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In re Zoran Corporation Derivative Litigation Settlement:
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.
Settlement Hearing:
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:
For additional information regarding the Derivative Litigation, please
see the document links to the right.
How to Object to the 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.
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