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8-K - COMVERSE TECHNOLOGY INC/NY/ | mm04-0710_8k.htm |
Exhibit
99.1
NOTICE
OF PENDENCY AND SETTLEMENTS
OF
SHAREHOLDER ACTIONS AND OF SETTLEMENT HEARING
TO
ALL HOLDERS OF COMVERSE TECHNOLOGY, INC. STOCK ON APRIL 2 AND 5,
2010
This
Notice has been prepared to let you know of the proposed settlements (the
“Settlements”) of actions brought by several shareholders of Comverse
Technology, Inc. (“Comverse” or the “Company”). As explained below,
the United States District Court for the Eastern District of New York will hold
a hearing on June 21, 2010, at 10:00 a.m. to determine whether to approve the
Settlements. You have an opportunity to be heard at this
hearing.
PLEASE
READ THIS NOTICE CAREFULLY.
IT
MAY AFFECT YOUR LEGAL RIGHTS.
A
Stipulation of Compromise and Settlement was made and entered into as of the
17th day of
December, 2009 (the “Derivative Stipulation”), subject to court approval, by and
between the following parties: (1) plaintiffs Leonard Sollins, Timothy Hill, and
Louisiana Municipal Police Employees’ Retirement System (collectively,
“Derivative Plaintiffs”), each of whom has brought suit derivatively for and on
behalf of nominal defendant Comverse; (2) nominal defendant Comverse; and (3)
the Defendants; all by and through their counsel of record. A copy of
the Derivative Stipulation is attached to the Notice as Exhibit A.
A
Stipulation of Settlement was made and entered into as of the 25th day of March, 2010 (the
“Section 16(b) Stipulation”), subject to court approval, by and between the
following parties: (1) plaintiff Mark Levy, who brought suit under Section 16(b)
of the Securities Exchange Act of 1934 (the “Exchange Act”) for the benefit of
nominal defendant Comverse, (2) defendant Koren, and (3) nominal defendant
Comverse. A copy of the Section 16(b) Stipulation is attached to the
Notice as Exhibit B.
1
I. BACKGROUND
– WHAT ARE THESE SETTLEMENTS ABOUT?
A. The
Derivative Actions
On March
3, 2006, Comverse received a telephone call from The Wall Street Journal
regarding unusual patterns in the Company’s stock option grants. On
March 14, 2006, the Company announced the creation of a Special Committee of its
Board of Directors to review matters relating to the Company’s stock option
grants, including, but not limited to, the accuracy of the stated dates of
option grants and whether all proper corporate procedures were
followed.
In April
of 2006 a shareholder derivative action was filed in the Supreme Court of the
State of New York, County of New York, on behalf of Comverse, against certain of
its current or former officers and directors. The action was
subsequently consolidated with other shareholder derivative actions, which had
been filed against the Company, under the caption In re Comverse Technology, Inc.
Derivative Litigation (the “State Derivative Action”). The
State Derivative Action names as defendants Jacob “Kobi” Alexander, Zvi
Alexander, Zeev Bregman, Dan Bodner, Itsik Danziger, John H. Friedman, Francis
Girard, Ron Hiram, David Kreinberg, Igal Nissim, Sam Oolie, Shawn K. Osborne,
William F. Sorin, Carmel Vernia, Shaula A. Yemini, Yechiam Yemini, and Deloitte
& Touche LLP (“D&T”). In the State Derivative Action, the
plaintiffs allege that each individual defendant is liable to the Company for
causing the Company to engage in a scheme to backdate stock-option
grants. The consolidated complaint asserts claims of breach of
fiduciary duty, waste of corporate assets, unjust enrichment, aiding and
abetting breaches of fiduciary duty, and insider selling. The
complaint also alleges wrongdoing against D&T in connection with its
performance on behalf of the Company. Specifically, as to D&T,
the complaint alleges professional malpractice, breach of contract, and
negligent misrepresentation.
On or
about April 20, 2006, a federal derivative action was filed in the United States
District Court for the Eastern District of New York, on behalf of Comverse,
against current or
2
former
officers and directors of the Company. This shareholder derivative
action was subsequently consolidated under the caption In re Comverse Technology, Inc.
Derivative Litigation (the “Federal Derivative Action”).1 The Federal Derivative Action names
as defendants Jacob “Kobi” Alexander, Zvi Alexander, Raz Alon, Dan Bodner, Zeev
Bregman, Itsik Danziger, John H. Friedman, Francis E. Girard, Ron Hiram, David
Kreinberg, Igal Nissim, Sam Oolie, Shawn Osborne, William F. Sorin, Carmel
Vernia, Shaula A. Yemini, and Yechiam Yemini.2 In the Federal Derivative Action,
plaintiff alleges that the defendants engaged in or benefited from the improper
backdating of stock options, and, as a result, disseminated materially false
financial statements and proxy statements to the shareholders of the
Company. The consolidated complaint asserts claims for breach of
fiduciary duty or the aiding and abetting thereof, insider selling, corporate
waste, unjust enrichment, and violation of section 14(a) of the Exchange
Act.
On
January 10, 2007, Comverse filed its motion to dismiss for failure to make a
pre-suit demand in the State Derivative Action. On March 20, 2007,
State Lead Plaintiffs filed their opposition to Comverse’s motion to
dismiss. By decision and order dated August 7, 2007, Justice Richard
B. Lowe III granted nominal defendant Comverse’s motion to dismiss the State
Derivative Action. On November 7, 2007, the State Lead Plaintiffs
appealed the August 7, 2007 Decision and Order of the State Court.
______________________________
1 The
State Derivative Action and the Federal Derivative Action are referred to
collectively herein as the “Derivative Actions.”
2 All
named defendants in both the State Derivative Action and the Federal Derivative
Action are referred to herein as the “Individual Defendants.” Zvi
Alexander and Carmel Vernia were named as defendants in the Derivative Actions,
but service was never perfected. As former officers and/or directors
of Comverse, they are included as part of the definition of released persons and
will be released as part of the proposed settlement. The Individual
Defendants, nominal defendant Comverse, and D&T are collectively referred to
herein as “Defendants.”
3
On
December 20, 2007, and December 21, 2007, the defendants in the Federal
Derivative Action filed various motions to dismiss. On April 22,
2008, defendants’ motions to dismiss the Federal Derivative Action were held in
abeyance pending the resolution of State Lead Plaintiffs’ appeal in the Supreme
Court of the State of New York, Appellate Division, First
Department. By decision and order dated October 7, 2008, the
Appellate Division, First Department, reversed Justice Lowe’s August 7, 2007
Decision and Order and ordered that the complaint in the State Derivative Action
be reinstated.
The
motions to dismiss in the Federal Derivative Action remain outstanding, and
(other than a motion filed by one of the Individual Defendants, which was
withdrawn without prejudice) motions to dismiss were never filed (or re-filed)
in the State Derivative Action, and the time to respond to the State Derivative
Complaint was extended and has not expired.
On
January 29, 2008, Comverse announced, in a Form 8-K filed with the Securities
and Exchange Commission (“SEC”), the findings and recommendations of the Special
Committee, as well as the steps that the Company and its Board and officers
would take in response thereto. A copy of the January 29, 2008 Form
8-K is attached as Exhibit C.
For
approximately one year, the parties engaged in extensive negotiations, with and
without a mediator’s assistance, regarding a potential settlement of the
Derivative Actions. To that end, counsel for the parties have met in
person, participated in numerous telephonic conferences and other
communications, exchanged information and documents, and conducted confirmatory
investigation. Several parties to the Derivative Actions have also
participated in mediation sessions with Judge Daniel Weinstein. All
such settlement negotiations were conducted at arm’s length and in good
faith. As a result of these settlement negotiations, the parties
ultimately agreed to the terms contained herein.
4
By May
2009 the Parties to the Derivative Actions had agreed upon a settlement with all
Defendants except Jacob “Kobi” Alexander. Thereafter, an agreement
was reached with Mr. Alexander as well. The parties’ agreement was
reached after repeated meetings, both telephonic and in person, between counsel
for Derivative Plaintiffs and Defendants. Counsel for all parties
have independently concluded that the terms of the settlement in the Derivative
Actions are fair, reasonable, and adequate both to the Company and its
shareholders based upon the benefits and protections offered
therein.
The
Derivative Plaintiffs and their counsel believe that the claims asserted in the
complaints have merit. Nevertheless, the Derivative Plaintiffs and
their counsel, considering the terms of the proposed settlement in the
Derivative Actions and the risks associated with the Derivative Plaintiffs’
claims and the litigation, believe that the proposed settlement, described
below, is in the best interests of the Company and its
shareholders. Counsel have evaluated information made available in
the settlement negotiations, and have taken into account the risks and
uncertainties of proceeding with this litigation. Those risks include
the uncertainty of overcoming Defendants’ motions to dismiss, prevailing on the
merits, proving liability and damages at trial, and prevailing on post-trial
motions and likely appeals. Counsel have also taken into
consideration the value of timely relief versus the delay of protracted
litigation, and the substantial time and expense that will be
incurred. Based upon their consideration of all of these factors, as
well as the value of the relief obtained, Derivative Plaintiffs and their
counsel believe that the settlement is in the best interests of the Company and
its Shareholders.
Subject
to a guilty plea entered into by Mr. Sorin in another matter, Defendants deny
any and all liability to Derivative Plaintiffs and the
Company. Defendants, other than Mr. Kreinberg, deny that any of the
claims asserted in the complaints have merit and have agreed to settle the
litigation to avoid the expense and burdens of further
litigation. Mr. Kreinberg neither
5
admits
nor denies the allegations. Comverse denies the allegations made in
the Derivative Actions to the extent the allegations are inconsistent with the
Company’s public filings.
The
respective courts have not determined the merits of Derivative Plaintiffs’
claims or Defendants’ defenses. This Notice does not, and is not
intended to, imply that there have been or would be any findings of a violation
of law by Defendants or that recovery could be had in any amount if the
litigation were not settled.
B. The
Section 16(b) Action
On
February 2, 2007, an action was filed in the United States District Court for
the Southern District of New York, on behalf of Comverse, against Mr. Danziger
and John Does 1-20 pursuant to Section 16(b) of the Exchange Act, to recover
so-called “short-swing profits” (the Section 16(b) Action”). On June
1, 2007, the complaint was amended and captioned Levy v. Koren, No. 07-CV-896
(S.D.N.Y.) (AKH).
Comverse
and Mr. Koren each moved to dismiss the amended complaint on July 6 and August
27, 2007, respectively. Judge Colleen McMahon denied the motions and
directed the parties to conduct limited discovery on the issue of whether Mr.
Koren was an “officer” under Section 16(b) of the Exchange Act. The
parties conducted discovery and, following completion of discovery, Comverse and
Mr. Koren moved for summary judgment on January 15, 2008.
Mr. Koren
denies any wrongdoing. Following the settlement of the Derivative
Actions the parties to the Section 16(b) Action engaged in settlement
negotiations among themselves and determined that it was in the interest of all
parties to simultaneously resolve all section 16(b) claims that were brought for
the benefit of the Company relating to the granting of stock options, along with
all other shareholder claims. Thus the parties moved to transfer the
Section 16(b) Action to the United States District Court for the Eastern
District of New York so
6
that it
could be coordinated with the Derivative Actions for purposes of settlement
only, as judicial and other economies would be achieved by a single consolidated
fairness hearing and notice of settlement. In evaluating the proposed
settlement of the Section 16(b) Action, the parties have considered the
following: the benefit being provided by the proposed settlement, including its
resolution in the context of a global settlement of all shareholder claims
relating to stock options; the uncertainties of the outcome of the Section 16(b)
Action; the cost to Comverse of the Section 16(b) Action in which it is
advancing Mr. Koren’s legal fees pursuant to his employment agreement; the
likelihood that the resolution of the claims in the amended complaint, whenever
and however determined, would be submitted for appellate review; and that
appellate review would prolong a final adjudication of the claims and defenses
asserted, resulting in additional legal fees, which could reduce the amount of
any ultimate recovery (whether on a litigated judgment, if plaintiff were to
prevail, or settlement).
The court
has not determined the merits of plaintiff’s claims or Mr. Koren’s
defenses. This Notice does not, and is not intended to, imply that
there have been or would be any findings of a violation of law by Mr. Koren or
that recovery could be had in any amount if the litigation were not
settled.
II. TERMS
OF THE PROPOSED SETTLEMENTS
A. The
Derivative Actions
The terms
and conditions of the proposed settlement of the Derivative Actions are set
forth in the Stipulation attached as Exhibit A. The following
description of the terms of the proposed settlement is only a
summary.
7
1.
|
Monetary Remedies and
Option Surrenders in the Derivative
Actions
|
a. Jacob
“Kobi” Alexander
Conditioned
upon the final approval of the settlements of the Derivative Actions, the
shareholder class action, captioned In Comverse Technology, Inc.
Securities Litigation, No. 06-CV-1825 (NGG)(RER), pending in the United
States District Court for the Eastern District of New York, and the action
brought against Mr. Alexander by the SEC, captioned SEC v. Alexander, No.
06-CV-03844 (NGG)(RER), pending in the United States District Court for the
Eastern District of New York, as well as the discontinuance with prejudice of
Comverse Technology, Inc. v.
Alexander, No. 08/600142 (N.Y. Sup. Ct., N.Y. Co.), and other certain
events, Mr. Alexander shall contribute a total of $60,000,000 to or for the
benefit of Comverse. The source of the $60,000,000 is a follows: (1)
the cash and securities in Mr. Alexander’s brokerage accounts that have been
seized and frozen by order of the United States District Court, Eastern District
of New York in a forfeiture action brought by the United States Government; (2)
the cash surrender value of Mr. Alexander’s split dollar life insurance
policies; (3) the amount in Mr. Alexander’s Israeli education fund account(s);
(4) the total amount in Mr. Alexander’s Israeli Manager’s Insurance policies
(both pension and severance components); and (5) additional cash
contributions.
b. William
Sorin
Mr. Sorin
will, conditioned upon the dismissal with prejudice of the claims against him in
the Derivative Actions and Comverse Technology, Inc. v.
Alexander, No. 08/600142, and upon the releases and contribution bar
order detailed in the Stipulation, pay $1,000,000 as follows: $500,000 will be
paid into escrow for the benefit of Comverse upon execution of the Stipulation,
and another $500,000 will be paid to Comverse within two years of the Effective
Date of the settlement. In addition, Mr. Sorin will relinquish his
counterclaims against
8
Comverse
seeking approximately $2,206,250 in damages relating to, among other things,
deferred compensation, lost wages, and cancelled or revoked options and
restricted stock.
c. David
Kreinberg
Mr.
Kreinberg will, conditioned upon the dismissal with prejudice of the claims
against him in the Derivative Actions and Comverse Technology, Inc. v.
Kreinberg, No. 09/600052, and upon the releases and contribution bar
order detailed in the Stipulation, pay $75,000 into escrow for the benefit of
Comverse within ten days of entry of the United States District Court for the
Eastern District of New York’s Order preliminarily approving the
settlement. In addition, Mr. Kreinberg will relinquish his
counterclaims against Comverse seeking approximately $4,300,000 in damages
relating to, among other things, deferred compensation, lost wages, and
cancelled or revoked options and restricted stock and an additional
approximately $1,000,000 in attorneys’ fees for which Mr. Kreinberg has been
seeking indemnification from the Company.
d. D&T
D&T
will, conditioned upon the dismissal with prejudice of the claims against it in
the State Derivative Action and upon the releases and contribution bar order
detailed in the Stipulation, pay $275,000 into escrow for the benefit of
Comverse.
e. John H.
Friedman
Mr.
Friedman will, conditioned upon the dismissal with prejudice of the claims
against him in the Derivative Actions and upon the releases and contribution bar
order detailed in the Stipulation, relinquish all of his 71,000 outstanding
unexercised options. In addition, Mr. Friedman will forfeit any
claims concerning deferred compensation or the grant or exercise of any options,
except claims concerning his interest in 6,500 vested shares of deferred
stock.
9
f. Sam
Oolie
Mr. Oolie
will, conditioned upon the dismissal with prejudice of the claims against him in
the Derivative Actions and upon the releases and contribution bar order detailed
in the Stipulation, relinquish all of his 44,000 outstanding unexercised
options. In addition, Mr. Oolie will forfeit any claims concerning
deferred compensation or the grant or exercise of any options, except claims
concerning his interest in 6,500 vested shares of deferred stock and his alleged
and disputed interest in up to 11,000 warrants.
g. Ron
Hiram
Mr. Hiram
will, conditioned upon the dismissal with prejudice of the claims against him in
the Derivative Actions and upon the releases and contribution bar order detailed
in the Stipulation, relinquish 40,500 of the outstanding unexercised options he
holds. In addition, Mr. Hiram will forfeit any claims concerning
deferred compensation or the grant or exercise of the 40,500 outstanding
unexercised options discussed above, except claims concerning his interest in
4,000 vested shares of deferred stock.
h. Comverse’s
Insurance Carrier
Comverse’s
insurance carrier, on behalf of the Individual Defendants except for Mr.
Alexander, Mr. Sorin, and Mr. Kreinberg, will pay $1,000,000 to
Comverse.
2.
|
Corporate
Governance
|
In
connection with resolving the Derivative Actions, Comverse has taken certain
actions and adopted certain policies including, but not limited to:
|
a.
|
All
directors who served on the Board at any time during which stock options
were backdated are no longer on the
Board.
|
|
b.
|
Other
than the Chief Executive Officer, all members of the Board will be
“independent” as defined by heightened standards adopted by the
Board.
|
|
c.
|
The
senior management in place at the Company when the Special Committee began
its investigation is no longer with the
Company.
|
10
|
d.
|
The
Company has made the following changes to its management team: (1) the
hiring of a new Chief Executive Officer; (2) the hiring of a new General
Counsel; (3) the hiring of a new Chief Financial Officer; (4) the hiring
of a new Compliance Officer;
(5)
the hiring of a new Executive Vice President, Global Human Resources; and
(6) the hiring of a Chief Accounting
Officer.
|
|
e.
|
The
Chairman of the Board will be an independent
director.
|
|
f.
|
The
positions of Chairman of the Board and Chief Executive Officer will be
held by different persons.
|
|
g.
|
The
Board’s Corporate Governance Guidelines and Principles, all committee
charters, and the Company’s Employee Code of Business Conduct and Ethics
were reviewed and revised.
|
|
h.
|
All
nonemployee directors will hold one-half of all stock received as
compensation (after sale of that portion that may be necessary for payment
of tax liability) for at least as long as they continue to serve on the
Board.
|
|
i.
|
The
Company’s bylaws were amended to permit certain long-term substantial
shareholders to propose, in the Company’s own proxy materials, nominees
for election as directors (proxy
access).
|
|
j.
|
The
Board adopted a policy that provides, among other things, that: (1) as a
condition for nomination or re-nomination, a director nominee will agree
to submit a letter of resignation from the Board if the director fails to
receive a majority of the votes cast in an uncontested election, and (2)
if a resignation is submitted, the Board will decide, through a process
managed by the Corporate Governance and Nominating Committee (and
excluding the nominee in question), whether to accept such resignation, it
being expected that the Board will accept the resignation absent a
compelling reason to the contrary (a Form 8-K to be filed to disclose the
Board’s explanation of its
decision).
|
|
k.
|
The
Board adopted a policy requiring directors to attend the annual meeting of
shareholders absent unusual
circumstances.
|
|
l.
|
A
Board Development Program is in the process of being developed, which will
encourage directors to attend at least one director development program or
conference per year.
|
|
m.
|
The
Board adopted a policy that at least one member of the Audit Committee
will qualify as an “audit committee financial expert” as defined by the
SEC.
|
|
n.
|
An
internal audit unit that reports directly to the Audit Committee was
created.
|
|
o.
|
The
Special Committee has determined that all equity grants shall require
approval of both the Compensation Committee and a majority of the
nonemployee members of
|
11
the Board, unless and until a new stock incentive compensation plan has been approved. |
The
Defendants acknowledge and agree that the pendency of the Derivative Actions was
a contributing factor underlying Comverse’s decision to implement the above
actions.
3.
|
Releases in the
Derivative Actions
|
If the
settlement in the Derivative Actions is approved by the respective courts, then
upon the Effective Date of the settlement, the Derivative Plaintiffs, on behalf
of themselves, and their Related Persons, Comverse, and any Comverse
Shareholder, release any Released Claims they may have against any of the
Released Persons. Derivative Plaintiffs also release all claims
against the Defendants’ counsel related to the defense of the Derivative
Actions.
“Related
Persons” means with respect to any Person, such Person’s present and former
parent entities, subsidiaries (direct or indirect) and affiliates, and each of
their respective present and former shareholders, general partners, limited
partners, affiliates, divisions, joint ventures, partnerships, officers,
directors, principals, employees, agents, representatives, attorneys, insurers,
excess insurers, experts, advisors, investment advisors, underwriters,
fiduciaries, trustees, auditors, accountants, representatives, spouses and
immediate family members, and the predecessors, heirs, legatees, successors,
assigns, agents, executors, devisees, personal representatives, attorneys,
advisors and administrators of any of them, and the predecessors, successors,
and assigns of each of the foregoing, and any other Person in which any such
Person has or had a controlling interest or which is or was related to or
affiliated with such Person, and any trust of which such Person is the settlor
or which is for the benefit of such Person or member(s) of his or her
family. With respect to D&T, the definition of Related Persons
includes Deloitte; provided, however, that David Kreinberg shall not be
considered or included as a Related Person of D&T or Deloitte as defined
herein. “Person” means a natural person, individual, corporation,
partnership, limited partnership, limited liability
partnership,
12
limited
liability company, association, joint venture, joint stock company, estate,
legal representative, trust, unincorporated association, government or any
political subdivision or agency thereof, any business, or legal
entity.
“Released
Claims” means any statutory or common law claims, rights, demands, suits,
matters, issues, or causes of action under federal, state, local, foreign law,
or any other law, rule, or regulation, including any claim for breach of
fiduciary duty, insider trading, misappropriation of information, failure to
disclose, abuse of control, breach of Comverse’s policies or procedures, waste,
mismanagement, gross mismanagement, unjust enrichment, misrepresentation, fraud,
breach of contract, negligence, breach of duty of care or other duty, violations
of law, money damages, injunctive relief, corrective disclosure, damages,
penalties, disgorgement, restitution, contribution, indemnity, interest,
attorneys’ fees, expert or consulting fees, and any and all other costs,
expenses, or liability whatsoever, whether based on federal, state, local,
foreign, statutory, common law, or any other law, rule, or regulation, whether
fixed or contingent, accrued or un-accrued, liquidated or un-liquidated, at law
or in equity, matured or un-matured, whether known or Unknown, that were
asserted, or could have been asserted in the Derivative Actions by Comverse,
Derivative Plaintiffs, or any Comverse Shareholder, derivatively on behalf of
Comverse, in any court of competent jurisdiction or any other adjudicatory
tribunal, against the Released Persons in connection with, arising out of,
related to, based upon, in whole or in part, directly or indirectly, in any way,
to the facts, transactions, events, occurrences, acts, disclosures, oral or
written statements, representations, filings, publications, disseminations,
press releases, presentations, accounting practices or procedures, compensation
practices or procedures, omissions or failures to act which were or which could
have been alleged or described in the Derivative Actions by Comverse, Derivative
Plaintiffs, or any Comverse Shareholder, derivatively on behalf of
Comverse. The “Released Claims” include
13
but are
not limited to any and all claims related to or arising out of the matters
reported in Comverse’s Form 8-Ks dated November 5, 2007, January 29, 2008, March
16, 2009, and April 27, 2009; Comverse’s compensation practices; Comverse’s
backdating of options; Comverse’s administration of a secret options reserve
fund; Comverse’s recycling of unexercised options from departed employees to
other employees, or any other Comverse options dating or granting practice,
procedure, or policy; Comverse’s issuance and administration of employee stock
options; Comverse’s earnings manipulation, finances, or accounting; Comverse’s
public filings and statements; revenue recognition issues; payments made by
individuals in foreign jurisdictions on behalf of Comverse or its Related
Persons; audits or reviews of Comverse’s consolidated financial statements for
the fiscal year ended January 31, 2005, the first three quarters of the fiscal
year-end January 31, 2006, or any prior period; the Report of the Special
Committee, the Shareholder Class Action, the FBI affidavit in support of arrest
warrants issued against defendants Alexander, Kreinberg, and Sorin, or the SEC’s
complaints against defendants Alexander, Kreinberg, and Sorin that were
asserted, or could have been asserted in the Derivative Actions by Comverse,
Derivative Plaintiffs, or any Comverse Shareholder, derivatively on behalf of
Comverse. Notwithstanding any of the foregoing, the Released Claims
do not include any nonderivative class claims or claims that already have been
asserted in the Shareholder Class Action.
“Released
Persons” means each and all of the Defendants, and each and all of their
respective Related Persons.
Upon the
Effective Date, each Defendant, on behalf of himself or itself and on behalf of
his or its respective Related Persons, releases any Released Defendants’ Claims
they may have against any of the Derivative Plaintiffs and Derivative
Plaintiffs’ Counsel and their
14
subsidiaries,
affiliates, members, directors, officers, employees, partners, agents, heirs,
administrators, successors, and assigns.
Upon the
Effective Date, each Defendant and his or its Related Persons shall be deemed to
have, and by operation of this Stipulation shall have fully, finally, and
forever released, relinquished, and discharged each other and their respective
Related Persons from all claims (including Unknown Claims), arising out of,
relating to, or in connection with the Released
Claims. Notwithstanding any other provision of the Stipulation or
anything contained in any Exhibit (i.e., the Stipulation’s exhibits) to the
contrary, nothing in the Stipulation or in any Exhibit (i.e., the Stipulation’s
exhibits) shall be construed to (a) release, discharge, extinguish, or otherwise
compromise any claims or potential claims that Comverse or any Person who is or
was a defendant in the Derivative Actions may have under or relating to any
policy of liability or other insurance, (b) release, discharge, extinguish, or
otherwise compromise any obligation owed to Comverse or any Person who is or was
a defendant in the Derivative Actions by an insurer, co-insurer, or reinsurer,
or (c) release or discharge any claim by Deloitte (as defined in the
Stipulation) for professional fees now due and owing, or that in the future may
become due and owing, by Comverse or any of its affiliates for professional
services rendered. Notwithstanding anything in this paragraph, the
exchange of releases between Mr. Alexander and Comverse and the scope of such
releases shall be in accordance with the terms set forth in Exhibit C to the
Stipulation.
B. The
Section 16(b) Action
The terms
and conditions of the proposed settlement of the Section 16(b) Action are set
forth in the Section 16(b) Stipulation attached as Exhibit B. The following
description of the terms of the proposed Section 16(b) settlement is only a
summary.
15
1. Monetary Remedies and Option
Surrender in the Section 16(b) Action
Mr. Koren
will pay $150,000 to the Company on or before the tenth business day after the
order approving the section 16(b) settlement becomes final. Mr. Koren
will also, conditioned upon the order approving the settlement becoming final,
relinquish all right, title, and interest that he has in 92,500 outstanding
unexercised options to acquire shares of the Company’s common stock and agrees
that all rights to exercise such options, including his rights under stock
option grant agreements, shall be cancelled and shall be deemed null and
void.
2. Releases in the Section
16(b) Action
Mr. Koren
releases, waives, and forfeits any and all claims against Comverse, its
affiliated companies, subsidiaries, directors, and officers relating to deferred
compensation or Comverse’s purchase of his equity interest in investments, or
any other compensation relating to his employment.
Plaintiff
in the Section 16(b) Action and Comverse jointly and severally release and
discharge Mr. Koren and any and all current and former directors and officers
(including the “John Does” referenced in the Amended Complaint) of the Company
from claims for alleged violations of Section 16(b) of the Exchange Act and Rule
16a-1 (17 C.F.R. § 240.16a-1) promulgated thereunder, including from any and all
liability and damages under or based upon any and all, known or unknown, alleged
violations of Section 16(b) of the Exchange Act and Rule 16a-1 (17 C.F.R. §
240.16a-1) promulgated thereunder, that
have been, could have been, or might have been asserted in the Section 16(b)
Action, on behalf of plaintiff, any other person or entity, Comverse, and/or any
and all owners of any security (as defined in Section 3(a)(10) of the Exchange
Act) issued by Comverse, or any of them, whether individually, directly,
representatively, derivatively or in any other capacity, against Mr.
Koren.
16
III. ATTORNEYS’
FEES AND EXPENSES
A. The
Derivative Actions
Derivative
Plaintiffs’ Counsel shall apply for an award of attorneys’ fees and
reimbursements for Derivative Plaintiffs’ Counsel (the “Derivative Fee and
Expense Application”) not to exceed $9,350,000 and to be paid by Comverse,
subject to court approval.
Derivative
Plaintiffs’ Counsel in the Derivative Actions are: Bernstein Litowitz Berger
& Grossmann LLP, 1285 Avenue of the Americas, New York, New
York 10019; Barroway Topaz Kessler Meltzer & Check, LLP, 280 King
of Prussia Road, Radnor, Pennsylvania 19087; and Milberg LLP, One
Penn Plaza, New York, New York 10119-0165.
The
application for attorneys’ fees will be submitted on behalf of Plaintiffs’
Counsel and the following additional counsel in the Derivative Actions: Ballon
Stoll Bader & Nadler, P.C., 1450 Broadway, 14th Floor, New York, New
York 10018; Berman DeValerio, One Liberty Square, Boston,
Massachusetts 02109; Brower Piven, 488 Madison Avenue, Eighth Floor,
New York, New York 10022; Faruqi & Faruqi, LLP, 369 Lexington
Avenue, 10th Floor, New York, New York 10017-6531; Gardy & Notis,
LLP, 560 Sylvan Avenue, Englewood Cliffs, New Jersey 07632; Law
Offices Bernard M. Gross, P.C., Suite 450, The Wanamaker Building, Juniper and
Market Streets, 100 Penn Square East, Philadelphia,
Pennsylvania 19107; Harwood Feffer LLP, 488 Madison Avenue, 8th
Floor, New York, New York 10022; and The Weiser Law Firm, P.C., 121
N. Wayne Avenue, Suite 100, Wayne, Pennsylvania 19087.
B. The
Section 16(b) Action
Plaintiff’s
counsel in the Section 16(b) Action shall apply for an award of attorneys’ fees
and reimbursements (the “Section 16(b) Fee and Expense Application”) not to
exceed $250,000 and to be paid by Comverse, subject to court
approval.
Plaintiff’s
counsel in the Section 16(b) Action is Abraham Fruchter & Twersky LLP, One
Penn Plaza, Suite 2805, New York, New York 10119.
17
IV. SETTLEMENT
HEARING AND YOUR RIGHT TO OBJECT
The
Honorable Nicholas G. Garaufis of United States District Court for the Eastern
District of New York, will hold a hearing (the “Settlement Hearing”) on June 21,
2010, at 10:00 a.m. at the United States Courthouse, 225 Cadman Plaza East,
Brooklyn, New York 11201, to consider whether to grant final approval of the
proposed Settlements. You have a right to appear in person or through
counsel at the Settlement Hearing to object to the terms of the proposed
Settlements or otherwise present evidence or argument that may be proper and
relevant. However, you shall not be heard, and no papers, briefs, or
other documents provided by you shall be received and considered by the court
(unless the court in its discretion shall thereafter otherwise direct, upon
application of such person and for good cause shown), unless not later than May
24, 2010, you file with the Court:
(a) a written
notice of intention to appear;
(b) competent
evidence that you held shares of Comverse common stock as of April 2, 2010, if
you are objecting to the Settlement of the Derivative Actions, or April 5, 2010,
if you are objecting to the Settlement of the Section 16(b) Action, and that you
continue to hold shares of Comverse common stock as of the date of the
Settlement Hearing; and
(c) a
statement of your objections to any matters before the Court, the grounds
therefor or the reasons for your desiring to appear and be heard, as well as all
documents or writings you desire the Court to consider.
The
addresses for filing and serving objections to the Derivative Actions
are:
18
The
Court:
|
Clerk
of Court
United
States Courthouse
225
Cadman Plaza East
Brooklyn,
New York 11201
|
Attorneys
for Plaintiff Louisiana Municipal Police Employees’ Retirement System in
the Federal Derivative Action:
|
Steven
B. Singer
BERNSTEIN
LITOWITZ BERGER
&
GROSSMANN LLP
1285
Avenue of the Americas
New
York, New York 10019
|
Attorneys
for Plaintiffs Leonard Sollins and Timothy Hill in the State Derivative
Action:
|
Benjamin
Y. Kaufman
MILBERG
LLP
One
Penn Plaza
New
York, New York 10119-165
|
Eric
L. Zagar
BARROWAY
TOPAZ KESSLER MELTZER & CHECK, LLP
280
King of Prussia Road
Radnor,
Pennsylvania
|
|
Attorneys
for Nominal Defendant Comverse Technology, Inc.:
|
Daniel
J. Horwitz
DICKSTEIN
SHAPIRO LLP
1633
Broadway
New
York, New York 10019
|
Attorneys
for Defendant Jacob “Kobi” Alexander:
|
Jeremy
Temkin
MORVILLO,
ABRAMOWITZ, GRAND,
IASON,
ANELLO & BOHRER, P.C.
565
Fifth Avenue
New
York, New York 10017
|
The
addresses for filing and serving objections to the Section 16(b) Action
are:
The
Court:
|
Clerk
of Court
United
States Courthouse
225
Cadman Plaza East
Brooklyn,
New York 11201
|
Attorneys
for Plaintiff Mark Levy:
|
Mitchell
M.Z. Twersky
ABRAHAM
FRUCHTER & TWERSKY LLP
One
Penn Plaza
Suite
2805
New
York, New York 10119
|
19
Attorneys
for Nominal Defendant Comverse Technology, Inc.:
|
Miranda
S. Schiller
WEIL,
GOTSHAL & MANGES LLP
767
Fifth Avenue
New
York, New York 10153
|
Attorneys
for Defendant Koren:
|
Seth
T. Taube
BAKER
BOTTS LLP
30
Rockefeller Plaza
New
York, New York 10112
|
Even if
you do not appear at the Settlement Hearing, the court will consider your
written submission. Unless the court otherwise directs, you shall not
be entitled to object to the approval of the Settlements, to any order and final
judgment entered thereon, to the Derivative or Section 16(b) Fee and Expense
Applications, or to otherwise be heard, except by serving and filing a written
objection and supporting papers and documents as prescribed
above. If you fail
to object in the manner and within the time prescribed above you shall be deemed
to have waived your right to object (including the right to appeal) and shall
forever be barred, in this proceeding or in any other proceeding, from raising
such objection(s).
IV. FURTHER
INFORMATION
For more
details about the matters involved in the Derivative Actions, you may inspect
the case files of the United States District Court for the Eastern District of
New York for In re Comverse
Technology. Inc. Derivative Litigation, No. 06-Civ-1849 (NGG)(RER), at
the Courthouse located at 225 Cadman Plaza East, Brooklyn, New York 11201, and
of the New York Supreme Court for In re Comverse Technology, Inc.
Derivative Litigation, Case No. 601272/06, at the Courthouse located at
60 Centre Street, New York, New York 10007 during regular business
hours. Any other inquiries regarding the Derivative Actions should be
addressed in the first instance to Derivative Plaintiffs Counsel:
20
Attorneys
for Plaintiff Louisiana Municipal Police Employees’ Retirement System in
the Federal Derivative Action:
|
Mark
Lebovitch
Steven
B. Singer
Laura
Helen Gundersheim
BERNSTEIN
LITOWITZ BERGER
&
GROSSMANN LLP
1285
Avenue of the Americas
New
York, New York 10019
(212)
554-1400
|
Attorneys
for Plaintiffs Leonard Sollins and Timothy Hill in the State Derivative
Action:
|
Benjamin
Y. Kaufman
Neil
Fraser
Todd
L. Kammerman
MILBERG
LLP
One
Penn Plaza
New
York, New York 10119-0165
(212)
594-5300
|
Eric
L. Zagar
Michael
Wagner
Tara
P. Kao
BARROWAY
TOPAZ KESSLER MELTZER & CHECK, LLP
280
King of Prussia Road
Radnor,
Pennsylvania
(610)
822-2209
|
For more
details about the matters involved in the Section 16(b) Action, you may inspect
the case files of the United States District Court for the Eastern District of
New York for In re Comverse
Technology. Inc. Derivative Litigation, No. 06-Civ-1849 (NGG)(RER), at
the Courthouse located at 225 Cadman Plaza East, Brooklyn, New York 11201, and
of the United States District Court for the Southern District of New York for
Levy v. Koren, No.
07-Civ-896, at the Courthouse located at 500 Pearl Street, New York,
NY 10007 during regular business hours. Any other
inquiries regarding the Section 16(b) Action should be addressed in the first
instance to counsel for plaintiff in the Section 16(b) Action:
21
Attorneys
for Plaintiff Mark Levy
|
Mitchell
M.Z. Twersky
ABRAHAM
FRUCHTER & TWERSKY LLP
One
Penn Plaza
Suite
2805
New
York, New York 10119
(212)
279-5050
|
PLEASE
DO NOT CALL OR DIRECT ANY INQUIRIES TO THE COURTS.
DATED:
April 7, 2010
|
BY
ORDER OF THE COURT
UNITED
STATES DISTRICT COURT
EASTERN
DISTRICT OF NEW YORK
|
22
EXHIBIT
A
UNITED
STATES DISTRICT COURT
EASTERN
DISTRICT OF NEW YORK
IN
RE COMVERSE TECHNOLOGY, INC. DERIVATIVE LITIGATION
|
06-CV-1849
(NGG)(RER)
|
SUPREME
COURT OF THE STATE OF NEW YORK
COUNTY OF
NEW YORK
IN
RE COMVERSE TECHNOLOGY, INC. DERIVATIVE LITIGATION
|
No.
601272/06
Hon.
Richard B. Lowe III, J.S.C.
|
STIPULATION OF COMPROMISE
AND SETTLEMENT
This Stipulation of Compromise and
Settlement is made and entered into as of the 17th day of December, 2009
(the “Stipulation”), subject to the approval of the respective courts, by and
between the following parties to the above-entitled actions (the “Derivative
Actions”): (1) plaintiffs Leonard Sollins, Timothy Hill, and Louisiana Municipal
Police Employees’ Retirement System (collectively, “Plaintiffs”), each of whom
has brought suit derivatively for and on behalf of nominal defendant Comverse
Technology, Inc. (“Comverse” or the “Company”); (2) nominal defendant Comverse;
and (3) the Defendants (as defined in Section 1.6); all by and through their
counsel of record (collectively, the “Parties,” as defined in Section
1.19). This Stipulation is intended by the Parties to fully, finally,
and forever resolve, discharge, and settle the Released Claims (as defined in
Section 1.26), upon and subject to the terms and conditions hereof.
I.
|
DEFINITIONS
|
As used
in this Stipulation, the following terms shall have the meanings specified
below:
Exhibit A
- 1
1.1 “Alexander
Apartments” means the seven apartments titled in Jacob “Kobi” Alexander’s name,
which are the subject of a pre-judgment attachment order (the “Order of
Attachment”) entered in Comverse Technology, Inc. v. Jacob
“Kobi” Alexander, No. 600142/08, pending
in the Supreme Court of the State of New York.
1.2 “Board”
means the Board of Directors of Comverse.
1.3 “Civil
Forfeiture Action” means United States of America v. All
Funds on Deposit at: Citigroup Smith Barney Account No. 600-00338 held in the
name of Kobi Alexander and Citigroup Smith Barney Account No. 600-27694 held in
the name of Kobi J. Alexander, No. 06-CV-03730 (NGG)(RER), pending in the
United States District Court for the Eastern District of New York.
1.4 “Compensation
Committee” means the committee, formerly known as the Remuneration and Stock
Option Committee, comprised of members of the Comverse Board that has overall
responsibility for the compensation of the Company’s directors and executive
officers, and for approving the director and officer compensation plans,
policies, and programs of the Company.
1.5 “Complaints”
means the Consolidated and Amended Shareholder Derivative Complaint filed in the
State Derivative Action and the Consolidated, Amended and Verified Shareholder
Derivative Complaint filed in the Federal Derivative Action,
collectively.
1.6 “Defendants”
means Comverse, D&T, and the Individual Defendants.
1.7 “Deloitte”
means Deloitte & Touche LLP (“D&T”), Deloitte LLP (formerly known as
Deloitte & Touche USA LLP), Deloitte Consulting LLP, Deloitte Tax LLP,
Deloitte Financial Advisory Services LLP, Deloitte Touche Tohmatsu (“DTT”) and
any and all DTT associate and member firms, all their respective, past, present
and future parent companies,
Exhibit A
- 2
subsidiaries,
affiliates, divisions, related entities, joint venturers, subcontractors,
agents, attorneys, insurers, subrogees, co-insurers and reinsurers, all their
respective, past, present and future officers, directors, employees, members,
partners, principals, shareholders and owners, and all their respective heirs,
executors, administrators, personal representatives, predecessors, successors,
transferees, and assigns; except that David Kreinberg is not included in the
definition of Deloitte and is specifically excluded from the definition of
Deloitte. D&T is a defendant in only the State Derivative
Action.
1.8 “Derivative
Actions” means the State Derivative Action and the Federal Derivative Action,
collectively.
1.9 “Direct
Actions” means the actions brought by Comverse against Jacob “Kobi” Alexander
and William Sorin in the Supreme Court of the State of New York, Comverse Technology, Inc. v.
Alexander, No. 08/600142, and against David Kreinberg in the Supreme
Court of the State of New York, Comverse Technology, Inc. v.
Kreinberg, No. 09/600052.
1.10 “Effective
Date” means the date of completion of the following: (a) entry of an Order and
Final Judgment approving in all material respects this Stipulation; (b) entry of
an Order dismissing with prejudice the State Derivative Action; and (c) either
(1) expiration of the time to appeal or otherwise seek review of the Order and
Final Judgment and the order dismissing the State Derivative Action, without any
appeal having been taken or review sought, or (2) if an appeal is taken or
review sought, the expiration of five (5) days after an appeal or review shall
have been dismissed or finally determined by the highest court before which such
appeal or review is sought and which affirms the material terms of such
settlement and/or Order and Final Judgment and/or order dismissing the State
Derivative Action and is not subject to further judicial
review.
Exhibit A
- 3
1.11 “Federal
Court” means the United States District Court for the Eastern District of New
York.
1.12 “Federal
Derivative Action” means In re
Comverse Technology, Inc., No. 06-CV-1849 (NGG)(RER), pending in the
United States District Court for the Eastern District of New York, before the
Honorable Nicholas Garaufis.
1.13 “Federal
Dismissal” means the entry of an order dismissing with prejudice the Federal
Derivative Action.
1.14 “Federal
Lead Plaintiff” means Louisiana Municipal Police Employees’ Retirement
System.
1.15 “Individual
Defendants” means Jacob “Kobi” Alexander (“Mr. Alexander” or “Alexander”), Raz
Alon, Dan Bodner, Zeev Bregman, Itsik Danziger, John H. Friedman, Francis
Girard, Ron Hiram, David Kreinberg, Igal Nissim, Sam Oolie, Shawn K. Osborne,
William F. Sorin, Shaula A. Yemini, and Yechiam Yemini. Individual
Defendant Raz Alon is a defendant in only the Federal Derivative Action.1
1.16 “Nominal
Defendant” means Comverse.
1.17 “Notice”
means the Notice of Pendency and Settlement of Derivative Actions and of
Settlement Hearing, substantially in the form submitted contemporaneously
herewith as Exhibit 1 to Exhibit A.
1.18 “Order
and Final Judgment” means an order and final judgment substantially in the form
of Exhibit B hereto.
1.19 “Parties”
means collectively, Plaintiffs, Defendants, and Nominal Defendant.
_________________________
1 Zvi
Alexander and Carmel Vernia were named as defendants in the Derivative Actions,
but service was never perfected. As former officers and/or directors
of Comverse, they are included as part of the definition of Released Persons and
will be released as part of the proposed Settlement.
Exhibit A
- 4
1.20 “Person”
means a natural person, individual, corporation, partnership, limited
partnership, limited liability partnership, limited liability company,
association, joint venture, joint stock company, estate, legal representative,
trust, unincorporated association, government or any political subdivision or
agency thereof, any business, or legal entity.
1.21 “Plaintiffs”
means Leonard Sollins, Timothy Hill, and Louisiana Municipal Police Employees’
Retirement System.
1.22 “Plaintiffs’
Counsel” means Milberg LLP; Barroway Topaz Kessler Meltzer & Check, LLP; and
Bernstein Litowitz Berger & Grossmann LLP.
1.23 “Preliminary
Order” means an order substantially in the form of Exhibit A hereto,
preliminarily approving the Settlement and directing notice thereof to
shareholders.
1.24 “Publication
Notice” means the Summary Notice of Pendency and Settlement of Derivative
Actions and of Settlement Hearing, substantially in the form submitted
contemporaneously herewith as Exhibit 2 to Exhibit A.
1.25 “Related
Persons” means, with respect to any Person, such Person’s present and former
parent entities, subsidiaries (direct or indirect) and affiliates, and each of
their respective present and former shareholders, general partners, limited
partners, affiliates, divisions, joint ventures, partnerships, officers,
directors, principals, employees, agents, representatives, attorneys, insurers,
excess insurers, experts, advisors, investment advisors, underwriters,
fiduciaries, trustees, auditors, accountants, representatives, spouses and
immediate family members, and the predecessors, heirs, legatees, successors,
assigns, agents, executors, devisees, personal representatives, attorneys,
advisors and administrators of any of them, and the predecessors, successors,
and assigns of each of the foregoing, and any other Person in which any such
Person has or had a controlling interest or which is or was related to or
affiliated with
Exhibit A
- 5
such
Person, and any trust of which such Person is the settlor or which is for the
benefit of such Person or member(s) of his or her family. With
respect to D&T, the definition of Related Persons includes Deloitte;
provided, however, that David Kreinberg shall not be considered or included as a
Related Person of D&T or Deloitte as defined herein.
1.26 “Released
Claims” means any statutory or common law claims, rights, demands, suits,
matters, issues, or causes of action under federal, state, local, foreign law,
or any other law, rule, or regulation, including any claim for breach of
fiduciary duty, insider trading, misappropriation of information, failure to
disclose, abuse of control, breach of Comverse’s policies or procedures, waste,
mismanagement, gross mismanagement, unjust enrichment, misrepresentation, fraud,
breach of contract, negligence, breach of duty of care or other duty, violations
of law, money damages, injunctive relief, corrective disclosure, damages,
penalties, disgorgement, restitution, contribution, indemnity, interest,
attorneys’ fees, expert or consulting fees, and any and all other costs,
expenses, or liability whatsoever, whether based on federal, state, local,
foreign, statutory, common law, or any other law, rule, or regulation, whether
fixed or contingent, accrued or un-accrued, liquidated or un-liquidated, at law
or in equity, matured or un-matured, whether known or Unknown, that were
asserted, or could have been asserted in the Derivative Actions by Comverse,
Plaintiffs, or any Comverse Shareholder, derivatively on behalf of Comverse, in
any court of competent jurisdiction or any other adjudicatory tribunal, against
the Released Persons in connection with, arising out of, related to, based upon,
in whole or in part, directly or indirectly, in any way, to the facts,
transactions, events, occurrences, acts, disclosures, oral or written
statements, representations, filings, publications, disseminations, press
releases, presentations, accounting practices or procedures, compensation
practices or procedures, omissions or failures to act which were or which could
have been alleged or
Exhibit A
- 6
described
in the Derivative Actions by Comverse, Plaintiffs, or any Comverse Shareholder,
derivatively on behalf of Comverse. The “Released Claims” include but
are not limited to any and all claims related to or arising out of the matters
reported in Comverse’s Form 8-Ks dated November 5, 2007, January 29, 2008, March
16, 2009, and April 27, 2009; Comverse’s compensation practices; Comverse’s
backdating of options; Comverse’s administration of a secret options reserve
fund; Comverse’s recycling of unexercised options from departed employees to
other employees, or any other Comverse options dating or granting practice,
procedure, or policy; Comverse’s issuance and administration of employee stock
options; Comverse’s earnings manipulation, finances, or accounting; Comverse’s
public filings and statements; revenue recognition issues; payments made by
individuals in foreign jurisdictions on behalf of Comverse or its Related
Persons; audits or reviews of Comverse’s consolidated financial statements for
the fiscal year ended January 31, 2005, the first three quarters of the fiscal
year-end January 31, 2006, or any prior period; the Report of the Special
Committee, the Shareholder Class Action, the FBI affidavit in support of arrest
warrants issued against defendants Alexander, Kreinberg, and Sorin, or the SEC’s
complaints against defendants Alexander, Kreinberg, and Sorin that were
asserted, or could have been asserted in the Derivative Actions by Comverse,
Plaintiffs, or any Comverse Shareholder, derivatively on behalf of
Comverse. Notwithstanding any of the foregoing, the Released Claims
do not include any nonderivative class claims or claims that already have been
asserted in the Shareholder Class Action.
1.27 “Released
Defendants’ Claims” means any and all claims, rights or causes of action or
liabilities whatsoever, whether based on federal, state, local, statutory or
common law or any other law, rule, or regulation, including both known claims
and Unknown Claims, that
Exhibit A
- 7
have been
or could have been asserted in the Derivative Actions or any forum by the
Defendants or any of them or the successors, and assigns of any of them against
any of the Plaintiffs and Plaintiffs’ Counsel and their subsidiaries,
affiliates, members, directors, officers, employees, partners, agents, heirs,
administrators, successors, and assigns, which arise out of or relate in any way
to the institution, prosecution, or settlement of the Derivative Actions (except
for claims to enforce the terms of this Settlement).
1.28 “Released
Persons” means each and all of the Defendants, and each and all of their
respective Related Persons.
1.29 “SEC”
means the United States Securities and Exchange Commission.
1.30 “Settlement”
means the settlement and compromise of the Derivative Actions as provided for
herein.
1.31 “Settlement
Hearing” means the hearing or hearings at which the Federal Court will review
the adequacy, fairness, and reasonableness of the Settlement.
1.32 “Shareholder(s)”
means any holder of record or beneficial holder of Comverse common
stock.
1.33 “Shareholder
Class Action” means In re
Comverse Technology, Inc. Securities Litigation, No. 06-CV-01825
(NGG)(RER), pending in the United States District Court for the Eastern District
of New York.
1.34 “Shareholder
Class Action Settlement” means (a) an entry of a final order and judgment
entered by the court approving the settlement in the Shareholder Class Action
and (b) an entry of an order by the court in the Shareholder Class Action
finding that common stock issued by Comverse (in lieu of paying in cash a
portion of the amounts otherwise required to be
Exhibit A
- 8
paid in
cash by the settlement in the Shareholder Class Action) is exempt from
registration under Section 3(a)(10) of the Securities Act of 1933.
1.35 “Special
Committee” means the committee appointed by the Board on March 10, 2006, to
oversee a review of the Company’s historical stock option grants, including the
administration of a secret options reserve fund and the recycling of unexercised
options from departed employees, as well as a review of issues related to
revenue recognition and earnings manipulation.
1.36 “State
Court” means the Supreme Court of the State of New York, County of New
York.
1.37 “State
Derivative Action” means In re
Comverse Technology, Inc., No. 601272/2006, pending in the Supreme Court
of the State of New York, County of New York before the Honorable Richard Lowe
III.
1.38 “State
Dismissal” means the entry of an order dismissing with prejudice the State
Derivative Action.
1.39 “State
Lead Plaintiffs” means Leonard Sollins and Timothy Hill.
1.40 “Stipulation”
means this Stipulation of Compromise and Settlement.
1.41 “Unknown
Claims” means any Released Claims which Comverse, the Plaintiffs, or any
Comverse Shareholder does not know or suspect to exist in his, her, or its favor
at the time of the release of the Released Persons and any Released Defendants’
Claims, which any Defendant does not know or suspect to exist in his, her, or
its favor, which, if known by him, her, or it, might have affected his, her, or
its decision(s) with respect to this Settlement. With respect to any
and all Released Claims and Released Defendants’ Claims, the Parties stipulate
and agree that upon the Effective Date, the Plaintiffs and the Defendants shall
expressly waive, and any
Exhibit A
- 9
other
Comverse Shareholder shall be deemed to have waived, and by operation of the
Order and Final Judgment shall have expressly waived, any and all provisions,
rights, and benefits conferred by any law of any state or territory of the
United States, or principle of common law, which is similar, comparable, or
equivalent to California Civil Code section 1542, which
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.
Plaintiffs and Defendants acknowledge,
and any Comverse Shareholder by operation of law shall be deemed to have
acknowledged, that the inclusion of “Unknown Claims” in the definition of
Released Claims and Released Defendants’ Claims was separately bargained for and
was a key element of the Settlement.
II.
|
FACTUAL AND PROCEDURAL
BACKGROUND
|
2.1 On March
3, 2006, Comverse received a telephone call from The Wall Street Journal
regarding unusual patterns in the Company’s stock option grants.
2.2 On March
14, 2006, the Company announced the creation of a Special Committee to review
matters relating to the Company’s stock option grants, including, but not
limited to, the accuracy of the stated dates of option grants and whether all
proper corporate procedures were followed. The objectives of the
Special Committee’s investigation were to discover whether the Company’s stock
option grants had been backdated and, if so, to determine the extent of such
backdating and who was involved, to investigate other practices that were
inconsistent with the requirements of the Company’s stock option plans,
including the recycling of unexercised options from departed employees to other
employees, and to investigate option
Exhibit A
- 10
grants to
fictitious accounts. The Special Committee also performed an
investigation of issues relating to revenue recognition and earnings
manipulation.
2.3 On March
18, 2006, The Wall Street
Journal published an article titled “The Perfect Payday” reporting that
several companies, including Comverse, had peculiar patterns of option granting,
and questioning the accuracy of the stated dates of certain option
grants.
2.4 On or
about April 11, 2006, the State Derivative Action was brought on behalf of the
Company, alleging that certain defendants improperly engaged in, approved,
and/or benefited from the “backdating” of stock options grants beginning in
approximately 1991. The initial State Derivative Action was
ultimately consolidated with various other shareholder actions and a
Consolidated and Amended Shareholder Derivative Complaint was filed on or about
September 18, 2006.
2.5 The
Federal Derivative Action was initially commenced on or about April 20, 2006,
similarly alleging that certain defendants improperly engaged in, approved, and
benefited from the “backdating” of stock option grants, and that Comverse’s
financial results were inaccurate as a result. The initial federal
derivative action was ultimately consolidated with various other shareholder
actions, and a Consolidated, Amended and Verified Shareholder Derivative
Complaint was filed on or about October 6, 2006.
2.6 On
December 20, 2007, and December 21, 2007, the defendants in the Federal
Derivative Action filed various motions to dismiss and, on December 21, 2007,
the Federal Lead Plaintiff filed its omnibus opposition to defendants’ motion to
dismiss.
2.7 On
January 10, 2007, Comverse filed its motion to dismiss for failure to make a
pre-suit demand in the State Derivative Action. On March 20, 2007,
State Lead Plaintiffs filed their opposition to Comverse’s motion to
dismiss.
Exhibit A
- 11
2.8 During
the briefing of Comverse’s motion to dismiss the State Derivative Action,
Comverse and the State Lead Plaintiffs, through their counsel, had several
discussions regarding the litigation.
2.9 Comverse
voluntarily provided State Lead Plaintiffs with limited discovery, and State
Lead Plaintiffs provided the Special Committee with certain information obtained
through State Lead Plaintiffs’ own independent investigation. Information
provided to the Special Committee concerning the earnings manipulation was
included in Comverse’s filing with the SEC in its Form 8-K dated January 29,
2008.
2.10 By
Decision and Order dated August 7, 2007, Justice Lowe granted Nominal Defendant
Comverse’s motion to dismiss the State Derivative Action. On November
7, 2007, the State Lead Plaintiffs appealed the August 7, 2007 Decision and
Order of the State Court.
2.11 On
January 16, 2008, the Company filed a lawsuit in the Supreme Court of the State
of New York, County of New York, captioned Comverse Technology, Inc. v.
Alexander, No. 08/600142, against Mr. Alexander and Mr. Sorin asserting
claims of fraud, breach of fiduciary duty, and unjust enrichment arising out of
the options backdating scheme. On June 3, 2008, as part of this
action against Mr. Alexander, the Company obtained an attachment order against
the Alexander Apartments. Mr. Alexander and Mr. Sorin alleged
counterclaims against Comverse.
2.12 On
January 17, 2008, the Company filed a lawsuit against Mr. Kreinberg in the
Superior Court of New Jersey, Bergen County. This action was
subsequently re-filed in the Supreme Court of the State of New York, County of
New York, captioned Comverse
Technology, Inc. v. Kreinberg, No. 600052/09. The complaint
alleged fraud, breach of fiduciary duty, and unjust enrichment arising out of
the options backdating scheme.
Exhibit A
- 12
2.13 On April
22, 2008, defendants’ motions to dismiss the Federal Derivative Action were held
in abeyance pending the resolution of State Lead Plaintiffs’ appeal in the
Supreme Court of the State of New York, Appellate Division, First
Department. By decision and order dated October 7, 2008, the
Appellate Division, First Department reversed Justice Lowe’s August 7, 2007
Decision and Order and ordered that the complaint in the State Derivative Action
be reinstated.
2.14 After the
complaint was reinstated in the State Derivative Action, discovery in the
Derivative Actions proceeded, including the production by Comverse of
approximately 200,000 pages of documents.
2.15 The
motions to dismiss in the Federal Derivative Action remain outstanding, and
(other than a motion filed by one of the Individual Defendants, which was
withdrawn without prejudice subject to restoration on the existing record if the
Settlement is not consummated) motions to dismiss were never filed (or re-filed)
in the State Derivative Action. The time to respond to the State
Derivative Complaint was extended and has not expired.
2.16 On
January 12, 2009, the State Lead Plaintiffs attended a mediation with the
Honorable Daniel Weinstein (Ret.) of JAMS.
2.17 After the
January 12, 2009 mediation, the Parties engaged in discussions and negotiations
regarding a possible negotiated resolution of the claims in the Derivative
Actions. Plaintiffs’ Counsel met several times with counsel for the
Special Committee and with the Company’s counsel in the Shareholder Class Action
to discuss possible settlement terms. Plaintiffs’ Counsel, together
with the Special Committee’s counsel and the Company’s counsel in the
Shareholder Class Action, also met with counsel for defendants Alexander, Sorin,
and Kreinberg. Plaintiffs’ Counsel also held multiple telephone
conferences with various
Exhibit A
- 13
defendants’
counsel, the Special Committee’s counsel, and the Company’s counsel in the
Shareholder Class Action, concerning possible settlement terms.
2.18 During
their settlement discussions following the January 12, 2009 mediation, the
Parties continued to engage in formal discovery, including several depositions
of key witnesses.
2.19 By May
2009, the Parties had agreed upon a settlement with all defendants except Mr.
Alexander, and the Parties updated Justice Lowe in that regard.
2.20 On May
11, 2009, the State Lead Plaintiffs, the Federal Lead Plaintiff, the Company’s
counsel in the Shareholder Class Action, the Special Committee’s counsel, and
Alexander participated in another mediation with Judge Weinstein.
2.21 After the
mediation, Comverse and Plaintiffs reached a settlement in principle with Mr.
Alexander.
2.22 On July
15, 2009, the parties to the Shareholder Class Action reached an agreement in
principle to settle the Shareholder Class Action.
2.23 Comverse
and Plaintiffs believe that the proposed Settlement is in the best interests of
Comverse and Comverse’s Shareholders.
2.24 In sum,
for approximately one year, the Parties engaged in extensive negotiations, with
and without a mediator’s assistance, regarding a potential settlement of the
Derivative Actions. To that end, counsel for the Parties have met in
person, participated in numerous telephonic conferences and other
communications, exchanged information and documents, and conducted confirmatory
investigation. Several Parties have also participated in mediation
sessions with Judge Weinstein. All such settlement negotiations were
conducted at
Exhibit A
- 14
arm’s
length and in good faith. As a result of these settlement
negotiations, the Parties ultimately agreed to the terms contained
herein.
NOW, THEREFORE, IT IS HEREBY STIPULATED
AND AGREED by and between the undersigned counsel for the Parties herein that
the Released Claims shall be and hereby are compromised, settled, discontinued,
and dismissed with prejudice and without costs (except as defined herein) as to
all Released Persons upon the following terms and conditions.
III.
|
SETTLEMENT OF
DERIVATIVE ACTIONS
|
3.1 Defendants’ Denial of
Liability. Subject to Mr. Sorin’s allocution in connection
with his guilty plea2 relating to the backdating scheme, each of the
Individual Defendants (other than Mr. Kreinberg) and D&T have denied and
continue to deny all of the claims in the Derivative Actions, and have denied
and continue to deny having committed, aided, or attempted to commit any
violations of law or breach of any duty of any kind or otherwise having acted in
any improper manner. Mr. Kreinberg neither admits nor denies the
allegations made in the Derivative Actions and the Direct
Actions. Comverse denies the allegations made in the Derivative
Actions and Shareholder Class Action to the extent the allegations are
inconsistent with the Company’s public filings. The Defendants are
entering into the Stipulation because the proposed Settlement would eliminate
the expenses, burdens, and risks associated with further litigation of the
Derivative Actions and Direct Actions, and Comverse is doing so because it
additionally believes the proposed Settlement is in the best interests of
Comverse and all of its Shareholders.
3.2 Reliance Upon Own
Knowledge. Plaintiffs expressly represent and warrant that, in
entering into the Settlement, they relied upon their own knowledge and
investigation
__________________________
2 Mr.
Sorin’s allocution and guilty plea are the subject of a habeas proceeding, and
he otherwise denies any wrongdoing.
Exhibit A
- 15
(including
the knowledge of and investigation performed by Plaintiffs’ Counsel), and not
upon any promise, representation, warranty, or other statement made by or on
behalf of any of the Defendants or their Related Persons not expressly contained
in this Stipulation.
3.3 Principal Terms of
Settlement. The Derivative Actions were a contributing factor
in Comverse’s ability to obtain the monetary settlement payments set forth in
Subsection 3.3.1 below and its decision
to implement the actions set forth in Subsection 3.3.2 below. Comverse
and the Special Committee acknowledge that the monetary settlement payments and
corporate governance actions implemented by the Company confer substantial
benefits upon Comverse and its Shareholders.
3.3.1
|
Payments and Option
Surrenders.
|
a. Mr.
Alexander’s contribution to this Settlement, and the terms and conditions
thereof, are set forth in Exhibit C, and are incorporated herein.
b. Mr. Sorin
will, conditioned upon the dismissal with prejudice of the claims against him in
the Derivative Actions and Comverse Technology, Inc. v.
Alexander, No. 08/600142, and upon the releases and contribution bar
order contained herein, pay $1,000,000 (the “Sorin Cash Settlement Amount”) as
follows: $500,000 will be paid into escrow for the benefit of Comverse upon
execution of this Stipulation, and another $500,000 will be paid to Comverse
within two (2) years of the Effective Date. (Mr. Sorin has also
previously paid $3,088,424.10 to the SEC.) In the event that there is
any nonpayment by Mr. Sorin of any of the $500,000 due within two (2) years of
the Effective Date, then Comverse’s counsel and Plaintiffs’ Counsel will have
the option to terminate this Settlement as against Mr. Sorin by vacating the
Order and Final Judgment and the dismissal of Comverse Technology, Inc. v.
Alexander, No. 08/600142, and the State Derivative Action as against Mr.
Sorin only or to enter a consent judgment against Mr. Sorin for the amount due,
up to $500,000. If the Effective Date fails to
Exhibit A
- 16
occur
with respect to Mr. Sorin, other than by reason of Mr. Sorin’s conduct, then Mr.
Sorin’s payment will be returned, along with any accrued interest and net of any
taxes on the income. In addition, Mr. Sorin will relinquish his
counterclaims against Comverse seeking approximately $2,206,250 in damages
relating to, among other things, deferred compensation, lost wages, and
cancelled or revoked options and restricted stock. To the extent that
there is a settlement in the Shareholder Class Action, Comverse shall obtain a
full and final release on behalf of Mr. Sorin without further contribution from
Mr. Sorin in the Shareholder Class Action.
c. Mr.
Kreinberg will, conditioned upon the dismissal with prejudice of the claims
against him in the Derivative Actions and Comverse Technology, Inc. v.
Kreinberg, No. 09/600052, (N.Y. Sup. Ct.) (the “Kreinberg Action”) and
upon the releases and contribution bar order contained herein, and in addition
to the $2,394,917.68 that Mr. Kreinberg has previously paid to the SEC, pay
$75,000 (the “Kreinberg Cash Settlement Amount”) into escrow for the benefit of
Comverse within ten (10) days of entry of the Preliminary Order. If
the Effective Date fails to occur with respect to Mr. Kreinberg, other than by
reason of Mr. Kreinberg’s conduct, then Mr. Kreinberg’s payment will be
returned, along with any accrued interest and net of any taxes on the
income. In addition, upon the discontinuance with prejudice of the
claims against him in the Kreinberg Action, Mr. Kreinberg will relinquish his
counterclaims against Comverse seeking approximately $4,300,000 in damages
relating to, among other things, deferred compensation, lost wages, and
cancelled or revoked options and restricted stock and an additional
approximately $1,000,000 in attorneys’ fees for which Mr. Kreinberg has been
seeking indemnification from the Company, and to fully cooperate with Comverse
in the prosecution of any claims related to the Released Claims. To
the extent that there is a settlement in the Shareholder Class Action, Comverse
shall obtain a full and final
Exhibit A
- 17
release
on behalf of Mr. Kreinberg without further contribution from Mr. Kreinberg in
the Shareholder Class Action.
d. D&T
will, conditioned upon the dismissal with prejudice of the claims against it in
the State Derivative Action and upon the releases and contribution bar order
contained herein, pay $275,000 (the “D&T Cash Settlement Amount”) into the
Derivative Settlement Fund upon the Effective Date.
e. Mr.
Friedman will, conditioned upon the dismissal with prejudice of the claims
against him in the Derivative Actions and upon the releases and contribution bar
order contained herein, relinquish all of his 71,000 outstanding unexercised
options. Upon the Effective Date, Mr. Friedman relinquishes all
right, title, and interest that he may have to the 71,000 outstanding
unexercised options to acquire shares of the Company held by him and agrees that
all rights thereunder, including under the relevant option agreements, shall be
null and void. Within ten (10) days of the Effective Date, the
Company will remove Mr. Friedman’s options from its books. Between
the date of the execution of this Stipulation and the time at which the Company
removes these 71,000 outstanding unexercised options from its books, Mr.
Friedman will refrain from exercising, disposing, or taking any other action
with respect to these options. In addition, Mr. Friedman will forfeit
any claims concerning deferred compensation or the grant or exercise of any
options, except claims concerning his interest in 6,500 vested shares of
deferred stock. To the extent that there is a settlement in the
Shareholder Class Action, Comverse shall obtain a full and final release on
behalf of Mr. Friedman without further contribution from Mr. Friedman in the
Shareholder Class Action.
f. Mr. Oolie
will, conditioned upon the dismissal with prejudice of the claims against him in
the Derivative Actions and upon the releases and contribution bar
order
Exhibit A
- 18
contained
herein, relinquish all of his 44,000 outstanding unexercised
options. Upon the Effective Date, Mr. Oolie relinquishes all right,
title, and interest that he may have to the 44,000 outstanding unexercised
options to acquire shares of the Company held by him and agrees that all rights
thereunder, including under the relevant option agreements, shall be null and
void. Within ten (10) days of the Effective Date, the Company will
remove Mr. Oolie’s options from its books. Between the date of the
execution of this Stipulation and the time at which the Company removes these
44,000 outstanding unexercised options from its books, Mr. Oolie will refrain
from exercising, disposing, or taking any other action with respect to these
options. In addition, Mr. Oolie will forfeit any claims concerning
deferred compensation or the grant or exercise of any options, except claims
concerning his interest in 6,500 vested shares of deferred stock and his alleged
and disputed interest in up to 11,000 warrants. To the extent that
there is a settlement in the Shareholder Class Action, Comverse shall obtain a
full and final release on behalf of Mr. Oolie without further contribution from
Mr. Oolie in the Shareholder Class Action.
g. Mr. Hiram
will, conditioned upon the dismissal with prejudice of the claims against him in
the Derivative Actions and upon the releases and contribution bar order
contained herein, relinquish 40,500 of the outstanding unexercised options he
holds. Upon the Effective Date, Mr. Hiram relinquishes all right,
title, and interest that he may have to 40,500 outstanding unexercised options
to acquire shares of the Company held by him and agrees that all rights
thereunder, including under the relevant option agreements, shall be null and
void. Within ten (10) days of the Effective Date, the Company will
remove these 40,500 options from its books. Between the date of the
execution of this Stipulation and the time at which the Company removes 40,500
of the outstanding unexercised options held by Mr. Hiram, Mr. Hiram will refrain
from exercising, disposing, or taking any other action with respect to these
options.
Exhibit A
- 19
In
addition, Mr. Hiram will forfeit any claims concerning deferred compensation or
the grant or exercise of the 40,500 options discussed in this Section, except
claims concerning his interest in 4,000 vested shares of deferred
stock. To the extent that there is a settlement in the Shareholder
Class Action, Comverse shall obtain a full and final release on behalf of Mr.
Hiram without further contribution from Mr. Hiram in the Shareholder Class
Action.
h. Comverse
shall cause Comverse’s insurance carrier, on behalf of the Individual Defendants
except for Mr. Alexander, Mr. Sorin, and Mr. Kreinberg, to pay to Comverse
$1,000,000 (the “Carrier Cash Contribution Amount”) within the later of (i)
August 30, 2010, or (ii) thirty (30) days of the later of the Federal Dismissal,
State Dismissal, or the Shareholder Class Action Settlement. Upon
receipt of the Carrier Cash Contribution Amount, Comverse shall deposit said
monies into the Derivative Settlement Fund. If the Effective Date
fails to occur with respect to the Individual Defendants except for Mr.
Alexander, Mr. Sorin, and Mr. Kreinberg, then the Carrier Cash Contribution
Amount will be returned directly to Comverse’s insurance carrier in accordance
with instructions provided by Comverse, along with any accrued interest and net
of any taxes on the income.
i. None of
these settlements for monetary payments from or options surrenders by Mr.
Alexander, Mr. Sorin, Mr. Kreinberg, D&T, Mr. Friedman, Mr. Oolie, and Mr.
Hiram, are contingent upon approval of any of the others and all of them are
severable from one another, and the Order and Final Judgment may be modified
accordingly in the event the Federal or State Court fails to approve the
Settlement with a particular Defendant or Defendants; except that any such
modification shall not affect or alter the contribution bar order provided in
Subsection 3.7 for
the benefit of any other Defendant, and its Related Persons, as to which this
Settlement is approved and the Effective Date occurs. Mr. Alexander
has a right to terminate his
Exhibit A
- 20
settlement
in the Shareholder Class Action and in the Derivative
Actions. Notwithstanding Mr. Alexander’s termination of his
settlement in the Shareholder Class Action and/or the Derivative Actions, this
Settlement in the Derivative Actions and this Stipulation between the Parties
other than Mr. Alexander shall continue in full force and effect on the terms
described herein.
j. Upon
deposit of the Sorin, Kreinberg, and D&T Cash Settlement Amounts and Carrier
Cash Contribution Amount into escrow, these Amounts and any income or interest
earned thereon shall be the “Derivative Settlement Fund.” Plaintiffs’
Counsel has a security interest in the Derivative Settlement Fund in the amount
of the attorneys’ fees and reimbursements for Plaintiffs’ Counsel (“Fees and
Expenses”) awarded by the Federal Court. The Company will execute a
security agreement granting a security interest and will file a financing
statement to reflect such interest. Any sums required to be held in
escrow hereunder prior to the Effective Date shall be held by a federally
chartered bank designated by Comverse as escrow agent (the “Escrow
Agent”). All funds held by the Escrow Agent shall be deemed to be in
the custody of the Federal Court and shall remain subject to the jurisdiction of
the Federal Court until the Effective Date. Upon the Federal
Dismissal, State Dismissal, and Shareholder Class Action Settlement, the
Derivative Settlement Fund shall be distributed to the Company. If
the Effective Date fails to occur by reason other than a Defendant’s failure to
comply with his or its obligations under Section 3.3.1, then the Escrow Agent,
or Comverse, to the extent funds were distributed to Comverse, will return the
funds to each payor respectively pursuant to this Stipulation and/or further
order of the Federal Court. The Escrow Agent shall invest any funds
held in escrow in short-term United States Agency or Treasury Securities (or a
mutual fund invested solely in such instruments) and shall collect and reinvest
all interest accrued thereon. The Parties hereto agree that the
Derivative Settlement Fund is intended to be a Qualified
Exhibit A
- 21
Settlement
Fund within the meaning of Treasury Regulation § 1.468B-1 and that the
Company, as administrator of the Derivative Settlement Fund within the meaning
of Treasury Regulation § 1.468B-2(k)(3), shall be responsible for filing tax
returns for the Derivative Settlement Fund and paying from the Derivative
Settlement Fund any taxes owed with respect to the Derivative Settlement
Fund. The Parties hereto agree that the Derivative Settlement Fund
shall be treated as a Qualified Settlement Fund from the earliest date possible,
and agree to any relation-back election required to treat the Derivative
Settlement Fund as a Qualified Settlement Fund from the earliest date
possible. The Escrow Agent shall provide to any Defendant making
payment to the Derivative Settlement Fund a copy of IRS Form W-9 for the
Qualified Settlement Fund. Counsel for any Defendant making payment
to the Derivative Settlement Fund agree to provide promptly to the Escrow Agent
the statement described in Treasury Regulation § 1.468B-3(e).
3.3.2 Corporate
Governance. In connection with resolving the Derivative
Actions, Comverse has taken certain actions and adopted certain policies
including, but not limited to:
a. All
directors who served on the Board at any time during which stock options were
backdated are no longer on the Board.
b. Other
than the Chief Executive Officer, all members of the Board will be “independent”
as defined by heightened standards adopted by the Board.
c. The
senior management in place at the Company when the Special Committee began its
investigation is no longer with the Company.
d. The
Company has made the following changes to its management team: (1) the hiring of
a new Chief Executive Officer; (2) the hiring of a new General Counsel; (3) the
hiring of a new Chief Financial Officer; (4) the hiring of a new Compliance
Officer;
Exhibit A
- 22
(5) the
hiring of a new Executive Vice President, Global Human Resources; and (6) the
hiring of a Chief Accounting Officer.
e. The
Chairman of the Board will be an independent director.
f. The
positions of Chairman of the Board and Chief Executive Officer will be held by
different persons.
g. The
Board’s Corporate Governance Guidelines and Principles, all committee charters,
and the Company’s Employee Code of Business Conduct and Ethics were reviewed and
revised.
h. All
nonemployee directors will hold one-half of all stock received as compensation
(after sale of that portion that may be necessary for payment of tax liability)
for at least as long as they continue to serve on the Board.
i. The
Company’s bylaws were amended to permit certain long-term substantial
shareholders to propose, in the Company’s own proxy materials, nominees for
election as directors (proxy access).
j. The Board
adopted a policy that provides, among other things, that: (1) as a condition for
nomination or re-nomination, a director nominee will agree to submit a letter of
resignation from the Board if the director fails to receive a majority of the
votes cast in an uncontested election, and (2) if a resignation is submitted,
the Board will decide, through a process managed by the Corporate Governance and
Nominating Committee (and excluding the nominee in question), whether to accept
such resignation, it being expected that the Board will accept the resignation
absent a compelling reason to the contrary (a Form 8-K to be filed to disclose
the Board’s explanation of its decision).
Exhibit A
- 23
k. The Board
adopted a policy requiring directors to attend the annual meeting of
shareholders absent unusual circumstances.
l. A Board
Development Program is in the process of being developed, which will encourage
directors to attend at least one director development program or conference per
year.
m. The Board
adopted a policy that at least one member of the Audit Committee will qualify as
an “audit committee financial expert” as defined by the SEC.
n. An
internal audit unit that reports directly to the Audit Committee was
created.
o. The
Special Committee has determined that all equity grants shall require approval
of both the Compensation Committee and a majority of the nonemployee members of
the Board, unless and until a new stock incentive compensation plan has been
approved.
3.4 Notice. Comverse
shall be responsible for all costs of any court-directed notice to the
shareholders. In no event shall the Plaintiffs be responsible for any
costs relating to notifying shareholders.
3.5 Attorneys’ Fees and
Expenses.
3.5.1 Subject
to court approval, Comverse and/or its successors-in-interest shall pay, to
Plaintiffs’ Counsel, Fees and Expenses in the total amount of
$9,350,000. Payment of $9,350,000 is contingent upon the courts’
approval of the Stipulation of Compromise and Settlement, the Federal Dismissal,
the State Dismissal, the Shareholder Class Action Settlement, and satisfaction
of all payment obligations under Section 3.3.1. In the event that a
Party fails to comply with his obligations under Section 3.3.1, Fees and
Expenses will be reduced by an
Exhibit A
- 24
amount
such that the total payment of Fees and Expenses does not exceed fifteen (15)
percent of the total amounts actually paid under Section
3.3.1. Comverse and/or its respective successors-in-interest shall
pay the Fees and Expenses to Milberg LLP as receiving agent for Plaintiffs’
Counsel within the later of (i) August 30, 2010, or (ii) thirty (30) days of the
later of the State Dismissal, the Federal Dismissal, or the Shareholder Class
Action Settlement. Plaintiffs’ Counsel’s receipt of the Fees and
Expenses is subject to Plaintiffs’ Counsel’s joint and several obligation to
make a refund or repayment to the Company or its designee if, as a result of any
appeal and/or further proceedings on remand, or successful collateral attacks,
the amount of Fees and Expenses is reduced. Plaintiffs’ Counsel has a
security interest in the Derivative Settlement Fund in the amount of the Fees
and Expenses.
3.5.2 Except as
expressly provided herein, Plaintiffs and Plaintiffs’ Counsel shall bear their
own fees, costs, and expenses and no defendant shall assert any claim for
expenses, costs, and fees against any Plaintiff or Plaintiffs’
Counsel.
3.5.3 Except as
otherwise provided herein or by separate agreement among the Defendants, all
Parties shall bear their own attorneys’ fees and costs incurred in connection
with the Derivative Actions and the matters set forth in this
Stipulation.
3.6 Releases.
3.6.1 Upon the
Effective Date, Plaintiffs, on behalf of themselves and their Related Persons,
Comverse, and any Comverse Shareholder, release any Released Claims they may
have against any of the Released Persons. Plaintiffs also release all
claims against the Defendants’ counsel related to the defense of the Derivative
Actions.
3.6.2 Upon the
Effective Date, each Defendant, on behalf of himself or itself and on behalf of
his or its respective Related Persons, releases any Released Defendants’
Claims
Exhibit A
- 25
they may
have against any of the Plaintiffs and Plaintiffs’ Counsel and their
subsidiaries, affiliates, members, directors, officers, employees, partners,
agents, heirs, administrators, successors, and assigns.
3.6.3 Upon the
Effective Date, each Defendant and his or its Related Persons shall be deemed to
have, and by operation of this Stipulation shall have fully, finally, and
forever released, relinquished, and discharged each other and their respective
Related Persons from all claims (including Unknown Claims), arising out of,
relating to, or in connection with the Released
Claims. Notwithstanding any other provision of this Stipulation or
anything contained in any Exhibit hereto to the contrary, nothing in this
Stipulation or in any Exhibit hereto shall be construed to (a) release,
discharge, extinguish, or otherwise compromise any claims or potential claims
that Comverse or any Person who is or was a defendant in the Derivative Actions
may have under or relating to any policy of liability or other insurance, (b)
release, discharge, extinguish, or otherwise compromise any obligation owed to
Comverse or any Person who is or was a defendant in the Derivative Actions by an
insurer, co-insurer, or reinsurer, or (c) release or discharge any claim by
Deloitte for professional fees now due and owing, or that in the future may
become due and owing, by Comverse or any of its affiliates for professional
services rendered. Notwithstanding anything in this paragraph, the
exchange of releases between Mr. Alexander and Comverse and the scope of such
releases shall be in accordance with the terms set forth in Exhibit C,
hereto.
3.6.4 Notwithstanding
any other provision of this Stipulation, the Individual Defendants’ rights to
indemnification and/or advancement from Comverse are not affected in any way by
this Stipulation.
Exhibit A
- 26
3.7 Contribution Bar
Order. Upon the entry of the Order and Final Judgment, each of
the Defendants and any other Person shall be deemed to be, and by operation of
the Order and Final Judgment shall be, permanently barred, enjoined, and
restrained from commencing, prosecuting, or asserting any claim(s) for
contribution, however denominated, that is related to, based upon, or arises out
of the Released Claims, regardless of whether such claim(s) for contribution is
asserted as a claim, cross-claim, counterclaim, third-party claim, or in any
other manner, in the Derivative Actions, the Direct Actions, or in any other
court, arbitration, administrative agency, or forum. All such claims
for contribution will be extinguished, discharged, satisfied, and unenforceable
both (a) against the Released Persons and (b) by the Released Persons against
any other Person. Nothing herein, however, shall prevent any Party
from seeking documents or testimony from any Defendant with regard to any
proceeding.
3.8 Discontinuance of State
Derivative Action. Within five (5) days after entry by the
Federal Court of an order approving the settlement of the Federal Derivative
Action, the parties to the State Derivative Action shall execute a stipulation
of discontinuance and jointly request that the State Court approve the
discontinuance in accordance with New York’s Business Corporation Law and shall
use their best efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things reasonably necessary, proper, or advisable under
applicable laws, regulations, and agreements, to secure such discontinuance with
prejudice.
3.9 Discontinuance of Claims
Against Mr. Alexander, Mr. Sorin, and Mr. Kreinberg. Within
five (5) days after the time for appeals from a final order and judgment
approving the Federal and State Derivative Action settlements and Shareholder
Class Action settlement has expired, or appeals therefrom have been exhausted,
Comverse shall execute a stipulation of discontinuance to be filed with the
clerk of the State Court in the Direct Actions providing for
Exhibit A
- 27
the
voluntary discontinuance with prejudice of Comverse’s claims against Mr.
Alexander, Mr. Sorin, and Mr. Kreinberg in the Direct Actions and shall use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things reasonably necessary, proper, or advisable under
applicable laws, regulations, and agreements, to secure such discontinuance with
prejudice.
IV.
|
COURT
APPROVAL
|
4.1 Application for Preliminary
Order. Promptly after execution of this Stipulation, the
Parties shall jointly submit to the Federal Court this Stipulation with its
related documents and shall apply for entry of the Preliminary Order,
substantially in the form of Exhibit A hereto, requesting, inter alia, an order
which preliminarily approves the Settlement and directs Comverse to notify
shareholders by (1) causing the Notice, substantially in the form of Exhibit 1
to Exhibit A, to be filed by the Company in a Form 8-K with the SEC, along with
a copy of this Stipulation as an exhibit to the Form 8-K, (2) posting the Notice
and this Stipulation on the Company’s website through the Settlement Hearing,
and (3) publishing the Publication Notice, substantially in the form of Exhibit
2 to Exhibit A, in The Wall
Street Journal.
4.2 The
parties to the State and Federal Derivative Actions shall cooperate in
obtaining approval of the Federal and State Courts for dismissal of the State
and Federal Derivative Actions with prejudice and in accordance with the terms
of this Stipulation and governing law.
V.
|
EFFECTIVE DATE OF
SETTLEMENT, WAIVER OR
TERMINATION
|
5.1 This
Settlement shall become effective on the Effective Date.
5.2 If any of
the conditions of the Effective Date fail to occur, then any of the Parties may
terminate the Stipulation and withdraw from the Settlement by providing written
notice of such action to the undersigned counsel for all of the Parties within
thirty (30) days after the
Exhibit A
- 28
failure
of such condition. In the event that the Settlement is terminated,
the proposed Settlement and any actions taken in connection therewith shall be
vacated and shall become null and void for all purposes, and all negotiations,
transactions, and proceedings connected with it: (a) shall be without prejudice
to the rights of any Party; (b) shall not be deemed to be or construed as
evidence of, or an admission by any Party of, any fact, matter, or thing; and
(c) shall not be admissible in evidence or be used for any purpose in any
subsequent proceedings in the Derivative Actions, the Direct Actions, or any
other action or proceeding. The Parties shall be deemed to have
reverted to their respective status in the Derivative Actions and/or the Direct
Actions as of the date and time immediately prior to the execution of this
Stipulation, and, except as otherwise expressly provided, the Parties shall
proceed in all respects as if this Stipulation and any related Orders had not
been entered, and any portion of the Derivative Settlement Fund previously paid
by or on behalf of the Defendants, together with any interest earned thereon,
less any taxes due with respect to such income, shall be returned to the
Person(s) who made the payments to the Derivative Settlement Fund.
5.3 In the
event that any of the Defendants fail to comply with their obligations under
Section 3.3.1, the Special Committee’s counsel and Plaintiffs’ Counsel
shall have the option to terminate this Settlement as against the party
that failed to comply by voiding the release as against the defaulting Party and
its Related Persons and vacating the Order and Final Judgment and the dismissal
of the Direct Actions and the State Derivative Action, where applicable, or to
enter a consent judgment, against the Party that failed to comply for the amount
due under Section 3.3.1. Funds paid into the Derivative Settlement Fund by
the Party that failed to comply may be used to offset the outstanding
obligation. The Special Committee and Plaintiffs’ Counsel will
cooperate in the enforcement of the obligations arising under this
Exhibit A
- 29
Stipulation,
and prosecution of claims against defaulting defendants. If the
Special Committee determines that it does not wish to pursue claims against the
defaulting Party, it will assign all of its rights, claims, or causes of
action that it could assert pursuant to this Section to
Plaintiffs. The rights and obligations of Plaintiffs’ Counsel to Fees
and Expenses as set forth in Section 3.5.1 shall continue.
5.4 Standstill
Agreement. Pending entry of the Order and Final Judgment and
the State Dismissal, Plaintiffs are barred and enjoined from commencing,
prosecuting, instigating, or in any way participating in the commencement or
prosecution of any action asserting any Released Claims or participating in
coordinated discovery, either directly, representatively, derivatively, or in
any other capacity, against any Released Persons. Plaintiffs also
agree not to oppose any motion to dismiss any other proceedings to the extent
any Released Claims are asserted or continue to be asserted in any court before
or after the entry of a judgment based on this Settlement.
VI.
|
MISCELLANEOUS
PROVISIONS
|
6.1 All of
the exhibits attached hereto are hereby incorporated by reference as though
fully set forth herein.
6.2 Each
Defendant contributing to the Derivative Settlement Fund warrants as to himself
or itself that, as to the payments made by or on behalf of him or it, at the
time of such payment that the Defendant made or caused to be made pursuant to
this Stipulation, he or it was not insolvent, nor did nor will the payment
required to be made by or on behalf of him or it render such Defendant
insolvent, within the meaning of and/or for the purposes of the United States
Bankruptcy Code, including §§ 101 and 547 thereof. This warranty
is made by each such Defendant and not by counsel for such
Defendant.
Exhibit A
- 30
6.3 If a case
is commenced in respect of any Defendant contributing to the Settlement Amount
(or any insurer contributing funds to the Cash Settlement Amount on behalf of
any Defendant) under Title 11 of the United States Code (Bankruptcy), or a
trustee, receiver, conservator, or other fiduciary is appointed under any
similar law, and in the event of the entry of a final order of a court of
competent jurisdiction determining the transfer of money to the Derivative
Settlement Fund or any portion thereof by or on behalf of such Defendant to be a
preference, voidable transfer, fraudulent transfer, or similar transaction and
any portion thereof is required to be returned, and such amount is not promptly
deposited to the Derivative Settlement Fund by others, then, at Comverse and
Plaintiffs’ Counsel’s joint election, Comverse and Plaintiffs shall jointly move
the Federal Court to vacate and set aside the releases given and judgment
entered in favor of the defaulting Defendant(s) pursuant to this Stipulation,
which releases and judgment shall be null and void, and Comverse, Plaintiffs,
and the defaulting Party shall be restored to their respective positions in the
litigation immediately prior to the execution of this Stipulation (except that
the contribution bar order shall remain in effect as to the defaulting Party)
and any cash amounts in the Derivative Settlement Fund shall be returned as
provided in Section 5.2 above.
6.4 Cooperation of the
Parties. The Parties (a) acknowledge that it is their intent
to consummate this Settlement and (b) agree to cooperate to the extent
reasonably necessary to effectuate and implement all terms and conditions of
this Stipulation and to exercise their reasonable efforts to accomplish the
foregoing terms and conditions of this Stipulation. The Parties will
seek the Federal Court’s approval of the Preliminary Order and, when
appropriate, the Order and Final Judgment.
Exhibit A
- 31
6.5 Acknowledgment of Adequate
Consideration. The Parties acknowledge, represent, and warrant
to each other that the terms of this Settlement are such that each of the
Parties is to receive adequate consideration for the consideration
given.
6.6 Continuous
Ownership. Each Plaintiff by its respective counsel represents
and warrants that it has continuously owned shares of Comverse common stock
throughout the Derivative Actions.
6.7 No
Admissions. The provisions contained in this Stipulation and
all negotiations, statements, and proceedings leading up to and in connection
therewith are not, shall not be argued to be, and shall not be deemed, a
presumption, concession, or admission by any of the Parties or Released Persons
of any fault, liability, or wrongdoing as to any fact or claim alleged or
asserted in the Derivative Actions or any other actions or proceedings and shall
not be interpreted, construed, invoked, offered or received in evidence, or
otherwise used by any person in these or any other action or proceeding, whether
civil, criminal, or administrative, except in a proceeding to enforce the terms
or conditions of this Stipulation. Accordingly, the Defendants may
file this Stipulation or any judgment or order relating thereto in any action
that may be brought against them to support a defense or counterclaim based on
res judicata, collateral estoppel, release, good faith settlement, judgment bar
or reduction, or any other theory of claim preclusion or issue preclusion or
similar defense or counterclaim. Nothing contained herein shall
prevent the Defendants from complying with any disclosure obligation under
federal, state or other law, or from otherwise referring to the Settlement or
the releases contained in this Stipulation.
6.8 Confidentiality
Agreements. The Stipulation and [Proposed] Order for the
Production and Exchange of Confidential Information executed by the parties to
the State
Exhibit A
- 32
Derivative
Action, the Stipulation and [Proposed] Order Governing the Protection and
Exchange of Confidential Material executed by the parties to the Federal
Derivative Action, and the Stipulation and [Proposed] Order for the Production
and Exchange of Confidential Information executed by the parties in Comverse Technology, Inc. v.
Alexander, No. 08/600142, shall survive this Stipulation and the
Settlement.
6.9 Costs. Except
as otherwise expressly provided herein, the Parties shall bear their own
costs.
6.10 Public
Statements. Plaintiffs and Comverse believe that the terms and
conditions of the Settlement are in the best interests of the Company and its
Shareholders. Accordingly, the Parties and their counsel agree that
any public statements concerning the Derivative Actions, the Direct Actions, or
this Settlement will not be inconsistent with this belief. The
Parties and their counsel further agree to use their best efforts not to
publicly disparage each other. Nothing in this Section 6.10 affects
any Parties’ testimonial rights or any Party’s right to make statements
consistent with their position in other legal proceedings.
6.11 Entire
Agreement. This Stipulation and all documents executed
pursuant hereto constitute the entire agreement between the Parties with respect
to the settlement of the Derivative Actions and supersede any and all prior
negotiations, discussions, agreements, or undertakings, whether oral or written,
with respect to the settlement of the Derivative Actions.
6.12 Binding
Effect. This Stipulation shall be binding upon, and inure to
the benefit of all Parties, Released Persons, and their respective successors
and assigns. This Stipulation is not intended, and shall not be
construed, to create rights in or confer benefits on any other Persons, and
there shall not be any third-party beneficiaries hereto except as expressly
provided hereby with respect to such aforementioned Persons who are not Parties
or Released Persons.
Exhibit A
- 33
6.13 Modification. This
Stipulation may be amended or modified only by a written instrument signed by or
on behalf of all Parties or their respective
successors-in-interests.
6.14 Judicial
Enforcement. The Federal Court shall retain jurisdiction with
respect to the implementation and enforcement of the terms of the Stipulation
and the Settlement, and the Parties submit to the jurisdiction of the Federal
Court for purposes of implementing and enforcing the terms of the Stipulation
and Settlement.
6.15 Choice of
Law. This Stipulation shall be governed by the laws of the
State of New York, without regard to conflict of laws
principles. Except as provided herein, no court action with respect
to any dispute, claim, or controversy arising out of or relating to this
Stipulation may be initiated by any of the Parties until the matter has been
submitted to JAMS for mediation, preferably before Judge
Weinstein. Any Party may commence mediation by providing to JAMS and
the other Parties a written request for mediation, setting forth the subject of
the dispute and the relief requested. The Parties will cooperate with
JAMS and with one another in selecting a mediator from JAMS’ panel of neutrals
(if Judge Weinstein is not available), and in scheduling the mediation
proceedings, with the understanding that all Parties shall work in good faith to
have the mediation scheduled within thirty (30) days of the transmission of the
written mediation request. The Parties covenant that they will
participate in the mediation in good faith, and that they will share equally in
its costs. All offers, promises, conduct, and statements, whether
oral or written, made in the course of the mediation by any of the Parties,
their agents, employees, experts, and attorneys, and by the mediator and any
JAMS employees, are confidential, privileged, and inadmissible for any purpose,
including impeachment, in any litigation or other proceeding involving the
Parties, provided that evidence that is otherwise admissible or discoverable
shall not be rendered inadmissible or
Exhibit A
- 34
nondiscoverable
as a result of its use in the mediation. Any of the Parties may seek
equitable relief prior to the mediation to preserve the status quo pending the
completion of that process. Except for such an action to obtain
equitable relief, no Party may initiate a court action with respect to the
matters submitted to mediation until after the completion of the initial
mediation session, or forty-five (45) days after the date of filing the written
request for mediation, whichever occurs first. Mediation may continue
after the initiation of a court action, if the Parties so desire.
6.16 Warranties of
Authority. Each counsel or Person executing the Stipulation or
any of the related documents on behalf of any Party hereby warrants that such
Person has the full authority to do so.
6.17 Factual and Procedural
Background. The factual recitation in Section II above is for
background purposes only, is provided by Comverse and Plaintiffs, and is correct
to the best of Comverse’s and Plaintiffs’ knowledge.
6.18 Waiver of
Breach. The Parties may not waive or vary any right hereunder
except by an express written waiver or variation. Any failure to
exercise or any delay in exercising any of such rights, or any partial or
defective exercise of such rights, shall not operate as a waiver or variation of
that or any other such right. The waiver by one Party of any breach
of this Stipulation by another Party shall not be deemed a waiver of any other
prior or subsequent breach of this Stipulation.
6.19 Fair
Construction. This Stipulation shall not be construed more
strictly against one Party than another merely by virtue of the fact that it, or
any part of it, may have been prepared by counsel for one of the Parties, it
being recognized that it is the result of arm’s length
Exhibit A
- 35
negotiations
between the Parties and counsel for all Parties have contributed substantially
and materially to the preparation of this Stipulation.
6.20 No Assignment of
Claims. Plaintiffs hereby represent and warrant, individually
and collectively, that he/she/it/they have not assigned any rights, claims, or
causes of action that were asserted or could have been asserted in connection
with, under or arising out of any of the claims being settled or released
herein.
6.21 Counterparts. This
Stipulation may be executed in any number of counterparts, each of which will be
deemed an original, but all of which will constitute one and the same
instrument. This Stipulation and any amendments hereto, to the extent
executed and delivered by means of a facsimile machine or e-mail of a PDF file
containing a copy of an executed agreement (or signature page thereto), shall be
treated in all respects and for all purposes as an original agreement or
instrument and shall have the same binding legal effect as if it were the
original signed version thereof. No Party shall raise the use of a
facsimile machine or e-mail to deliver a signature or the fact that any
signature or agreement was transmitted or communicated through the use of a
facsimile machine or e-mail as a defense to the formation or the enforceability
of this Stipulation and each such Person forever waives any such
defense.
6.22 Stay of
Proceedings. The Parties will cooperate to seek court approval
of a stay of all proceedings in the Derivative Actions except those provided in
this Stipulation related to court approval of the Settlement.
6.23 Extensions of
Time. Without further order of the Federal Court, the Parties
hereto may agree in writing to reasonable extensions of time to carry out any of
the provisions of this Stipulation.
Exhibit A
- 36
The
Parties have caused this Stipulation to be duly executed and delivered by their
counsel of record:
Dated:
|
New
York, New York
|
Dated:
|
New
York, New York
|
|||||
December
17, 2009
|
December
17, 2009
|
|||||||
BERNSTEIN
LITOWITZ BERGER
&
GROSSMANN LLP
|
MILBERG
LLP
|
|||||||
By:
|
/s/ Steven B. Singer |
By:
|
/s/ Benjamin Y. Kaufman | |||||
Steven
B. Singer
Mark
Lebovitch
Laura
Helen Gundersheim
|
Benjamin
Y. Kaufman
Neil
Fraser
Todd
L. Kammerman
|
|||||||
1285
Avenue of the Americas
New
York, New York 10019
(212)
554-1400
Attorneys
for Plaintiff Louisiana Municipal Police Employees’ Retirement
System
|
One
Pennsylvania Plaza
New
York, New York 10119
(212)
594-5300
Attorneys
for Plaintiffs Leonard Sollins and Timothy
Hill
|
Dated:
|
Radnor,
Pennsylvania
|
||
December
17, 2009
|
|||
BARROWAY
TOPAZ KESSLER MELTZER & CHECK, LLP
|
|||
By:
|
/s/ Michael Wagner | ||
Eric
L. Zagar
Michael
Wagner
Tara
P. Kao
|
|||
280
King of Prussia Road
Radnor,
Pennsylvania
(610)
822-2209
Attorneys
for Plaintiffs Leonard Sollins and Timothy Hill
|
Exhibit A
- 37
Dated:
|
New
York, New York
|
Dated:
|
New
York, New York
|
||||
December
17, 2009
|
December
17, 2009
|
||||||
DICKSTEIN
SHAPIRO LLP
|
MORVILLO,
ABRAMOWITZ, GRAND,
IASON,
ANELLO & BOHRER, P.C.
|
||||||
By:
|
/s/ Daniel J. Horwitz |
By:
|
/s/ Robert G. Morvillo | ||||
Daniel
J. Horwitz
Donald
A. Corbett
Lindsay
A. Bush
|
Robert
G. Morvillo
Edward
Spiro
Jeremy
Temkin
Erica
Sparkler
|
||||||
1633
Broadway
New
York, New York 10019
(212)
277-6500
Attorneys
for Nominal Defendant Comverse Technology, Inc.
|
565
Fifth Avenue
New
York, New York 10017
(212)
856-9600
Attorneys
for Defendant Jacob (“Kobi”) Alexander
|
||||||
Dated:
|
New
York, New York
|
Dated:
|
New
York, New York
|
||||
December
17, 2009
|
December
17, 2009
|
||||||
GIBSON,
DUNN & CRUTCHER LLP
|
DECHERT
LLP
|
||||||
By:
|
/s/ Joel M. Cohen |
By:
|
/s/ David Hoffner | ||||
Joel
M. Cohen
|
David
Hoffner
Robert
Topp
|
||||||
200
Park Avenue
New
York, New York 10166
(212)
351-4000
Attorneys
for Defendant Itsik Danziger
|
1095
Avenue of the Americas
New
York, New York 10036
(212)
698-3500
Attorneys
for Defendant David Kreinberg
|
||||||
Dated:
|
New
York, New York
|
Dated:
|
New
York, New York
|
||||
December
17, 2009
|
December
17, 20097
|
||||||
BAKER
BOTTS LLP
|
KRAMER
LEVIN NAFTALIS & FRANKEL LLP
|
||||||
By:
|
/s/ Seth Taube |
By:
|
/s/ Arthur Aufses | ||||
Seth
Taube
Richard
Harper
Ian
Hummel
|
Arthur
Aufses
Yehudis
Lewis
Guillaine
Senecal
|
||||||
30
Rockefeller Plaza
New
York, New York 10112
(212)
408-2500
Attorneys
for Defendant Ron Hiram
|
1177
Avenue of the Americas
New
York, New York 10036
(212)
715-9234
Attorneys
for Defendants John Friedman
and
Sam Oolie
|
Exhibit A
- 38
Dated:
|
New
York, New York
|
Dated:
|
New
York, New York
|
||||
December
17, 2009
|
December
17, 2009
|
||||||
KOBRE
& KIM LLP
|
LAW
OFFICE OF HENRY PUTZEL, III
|
||||||
By:
|
/s/ Steven Perlstein |
By:
|
/s/ Henry Putzel, III | ||||
Steven
Perlstein
Steven
Kobre
|
Henry
Putzel, III
Lucia
T. Chapman
|
||||||
800
Third Avenue
New
York, New York 10022
(212)
488-1207
Attorneys
for Defendant Igal Nissim
|
565
Fifth Avenue, 9th Floor
New
York, New York 10017
(212)
661-0066
Attorneys
for Defendant Shaula Yemini
|
||||||
Dated:
|
New
York, New York
|
Dated:
|
New
York, New York
|
||||
December
17, 2009
|
December
17, 2009
|
||||||
LANKLER
SIFFERT & WOHL LLP
|
LAW
OFFICES OF SOLOMON N. KLEIN
|
||||||
By:
|
/s/
John Siffert
|
By:
|
/s/
Solomon N. Klein
|
||||
Derek
Chan
John
Siffert
|
Solomon
N. Klein
|
||||||
500
Fifth Avenue, 33rd Floor
New
York, New York 10110
(212)
921-8399
Attorneys
for Defendant Zeev Bregman
|
1410
Broadway - Suite 1802
New
York, NY 10018
(212)
575-0202
Attorneys
for Defendant William Sorin
|
||||||
Dated:
|
New
York, New York
|
Dated:
|
New
York, New York
|
||||
December
__, 2009
|
December
17, 2009
|
||||||
LAW
OFFICES OF THOMAS P. PUCCIO
|
MORRISON
& FOERSTER LLP
|
||||||
By:
|
|
By:
|
/s/
Jamie Levitt
|
||||
Thomas
Puccio
|
Jack
Auspitz
Jamie
Levitt
|
||||||
230
Park Avenue, Suite 301
New
York, New York 10169
(212)
883-6383
Attorneys
for Defendant William Sorin
|
1290
Avenue of the Americas
New
York, New York 10104
(212)
468-8000
Attorneys
for Defendant Dan Bodner
|
||||||
Exhibit A
- 39
Dated:
|
New
York, New York
|
Dated:
|
New
York, New York
|
||||
December
17, 2009
|
December
17, 2009
|
||||||
MANATT
PHELPS & PHILLIPS LLP
|
SIDLEY
AUSTIN LLP
|
||||||
By:
|
/s/
Ronald G. Blum
|
By:
|
/s/ Steven M. Bierman | ||||
Amy
Terry Sheehan
Ronald
G. Blum
|
Steven
M. Bierman
Saima
S. Ahmed
|
||||||
7
Times Square
New
York, New York 10036
(212)
790-4500
Attorneys
for Defendant Raz Alon
|
787
Seventh Avenue
New
York, New York 10019
(212)
839-5300
Attorneys
for Defendant Deloitte & Touche LLP
|
||||||
Dated:
|
New
York, New York
|
Dated:
|
New
York, New York
|
||||
December
17, 2009
|
December
17, 2009
|
||||||
THOMPSON
HINE LLP
|
PAUL,
HASTINGS, JANOFSKY &
WALKER
LLP
|
||||||
By:
|
/s/
Rebecca Brazzano
|
By:
|
/s/
Asa R. Danes
|
||||
David
Wilson
Rebecca
Brazzano
|
Daniel
B. Goldman
Asa
R. Danes
|
||||||
335
Madison Avenue, 12th Floor
New
York, New York 10017
(212)
344-5680
Attorneys
for Defendant Shawn Osborne
|
Park
Avenue Tower
75
East 55th Street, First Floor
New
York, New York 10022
(212)
318-6024
Attorneys
for Defendant Yechiam Yemini
|
||||||
Dated:
|
New
York, New York
|
||||||
December
17, 2009
|
|||||||
WILMER
CUTLER PICKERING HALE AND DORR LLP
|
|||||||
By:
|
/s/ Joanne Monteavaro | ||||||
Joanne
Monteavaro
William
Paine
|
|||||||
399
Park Avenue
New
York, New York 10022
(212)
230-8800
Attorneys
for Defendant Francis Girard
|
|||||||
Exhibit A
- 40
EXHIBIT
A
UNITED
STATES DISTRICT COURT
EASTERN
DISTRICT OF NEW YORK
|
|
IN
RE COMVERSE TECHNOLOGY, INC. DERIVATIVE LITIGATION
|
06-cv-1849
(NGG)(RER)
|
PRELIMINARY APPROVAL AND
SCHEDULING ORDER
The
parties to the above-captioned consolidated derivative action (the “Federal
Derivative Action”) have applied pursuant to Rule 23.1 of the Federal Rules of
Civil Procedure for an Order to approve the proposed settlement of the Federal
Derivative Action in accordance with the Stipulation of Compromise and
Settlement entered into by the parties, dated as of December 17, 2009 (the
“Stipulation”), and for the dismissal of the Federal Derivative Action with
prejudice upon the terms and conditions set forth in the Stipulation (the
“Settlement”). The parties to a parallel derivative action currently
pending in the Supreme Court of the State of New York, In re Comverse Technology, Inc.
Derivative Litigation, No. 601272/06, have also signed the Stipulation
and have therefore agreed to be bound by its terms. The parties
anticipate seeking dismissal with prejudice of the pending state derivative
action if and when this Court grants final approval of the
Settlement. The Court having read and considered the Stipulation and
accompanying documents, and all parties having consented to the entry of this
Order,
NOW,
THEREFORE, this ___ day of _______ __, 20__, upon application of the
Parties,
IT IS
HEREBY ORDERED as follows:
1. Except
for terms defined herein, the Court adopts and incorporates the definitions in
the Stipulation for purposes of this Order.
2. For
purposes of this Settlement, the Federal Derivative Action is to be treated as a
properly maintained derivative action on behalf of Comverse under Rule 23.1 of
the Federal
Exhibit A
- A - 1
Rules of
Civil Procedure and Louisiana Municipal Police Employees’ Retirement System is
to be treated as an appropriate derivative plaintiff.
3. The
Settlement appears to be the product of serious, informed, noncollusive
negotiations, has no obvious deficiencies, provides substantial value to the
Company and falls within the range of possible approval and, therefore, merits
further consideration.
4. The Court
preliminarily finds that the Settlement is fair, reasonable, adequate, and in
the best interests of the Company and its Shareholders.
5. The Court
has scheduled a Settlement Hearing, which will be held on ________ __, 20__, at
_ m., at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York
11201, to:
(a) consider
the Settlement pursuant to Rule 23.1 of the Federal Rules of Civil Procedure as
fair, reasonable, adequate, and in the best interests of the Company and its
Shareholders;
(b) consider
an Order and Final Judgment dismissing the Federal Derivative Action with
prejudice, with each Party to bear his or its own costs, and release and enjoin
prosecution of any and all Released Claims;
(c) consider
Plaintiffs’ Counsel’s request for an award of Fees and Expenses;
and
(d) hear
other such matters as the Court may deem necessary and appropriate.
6. The Court
reserves the right to adjourn the Settlement Hearing or modify any of the dates
set forth herein without further notice to the Company’s
Shareholders.
Exhibit A
- A - 2
7. The Court
reserves the right to approve the Settlement at or after the Settlement Hearing
with such modifications as may be consented to by the parties to the Federal
Derivative Action and without further notice to the Company’s
Shareholders.
8. The Court
approves, as to form and content, the Notice of Pendency and Settlement of
Derivative Actions and of Settlement Hearing (the “Notice”), annexed as Exhibit
1 to Exhibit A to the Stipulation, and the Summary Notice of Pendency and
Settlement of Derivative Actions and of Settlement Hearing (“Publication
Notice”), annexed as Exhibit 2 to Exhibit A to the Stipulation, and finds that
the filing, posting, and publication of these notices, substantially in the
manner and form set forth in this Order, meets the requirements of Rule 23.1 of
the Federal Rules of Civil Procedure and due process under the United States
Constitution and any other applicable laws, is the best notice practicable under
the circumstances, and shall constitute due and sufficient notice of all matters
relating to the Settlement.
9. All costs
incurred in notifying the Company’s Shareholders of the Settlement, shall be
paid by the Company, and in no event shall Plaintiffs or their counsel be
responsible for any costs relating to notifying Shareholders.
10. No later
than ________ __, 20__, Comverse’s counsel shall cause a copy of the Notice,
substantially in the form annexed as Exhibit 1 to Exhibit A to the Stipulation,
to be (1) filed in a Form 8-K with the SEC, along with a copy of the Stipulation
as an exhibit to the Form 8-K, and (2) posted on the Company’s website through
the date of the Settlement Hearing.
11. No later
than ________ __, 20__, Comverse’s counsel shall cause a copy of the Publication
Notice, substantially in the form annexed as Exhibit 2 to Exhibit A to the
Stipulation to be published in The Wall Street
Journal.
Exhibit A
- A - 3
12. At least
seven (7) days prior to the Settlement Hearing, Comverse’s counsel shall file
with the Court and serve on Plaintiffs’ Counsel proof, by affidavit or
declaration, of such SEC filing, website posting, and publication.
13. All
proceedings in the Federal Derivative Action, other than such proceedings as may
be necessary to carry out the terms and conditions of the Stipulation and the
Settlement, are hereby stayed and suspended until further Order of this
Court. Pending final determination of whether the Stipulation should
be approved, Plaintiffs, the Company, Plaintiffs’ Counsel, all of the Company’s
Shareholders, and any of them, are barred and enjoined from commencing,
prosecuting, instigating, or in any way participating in the commencement or
prosecution of any action asserting any Released Claims against any Released
Persons.
14. Any
Shareholder as of _________ __, 20__ [date of Preliminary Order], that continues
to hold shares of Comverse common stock as of the date of the Settlement Hearing
(“Objecting Shareholder”) may appear and show cause, if he, she, or it has any
reason why the proposed Settlement of the Federal Derivative Action should not
be approved as fair, reasonable, and adequate, or why a Judgment should not be
entered thereon, or why attorneys’ fees and expenses should not be awarded to
counsel for the Plaintiffs; provided, however, that no Objecting Shareholder
shall be heard or entitled to contest the approval of the terms and conditions
of the proposed Settlement, or, if approved, the Order and Final Judgment to be
entered thereon approving the same, or the attorneys’ fees and expenses to be
awarded to counsel for the Plaintiffs unless that person files and serves his,
her, or its objection in accordance with the terms and conditions in the
Notice.
15. Any
Objecting Shareholder who does not file and serve a timely objection in
accordance with the terms and conditions in the Notice shall be deemed to have
waived any
Exhibit A
- A - 4
objection
such Objecting Shareholder might have, and shall forever be barred, in these
proceedings or in any other proceeding, from making any objection to or
otherwise challenging the Settlement, the Stipulation or any provision thereof,
the dismissal of the Derivative Actions, or the application and award of
attorneys’ fees and expenses and/or any other proceedings herein, and shall have
no right to appeal therefrom.
16. If the
Settlement provided for in the Stipulation shall be approved by the Court
following the Settlement Hearing, an Order and Final Judgment shall be entered
as described in the Stipulation.
17. If the
Stipulation is not approved by the Court, is terminated, or shall not become
effective for any reason, the Federal Derivative Action shall proceed,
completely without prejudice to any party as to any matter of law or fact, as if
the Stipulation had not been made and had not been submitted to the Court, and
neither the Stipulation, any provision contained in the Stipulation, any action
undertaken pursuant thereto, nor the negotiation thereof by any party shall be
deemed an admission or offered or received in evidence at any proceeding in the
Federal Derivative Action or any other action or proceeding.
IT IS SO
ORDERED
DATED:
|
|
||
|
|||
U.S.D.J.
NICHOLAS G. GARAUFIS
|
Exhibit A
- A - 5
EXHIBIT
A-2
SUMMARY
NOTICE OF PENDENCY AND SETTLEMENTS
OF
SHAREHOLDER ACTIONS AND OF SETTLEMENT HEARING
TO:
|
ANY
PERSON WHO OWNS COMVERSE COMMON STOCK (“COMVERSE
SHAREHOLDER”)
|
YOU ARE
HEREBY NOTIFIED that pursuant to an
Order of the United States District Court for the Eastern District of New York,
a hearing will be held on June 21, 2010, at 10:00 a.m., before the Honorable
Nicholas G. Garaufis, United States District Judge, at the United States
Courthouse, 225 Cadman Plaza East, Brooklyn, New York 11201, for the purpose of
determining whether the proposed settlements in the shareholder actions
captioned In re Comverse
Technology, Inc. Derivative Litigation, No. 06-CV-1849 (NGG)(RER) (the
“Federal Derivative Action”), and Levy v. Koren, No. 07-CV-896
(AKH) (S.D.N.Y.) (the “Section 16(b) Action”), should be approved as fair,
reasonable, and adequate, and whether judgments dismissing the Federal
Derivative Action and the Section 16(b) Action should be entered.
Plaintiffs
in the Federal Derivative Action are Comverse shareholders who filed certain
claims against the defendants on behalf and in the right of Comverse, alleging
that the defendants engaged in or benefited from the improper backdating of
stock options, and, as a result, disseminated materially false financial
statements and proxy statements to the shareholders of the
Company. Plaintiff in the Section 16(b) Action brought an action
pursuant to Section 16(b) of the Securities Exchange Act of 1934 to recover
so-called “short-swing profits.” In connection with resolving the
Federal Derivative Action and a parallel derivative action, which alleges
substantially similar claims and is pending in the Supreme Court of the State of
New York, captioned In
re Comverse Technology,
Inc. Derivative Litigation, No. 601272/06 (the “State Derivative
Action”), Comverse has taken certain corporate governance actions, and Comverse
officers and directors are being released from liability to
Comverse. The proposed settlement provides for dismissal of the State
Derivative Action.
Exhibit A
- A2 - 1
The
proposed settlements further provide for the payment of fees and expenses for
plaintiffs’ counsel in the Derivative Actions and Section 16(b)
Action.
IF YOU ARE A CURRENT OWNER OF
COMVERSE COMMON STOCK YOUR RIGHTS MAY BE AFFECTED BY PROCEEDINGS IN THESE
ACTIONS. A more detailed form of notice describing the
Settlements has been filed by the Company with the SEC in a Form 8-K and posted
on the Company’s website, www.comverse.com.
Inquiries
may be made to plaintiffs’ counsel in the Derivative Actions and Section 16(b)
Action:
Attorneys
for Derivative Plaintiff Louisiana Municipal Police Employees’ Retirement
System in the Federal Derivative Action:
|
Mark
Lebovitch
Steven
B. Singer
Laura
Helen Gundersheim
BERNSTEIN
LITOWITZ BERGER
&
GROSSMANN LLP
1285
Avenue of the Americas
New
York, New York 10019
(212)
554-1400
|
Attorneys
for Derivative Plaintiffs Leonard Sollins and Timothy Hill in the State
Derivative Action:
|
Benjamin
Y. Kaufman
Neil
Fraser
Todd
L. Kammerman
MILBERG
LLP
One
Pennsylvania Plaza
New
York, New York 10119
(212)
594-5300
|
Eric
L. Zagar
Michael
Wagner
Tara
P. Kao
BARROWAY
TOPAZ KESSLER MELTZER & CHECK, LLP
280
King of Prussia Road
Radnor,
Pennsylvania
(610)
822-2209
|
Exhibit A
- A2 - 2
Attorneys
for Section 16(b) Plaintiff Mark Levy
|
Mitchell
M.Z. Twersky
ABRAHAM
FRUCHTER & TWERSKY LLP
One
Penn Plaza
Suite
2805
New
York, New York 10119
(212)
279-5050
|
Any objection to the settlement of the
Derivative Actions must be filed with the Court no later than May 24, 2010, and
sent via first-class mail or overnight delivery to the following counsel of
record:
The
Court:
|
Clerk
of Court
United
States Courthouse
225
Cadman Plaza East
Brooklyn,
New York 11201
|
Attorneys
for Plaintiff Louisiana Municipal Police Employees’ Retirement System in
the Federal Derivative Action:
|
Steven
B. Singer
BERNSTEIN
LITOWITZ BERGER
&
GROSSMANN LLP
1285
Avenue of the Americas
New
York, New York 10019
|
Attorneys
for Plaintiffs Leonard Sollins and Timothy Hill in the State Derivative
Action:
|
Benjamin
Y. Kaufman
MILBERG
LLP
One
Penn Plaza
New
York, New York 10119-165
|
Eric
L. Zagar
BARROWAY
TOPAZ KESSLER MELTZER & CHECK, LLP
280
King of Prussia Road
Radnor,
Pennsylvania
|
|
Attorneys
for Nominal Defendant Comverse Technology, Inc.:
|
Daniel
J. Horwitz
DICKSTEIN
SHAPIRO LLP
1633
Broadway
New
York, New York 10019
|
Attorneys
for Defendant Jacob “Kobi” Alexander:
|
Jeremy
Temkin
MORVILLO,
ABRAMOWITZ, GRAND,
IASON,
ANELLO & BOHRER, P.C.
565
Fifth Avenue
New
York, New York 10017
|
Exhibit A
- A2 - 3
Any
objection to the settlement of the Section 16(b) Action must be filed with the
Court no later than May 24, 2010, and sent via first-class mail or overnight
delivery to the following counsel of record:
The
Court:
|
Clerk
of Court
United
States Courthouse
225
Cadman Plaza East
Brooklyn,
New York 11201
|
Attorneys
for Plaintiff Mark Levy:
|
Mitchell
M.Z. Twersky
ABRAHAM
FRUCHTER & TWERSKY LLP
One
Penn Plaza
Suite
2805
New
York, New York 10119
(212)
279-5050
|
Attorneys
for Nominal Defendant Comverse Technology, Inc.:
|
Miranda
S. Schiller
WEIL,
GOTSHAL & MANGES LLP
767
Fifth Avenue
New
York, New York 10153
|
Attorneys
for Defendant Koren:
|
Seth
T. Taube
BAKER
BOTTS LLP
30
Rockefeller Plaza
New
York, New York 10112
|
PLEASE
DO NOT CONTACT THE COURT OR THE CLERK OF THE COURT REGARDING THIS
NOTICE.
DATED:
April 7, 2010
|
BY
ORDER OF THE COURT UNITED
STATES
DISTRICT COURT
EASTERN
DISTRICT OF NEW YORK
|
Exhibit A
- A2 - 4
EXHIBIT
B
UNITED
STATES DISTRICT COURT
EASTERN
DISTRICT OF NEW YORK
|
|
IN
RE COMVERSE TECHNOLOGY, INC. DERIVATIVE LITIGATION
|
06-CV-1849
(NGG)(RER)
|
ORDER
AND FINAL JUDGMENT APPROVING
SETTLEMENT AND
DISMISSING WITH PREJUDICE
WHEREAS,
the above-captioned consolidated shareholder derivative action having come on
regularly for a hearing, as noticed, on ____ __, 20__, at __m., pursuant to the
Order of this Court, dated _____ __, 20__ (the “Preliminary Order”), to consider
and determine the matters set forth in the Preliminary Order; and
WHEREAS,
due and sufficient notice having been given as provided in the Hearing Order,
and all persons having any objection to the proposed settlement or the request
for attorneys’ fees and expenses described in the Notice of Pendency and
Settlement of Derivative Actions and of Settlement Hearing having been given an
opportunity to present such objections to the Court; and
WHEREAS,
[no objections to the settlement or the requested attorneys’ fees and expenses
were received] [all objections to the settlement or the requested attorneys’
fees and expenses having been heard in opposition]; and
WHEREAS,
on ______ __, 20__, the Court entered an order approving the settlement and,
having reviewed the parties’ written submissions and heard the testimony of
counsel to the parties, determined that the requested attorneys’ fees and
expenses of $9,350,000 was fair and reasonable; and
WHEREAS,
the Court having heard and considered the matter, including all papers filed in
connection therewith, the arguments of the parties at the ____ __, 2010
hearing;
Exhibit A
- B - 1
IT IS
HEREBY ORDERED, ADJUDGED, AND DECREED that:
1. This
Order and Final Judgment incorporates by reference the definitions in the
Stipulation of Compromise and Settlement executed by the Parties on December 17,
2009, and filed with the Court on ______ __, 20__, and all terms used herein
shall have the same meanings as set forth in the Stipulation.
2. The
Court has jurisdiction over the subject matter of the Federal Derivative Action,
and over all parties to the Federal Derivative Action and Stipulation, for
purposes of reviewing and approving the Settlement, including nominal defendant
Comverse Technology, Inc., the Individual Defendants,1 Deloitte & Touche LLP, and Comverse’s
Shareholders.
3. The
Notice is hereby determined to be fair, reasonable, and adequate notice under
the circumstances and in full compliance with Rule 23.1 of the Federal Rules of
Civil Procedure, and the requirements of due process of the United States
Constitution and any other applicable laws, and constitutes due and sufficient
notice.
4. This
action is properly maintained as a derivative action under Rule 23.1 of the
Federal Rules of Civil Procedure on behalf of Comverse and Louisiana Municipal
Police Employees’ Retirement System is an appropriate derivative
plaintiff.
5. The
Court hereby approves the Settlement set forth in the Stipulation and finds that
the Settlement is in all respects fair, just, reasonable, and adequate to
Comverse and its Shareholders and shall be consummated in accordance with the
terms and conditions of the
______________________
1 The
“Individual Defendants” are Jacob “Kobi” Alexander (“Mr. Alexander” or
“Alexander”), John H. Friedman, William F. Sorin, Ron Hiram, Itsik Danziger, Sam
Oolie, Carmel Vernia, Francis Girard, Igal Nissim, David Kreinberg, Zeev
Bregman, Dan Bodner, Shaula A. Yemini, Zvi Alexander, Yechiam Yemini, Shawn K.
Osborne, and Raz Alon. Individual Defendant Raz Alon is a defendant
in only the Federal Derivative Action. Zvi Alexander and Carmel
Vernia were named as defendants in the Derivative Actions, but service was never
perfected. As former officers and/or directors of Comverse, they are
included as part of the definition of Released Persons and will be released as
part of the proposed settlement.
Exhibit A
- B - 2
Stipulation. The
Parties are hereby authorized and directed to comply with the terms of the
Stipulation and to consummate the Settlement in accordance with its terms and
provisions.
6. The
Federal Derivative Action, and each of the complaints filed therein, and all of
the Released Claims as against the Released Persons, are hereby DISMISSED WITH PREJUDICE, with
each Party to bear his or its own costs (except as otherwise provided in this
Order and Final Judgment or the Stipulation).
7. Plaintiffs,
on behalf of themselves and their Related Persons, Comverse, and any Comverse
Shareholder, are hereby forever barred and enjoined from prosecuting any
Released Claims they may have against any of the Released
Persons. Plaintiffs are also hereby forever barred and enjoined from
prosecuting any claims against the Defendants’ counsel related to the defense of
the Derivative Actions.
8. Each
Defendant, on behalf of himself or itself and on behalf of his or its respective
Related Persons, is hereby forever barred and enjoined from prosecuting any
Released Defendants’ Claims they may have against any of the Plaintiffs and
Plaintiffs’ Counsel and their subsidiaries, affiliates, members, directors,
officers, employees, partners, agents, heirs, administrators, successors, and
assigns.
9. Each
Defendant and his or its Related Persons shall be hereby barred and enjoined
from prosecuting any claims (including Unknown Claims) against each other and
their respective Related Persons, arising out of, relating to, or in connection
with the Released Claims. Notwithstanding the above, nothing
in this paragraph shall bar any claims or potential claims that Comverse or
any Person who is or was a Defendant in the Derivative Actions may have under or
relating to any policy of liability or other
insurance. Notwithstanding anything in this paragraph, the exchange
of releases between Mr. Alexander and Comverse and the scope of such releases
shall be in accordance with the terms set forth in Exhibit C to the
Stipulation.
Exhibit A
- B - 3
10. Each
of the Defendants and any other Person shall be deemed to be, and by operation
of this Order and Final Judgment shall be, permanently barred, enjoined, and
restrained from commencing, prosecuting, or asserting any claim(s) for
contribution, however denominated, that is related to, based upon, or arises out
of the Released Claims, regardless of whether such claim(s) for contribution is
asserted as a claim, cross-claim, counterclaim, third-party claim, or in any
other manner, in the Derivative Actions, the Direct Actions, or in any other
court, arbitration, administrative agency, or forum. All such claims
for contribution will be extinguished, discharged, satisfied, and unenforceable
both (a) against the Released Persons and (b) by the Released Persons against
any other Person. Nothing herein, however, shall prevent any Party
from seeking documents or testimony from any Defendant with regard to any
proceeding.
11. In
the event Mr. Alexander terminates his settlement in the Shareholder Class
Action and/or the Derivative Actions, he shall be severed from this Order and
Final Judgment and this Order and Final Judgment shall remain binding on
Plaintiffs, on behalf of themselves and their Related Persons, Comverse, and any
Comverse Shareholder, on the one hand, and Comverse and all Defendants, other
than Mr. Alexander on the other hand. Notwithstanding anything in
this Order and Final Judgment to the contrary, if Mr. Alexander terminates his
Settlement with the Shareholder Class Action and/or the Derivative
Actions, he shall remain bound by and subject to the contribution bar order
described in paragraph 10 above, but nothing herein shall affect Mr.
Alexander’s right to a set-off, judgment reduction or other credit against the
Derivative Plaintiffs or Comverse pursuant to 15 U.S.C. § 78u-4(f)(7)(B), N.Y. §
GOL 15-108, or other provisions of federal or state statutory or common law, in
the event he terminates this Settlement.
12. Plaintiffs’
Counsel is hereby awarded Fees and Expenses in the amount of $9,350,000, which
Comverse will pay to Milberg LLP as receiving agent for
Plaintiffs’ Counsel
Exhibit A
- B - 4
within
the later of (i) August 30, 2010, or (ii) thirty (30) days of the later of the
State Dismissal, the Federal Dismissal, or the Shareholder Class Action
Settlement. Plaintiffs’ Counsel’s receipt of the Fees and Expenses is
subject to Plaintiffs’ Counsel’s joint and several obligation to make a refund
or repayment to the Company or its designee if, as a result of any appeal and/or
further proceedings on remand, or successful collateral attacks, the amount of
Fees and Expenses is reduced. In the event that a Party fails to
comply with Section 3.3.1 of the Stipulation, Fees and Expenses will be reduced
by an amount such that total payment of Fees and Expenses does not exceed
fifteen percent of the total amounts actually paid under Section
3.3.1.
13. Nothing
in the Stipulation, the Settlement set forth therein, or any act performed or
document executed pursuant to or in furtherance of the Stipulation or the
Settlement is, may be deemed to be or may be used as an admission of, or
evidence of, the validity of any Released Claim, or of any wrongdoing or
liability of any of the Defendants or Released Persons; or is or may be used as
an admission of, or evidence of, any fault or omission of any of the Defendants
or Released Persons in any civil, criminal, or administrative proceeding in any
court, administrative agency, or other tribunal. Defendants and the
Released Persons may file this Order and Final Judgment in any action or
proceeding that may be brought against them in order to support a defense or
counterclaim based on principles of res judicata, collateral estoppel, release,
good-faith settlement, judgment bar or reduction, any theory of claim preclusion
or issue preclusion, or similar defense or counterclaim.
14. Nothing
contained herein shall be construed to release, discharge, extinguish or
otherwise compromise any claims, potential claims, duties, obligations or rights
that Comverse or any Person who is or was a defendant in the Derivative Actions
or any insurer may have or owe under or relating to any policy of liability or
other insurance.
Exhibit A
- B - 5
15. Without
in any way affecting the finality of this Order and Final Judgment, this Court
shall retain continuing jurisdiction to enter any further orders as may be
necessary to effectuate or enforce the terms and provisions of the Stipulation
and the Settlement, to protect and effectuate the provisions of this Order and
Final Judgment, and to hear and determine other matters relating to the
administration, consummation, construction, or enforcement of the Settlement
provided for in the Stipulation and in this Order and Final
Judgment.
16. The
Clerk of the Court is directed to enter this Final Judgment pursuant to this
Order in accordance with Rules 54 and 58 of the Federal Rules of Civil
Procedure.
ENTER:
|
|
U.S.D.J.
Nicholas G. Garaufis
|
|
Judgment
signed and entered this __ day of ___, 20__.
|
|
Exhibit A
- B - 6
EXHIBIT
C
Jacob
“Kobi” Alexander Settlement Provisions
I.
|
Mr.
Alexander shall contribute $60 million to Comverse as follows1:
|
A.
|
The
cash in his brokerage accounts that have been seized and frozen by order
of the Federal Court (the “Accounts”) as set forth in paragraph
I.G;
|
B.
|
The
value of the securities in the Accounts. Securities in the
Accounts shall be valued as of December 31, 2009 (the “Valuation
Date”). The securities in the Accounts, including shares of
Verint Systems, Inc. (“Verint”), Ulticom, Inc. (“Ulticom”), and private
equity fund securities (SSB Masters Fund L.P., Private Selection Fund I
LLC, Private Selection Fund 2 L.P., and SSB Greenwich Street II LP)
(“Private Equity Funds”), shall be valued at the amounts set out in the
brokerage account statements as of the Valuation
Date;
|
C.
|
The
aggregate value of the Accounts as of the Valuation Date, consisting of
the amount of cash in the Accounts as of the Valuation Date and the value
of the securities as determined under paragraph I.B above, is referred to
as the “Account Value”;
|
D.
|
Comverse
and Mr. Alexander shall jointly cooperate to cause the following to be
released and paid to Comverse: (i) the cash surrender value of Mr.
Alexander’s split dollar life insurance policies, (ii) the amount in Mr.
Alexander’s Israeli education fund account(s), and (iii) the total amount
in Mr. Alexander’s Manager’s Insurance policies (both pension and
severance components);
|
E.
|
Comverse
and Mr. Alexander shall use their reasonable best efforts, consistent with
paragraph I.D, to cause the funds
described in paragraph I.D to be received by Comverse on or before June
30, 2010. In the event that any portion of the funds referenced
in paragraph I.D is not received by Comverse before June 30, 2010, Mr.
Alexander shall pay an equivalent amount to Comverse. To the
extent that such funds are subsequently received by Comverse, Comverse
shall transfer that amount to Mr.
Alexander.
|
|
i.
|
As
an alternative to causing (a) the amount in his Israeli education fund
account(s) and/or (b) the amount of his Manager’s Insurance policies (both
pension and severance components) (collectively the “Education and
Manager’s Insurance Amounts”) to be released and paid to Comverse, Mr.
Alexander may elect to transfer the policies and accounts in paragraph I.D
to himself, in which case he shall pay to Comverse an amount of equal
value. If Mr. Alexander
so
|
_____________________________
1 Unless
otherwise defined, the capitalized words shall have the meanings set out in the
Stipulation of Compromise and Settlement in the following actions: In re Comverse Technology, Inc.
Derivative Litig., No. 06 CV 1849 (NGG)(RER) (E.D.N.Y.); and In re Comverse Technology, Inc.
Derivative Litig., No. 601272/06 (N.Y. Sup. Ct.).
Exhibit A
- C - 1
elects,
Comverse will use commercially reasonable efforts to cause (a) Mr. Alexander’s
Israeli education fund account(s), and (b) Mr. Alexander’s Manager’s Insurance
policies (both pension and severance components), to be transferred to Mr.
Alexander;
F.
|
Mr.
Alexander shall pay to Comverse the amount by which $60 million exceeds
the Account Value and the amounts received by Comverse pursuant to,
without duplication, paragraphs I.D and I.E (the “Balance”) on
or before June 30, 2010;
|
G.
|
Mr.
Alexander and his wife Hana Alexander will withdraw and relinquish any
claims previously asserted in the Civil Forfeiture Action to the cash and
securities in the Accounts, and shall cooperate with all reasonable
requests by the Office of the United States Attorney for the Eastern
District of New York (the “USAO”) regarding the forfeiture of the
Accounts. Mr. and Mrs. Alexander will also cooperate with all
reasonable requests by the USAO and Comverse regarding the transfer of the
Accounts to Comverse as soon as reasonably possible after the Completion
Date.2 On or before the entry
of the Preliminary Order, Mr. and Mrs. Alexander will execute such
documents as are necessary to withdraw and relinquish their claims to the
cash and securities in the Accounts, and will deliver said documents to
the USAO or a mutually acceptable third party, subject to an agreement to
hold these documents in escrow until the Completion Date, at which time
the parties anticipate the USAO will file the documents as necessary to
effectuate the forfeiture of the Accounts and transfer the assets in the
Accounts to Comverse;
|
H.
|
Following
the Completion Date and within ten (10) days after the transfer of the
assets in the Accounts to the Class Settlement Fund (the “Transfer Date”),
Mr. Alexander or his designee shall pay to the Class Settlement Fund3 an amount equal to the value of the
Private Equity Funds as set out in the brokerage account statements on the
Valuation Date, less any cash that has been generated between the
Valuation Date and the date on which the Private Equity Funds are
transferred to Mr. Alexander or his designee (the “Private Equity Purchase
Price”). Within forty-eight (48) hours after receipt of the
Private Equity Purchase Price, the Class Settlement Fund will transfer the
Private Equity Funds (including any securities distributed from the
Private Equity Funds in kind) to Mr. Alexander’s designee, or, if the USAO
does not object, to Mr. Alexander;
|
I.
|
After
Comverse’s receipt of funds pursuant to, without duplication, paragraphs
I.A, I.E, and I.F, Comverse shall deposit such funds into the Derivative
Settlement
|
____________________________
2
“Completion Date” means the last date on which the appeals from final orders and
judgments approving (a) the Federal Derivative Action, (b) the State Derivative
Action, and (c) the Shareholder Class Action have expired.
3
“Class Settlement Fund” means the “Settlement Fund” defined in the Stipulation
of Settlement in In re
Comverse Technology, Inc. Securities Litigation, No. 06-CV-1825
(NGG)(RER).
Exhibit A
- C - 2
Fund. Within
forty-eight (48) hours of Comverse receipt of funds pursuant to, without
duplication, paragraphs I.A, I.E, and I.F, Comverse shall direct the transfer of
the funds from the Derivative Settlement Fund into the Class Settlement
Fund. Within forty-eight (48) hours after Comverse’s receipt of the
securities described in paragraph I.B, Comverse shall deposit the securities
into the Class Settlement Fund;
J.
|
Notwithstanding
anything to the contrary in the Stipulation, including, Section 3.3.1(j)
of the Stipulation, upon the Federal Dismissal, State Dismissal, and the
Shareholder Class Action Settlement, but in no event later than June 30,
2010, funds from the Derivative Settlement Fund in an amount equal to the
total amounts deposited into the Derivative Settlement Fund pursuant to
paragraphs I.E and I.F shall be distributed by the Derivative Settlement
Fund to or at the direction of Comverse into the Class Settlement
Fund;
|
K.
|
All
sums deposited into the Derivative Settlement Fund and the Class
Settlement Fund shall be held in escrow subject to paragraph VII.
|
II.
|
Notwithstanding
anything to the contrary in the Stipulation, Comverse, on the one hand,
and Mr. Alexander, on the other hand, shall execute releases substantially
in the form annexed as Exhibit C-1, releasing each other from any and all
claims, known or unknown, from the beginning of the world until the later
of the Completion Date or the discontinuance with prejudice of Comverse Technology, Inc. v.
Alexander, No. 08/600142 (N.Y. Sup. Ct.) (“Comverse v.
Alexander”). The release executed by Comverse shall
include a provision lifting the Order of Attachment with respect to the
Alexander Apartments. These releases shall be held in escrow as
described below in paragraph VII.
|
III.
|
Notwithstanding
anything to the contrary in the Stipulation, Comverse covenants (a) not to
sue Mr. Alexander, (b) not to cause its subsidiaries (direct and indirect)
and affiliates to sue Mr. Alexander, and (c) to use its reasonable best
efforts to cause its subsidiaries (direct and indirect) and affiliates not
to sue Mr. Alexander, for all claims, known or unknown, from the beginning
of the world until the later of the Completion Date or the discontinuance
with prejudice of Comverse v. Alexander,
provided that (i) such covenant shall not affect or impair the ability of
any directors, officers, employees, or agents of Comverse who serve on the
boards of directors of Ulticom or Verint from taking actions in the
exercise of their fiduciary duties as directors thereof and (ii) actions
taken in the exercise of such duties shall not constitute a breach of such
covenant.
|
IV.
|
Mr.
Alexander will transfer his equity interest in Starhome to Comverse
without additional consideration. On or before June 30, 2010,
Mr. Alexander will execute such documents as Comverse reasonably requests
to effectuate the transfer of his equity interest in Starhome, and such
documents shall be held in escrow as described in paragraph
VII.
|
Exhibit A
- C - 3
V.
|
Notwithstanding
anything to the contrary in the Stipulation, Mr. Alexander’s settlement of
the Federal Derivative Action and the State Derivative Action is
conditioned upon the final approval of the settlements of the Derivative
Actions, the Class Action, and SEC v. Alexander, No.
06-CV-03844 (NGG)(RER) (E.D.N.Y.) (“SEC Action”); the discontinuance with
prejudice of Comverse v.
Alexander; and the occurrence of the Completion Date and the
Transfer Date. For the avoidance of doubt, if Mr. Alexander
exercises his rights under paragraph 2.23 of the Stipulation entered into
in the Shareholder Class Action on or about December 16, 2009 (the “Class
Action Stipulation”), then this Stipulation is terminated through no fault
of Mr. Alexander subject to paragraph
VII.
|
VI.
|
Comverse
will cooperate with Mr. Alexander to cause the release of liens on the
Alexander Apartments to the extent necessary to allow him to mortgage
and/or sell such property to generate proceeds net of mortgages, taxes,
and brokerage fees and other closing costs (“Net Proceeds”) sufficient to
fund the amount due under paragraphs I.E, I.F, and I.H and any penalty to
be paid in settlement of the SEC Action. Comverse will also
cooperate with Mr. Alexander to cause the release of liens on the
Alexander Apartments to allow him to sell such property, provided that the
Net Proceeds from such sales (the “Additional Apartment Proceeds”) are
deposited into an escrow account pursuant to a mutually acceptable escrow
agreement, and subject to the Order of Attachment previously entered in
Comverse v.
Alexander until the Completion Date. The Additional
Apartment Proceeds may be used to satisfy the obligations of Mr. Alexander
or his designee under paragraph I.H. Upon the Completion Date,
Comverse will release the Order of Attachment and execute, within five (5)
business days of being presented with such documents, any and all
documents necessary to effectuate the transfer of the remaining Alexander
Apartments and the Additional Apartment Proceeds, if any, to Mrs.
Alexander. Comverse understands and acknowledges that Mrs.
Alexander is relinquishing her claims to the Accounts and the Alexander
Apartments based upon and in consideration of Comverse’s obligations under
this agreement.
|
VII.
|
If
the Completion Date fails to occur (1) other than by reason of Mr.
Alexander’s failure to comply with his obligations under the Stipulation
or (2) by reason of Mr. Alexander’s exercise of his rights under
paragraphs 2.21 through 2.26 of the Class Action Stipulation, then funds,
securities, and documents held in escrow shall be handled as
follows:
|
A.
|
Mr.
and Mrs. Alexander and Comverse will jointly request that the USAO (or
other mutually agreeable third party) return the releases described in
paragraph I.G to Mr. and Mrs.
Alexander;
|
B.
|
Releases
described in paragraph II shall be returned to Mr. Alexander and Comverse,
respectively;
|
C.
|
Funds
described in paragraphs I.D and I.E, shall be deposited into an escrow
account jointly established by counsel for Comverse and counsel for Mr.
Alexander at a mutually agreeable federally chartered bank,
pending
|
Exhibit A
- C - 4
resolution
of Comverse’s claims against Mr. Alexander and Mr. Alexander’s counterclaims
against Comverse;
D.
|
Funds
described in paragraph I.F and I.H, shall be deposited into an escrow
account jointly established by counsel for Comverse and counsel
for Mr. Alexander at a mutually agreeable federally chartered bank,
pending resolution of Comverse’s claims against Mr. Alexander and Mr.
Alexander’s counterclaims against Comverse. Notwithstanding the
above, if any of the funds described in paragraph I.F and I.H were
obtained by issuing mortgage(s) on the Alexander Apartments, such funds,
and only such funds, may be used to pay down the mortgage(s) on the
Alexander Apartments to the extent such mortgage(s) remains outstanding,
provided, however, that the Order of Attachment remains in
place. Subject to SEC approval and to the extent feasible,
funds designated for payment to the SEC shall be treated in accordance
with this paragraph VII.D; and
|
E.
|
The
documents described in paragraph IV shall be returned to Mr.
Alexander.
|
Exhibit A
- C - 5
EXHIBIT
C-1
UNITED
STATES DISTRICT COURT
EASTERN
DISTRICT OF NEW YORK
IN
RE COMVERSE TECHNOLOGY, INC. DERIVATIVE LITIGATION
|
No.
06-CV-1849 (NGG)(RER)
|
SUPREME
COURT OF THE STATE OF NEW YORK
COUNTY OF
NEW YORK
COMVERSE
TECHNOLOGY, INC.
Plaintiff,
JACOB
“KOBI” ALEXANDER and WILLIAM SORIN
Defendants.
|
No.
600142/08
Hon.
Richard B. Lowe III, J.S.C.
|
IN
RE COMVERSE TECHNOLOGY, INC.
DERIVATIVE
LITIGATION
|
No.
601272/06
Hon.
Richard B. Lowe III, J.S.C.
|
GENERAL
RELEASE
TO ALL TO WHOM THESE PRESENTS SHALL
COME OR MAY CONCERN, KNOW THAT Jacob “Kobi” Alexander, as RELEASOR, in
consideration of the terms contained in the Stipulation of Compromise and
Settlement in In re Comverse
Technology, Inc. Derivative Litigation, No. 06-CV-1849 (NGG)(RER) and
In re Comverse Technology,
Inc. Derivative Litigation, No. 601272/06 (N.Y. Sup. Ct.) dated December
17, 2009 (the “Derivative Stipulation”), including, but not limited to a release
of all of Comverse Technology, Inc.’s claims against Mr. Alexander and the terms
of paragraphs II, III, and VI of Exhibit C to the Derivative Stipulation,
receipt whereof is hereby acknowledged, releases and discharges
Comverse
Exhibit A
- C-1.1 - 1
Technology,
Inc. as RELEASEE, the RELEASEE, RELEASEE’S directors and officers (in their
capacity as officers and directors), successors, assigns, all of its direct and
indirect subsidiaries and affiliates (with the exception of Verint Systems, Inc.
and Ulticom, Inc.) from all actions, causes of action, suits, debts, sums of
money, accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments,
extents, executions, claims, and demands whatsoever, in law, admiralty or
equity, whether known or unknown, including, but not limited to any actions
related to the Released Claims as defined in the Derivative Stipulation, which
against the RELEASEE, the RELEASOR, RELEASOR’S heirs, executors, administrators,
successors and assigns ever had, now have or hereafter can, shall or may have,
for, upon, or by reason of any matter, cause or thing whatsoever from the
beginning of the world to the later of the Completion Date as defined in Exhibit
C to the Derivative Stipulation or the discontinuance with prejudice of Comverse Technology, Inc. v. Alexander, No.
600142/08, pending in the Supreme Court of the State of New York.
For the avoidance of doubt, nothing in
this RELEASE shall be construed as a waiver of claims against Verint Systems
Inc. or Ulticom, Inc. that Mr. Alexander ever had, now has or hereafter can,
shall, or may have, for, upon, or by reason of any matter, cause, or thing
whatsoever.
To the extent that an officer or
director of Comverse, or an officer or director of a direct or indirect
subsidiary or affiliate of Comverse (other than Verint and Ulticom), commences
an action against Mr. Alexander, this RELEASE will be null and void, and of no
further effect, as to that officer or director.
Exhibit A
- C-1.1 - 2
This RELEASE shall be held in escrow
pursuant to paragraphs II and VII of Exhibit C to the Derivative Stipulation and
this RELEASE shall not take effect unless the Completion Date, as defined in
Exhibit C to the Derivative Stipulation, occurs.
Dated:
|
New
York, New York
|
|||
December
__, 2009
|
||||
JACOB
“KOBI” ALEXANDER
|
||||
By:
|
Exhibit A
- C-1.1 - 3
UNITED
STATES DISTRICT COURT
EASTERN
DISTRICT OF NEW YORK
IN
RE COMVERSE TECHNOLOGY, INC. DERIVATIVE LITIGATION
|
No.
06-CV-1849 (NGG)(RER)
|
SUPREME
COURT OF THE STATE OF NEW YORK
COUNTY OF
NEW YORK
COMVERSE
TECHNOLOGY, INC.
Plaintiff,
JACOB
“KOBI” ALEXANDER and WILLIAM SORIN
Defendants.
|
No.
600142/08
Hon.
Richard B. Lowe III, J.S.C.
|
IN
RE COMVERSE TECHNOLOGY, INC.
DERIVATIVE
LITIGATION
|
No.
601272/06
Hon.
Richard B. Lowe III, J.S.C.
|
GENERAL
RELEASE
TO ALL TO WHOM THESE PRESENTS SHALL
COME OR MAY CONCERN, KNOW THAT Comverse Technology, Inc. a corporation organized
under the laws of the State of New York, and all of its direct and indirect
subsidiaries and affiliates (with the exception of Verint Systems, Inc. and
Ulticom, Inc.) (“Comverse”) as RELEASOR, in consideration of the terms contained
in the Stipulation of Compromise in In re Comverse Technology, Inc.
Derivative Litigation, No. 06-CV-1849 (NGG)(RER) and In re Comverse Technology, Inc.
Derivative Litigation, No. 601272/06 (N.Y. Sup. Ct.) dated December 17,
2009 (the “Derivative Stipulation”), including, but not limited to the payments
made by or on behalf of Jacob “Kobi”
Exhibit A
- C-1.2 - 1
Alexander
thereunder, receipt whereof is hereby acknowledged, releases and discharges Mr.
Alexander as RELEASEE, the RELEASEE, RELEASEE’S spouse, heirs, executors,
administrators, successors and assigns from all actions, causes of action,
suits, debts, sums of money, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, controversies, agreements, promises, variances,
trespasses, damages, judgments, extents, executions, claims, and demands
whatsoever, in law, admiralty or equity, whether known or unknown, including,
but not limited to any actions related to Released Claims as defined in the
Derivative Stipulation, which against the RELEASEE, the RELEASOR, RELEASOR’S
successors and assigns ever had, now have or hereafter can, shall or may have,
for, upon, or by reason of any matter, cause or thing whatsoever from the
beginning of the world to the later of the Completion Date as defined in the
Derivative Stipulation or the discontinuance with prejudice of Comverse Technology, Inc. v. Alexander, No.
600142/08, pending in the Supreme Court of the State of New York.
Comverse further releases the
attachment order entered on or about June 3, 2008, in Comverse Technology, Inc. v.
Alexander, No. 600142/08, which attached seven apartments titled in Mr.
Alexander’s name, and agrees to execute all documents necessary to effectuate
the release of the attachment order.
This RELEASE shall be held in escrow
pursuant to paragraph II and VII of Exhibit C to the Derivative Stipulation and
this RELEASE shall not take effect unless the Completion Date, as defined in
Exhibit C to the Derivative Stipulation, occurs.
Dated:
|
New
York, New York
|
|||
January
__, 2010
|
||||
COMVERSE
TECHNOLOGY, INC
|
||||
By:
|
Exhibit A
- C-1.2 - 2
EXHIBIT
B
UNITED
STATES DISTRICT COURT
EASTERN
DISTRICT OF NEW YORK
|
|||
MARK
LEVY,
|
x
|
||
:
|
|||
Plaintiff,
|
:
|
No.
10 CV 01478 (NGG) (RER)
|
|
:
|
|||
v.
|
:
|
||
:
|
|||
YAACOV
KOREN and JOHN DOES 1-20
|
:
|
||
:
|
|||
Defendants,
|
:
|
||
-and-
|
:
|
||
:
|
|||
COMVERSE
TECHNOLOGY, INC.
|
:
|
||
:
|
|||
Nominal
Defendant.
|
x
|
STIPULATION OF
SETTLEMENT
WHEREAS,
plaintiff Mark Levy (“plaintiff or “Levy”), a shareholder of Comverse
Technology, Inc. (“Comverse” or the “Company”), brought an action (the “Action”)
in the United States District Court for the Southern District of New York, Levy v. Koren and John Does
1-20, No. 07-CV-896 (AKH)(DCF), pursuant to Section 16(b) of the
Securities Exchange Act of 1934 (the “Exchange Act”), to recover so-called
“short-swing profits” allegedly obtained by defendant Yaacov Koren (“Koren” or
the “defendant”) and John Does 1-20, in connection with the exercise and sale of
stock options issued by Comverse;
WHEREAS,
the defendant denies any wrongdoing whatsoever and this Stipulation of
Settlement (“Stipulation”) shall in no event be construed or deemed to be
evidence of an admission or concession on the part of defendant with respect to
any claim or of any fault or liability or wrongdoing or damage whatsoever, or
any infirmity in the defenses that the defendant has asserted. Levy,
Comverse and Koren (collectively, the “Parties”) recognize, however, that the
Action has been filed by plaintiff and defended by defendant with
adequate
Exhibit B
- 1
basis in
fact under Rule 11 of the Federal Rules of Civil Procedure, and that the Action
is being voluntarily settled after advice of counsel and negotiation between
counsel for the Parties;
WHEREAS,
Comverse and defendant each moved to dismiss Plaintiff’s Amended Complaint on
July 6 and August 27, 2007, respectively; Judge Colleen McMahon denied the
motions and directed the Parties to conduct discovery on the issue of whether
defendant was an “officer” under Section 16(b) of the Exchange Act;
WHEREAS,
the Parties conducted limited discovery and discovery disputes were resolved by
the Court, and following completion of such discovery, Comverse and defendant
each moved for summary judgment on January 15, 2008; plaintiff opposed summary
judgment;
WHEREAS,
in April 2006, prior to the commencement of the Action, a shareholder derivative
action was brought on behalf of the Company in the United States District Court
for the Eastern District of New York (the “Federal Derivative Action”), alleging
that certain defendants (other than Koren) improperly engaged in, approved,
and/or benefited from the “backdating” of stock option grants which allegedly
caused damage to the Company; the Derivative Action was consolidated with other
shareholder actions on October 6, 2006, and a consolidated, Amended and Verified
Shareholder Derivative Complaint was filed entitled In re Comverse Technology,
Inc., No. 06-CV-1849 (NGG)(RER), which is pending before the Honorable
Nicholas Garaufis;
WHEREAS,
on September 22, 2006, Magistrate Judge Ramon Reyes issued an order in the
Federal Derivative Action directing that “[e]ach newly-filed or transferred
shareholder derivative action that arises out of the subject matter of the
Derivative Litigation shall be consolidated with the Derivative
Litigation . . . .”
Exhibit B
- 2
WHEREAS,
on February 16, 2007, the Lead Plaintiff in the Federal Derivative Action filed
a letter with the Court asserting that the Action should be consolidated with
the Derivative Action; Magistrate Judge Reyes determined that the Court would
take no action on that letter;
WHEREAS,
on December 22, 2009, Lead Plaintiff in the Federal Derivative Action filed a
proposed Stipulation of Settlement with the Court that purports to release,
among other things, “any statutory . . . claims . . . under federal law . . .
including insider trading . . . that were asserted or could have been asserted
in the Derivative Actions by Comverse, Plaintiffs, or any Comverse Shareholder,
derivatively on behalf of Comverse . . . .”;
WHEREAS,
following the settlement of the proposed Federal Derivative Action the Parties
engaged in settlement negotiations among themselves and determined that it was
in the interest of all Parties to simultaneously resolve all shareholder claims
that were brought for the benefit of the Company relating to the grant of stock
options and to transfer the Action so that it can be coordinated with the
Federal Derivative Action for purposes of settlement only, as judicial and other
economies would be achieved by conducting a single coordinated fairness hearing
and issuing a single notice of settlement;
WHEREAS,
in evaluating the proposed settlement provided for herein, the Parties have
considered: the substantial benefit being provided by the proposed Settlement,
including its resolution in the context of a global settlement of all
shareholder claims relating to stock options; the uncertainties of the outcome
of this Action; the cost to Comverse of this Action in which it is advancing
defendant’s legal fees pursuant to his employment agreement; the likelihood that
the resolution of the claims in the Complaint, whenever and however determined,
would be submitted for appellate review; and that as a consequence of such
appellate review, there would
Exhibit B
- 3
be yet
additional time until there would be a final adjudication of the claims and
defenses asserted, and additional legal fees which could reduce the amount of
any ultimate recovery (whether on a litigated judgment, if plaintiff were to
prevail, or settlement).
NOW,
THEREFORE, IT IS HEREBY STIPULATED AND AGREED, for good and valuable
consideration, the sufficiency of which is hereby acknowledged, as
follows:
1. As soon
as practicable after this Stipulation has been executed, the Parties shall move
to transfer this Action so that it can be coordinated with the Federal
Derivative Action and, upon transfer of the action, shall move before the
Honorable Nicholas Garaufis: (i) for preliminary approval of this settlement and
the form of notice to shareholders; and (ii) for entry of a Preliminary Order,
substantially in the form annexed hereto as Exhibit A.
2. In order
to coordinate the consideration and approval of the Settlement in this Action
with the Court’s consideration and approval of a settlement in the Federal
Derivative Action, there shall be a single Notice of Pendency and Settlements of
Shareholder Actions and of Settlement Hearing (the “Notice”) regarding both this
Action and the Federal Derivative Action, and a single Summary Notice of
Pendency and Settlement of Shareholder Actions and of Settlement Hearing
(“Publication Notice”) regarding both this Action and the Federal Derivative
Action, which Notice and Publication Notice are attached hereto as Exhibits B
and C, respectively.
3. The
Parties agree and the form of Preliminary Order annexed hereto provides that
Comverse shall at its sole cost and expense notify its shareholders of the
Settlement and Settlement Hearing by (1) causing the Notice to be filed by the
Company in a Form 8-K with the SEC, along with a copy of this Stipulation as an
exhibit to the Form 8-K, (2) posting the Notice
Exhibit B
- 4
and this
Stipulation on the Company’s website through the date of the Settlement Hearing,
and (3) publishing the Publication Notice in the Wall Street
Journal.
4. At least
seven (7) days prior to the Settlement Hearing, Comverse’s counsel shall file
with the Court and serve on Plaintiffs’ Counsel proof, by affidavit or
declaration, of such SEC filing, website posting, and publication.
5. If the
settlement contemplated by this Stipulation is approved by the Court after
Notice and a hearing on the fairness of the settlement, counsel for the Parties
shall request that the Court enter an Order and Final Judgment (the “Order” or
“Final Judgment”), substantially in the form annexed hereto as Exhibit D, the
provisions of which are hereby incorporated by reference as if set forth in full
herein. The Order shall become final either by expiration of the time
for appeal or review of such Order, or, if any appeal is filed and not
dismissed, after the Order is affirmed on appeal and is no longer subject to
review upon appeal or review by writ of certiorari.
6. On or
before the 10th
business day after the Order approving the settlement becomes final, defendant
shall wire transfer to the Company the amount of one hundred fifty thousand
dollars ($150,000). In addition, defendant will, conditioned upon the
Order approving the settlement becoming final, relinquish all right, title, and
interest that he has in and to 92,500 outstanding unexercised options (the
“Options”) to acquire shares of the Company’s common stock and agrees that all
rights to exercise such Options, including his rights under stock option grant
agreements, shall be cancelled and shall be deemed null and
void. Between the date of the execution of this Stipulation and the
time at which the Company cancels the 92,500 Options, defendant will refrain
from transferring, exercising, disposing, or taking any other action with
respect to the Options. In addition, Koren releases, waives and
forfeits any and all claims against
Exhibit B
- 5
Comverse,
its affiliated companies, subsidiaries, directors and officers relating to
deferred compensation or Comverse’s purchase of his equity interest in
investments, or any other compensation relating to his
employment. The cash payment and relinquishment of rights described
in this paragraph 6 is referred to herein as the “Settlement
Payment.”
7. Entry and
finality of the Order is a condition precedent to defendant’s obligation to make
the Settlement Payment.
8. In the
event that the Court does not enter the Order approving the settlement, or such
Order does not become final, this Stipulation shall be null and void (except as
to this Paragraph 8), and the Parties shall be returned to their positions nunc pro tunc as they existed
on the date prior to the settlement, and without prejudice in any
way.
9. In
consideration of the Settlement Payment referred to above, and upon the order
approving the Settlement becoming final, plaintiff and Comverse jointly and
severally release and discharge defendant and any and all current and former
directors and officers (including the “John Does” referenced in the Amended
Complaint) of the Company from claims for alleged violations of Section 16(b) of
the Exchange Act and Rule 16a-1 (17 C.F.R. § 240.16a-1) promulgated thereunder,
including from any and all liability and damages under or based upon any and
all, known or unknown, alleged violations of Section 16(b) of the Exchange Act
and Rule 16a-1 (17 C.F.R. § 240.16a-1) promulgated thereunder, that have been,
could have been and might have been asserted in the Action, on behalf of
plaintiff, any other person or entity, Comverse, and/or any and all owners of
any security (as defined in Section 3(a)(10) of the Exchange Act) issued by
Comverse, or any of them, whether individually, directly, representatively,
derivatively or in any other capacity, against defendant.
Exhibit B
- 6
10. In
consideration of, among other things, the releases referenced in paragraph 9
above, defendant and Comverse jointly and severally release and discharge
plaintiff and his counsel from all claims, known or unknown, arising from or
relating to the Action, including any claim for attorneys’ fees, interest and
costs.
11. This
Stipulation and all negotiations and papers related to it, and any proceedings
in connection with the settlement, whether or not the settlement becomes final
or is consummated, are not and shall not be construed to be evidence of, or an
admission by, any of the Parties respecting the validity or invalidity of any of
the claims or defenses asserted in the action or of defendant’s liability or
lack of liability with respect to any such claim or for any damages sought in
the Action, or of any wrongdoing or lack of wrongdoing by any or all of them
whatsoever, and shall not be offered for admission or received as evidence of
any such liability or wrongdoing or damages, or lack thereof. The defendant does not
admit, either expressly or implicitly, that it is subject to any liability
whatsoever by reason of any of the matters alleged in the Amended Complaint or
referenced in the Stipulation, or that there is any merit to any of the claims
for damages suffered therein. The defendant, on the contrary,
expressly denies and disputes the existence of any such liability or
damages.
12. Plaintiff’s
counsel will apply to the Court, on notice to counsel for defendant and
Comverse, and to the shareholders of Comverse in the Notice, of an award of
attorneys’ fees and reimbursement of costs and expenses which award (inclusive
of costs and expenses) shall not exceed $250,000. Such attorneys’
fees and expenses as may be awarded by the Court are to be paid by the Company
on or before the 10th
business day after receipt of the Settlement Payment. Neither
defendant nor Comverse shall oppose, object or take any position or action that
is
Exhibit B
- 7
detrimental
to Plaintiffs’ application for attorneys’ fees, expenses and costs to the extent
the application does not exceed $250,000.
13. This
Stipulation may be executed in one or more counterparts, each of which shall be
deemed an original version of this Stipulation and all of which, when taken
together shall be deemed to constitute one and the same agreement, provided,
that no party shall be bound hereby unless and until all parties shall have
executed and delivered this Stipulation.
14. The
individuals signing this Stipulation represent that they have the authority to
execute this Stipulation, to grant releases in this Stipulation and to
compromise and settle all claims and defenses relating to the
Action.
15. This
Stipulation may not be modified or amended, nor may any of its provisions be
waived, except by a writing signed by all Parties hereto.
16. The
Parties shall use their best efforts to execute such documents and shall take
such other reasonable action as is necessary to effectuate the Stipulation, as
provided for herein.
Dated:New
York, New York
March 25, 2010
|
|||
BAKER
BOTTS LLP
|
ABRAHAM
FRUCHTER & TWERSKY LLP
|
||
By:
|
/s/ Seth T. Taube |
By:
|
/s/ Mitchell M.Z. Twersky |
Seth
T. Taube (ST-6088)
|
Mitchell
M.Z. Twersky (MT-6739)
|
||
30
Rockefeller Plaza
New
York, New York 10112
(212)
408-2500
|
One
Penn Plaza
Suite
2805
New
York, New York 10119
(212)
279-5050
|
||
Attorneys
for Defendant Yaacov Koren
|
Attorneys
for Plaintiff Mark Levy
|
Exhibit B
- 8
WEIL,
GOTSHAL & MANGES LLP
|
||
By:
|
/s/ Miranda S. Schiller | |
Miranda
S. Schiller (MS-9456)
|
||
767
Fifth Avenue
New
York, New York 10153
(212)
310-8000
|
||
Attorneys
for Nominal Defendant
Comverse
Technology, Inc.
|
Exhibit B
- 9
EXHIBIT
A
UNITED
STATES DISTRICT COURT
EASTERN
DISTRICT OF NEW YORK
|
|||
MARK
LEVY,
|
x
|
||
:
|
|||
Plaintiff,
|
:
|
No.
10 CV 01478 (NGG) (RER)
|
|
:
|
|||
v.
|
:
|
||
:
|
|||
YAACOV
KOREN and JOHN DOES 1-20
|
:
|
||
:
|
|||
Defendants,
|
:
|
||
-and-
|
:
|
||
:
|
|||
COMVERSE
TECHNOLOGY, INC.
|
:
|
||
:
|
|||
Nominal
Defendant.
|
x
|
PRELIMINARY ORDER IN
CONNECTION WITH SETTLEMENT PROCEEDINGS
WHEREAS, on March 25, 2010, the parties
to the above-captioned action (the “Action”) entered into a Stipulation of
Settlement (the “Stipulation”), which has been submitted for review and which,
together with the exhibits thereto, sets forth the terms and conditions for the
proposed settlement of the Action and all claims alleged in the Amended
Complaint, and dismissal of the Amended Complaint on the merits and with
prejudice, upon the terms and conditions set forth in the Stipulation; and the
Court having read and considered the Stipulation and the accompanying documents
and the prior proceedings in the Action; and the parties to the Stipulation
having consented to the entry of this Order; and all capitalized terms used
herein having the meanings defined in the Stipulation,
NOW THEREFORE, IT IS HEREBY ORDERED,
this ____ day of ________________________, 2010, that:
Exhibit B
- A - 1
The Court
has scheduled a Settlement Hearing, which will be held on ______________ ____,
2010, at _.m., at the United States Courthouse, 225 Cadman Plaza East, Brooklyn,
New York, 11021, to:
a. consider
whether the Settlement is fair, reasonable, adequate, and in the best interests
of the Company and its shareholders;
b. consider
an Order and Final Judgment dismissing the Action with prejudice, with each
Party to bear his or its own costs, except as to the attorneys’ fees and
expenses which may be awarded to Plaintiff’s counsel and payable by the Company,
and release and enjoin prosecution of any and all claims released in the
Stipulation;
c. consider
plaintiff’s counsel’s request for an award of fees and expenses;
and
d. hear
other such matters as the Court may deem necessary and appropriate.
2. The Court
reserves the right to adjourn the Settlement Hearing or modify any of the dates
set forth herein without further notice to the Company’s
shareholders.
3. The Court
reserves the right to approve the Settlement at or after the Settlement Hearing
with such modifications as may be consented to by the parties and without
further notice to the Company’s shareholders.
4. The Court
approves, as to form and content, the Notice of Pendency and Settlements of
Shareholder Actions and of Settlement Hearing (the “Notice”) annexed as Exhibit
B to the Stipulation, and the Summary Notice of Pendency and Settlements of
Shareholder Actions and of Settlement Hearing (“Publication Notice”) annexed as
Exhibit C to the Stipulation, and finds that the filing, posting, and
publication of these notices, substantially in the
Exhibit B
- A - 2
manner
and form set forth in this Order, meets the requirements of due process under
the United States Constitution and any other applicable laws, is the best notice
practicable under the circumstances, and shall constitute due and sufficient
notice of all matters relating to the Settlement.
5. All costs
incurred in notifying the Company’s shareholders of the Settlement shall be paid
by the Company, and in no event shall Plaintiff or his counsel be responsible
for any costs relating to notifying Shareholders.
6. No later
than __________________, 2010, Comverse’s counsel shall cause a copy of the
Notice, substantially in the form annexed as Exhibit B to the Stipulation, to be
(1) filed in a Form 8-K with the SEC, along with a copy of the Stipulation as an
exhibit to the Form 8-K, and (2) posted on the Company’s
website through the date of the Settlement Hearing.
7. No later
than _______________________, 2010, Comverse’s counsel shall cause a copy of the
Publication Notice, substantially in the form annexed as Exhibit C to the
Stipulation, to be published in the Wall Street Journal.
8. At least
seven (7) days prior to the Settlement Hearing, Comverse’s counsel shall file
with the Court and serve on Plaintiffs’ Counsel proof, by affidavit or
declaration, of such SEC filing, website posting, and publication.
9. All
proceedings in the Action, other than such proceedings as may be necessary to
carry out the terms and conditions of the Stipulation and the Settlement, are
hereby stayed and suspended until further order of this
Court. Pending final determination of whether the Stipulation should
be approved, Plaintiffs, the Company, Plaintiffs’ Counsel, all of the Company’s
shareholders, and any of them, are barred and enjoined from commencing,
prosecuting, instigating, or in any way participating in the commencement or
prosecution of any
Exhibit B
- A - 3
action
asserting any claims identified in paragraph 9 of the Stipulation against any of
the persons identified in that paragraph.
10. Comverse
shareholders shall be bound by all determinations and judgments in this Action,
whether favorable or unfavorable.
11. Any
shareholder as of ____________________, 2010, may appear and show cause, if he,
she, or it has any reason why the proposed Settlement should not be approved as
fair, reasonable, and adequate, or why a Final Judgment should not be entered
thereon, or why attorney’s fees and expenses should not be awarded to counsel
for the Plaintiff; provided, however, that no shareholder as of
______________________, 2010, shall be heard or entitled to contest the approval
of the terms and conditions of the proposed Settlement, or, if approved, entry
of the Order and Final Judgment thereon approving the same, or the attorneys’
fees and expenses to be awarded to counsel for the Plaintiffs unless that person
files and serves his, her, or its objection in accordance with the terms and
conditions in the Notice. The parties to the stipulation may serve a
response to any objection no later than seven (7) days prior the Settlement
Hearing.
12. Any
shareholder as of ______________________, 2010, who does not file and serve a
timely objection in accordance with the terms and conditions in the Notice shall
be deemed to have waived any objections such Shareholder might have, and shall
forever be barred, in these proceedings or in any other proceeding, from making
any objection to or otherwise challenging the Settlement, the Stipulation or any
provision thereof, the dismissal of the Action, or the application and award of
attorneys fees and expenses and/or any other proceedings herein, and shall have
no right to appeal therefrom.
13. If the
Stipulation is not approved by the Court, is terminated, or shall not become
effective for any reason, the Action shall proceed, completely without prejudice
to any of the Parties as to any matter of law or fact, as if the Stipulation had
not been made and had not
Exhibit B
- A - 4
been
submitted to the Court, and neither the Stipulation, any provision contained in
the Stipulation, any action undertaken pursuant thereto, nor the negotiation
thereof by any party shall be deemed an admission or offered or received in
evidence at any proceeding in the Action or any other action or
proceeding.
14. The Court
retains exclusive jurisdiction over the Action to consider all further matters
arising out of or connected with the Stipulation or the enforcement thereof, or
proceedings in connection therewith.
Dated:
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________________________,
2010
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New
York, New York
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NICHOLAS
G. GARAUFIS
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UNITED
STATES DISTRICT JUDGE
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Exhibit B
- A - 5
EXHIBIT
D
UNITED
STATES DISTRICT COURT
EASTERN
DISTRICT OF NEW YORK
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MARK
LEVY,
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x
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:
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Plaintiff,
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:
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No.
10 CV 01478 (NGG) (RER)
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:
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v.
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:
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:
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YAACOV
KOREN and JOHN DOES 1-20
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:
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:
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Defendants,
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:
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-and-
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:
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:
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COMVERSE
TECHNOLOGY, INC.
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:
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:
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Nominal
Defendant.
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x
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ORDER AND FINAL
JUDGMENT
On the __________ day of _____________,
2010, a hearing was held before this Court to determine: (1) whether the terms
and conditions of the Stipulation of Settlement, dated March 25, 2010 (the
“Stipulation”) are fair, reasonable and adequate for settlement of all claims
asserted by Mark Levy, for the benefit of Comverse Technology, Inc.
(“Comverse”), in the action now pending in this Court under the above caption,
including the release of the defendant Yaacov Koren (“Koren” or the “defendant”)
and should be approved; (2) whether judgment should be entered dismissing the
Amended Complaint with prejudice; and (3) whether and what to award plaintiff’s
counsel as reasonable attorneys’ fees and reimbursement of costs and
expenses.
This action (the “Action”) was brought
by plaintiff for the benefit of Comverse, to recover alleged “short-swing
profits” under § 16(b) of the Securities Exchange Act of 1934 (the “Exchange
Act”). The Court, having considered all matters submitted to it at
the hearing and
Exhibit B
- D - 1
otherwise
during the course of proceedings in this Action; and it appearing that notice of
the hearing substantially in the form approved by the Court was (i) filed by the
Company in a Form 8-K with the SEC, along with a copy of the Stipulation as an
exhibit, (ii) posted on the Company’s website through the Settlement Hearing,
and (iii) published in the Wall Street Journal; and
after a review of the record herein, the Stipulation and other papers submitted
to the Court, and having concluded that the Settlement should be
approved;
NOW, THEREFORE, IT IS HEREBY ORDERED
THAT:
1. The
Court has jurisdiction over the subject matter of the Action, the plaintiff,
Comverse, and the defendant.
2. The
method of notifying Comverse shareholders of the pendency of the Action and of
the settlement and its terms and conditions met the requirements due process,
and constituted the best notice practicable under the circumstances, and
constituted due and sufficient notice to all persons and entities entitled
thereto.
3. The
Stipulation (a copy of which is annexed hereto as Exhibit A) is hereby approved
as fair, reasonable and adequate and in the best interests of Comverse and its
shareholders. The parties are directed to consummate the settlement
in accordance with the terms and provisions of the Stipulation.
4. This
Order and Final Judgment and all negotiations and papers related to it, and any
proceedings in connection with the settlement, whether or not the settlement
becomes final or is consummated, are not and shall not be construed to be
evidence of, or an admission by, any of the Parties respecting the validity or
invalidity of any of the claims or defenses asserted in the Action or of
defendant’s liability or lack of liability with respect to any such claim or for
any damages sought in the Action, or of any wrongdoing or lack of wrongdoing by
any or
Exhibit B
- D - 2
all of
them whatsoever, and shall not be offered for admission or received as evidence
of any such liability or wrongdoing or damages, or lack thereof. The
defendant does not admit, either expressly or implicitly, that it is subject to
any liability whatsoever by reason of any of the matters alleged in the Amended
Complaint or referenced in the Stipulation, or that there is any merit to any of
the claims asserted therein. The defendant, on the contrary,
expressly denies and disputes the existence of any such liability or
damages.
5. The
Amended Complaint, each claim for relief therein, and the Action are hereby
dismissed on the merits, with prejudice and without costs, except as otherwise
provided in the award of attorneys’ fees, costs and disbursements provided for
herein; plaintiff and Comverse jointly and severally release and discharge
defendant and any and all current and former directors and officers (including
the “John Does” referenced in the Amended Complaint) of the Company from claims
for alleged violations of Section 16(b) of the Exchange Act and Rule 16a-1 (17
C.F.R. § 240.16a-1) promulgated thereunder, including from any and all liability
and damages under or based upon any and all, known or unknown, alleged
violations of Section 16(b) of the Exchange Act and Rule 16a01 (17 C.F.R. §
240.16a-1) promulgated thereunder, that have been, could have been and might
have been asserted in the Action, on behalf of plaintiff, any other person or
entity, Comverse, and/or any and all owners of any security (as defined in
Section 3(a)(10) of the Exchange Act) issued by Comverse, or any of them,
whether individually, directly, representatively, derivatively or in any other
capacity, against defendant.
6. The
defendant and Comverse jointly and severally release and discharge plaintiff and
his counsel from all claims, known or unknown, arising from or relating to the
Action, including any claim for attorneys’ fees, interest and
costs.
7. The
plaintiff, Comverse, and all owners of any security (as defined in
Exhibit B
- D - 3
Section
3(a)(10) of the Exchange Act) issued by Comverse, either individually, directly,
derivatively, representatively, or in any other capacity, and any of their
present, future or former officers, directors, employees, agents, attorneys,
representatives, advisors, trustees, parents, principals, subsidiaries, general
and limited partners, heirs, executors, administrators, successors and assigns
or anyone else, are hereby severally and permanently barred and enjoined from
instituting or prosecuting this or any other action, in this or any other Court
or tribunal of this or any jurisdiction, based upon or for the purpose of
enforcing any and all liability and damages under or based upon any and all,
known or unknown, alleged violations of Section 16(b) of the Exchange Act and
Rule 16a01 (17 C.F.R. § 240.16a-1) promulgated thereunder, that have been, could
have been and might have been asserted in the Action, on behalf of plaintiff,
any other person or entity, Comverse, and/or any and all owners of any security
(as defined in Section 3(a)(10) of the Exchange Act) issued by Comverse, or any
of them, whether individually, directly, representatively, derivatively or in
any other capacity, against defendants or any of their present or former
officers, directors, employees, agents, attorneys, representatives,
predecessors, shareholders, advisors and affiliates (as defined in Rule 12b-2,
promulgated pursuant to the Exchange Act) associates (as defined in Rule 12b-2,
promulgated pursuant to the Exchange Act), parents, principals, subsidiaries,
general or limited partners or partnerships, and each of their heirs, executors,
administrators, successors and assigns, or anyone else, in connection with, or
that arise now or hereafter out of, or relate in any way to the Action or the
Stipulation of Settlement (except for compliance with the Stipulation), or
matters , transactions, occurrences, or claims alleged in the Amended Complaint
or referenced in the Stipulation herein.
7. Plaintiff’s
counsel is hereby awarded attorneys’ fees, in the sum of $_____________, which
sum the Court finds to be fair and reasonable and which shall be paid
to
Exhibit B
- D - 4
plaintiff’s
counsel by Comverse after this Order has become final as set forth in the
Stipulation at paragraph 12.
8. Jurisdiction
is hereby reserved over all matters relating to the enforcement, administration,
and performance of the Stipulation.
9. The
Clerk of the Court is directed to enter and docket this Order and Final Judgment
in this Action.
Dated:
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New
York, New York
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_____________,
2010
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SO
ORDERED:
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_________________________
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NICHOLAS
G. GARAUFIS
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UNITED
STATE DISTRICT JUDGE
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Exhibit B
- D - 5
EXHIBIT
C
See Current Report on Form 8-K filed by
Comverse Technology, Inc. with the SEC on
January 29,
2008
Exhibit C - 1