in Part and Denying in Part Motion to Dismiss (6:5:2007)
- Consolidated Verified Derivative Complaint (3:14:2007)