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Transcript of ROBBINS ARROYO LLP LAUREN N. … · 1.12 "Plaintiffs' Counsel" means Robbins Arroyo LLP, Robbins...
STIPULATION OF SETTLEMENT LEAD CASE NO. C-12-05556-RS
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ROBBINS ARROYO LLP BRIAN J. ROBBINS (190264) [email protected] GEORGE C. AGUILAR (126535) [email protected] LAUREN N. OCHENDUSZKO (274227) [email protected] MICHAEL J. NICOUD (272705) [email protected] 600 B Street, Suite 1900 San Diego, CA 92101 Telephone: (619) 525-3990 Facsimile: (619) 525- 3991 Co-Lead Counsel for Plaintiffs [Additional Counsel on Signature Page]
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION
IN RE OCZ TECHNOLOGY GROUP, INC. SHAREHOLDER DERIVATIVE LITIGATION
))))))))))))))
Lead Case No.: C-12-05556-RS (Consolidated with Case Nos. C-12-06058-RS, C-12-06343-RS) STIPULATION OF SETTLEMENT Judge: Hon. Richard Seeborg
This Document Relates to:
ALL ACTIONS
Case3:12-cv-05556-RS Document41 Filed07/22/13 Page1 of 26
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LEAD CASE NO. C-12-05556-RS
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This Stipulation of Settlement dated July 19, 2013 (the "Stipulation"), is made and
entered into by and among the following Settling Parties: (i) plaintiffs Ian Cassiman, Clair
Vanderschaaf, and Robert L. Morton ("Plaintiffs") (on behalf of themselves and derivatively on
behalf of OCZ Technology Group, Inc.), by and through their counsel in the Action; (ii) the
Individual Defendants, by and through their counsel in the Action; and (iv) nominal defendant
OCZ Technology Group, Inc. ("OCZ" or the "Company"). This Stipulation is intended by the
Settling Parties to fully, finally, and forever resolve, discharge, and settle the Released Claims,
upon and subject to the terms and conditions hereof. Capitalized terms not otherwise defined
shall have the meanings set forth in Section 1, "Definitions."
TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT
NOW, THEREFORE, IT IS HEREBY STIPULATED, CONSENTED TO, AND
AGREED by and among the undersigned counsel for the Settling Parties herein, in consideration
of the benefits flowing to the Settling Parties from the Settlement, and subject to the approval of
the Court pursuant to Federal Rule of Civil Procedure 23.1, that the claims asserted in the Action
and the Released Claims shall be finally and fully compromised, settled, and released, and the
Action shall be dismissed with prejudice and with full preclusive effect, upon and subject to the
terms and conditions of this Stipulation, as set forth below.
1. Definitions
As used in this Stipulation, the following terms have the meanings specified below:
1.1 "Action" means the derivative actions that were consolidated and captioned as In
re OCZ Technology Group, Inc. Shareholder Derivative Litigation, Lead Case No. C-12-05556-
RS (N.D. Cal.).
1.2 "Co-Lead Counsel" means Robbins Arroyo LLP and Robbins Geller Rudman &
Dowd LLP.
1.3 "Court" means the U.S. District Court for the Northern District of California, San
Francisco Division.
1.4 "Defendants" means the Individual Defendants and nominal defendant OCZ.
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1.5 "Effective Date" means the first date by which all of the events and conditions
specified in paragraph 9.1 hereof have occurred and have been met.
1.6 "Final" means when the last of the following with respect to the Judgment
approving this Stipulation, substantially in the form of Exhibit D attached hereto, shall have
occurred: (1) the expiration of the time to file a notice of appeal from the Judgment; or (2) if, an
appeal has been filed, the court of appeal has either affirmed the Judgment or dismissed that
appeal and the time for any reconsideration or further appellate review has passed; or (3) if a
higher court has granted further appellate review, that court has either affirmed the underlying
Judgment or affirmed the court of appeal's decision affirming the Judgment or dismissing the
appeal. Any proceeding or order, or any appeal or petition for review pertaining solely to any
claim for attorneys' fees and expenses in the Action shall not in any way delay or preclude the
Judgment from becoming Final within the meaning of this paragraph.
1.7 "Individual Defendants" means Ryan M. Petersen, Ralph H. Schmitt, Adam J.
Epstein, Richard L. Hunter, Russell J. Knittel, and Arthur F. Knapp, Jr.
1.8 "Judgment" means the judgment to be entered by the Court, substantially in the
form attached hereto as Exhibit D.
1.9 "Notice" means the Notice of Proposed Settlement and Settlement Hearing,
substantially in the form attached hereto as Exhibit B.
1.10 "Person" means an individual, corporation, limited liability corporation,
professional corporation, partnership, limited partnership, limited liability partnership,
association, joint stock company, estate, legal representative, trust, unincorporated association,
government or any political subdivision or agency thereof, and any business or legal entity and
their spouses, heirs, predecessors, successors, parents, subsidiaries, representatives, or assignees.
1.11 "Plaintiffs" means Ian Cassiman, Clair Vanderschaaf, and Robert L. Morton,
together with any of their respective agents, heirs, assigns, predecessors, and/or successors.
1.12 "Plaintiffs' Counsel" means Robbins Arroyo LLP, Robbins Geller Rudman &
Dowd LLP, and The Law Office of Alfred G. Yates, Jr., P.C.
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1.13 "OCZ" or the "Company" means nominal defendant OCZ Technology Group, Inc.
including, but not limited to, its predecessors, successors, subsidiaries, affiliates, divisions, and
assigns.
1.14 "Related Persons" means each of the Defendants' past or present agents, officers,
directors, attorneys, accountants, auditors, advisors, insurers, co-insurers, reinsurers, spouses,
immediate family members, heirs, executors, personal representatives, estates, administrators,
trusts, predecessors, successors, and assigns, or other individual or entity in which any Defendant
has a controlling interest, and each and all of their respective past and present officers, directors,
employees, agents, affiliates, parents, subsidiaries, divisions, attorneys, accountants, auditors,
advisors, insurers, co-insurers, re-insurers, heirs, executors, personal representatives, estates,
administrators, trusts, predecessors, successors, and assigns.
1.15 "Released Claims" shall collectively mean any and all claims for relief (including
Unknown Claims as defined in paragraph 1.21 hereof), rights, demands, suits, matters, causes of
action, or liabilities, known or unknown, whether or not concealed or hidden, asserted or
unasserted (including, without limitation, claims for damages, interest, attorneys' fees, costs,
disgorgement, constructive trust, breach of duty of care and/or breach of duty of loyalty or good
faith, breach of contract, fraud, negligence, gross negligence, negligent misrepresentation, insider
trading, mismanagement, misconduct, waste of corporate assets, abuse of control, unjust
enrichment, or violations of statutes, rules, or regulations, whether based on federal, state, local,
statutory, or common law or any other law, rule, or regulation), that have been or could have
been asserted in the Action by Plaintiffs, OCZ, or by any OCZ shareholder derivatively on behalf
of OCZ, against each and every Defendant and the Released Persons arising out of and based
upon the facts, transactions, events, occurrences, acts, disclosures, statements, omissions, or
failures to act that were or could have been alleged in the Action, or any claims in connection
with, based upon, arising out of, or relating to the Settlement, but excluding any claims to
enforce the Settlement set forth in this Stipulation. Expressly excluded from the term "Released
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Claims" are: (i) all claims alleged by the plaintiffs in the Securities Class Action; and (ii) the
matters set forth in Paragraph 7.4 of this Stipulation.
1.16 "Released Persons" means each and all of the Defendants and their Related
Persons.
1.17 "Securities Class Action" means the putative securities class actions that were
consolidated and captioned as In re OCZ Technology Group, Inc. Securities Litigation, CV 12-
05265 RS, also pending in this Court.
1.18 "Settlement" means the Settlement contemplated by this Stipulation.
1.19 "Settling Parties" means, collectively, each of the Defendants, Plaintiffs, on behalf
of themselves and derivatively on behalf of OCZ, and OCZ, and its shareholders. "Settling
Party" means, individually, any of the Settling Parties.
1.20 "Summary Notice" means the Summary Notice of Proposed Settlement and
Settlement Hearing, substantially in the form attached hereto as Exhibit C.
1.21 "Unknown Claims" means any Released Claim(s) that Plaintiffs, OCZ, the
Individual Defendants, or any OCZ shareholders do not know or suspect to exist in his, her, or its
favor at the time of the release of the Released Persons, including claims which, if known by
him, her, or it, might have affected his, her, or its settlement with and release of the Released
Persons, or might have affected his, her, or its decision not to object to this Settlement. In this
regard, with respect to the Released Claims, the Settling Parties stipulate and agree that, upon the
Effective Date, Plaintiffs, the Individual Defendants, and OCZ shall expressly waive, and each
OCZ shareholder shall be deemed to have and by operation of the Judgment shall have expressly
waived, the provisions, rights, and benefits conferred by section 1542 of the California Civil
Code, and by any law of any state or territory of the United States or any other state, sovereign,
or jurisdiction, or any principle of common law that is similar, comparable, or equivalent to
section 1542 of the California Civil Code, 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
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KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
Plaintiffs, OCZ, the Individual Defendants, and OCZ shareholders acknowledge that they may
hereafter discover facts in addition to or different from those which he, she, or it now knows or
believes to be true with respect to the subject matter of the Released Claims, but, upon the
Effective Date, each Plaintiff, Individual Defendant, and OCZ shall expressly settle and release,
and each OCZ shareholder shall be deemed to have and by operation of the Judgment shall have
fully, finally, and forever settled and released, any and all Released Claims, known or unknown,
suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, that
now exist, or heretofore have existed upon any theory of law or equity now existing or coming
into existence in the future. The Settling Parties acknowledge, and each OCZ shareholder shall
be deemed by operation of the Judgment to have acknowledged, that the foregoing waiver was
separately bargained for and agreed upon with the express intention of releasing Unknown
Claims, and is a key element of the Settlement of which this release is a part.
2. Description of the Action and Settlement of the Action
On October 29, 2012, a shareholder derivative complaint (captioned Cassiman v.
Petersen) was filed in this Court derivatively on behalf of OCZ and against the Individual
Defendants for alleged violations of state law, including breach of fiduciary duty, waste of
corporate assets, and unjust enrichment, following announcements by the Company regarding,
among other things, accounting issues, indefinitely delayed financial filings, and material
weaknesses. On November 21, 2012, OCZ announced that it had received a letter and subpoena
from the U.S. Securities and Exchange Commission ("SEC") indicating that the SEC was
conducting an investigation regarding, among other matters, the financial reporting for customer
incentive programs. On November 29, 2012, another shareholder derivative action asserting
substantially similar claims was filed (captioned Vanderschaaf v. Petersen) and on December 14,
2012, a third shareholder derivative action was filed (captioned Morton v. Schmitt). The actions
were later consolidated under the caption In re OCZ Technology Group, Inc. Shareholder
Derivative Litigation, Lead Case No. C-12-05556-RS, and Co-Lead Counsel for Plaintiffs was
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appointed. On February 13, 2013, Plaintiffs filed the Verified Consolidated Shareholder
Derivative Complaint for Breach of Fiduciary Duty, Waste of Corporate Assets, and Unjust
Enrichment (the "Consolidated Complaint"). The Consolidated Complaint asserted substantially
similar claims as alleged in the individual actions.1
The actions alleged that certain current and former officers and directors of OCZ issued
and made a series of materially false and misleading statements regarding the Company's
financial condition and prospects for future growth. Specifically, Plaintiffs alleged that the
Individual Defendants failed to disclose that the Company's sales trends were not as robust as
they had stated and that rather, in order to address those negative trends in OCZ's business,
"incentives" (i.e., rebates) were delivered to customers in order to obtain sales and revenues that
were not properly accounted for under Generally Accepted Accounting Principles ("GAAP"),
rendering their statements concerning OCZ's financial results materially false and misleading.
Plaintiffs alleged that the Individual Defendants' actions concealed that OCZ's financial results
were materially false and misleading in violation of GAAP, OCZ's business was not growing to
the extent represented by Defendants, and OCZ's internal controls were so poor and inadequate
that OCZ's reported results were not reliable. Further, Plaintiffs alleged that as the Company
reported reduced revenues and projected revenues, the Individual Defendants falsely attributed
the decline to supply constraints, stating that demand for OCZ's product offerings simply
overwhelmed available supply. Plaintiffs alleged that the Individual Defendants' actions caused
substantial damage to OCZ.
In early 2013, the Settling Parties agreed to participate in mediation with the Honorable
Edward A. Infante (Ret.) ("Judge Infante"), former Chief Magistrate Judge of the U.S. District
1 Three similar shareholder derivative actions also were filed in Santa Clara County Superior Court (the "State Court Actions"). Briggs v. Petersen, Case No. 1:12-cv-235866 (Santa Clara Cnty. Super. Ct. filed Nov. 13, 2012); Armstrong v. Petersen, Case No. 1:12-cv-238051 (Santa Clara Cnty. Super. Ct. filed Dec. 18, 2012); Kapoosuzian v. Schmitt, Case No. 1:13-cv-240033 (Santa Clara Cnty. Super. Ct. filed Jan. 23, 2013). The State Court Actions have been stayed pending the resolution of the instant Action.
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Court for the Northern District of California and a highly-experienced securities mediator. On
May 20, 2013, the parties attended an all-day mediation under the direction of Judge Infante (the
"Mediation") to resolve the Action. Following the Mediation, additional arm's-length
negotiations mediated by Judge Infante regarding Plaintiffs' Counsel's fees and expenses for their
efforts in securing the benefits of the Settlement for OCZ took place. Shortly after the
Mediation, the Fee and Expense Amount (defined in paragraph 8.1 below) was resolved by a
proposal by Judge Infante.
3. Plaintiffs' Claims and the Benefits of the Settlement
3.1 The Plaintiffs believe that the claims asserted in the Action have merit, and
Plaintiffs' entry into this Stipulation and Settlement is not intended to be and shall not be
construed as an admission or concession concerning the relative strength or merit of the claims
alleged in the Action. However, the Plaintiffs recognize and acknowledge the expense and
length of continued legal proceedings necessary to prosecute the Action through trial and the
appeals process. Plaintiffs' Counsel have taken into account the uncertain outcome and the risk
of any litigation, especially in complex litigations such as the Action, as well as the difficulties
and delays inherent in such litigation. Plaintiffs' Counsel are also mindful of the problems of
proof and possible defenses to the claims asserted in the Action.
3.2 Plaintiffs' Counsel have conducted extensive investigation, including, inter alia:
(i) reviewing OCZ's press releases, public statements, SEC filings, and securities analysts'
reports, and advisories about the Company; (ii) reviewing media reports about the Company; (iii)
researching the applicable law with respect to the claims alleged in the Action and the potential
defenses thereto; (iv) preparing and filing derivative complaints, including the Consolidated
Complaint; (v) conducting preliminary damages analyses; (vi) participating in informal
conferences with Defendants' counsel regarding the specific facts of the cases, the perceived
strengths and weaknesses of the cases, and other issues in an effort to facilitate negotiations and
conducting research into the Company's corporate governance structure in order to make a
settlement demand; (vii) participating in mediation and other conferences before Judge Infante;
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and (viii) negotiating this Settlement with Defendants. Based on Plaintiffs' Counsel's thorough
review and analysis of the relevant facts, allegations, defenses, and controlling legal principles,
Plaintiffs' Counsel believe that the Settlement set forth in this Stipulation is fair, reasonable, and
adequate, and confers substantial benefits upon OCZ and its shareholders. Based upon Plaintiffs'
Counsel's evaluation, Plaintiffs have determined that the Settlement is in the best interests of
OCZ and its shareholders and have agreed to settle the Action upon the terms and subject to the
conditions set forth herein.
4. Defendants' Denials of Wrongdoing and Liability
4.1 The Individual Defendants have denied and continue to deny each and all of the
claims, charges of wrongdoing, or liability against them arising out of the conduct, statements,
acts, or omissions alleged, or that could have been alleged, in the Action. The Individual
Defendants have denied and continue to deny that they have committed, threatened, or attempted
to commit, any violations of law or breached any duty owed to Plaintiffs, OCZ, or its
shareholders. Nonetheless, the Individual Defendants have concluded that further proceedings
would be protracted and expensive and have determined that it is desirable that the claims
against them be settled on the terms reflected in this Stipulation. The Individual Defendants and
OCZ are entering into this Settlement because it will eliminate the uncertainty, distraction,
disruption, burden, risk, and expense of further litigation, and without admitting any wrongdoing
or liability whatsoever. OCZ acknowledges that the Settlement, which includes significant
corporate governance measures, confers substantial benefits on OCZ. OCZ believes that the
Settlement is fair, reasonable, adequate, and in the best interests of OCZ and its shareholders.
4.2 Neither this Stipulation, nor any of its terms or provisions, nor entry of the
Judgment, nor any document or exhibit referred or attached to this Stipulation, nor any action
taken to carry out this Stipulation, is, may be construed as, or may be used as evidence of the
validity of any of the Released Claims or an admission by or against Defendants of any fault,
wrongdoing, or concession of liability whatsoever.
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5. Corporate Governance Measures
5.1 In connection with the Settlement of the Action, within ninety (90) calendar days
after final approval of the Settlement, OCZ's Board shall adopt such resolutions and amend
appropriate committee charters to the extent applicable to ensure adherence to the Corporate
Governance Measures ("Measures"). The Measures shall be maintained for a minimum of five
(5) years from the Effective Date of this Stipulation; provided, however, that to the extent that
any of the Measures listed below conflicts with any applicable law, regulation, rule, or listing
standard ("Regulations"), whether in effect now or in the future, the Regulations will take
precedence and govern. These Measures constitute the consideration for this Stipulation, and
OCZ acknowledges and agrees that the Measures confer substantial benefits upon OCZ and its
shareholders. OCZ also acknowledges that the prosecution and Settlement of the Action was a
substantial contributing cause in the implementation, amendment, and/or maintenance of the
Measures set forth below.
I. AUDIT COMMITTEE AND REVIEW OF FINANCIAL STATEMENTS AND REPORTS
A. The Audit Committee shall review and discuss with the appropriate
members of management and the independent auditors at least four (4)
times annually:
The Audit Committee's recommendations for additions or 1.
variations in external auditing and internal control functions as it
may deem desirable; and
Management's assessment of internal control over financial 2.
reporting and any related reports and attestations.
B. The Audit Committee shall ask members of management and others to
attend Audit Committee meetings to provide pertinent information as
necessary.
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C. The Audit Committee shall discuss legal and regulatory compliance with
the Company's counsel.
D. The Audit Committee shall annually review the overall plan of the audit as
proposed by the independent auditors including the scope of the
examination to be performed, and any developments in accounting
principles and auditing standards that may affect either the financial
statements or the audit.
E. The Audit Committee shall review on an annual basis the results of the
internal controls review described herein in Section II, with the
appropriate consultants and/or OCZ personnel.
F. The Audit Committee's duties shall include assessing and, if necessary,
appropriately responding to the following:
Management's oversight of internal controls, the process for 1.
establishing and monitoring internal controls, and any special
auditing steps adopted in the event of material control deficiencies;
G. In carrying out its duties and responsibilities, the Audit Committee shall
also have the authority to meet with and seek any information it requires
from employees, officers, directors, or external parties.
H. The Audit Committee shall conduct or authorize investigations into any
activities it deems necessary and appropriate.
II. AUDITING AND ACCOUNTING PROCEDURES
A. The Company shall establish a financial reporting checklist to ensure that
the Company's accounting policies fulfill GAAP reporting requirements.
The Company's Chief Financial Officer ("CFO") or his or her designee(s),
which designee shall report to the CFO, shall complete the checklist to
ensure that all policies are up-to-date and adhered to prior to the issuance
of any filings on Forms 10-Q or 10-K. The completed checklist shall be
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reviewed by the Audit Committee and independent auditors prior to the
issuance of any filings on Forms 10-Q or 10-K.
B. The Company shall provide training at least annually to the CFO, finance,
accounting, and other relevant personnel of the Company with respect to
proper revenue recognition, impairment of assets, inventory obsolescence,
and other GAAP and U.S. Securities and Exchange Commission ("SEC")
financial reporting updates. If changes in GAAP and SEC financial
reporting will directly impact the Company's quarterly or annual financial
statements, such training shall take place prior to the issuance of the
financial statements.
C. The Company shall design, implement, and maintain an internal system to
monitor all customer incentive programs issued by the Company to ensure
compliance with GAAP and Company policies.
D. The Company shall establish a system of review to monitor inventory
levels at the Company to ensure compliance with GAAP and Company
policies.
E. Review of Internal Controls and Procedures
At least annually for the next two years, the Company shall 1.
conduct a comprehensive review that includes testing of internal
controls and procedures, including, but not limited to, controls with
respect to financial reporting, inventory, and customer incentives.
The review shall be conducted by external consultants and/or 2.
designated OCZ personnel with internal audit responsibilities.
After two years, such review shall be done at least once every three 3.
years.
The CFO or his or her designees, which designee shall report to the 4.
CFO, shall keep the Audit Committee informed of emerging trends
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in relevant regulatory matters, internal control issues, and provide
the Audit Committee with a report of outstanding audit issues and
the current status of management's efforts to resolve and improve
the control environment.
III. BOARD OF DIRECTORS
A. Composition of Board
Prior to the annual shareholder meeting that takes place after the 1.
resolution of the related securities class action, the Board will
consider in good faith whether to eliminate the classification of the
Board or to reduce the length of Board terms.
As soon as practicable, but in no event later than three months after 2.
the resolution of the related securities class action, the OCZ Board
shall be expanded to add one or two independent directors. The
Board shall solicit input from major long-term shareholders
regarding director candidates.
B. Director Tenure
No person shall serve as a member of the Board for a period of 1.
time exceeding ten years, unless his/her continued tenure is ratified
by a shareholder vote.
C. Lead Independent Director
In the absence of an independent Chairman of the Board, the 1.
independent members of the Board shall annually elect a Lead
Independent Director.
The Lead Independent Director shall coordinate the activities of 2.
the independent directors, coordinate with the Chief Executive
Officer and corporate secretary to set the agenda for Board
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meetings, chair executive sessions of the independent directors,
and perform other duties assigned from time to time by the Board.
The Lead Independent Director shall meet with the Compensation 3.
Committee to discuss, along with the members of the
Compensation Committee and the full Board, the Chief Executive
Officer's ("CEO") performance. The Chairman of the
Compensation Committee shall deliver to the CEO the Board's
evaluation, and the Lead Independent Director shall also attend the
performance review meeting with the CEO.
IV. RESTATEMENT CLAWBACK PROVISION
A. The Board shall adopt a resolution providing that, following an accounting
restatement due to material noncompliance, as a result of misconduct, with
any financial reporting requirements under the securities laws the
Company will seek repayment from the chief executive officer and chief
financial officer of any incentive-based compensation that was: (i) based
on the erroneous data; (ii) paid during the 12-month period preceding the
date of the accounting restatement; and (iii) in excess of what would have
been paid under the accounting restatement.
B. Any monies recovered under this provision may be held in constructive
trust for the benefit of the Company if the Board, in its discretion,
determines it is appropriate to do so.
C. This provision does not purport to limit Section 304 of the Sarbanes-Oxley
Act of 2002 in any way, but any monies recovered under this provision
shall be deemed by the Company to have been recovered under Section
304 of the Sarbanes-Oxley Act of 2002.
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D. The Nominating and Governance Committee shall ensure that this
provision is modified, as appropriate, to comply with applicable statutes,
rule, and regulations.
V. DIRECTOR TRAINING, CONTINUING EDUCATION, EVALUATION AND REPORTING
A. Each director shall attend, on an annual basis, a director education
program that includes training in GAAP and SEC financial reporting, to
the extent funds are available for such training.
6. Settlement Procedure
6.1 Promptly after the full execution of this Stipulation, Plaintiffs shall submit this
Stipulation and its Exhibits to the Court and apply for an order substantially in the form of
Exhibit A hereto, requesting preliminary approval of the Settlement set forth in this Stipulation
(the "Preliminary Approval Order"), and approval for the publication of the Notice of Proposed
Settlement and of Settlement Hearing (the "Notice") and the Summary Notice of Proposed
Settlement and of Settlement Hearing (the "Summary Notice") substantially in the form of
Exhibit B and C hereto, requesting: (i) preliminary approval of the Settlement set forth in this
Stipulation; (ii) approval of the form and manner of providing notice of the Settlement to current
OCZ shareholders; and (iii) a date for the final hearing at which the Court will determine, among
other matters, whether the terms of the Settlement should be approved, whether a final judgment
should be entered, and whether to approve the agreed-to Fee and Expense Amount (the
"Settlement Hearing"), pursuant to Federal Rule of Civil Procedure 23.1.
6.2 Within ten (10) business days of the issuance of the Preliminary Approval Order,
OCZ shall cause the Notice to be filed with the SEC on SEC Form 8-K, shall publish the
Summary Notice for one day in Investor's Business Daily, and shall post the Notice and
Stipulation on its website. All costs in providing the notice specified herein will be paid by
OCZ. The Settling Parties believe the content and manner of the notice, as set forth in this
paragraph, constitutes adequate and reasonable notice to current OCZ shareholders pursuant to
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applicable law and due process. At least seven (7) calendar days prior to the Settlement Hearing,
OCZ's Counsel shall file with the Court an appropriate affidavit or declaration with respect to
filing and posting the Notice and Summary Notice.
6.1 Within ten (10) business days after entry of the Preliminary Approval Order,
Plaintiffs' Counsel shall post copies of the Notice and Stipulation on the website of Robbins
Arroyo LLP. At least seven (7) calendar days prior to the Settlement Hearing, Plaintiffs' Counsel
shall file with the Court an appropriate affidavit or declaration with respect to posting copies of
the Notice and Stipulation on its website.
7. Mutual Releases
7.1 Except as set forth in paragraph 7.4 below, upon the Effective Date, Plaintiffs, on
their own behalf and derivatively on behalf of OCZ, OCZ, and each of OCZ's shareholders
(solely in their capacity as OCZ shareholders) shall be deemed to have, and by operation of the
Judgment shall have, fully, finally, and forever released, relinquished, and discharged the
Released Claims, including Unknown Claims, against the Released Persons. Nothing herein
shall in any way impair or restrict the rights of any of the Settling Parties to enforce the terms of
this Stipulation.
7.2 Upon the Effective Date, Plaintiffs, on their own behalf and derivatively on behalf
of OCZ and each of OCZ's shareholders (solely in their capacity as OCZ shareholders) will be
forever barred and enjoined from commencing, instituting, or prosecuting any of the Released
Claims (including Unknown Claims) or any action or other proceeding against any of the
Released Persons based on the Released Claims or any action or proceeding arising out of,
related to, or in connection with the settlement or resolution of the Action, provided that nothing
herein shall in any way impair or restrict the rights of any Settling Party to enforce the terms of
this Stipulation.
7.3 Upon the Effective Date, each of the Defendants and their Released Persons shall
be deemed to have, and by operation of the Judgment shall have, fully, finally, and forever
released, relinquished, and discharged each and all of the Plaintiffs and Plaintiffs' Counsel from
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all claims (including Unknown Claims) arising out of, relating to, or in connection with, the
institution, prosecution, assertion, settlement or resolution of the Action or the Released Claims.
Nothing herein shall in any way impair or restrict the rights of the Settling Parties to enforce the
terms of this Stipulation.
7.4 Nothing in this Stipulation constitutes or reflects a waiver or release of: (i) any
rights or claims of the Company pursuant to any contract(s) or agreement(s) with any Individual
Defendant, including but not limited to, any rights or claims pertaining to claw backs; (ii) any
rights or claims of the Individual Defendants pursuant to any contract(s) or agreement(s) with the
Company, including, but not limited to, any rights or claims pertaining to indemnification or
advancement of expenses; (iii) any rights or claims of the Individual Defendants to
indemnification or advancement of expenses arising from the Company's articles of
incorporation, bylaws or applicable law; (iv) any rights or claims of Defendants with respect to
their insurers and/or the insurers' Related Persons, including, but not limited to, any rights or
claims under any directors' and officers' liability insurance or other applicable insurance
coverage maintained by the Company.
8. Plaintiffs' Counsel's Attorneys' Fees and Expenses
8.1 As a result of arm's-length negotiations and with the substantial assistance of
Judge Infante, and in light of the substantial benefits conferred upon OCZ by Plaintiffs' Counsel's
efforts, OCZ shall pay Plaintiffs' Counsel the amount of $925,000, subject to Court approval (the
"Fee and Expense Amount"). This agreement was reached only after the Settling Parties had
substantially negotiated the Measures. The Fee and Expense Amount shall constitute final and
complete payment for Plaintiffs' attorneys' fees and expenses that have been incurred or will be
incurred in connection with the Action. The Fee and Expense Amount shall be funded to
Robbins Arroyo LLP as receiving agent for Plaintiffs' Counsel within ten (10) business days of
the entry of the Judgment, whether or not any timely objection or appeal has been filed to any
aspect of the Settlement.
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8.2 In the event that the Judgment fails to become Final, then it shall be the several
obligation of Plaintiffs' Counsel to make appropriate refunds or repayments of any attorneys' fees
and expenses previously paid within ten (10) business days from receiving notice from
Defendants' counsel or from a court of appropriate jurisdiction.
9. Conditions of Settlement, Effect of Disapproval, Cancellation or Termination
9.1 The Effective Date of this Stipulation shall be conditioned on the occurrence of
all of the following events:
(a) OCZ's Board has approved the Settlement;
(b) the Court has entered the Judgment substantially in the form of Exhibit D
approving the Settlement;
(c) the Court has entered the Entry of Judgment substantially in the form of
Exhibit E dismissing the Action with prejudice;
(d) the payment of the Fee and Expense Amount in accordance with
paragraph 8.1 and as approved by the Court;
(e) the passing of the date upon which the Judgment becomes Final.
9.2 If any of the conditions specified in paragraph 9.1 are not met, then this
Stipulation shall be deemed canceled and terminated unless Plaintiffs' Counsel and counsel for
Defendants mutually agree in writing to proceed with this Stipulation.
9.3 Any proceeding, appeal, or petition pertaining solely to the Fee and Expense
Amount or reversal or modification thereof, shall not operate to terminate, modify, or cancel this
Stipulation, or affect or delay the Effective Date or the finality of the Judgment approving this
Stipulation and the Settlement of the Action.
9.4 If for any reason the Effective Date does not occur, or if this Stipulation is in any
way canceled, terminated, or fails to become Final in accordance with its terms: (i) the payments
to Plaintiffs' Counsel pursuant to paragraph 8 shall be returned and repaid to the payor within
thirty (30) calendar days of the event that triggered the repayment obligation; (ii) the Settling
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Parties shall be restored to their respective positions as of the date immediately preceding the full
execution of this Stipulation; and (iii) all negotiations, proceedings, documents prepared, and
statements made in connection herewith shall be without prejudice to the Settling Parties, shall
not be deemed or construed to be an admission by a Settling Party of any act, matter, or
proposition and shall not be used in any manner for any purpose in the Action or in any other
action or proceeding. In such event, the terms and provisions of this Stipulation shall have no
further force and effect with respect to the Settling Parties and shall not be used in the Action or
in any other proceedings for any purpose, and any Judgment or other order entered in accordance
with the terms of this Stipulation shall be treated as vacated, nunc pro tunc.
10. Bankruptcy
10.1 In the event any proceedings by or on behalf of OCZ, whether voluntary or
involuntary, are initiated under any chapter of the U.S. Bankruptcy Code, including any act of
receivership, asset seizure, or similar federal or state law action ("Bankruptcy Proceedings"), the
Settling Parties agree to use their reasonable best efforts to obtain all necessary orders, consents,
releases, and approvals for effectuation of this Stipulation and Court approval of the Settlement
in a timely and expeditious manner. By way of example only, the Settling Parties agree to
cooperate in making applications and motions to the bankruptcy court for relief from any stay,
approval of the Settlement, authority to release funds, authority for the Defendants' insurer(s) to
disburse insurance proceeds consistent with this Stipulation, authority to release claims and
indemnify officers and directors, and authority for the Court to enter all necessary orders and
judgments, and any other actions reasonably necessary to effectuate the terms of the Settlement.
In addition, in the event of any Bankruptcy Proceedings by or on behalf of OCZ, the Settling
Parties agree that all dates and deadlines in the Action, if any, or any dates and deadlines
associated with the appeal of the Action, if any, will be extended for such periods of time as are
necessary to obtain necessary orders, consents, releases, and approvals from the bankruptcy court
to carry out the terms and conditions of the Settlement.
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11. Miscellaneous Provisions
11.1 The Settling Parties (i) acknowledge that it is their intent to consummate this
Stipulation; and (ii) agree to act in good faith and cooperate to take all reasonable and necessary
steps to expeditiously implement the terms and conditions of this Stipulation.
11.2 Pending the Effective Date of this Stipulation or the termination of the Stipulation
according to its terms, Plaintiffs and current OCZ shareholders are barred and enjoined from
commencing, prosecuting, instigating, continuing directly, representatively, derivatively or in
any other capacity, or in any way participating in the commencement or prosecution of any
action asserting any Released Claims against any of the Released Persons.
11.3 The Settling Parties intend this Settlement to be a final and complete resolution of
all disputes between Plaintiffs and Defendants with respect to the Action. The Settlement
compromises claims that are contested and shall not be deemed an admission by any Settling
Party as to the merits of any claim, allegation, or defense. The Settling Parties agree that the
parties and their respective counsel at all times during the course of the Action complied with the
applicable rules, including, without limitation, Federal Rule of Civil Procedure 11. The Settling
Parties further agree that the claims are being settled voluntarily after consultation with
competent legal counsel and an experienced mediator.
11.4 Neither this Stipulation nor the Settlement, nor any act performed or document
executed pursuant to or in furtherance of this Stipulation or the Settlement: (i) is or may be
deemed to be or may be offered, attempted to be offered or used in any way by the Settling
Parties or any other Person as a presumption, a concession or an admission of, or evidence of,
any fault, wrongdoing or liability of the Defendants or of the validity of any Released Claims; or
(ii) is intended by the Settling Parties to be offered or received as evidence or used by any other
Person in any civil, criminal, administrative, or other proceeding whatsoever, including before
any court, administrative agency or other tribunal. The Released Persons may file this
Stipulation and/or the Judgment in any action brought against them in order to support a defense
or counterclaim based on principles of res judicata, collateral estoppel, full faith and credit,
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release, good faith settlement, judgment bar or reduction, or any other theory of claim preclusion
or issue preclusion or similar defense or counterclaim.
11.5 In the event the Fee and Expense Amount payment is not made in accordance
with ¶ 8.1, interest will be assessed on the full amount due at 1% higher than the annual U.S.
prime interest rate quoted by The Wall Street Journal on the day that such payment was due.
11.6 The Exhibits to this Stipulation are material and integral parts hereof and are fully
incorporated herein by this reference.
11.7 This Stipulation may be amended or modified only by a written instrument signed
by or on behalf of all Settling Parties or their respective successors-in-interest.
11.8 This Stipulation and the Exhibits attached hereto constitute the entire agreement
among the Settling Parties and no representations, warranties, or inducements have been made to
any Settling Party concerning this Stipulation or any of its Exhibits other than the
representations, warranties, and covenants contained and memorialized in such documents.
11.9 In the event that there exists a conflict or inconsistency between the terms of this
Stipulation and the terms of any exhibit hereto, the terms of this Stipulation shall prevail.
11.10 In construing this Stipulation, no presumption shall be made against any of the
Settling Parties on the basis that it was a drafter of this Stipulation.
11.11 Plaintiffs represent and warrant that 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.
11.12 Each counsel or other Person executing this Stipulation or its Exhibits on behalf
of any Settling Party hereby warrants that such Person has the full authority to do so.
11.13 Except as otherwise provided herein, each of the Settling Parties shall bear its
own costs and expenses.
11.14 This Stipulation may be executed in one or more counterparts, including by
signature transmitted by facsimile or e-mailed PDF files. Each counterpart, when so executed,
Case3:12-cv-05556-RS Document41 Filed07/22/13 Page21 of 26
[PROP] ORDER PRELIMINARILY APPROVING DERIVATIVE SETTLEMENT & PROVIDING FOR NOTICE LEAD CASE NO. C-12-05556-RS
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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION
IN RE OCZ TECHNOLOGY GROUP, INC. SHAREHOLDER DERIVATIVE LITIGATION
)))))))))))))
Lead Case No.: C-12-05556-RS (Consolidated with Case Nos. C-12-06058-RS, C-12-06343-RS) [PROPOSED] ORDER PRELIMINARILY APPROVING DERIVATIVE SETTLEMENT AND PROVIDING FOR NOTICE
EXHIBIT A Judge: Hon. Richard Seeborg
This Document Relates to:
ALL ACTIONS
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WHEREAS, the Settling Parties have made application, pursuant to Federal Rule of Civil
Procedure 23.1, for an order (i) preliminarily approving the settlement (the "Settlement") of the
Action, in accordance with a Stipulation of Settlement dated July 19, 2013 (the "Stipulation"),
which, together with the Exhibits annexed thereto, sets forth the terms and conditions for a proposed
Settlement and dismissal of the Action with prejudice, upon the terms and conditions set forth
therein; and (ii) approving for distribution of the Notice of Proposed Settlement and Settlement
Hearing ("Notice") and the Summary Notice of Proposed Settlement and Settlement Hearing
("Summary Notice");
WHEREAS, all capitalized terms contained herein shall have the same meanings as set forth
in the Stipulation in addition to those capitalized terms defined herein; and
WHEREAS, the Court, having considered the Stipulation and the Exhibits annexed thereto
and having heard the arguments of the Settling Parties at the preliminary approval hearing:
NOW THEREFORE, IT IS HEREBY ORDERED:
1. The Court does hereby preliminarily approve, subject to further consideration at the
Settlement Hearing described below, the Stipulation and the Settlement set forth therein, including
the terms and conditions for Settlement and dismissal with prejudice of the Action.
2. A hearing (the "Settlement Hearing") shall be held before this Court on ________,
2013, at _____ __.m., at the U.S. District Court for the Northern District of California, San Francisco
Courthouse, Courtroom 3, 17th Floor, 450 Golden Gate Avenue, San Francisco, California 94102, to
determine, among other matters, whether: (a) the settlement of the Action on the terms and
conditions provided for in the Stipulation is fair, reasonable, and adequate to OCZ Technology
Group, Inc. ("OCZ" or the "Company") shareholders and to OCZ and should be approved by the
Court; (b) whether a Judgment as provided in paragraph 1.8 of the Stipulation should be entered
herein; and (c) whether to award attorneys' fees and expenses to Plaintiffs' Counsel upon the terms in
the Stipulation.
3. The Court approves, as to form and content, the Notice and Summary Notice,
attached as Exhibits B and C, respectively, to the Stipulation, and finds that the distribution of the
Notice and Summary Notice substantially in the manner and form set forth in this Preliminary
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Approval Order, meets the requirements of Federal Rule of Civil Procedure 23.1 and due process,
and is the best notice practicable under the circumstances and shall constitute due and sufficient
notice of all matters relating to the Settlement and the Settlement Hearing to all Persons entitled
thereto.
4. Not later than ten (10) business days following entry of this Preliminary Approval
Order, OCZ shall cause a copy of the Notice substantially in the form annexed as Exhibit B to the
Stipulation to be filed with the U.S. Securities and Exchange Commission ("SEC") as a SEC Form
8-K.
5. Not later than ten (10) business days following entry of this Preliminary Approval
Order, OCZ shall cause the Notice and the Stipulation to be posted on its website, such that visitors
to the website will readily find a hyperlink to the Notice and the Stipulation.
6. Not later than ten (10) business days following entry of this Preliminary Approval
Order, OCZ shall cause a copy of the Summary Notice substantially in the form annexed as Exhibit
C to the Stipulation to be published once in the national edition of Investor's Business Daily.
7. At least seven (7) calendar days prior to the Settlement Hearing, OCZ's counsel shall
serve on counsel for the Settling Parties and file with the Court proof, by affidavit or declaration, of
such filing, posting, and publication.
8. No later than ten (10) business days following entry of this Preliminary Approval
Order, Plaintiffs' Counsel shall post copies of the Notice and Stipulation on the website of Robbins
Arroyo LLP. At least seven (7) calendar days prior to the Settlement Hearing, Plaintiffs' Counsel
shall file with the Court an appropriate affidavit or declaration with respect to posting copies of the
Notice and Stipulation on its website.
9. All current OCZ shareholders shall be bound by all orders, determinations, and
judgments in the Action concerning the Settlement, whether favorable or unfavorable to current
OCZ shareholders.
10. Pending final determination of whether the Settlement should be approved, Plaintiffs
and current OCZ shareholders are barred and enjoined from commencing, prosecuting, instigating,
continuing directly, representatively, derivatively or in any other capacity, or in any way
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participating in the commencement or prosecution of any action asserting any Released Claims
against any of the Released Persons.
11. All papers in support of the Settlement and the award of attorneys' fees and expenses
shall be filed with the Court and served at least fourteen (14) calendar days prior to the deadline set
for objectors in paragraph 12 below and any reply briefs shall be filed at least seven (7) calendar
days prior to the Settlement Hearing.
12. Any current OCZ shareholder may appear and show cause, if he, she, or it has any,
reason why the Settlement of the Action should not be approved as fair, reasonable, and adequate, or
why a judgment should not be entered thereon, or why the Fee and Expense Amount should not be
awarded; provided, however, unless otherwise ordered by the Court, no current OCZ shareholder
shall be heard or entitled to contest the approval of the terms and conditions of the Settlement, or, if
approved, the Judgment to be entered thereon approving the same, or the Fee and Expense Amount
to be awarded to Plaintiffs' Counsel unless that Person has, at least ten (10) calendar days prior to the
Settlement Hearing, filed with the Clerk of the Court at the U.S. District Court for the Northern
District of California, San Francisco Courthouse, 450 Golden Gate Avenue, San Francisco,
California 94102, and served on the following counsel (delivered by hand or sent by first class mail)
appropriate proof of stock ownership, along with written objections, including the basis therefore,
and copies of any papers and briefs in support thereof such that they are received no later than ten
(10) calendar days prior to the Settlement Hearing:
SHAWN A. WILLIAMS ROBBINS GELLER RUDMAN & DOWD LLP Post Montgomery Center One Montgomery Street, Suite 1800 San Francisco, CA 94104 Telephone: (415) 288-4545 GEORGE AGUILAR ROBBINS ARROYO LLP 600 B Street, Suite 1900 San Diego, CA 92101 Telephone: (619) 525-3990 Co-Lead Counsel for Plaintiffs
BORIS FELDMAN CAZ HASHEMI WILSON SONSINI GOODRICH & ROSATI 650 Page Mill Road Palo Alto, CA 94304 Telephone: (650) 493-9300 Counsel for Nominal Defendant OCZ Technology Group, Inc. and Individual Defendants Adam J. Epstein, Richard L. Hunter, Russell J. Knittel, and Ralph H. Schmitt NORMAN J. BLEARS MAREN J. CLOUSE HOGAN LOVELLS US LLP
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525 University Ave., 4th Floor Palo Alto, CA 94301 Telephone: (650) 463-4000 Counsel for Defendant Arthur F. Knapp, Jr. DANIEL P. LEFLER IRELL & MANELLA, LLP 1800 Avenue of the Stars, Suite 900 Los Angeles, CA 90067 Telephone: (310) 277-1010 Counsel for Defendant Ryan Petersen
Any current OCZ shareholder who does not make his, her, or its objection in the manner provided
herein shall be deemed to have waived such objection and shall forever be foreclosed from making
any objection to the fairness, reasonableness, or adequacy of the Settlement as incorporated in the
Stipulation including the award of attorneys' fees and expenses, unless otherwise ordered by the
Court, but shall otherwise be bound by the Judgment to be entered and the releases to be given.
13. Neither the Stipulation nor the Settlement, nor any act performed or document
executed pursuant to or in furtherance of this Stipulation or the Settlement: (i) is or may be deemed
to be or may be offered, attempted to be offered, or used in any way by the Settling Parties or any
other Person as a presumption, a concession or an admission of, or evidence of, any fault,
wrongdoing, or liability of the Defendants or of the validity of any Released Claims; or (ii) is
intended by the Settling Parties to be offered or received as evidence or used by any other Person in
any civil, criminal, administrative, or other proceeding whatsoever, including before any court,
administrative agency, or other tribunal. The Released Persons may file the Stipulation and/or the
Judgment in any action brought against them in order to support a defense or counterclaim based on
principles of res judicata, collateral estoppel, full faith and credit, release, good faith settlement,
judgment bar or reduction, or any other theory of claim preclusion or issue preclusion or similar
defense or counterclaim.
14. The Court reserves the right to adjourn the date of the Settlement Hearing or modify
any other dates set forth herein without further notice to current OCZ shareholders, and retains
jurisdiction to consider all further applications arising out of or connected with the Settlement. The
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Court may approve the Settlement, with such modifications as may be agreed to by the Settling
Parties, if appropriate, without further notice to current OCZ shareholders.
IT IS SO ORDERED.
DATED HONORABLE RICHARD SEEBORG UNITED STATES DISTRICT JUDGE
Submitted by, ROBBINS ARROYO LLP BRIAN J. ROBBINS GEORGE C. AGUILAR LAUREN N. OCHENDUSZKO MICHAEL J. NICOUD
GEORGE C. AGUILAR
600 B Street, Suite 1900 San Diego, CA 92101 Telephone: (619) 525-3990 Facsimile: (619) 525-3991 [email protected] [email protected] [email protected] [email protected] ROBBINS GELLER RUDMAN & DOWD LLP SHAWN A. WILLIAMS Post Montgomery Center One Montgomery Street, Suite 1800 San Francisco, CA 94104 Telephone: (415) 288-4545 Facsimile: (415) 288-4534 [email protected] Co-Lead Counsel for Plaintiffs
874878
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ROBBINS ARROYO LLP BRIAN J. ROBBINS (190264) [email protected] GEORGE C. AGUILAR (126535) [email protected] LAUREN N. OCHENDUSZKO (274227) [email protected] MICHAEL J. NICOUD (272705) [email protected] 600 B Street, Suite 1900 San Diego, CA 92101 Telephone: (619) 525-3990 Facsimile: (619) 525- 3991 Co-Lead Counsel for Plaintiffs
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION
IN RE OCZ TECHNOLOGY GROUP, INC. SHAREHOLDER DERIVATIVE LITIGATION
)))))))))))))
Lead Case No.: C-12-05556-RS (Consolidated with Case Nos. C-12-06058-RS, C-12-06343-RS) NOTICE OF PROPOSED SETTLEMENT AND SETTLEMENT HEARING
EXHIBIT B Judge: Hon. Richard Seeborg
This Document Relates to:
ALL ACTIONS
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TO: ALL CURRENT RECORD HOLDERS AND BENEFICIAL OWNERS OF COMMON STOCK OF OCZ TECHNOLOGY GROUP, INC. ("OCZ"OR THE "COMPANY") AS OF JULY 19, 2013 ("CURRENT OCZ SHAREHOLDERS").
PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. THIS NOTICE RELATES TO A PROPOSED SETTLEMENT AND DISMISSAL OF THE ABOVE-CAPTIONED SHAREHOLDER DERIVATIVE ACTION, AND CONTAINS IMPORTANT INFORMATION REGARDING YOUR RIGHTS. YOUR RIGHTS MAY BE AFFECTED BY THESE LEGAL PROCEEDINGS. IF THE COURT APPROVES THE SETTLEMENT, YOU WILL BE FOREVER BARRED FROM CONTESTING THE APPROVAL OF THE PROPOSED SETTLEMENT AND FROM PURSUING THE RELEASED CLAIMS.
IF YOU HOLD OCZ COMMON STOCK FOR THE BENEFIT OF ANOTHER, PLEASE PROMPTLY TRANSMIT THIS DOCUMENT TO SUCH BENEFICIAL OWNER.
THE COURT HAS MADE NO FINDINGS OR DETERMINATIONS CONCERNING THE MERITS OF THIS ACTION. THE RECITATION OF THE BACKGROUND AND CIRCUMSTANCES OF THE SETTLEMENT CONTAINED HEREIN DOES NOT CONSTITUTE THE FINDINGS OF THE COURT. NO INFERENCES REGARDING THE MERITS OF THE ACTION OR LACK THEREOF SHOULD BE DRAWN FROM THE SETTLEMENT OR THE SENDING OF THIS NOTICE
Notice is hereby provided to you of the proposed settlement (the "Settlement") of this
shareholder derivative litigation (the "Notice"). This Notice is provided by Order of the U.S. District
Court for the Northern District of California (the "Court"). It is not an expression of any opinion by
the Court. The purpose of this Notice is to notify you of the terms of the proposed Settlement, and
your rights related thereto. The terms of the Settlement are set forth in the Stipulation of Settlement
dated July 19, 2013 ("Stipulation") which can be obtained at the Company's website at
http://ir.ocz.com or Plaintiffs' Counsel's website at http://www.robbinsarroyo.com/notices.1 This
Notice is not intended to be an expression of any opinion by the Court with respect to the merits of
the claims made in the Action, but is merely to advise you of the pendency and settlement of the
Action.
I. WHY THE COMPANY HAS ISSUED THIS NOTICE
Your rights may be affected by the settlement of the consolidated shareholder derivative
action captioned In re OCZ Technology Group, Inc. Shareholder Derivative Litigation, Lead Case
1 Unless otherwise noted, all capitalized terms shall have the same definition as set forth in the Stipulation. The Stipulation also provides a more detailed description of the Settlement terms.
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No. C-12-05556-RS (the "Action"). Plaintiffs Ian Cassiman, Clair Vanderschaaf, and Robert L.
Morton ("Plaintiffs"), defendants Ryan M. Petersen, Ralph H. Schmitt, Adam J. Epstein, Richard L.
Hunter, Russell J. Knittel, and Arthur F. Knapp, Jr. ("Individual Defendants") and nominal defendant
OCZ (OCZ and the Individual Defendants are collectively referred to as the "Defendants") have
agreed upon terms to settle the Action and have signed a written Stipulation of Settlement (the
"Stipulation") setting forth those settlement terms. If approved by the Court, the Settlement will
fully resolve the Action, including the dismissal of the Action with prejudice.
On ___________, 2013, at ___ __.m., before the Honorable Richard Seeborg, U.S. District
Court for the Northern District of California, San Francisco Courthouse, Courtroom 3, 17th Floor,
450 Golden Gate Avenue, San Francisco, California 94102, the Court will hold a hearing (the
"Settlement Hearing") in the Action. The purpose of the Settlement Hearing is to determine:
(i) whether the terms of the Settlement are fair, reasonable, and adequate and should be approved;
(ii) whether the Action should be dismissed with prejudice and a final judgment entered;
(iii) whether the Released Claims against the Released Persons should be fully and finally released;
(iv) whether the agreed-to amount of Plaintiffs' attorneys' fees and reimbursement of expenses in the
amount of $925,000 should be approved (the "Fee and Expense Amount"); and (v) such other
matters as may be necessary or proper under the circumstances.
II. OVERVIEW OF THE ACTION
On October 29, 2012, a shareholder derivative complaint (captioned Cassiman v. Petersen)
was filed in this Court on behalf of OCZ and against the Individual Defendants for alleged violations
of state law, including breach of fiduciary duty, waste of corporate assets, and unjust enrichment,
following announcements by the Company regarding, among other things, accounting issues,
indefinitely delayed financial filings, and material weaknesses. On November 29, 2012, another
shareholder derivative action asserting substantially similar claims was filed (captioned
Vanderschaaf v. Petersen) and on December 14, 2012, a third shareholder derivative action was filed
(captioned Morton v. Schmitt). These actions were later consolidated under the caption In re OCZ
Technology Group, Inc. Shareholder Derivative Litigation, Lead Case No. C-12-05556-RS
(together, the "Action"), and Co-Lead Counsel for Plaintiffs was appointed.
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On February 13, 2013, Plaintiffs filed the Verified Consolidated Shareholder Derivative
Complaint for Breach of Fiduciary Duty, Waste of Corporate Assets, and Unjust Enrichment (the
"Consolidated Complaint"). The Consolidated Complaint asserted substantially similar claims as
alleged in the individual actions.2 Specifically, the Consolidated Complaint alleged that the
Individual Defendants breached their fiduciary duties to OCZ and its shareholders by making
materially false and misleading statements regarding the Company’s financial condition and
prospects for future growth. Consolidated Complaint, ¶¶2,-3, 38. Plaintiffs alleged that the
Individual Defendants led the public to believe that demand for OCZ's products was high, sales were
strong, and revenue streams were reliable by failing to disclose that OCZ was actually experiencing
a lack of consumer demand for some of its products and that sales trends were not as robust as they
had stated. Id. Plaintiffs further alleged that the Individual Defendants’ actions concealed overly
lenient product return schemes and extraordinary customer incentives that ultimately did not
improve sales, and caused OCZ to stockpile excess, obsolete, and returned inventory without proper
accounting adjustments, which violated GAAP. Id., ¶3, 5, 21. Plaintiffs alleged that OCZ’s internal
controls were so inadequate that OCZ’s reported revenue projections were vastly exaggerated, its
inventory was a fraction of its reported value, and that OCZ needed to restate its previously filed
financial statements, causing an investigation into its accounting and other internal practices by the
SEC, as well as substantial financial and reputational damage to OCZ. Id., ¶4-5, 12.
In early 2013, the Settling Parties began settlement negotiations and ultimately agreed to
participate in a formal mediation process overseen by Judge Infante. In the weeks leading up to the
mediation session scheduled for May 20, 2013, the Settling Parties engaged in extensive negotiations
regarding the substance and form of a proposed Settlement. Proposals and information were
exchanged among the Settling Parties on a number of occasions. Further, the Settling Parties
2 Three similar shareholder derivative actions also were filed in Santa Clara County Superior Court (the “State Court Actions”). Briggs v. Petersen, et al., Case No. 1:12-cv-235866 (Santa Clara Cnty. Super. Ct. filed Nov. 13, 2012); Armstrong v. Petersen, et al., Case No. 1:12-cv-238051 (Santa Clara Cnty. Super. Ct. filed Dec. 18, 2012); Kapoosuzian v. Schmitt, et al., Case No. 1:13-cv-240033 (Santa Clara Cnty. Super. Ct. filed Jan. 23, 2013). The State Court Actions have been stayed pending the resolution of the Federal Action.
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submitted mediation briefs in support of their positions on the claims to Judge Infante. On May 20,
2013, the Settling Parties participated in an in-person, all-day mediation before Judge Infante. After
arm's-length and hard-fought negotiations, the Settling Parties resolved the remaining issues on the
substance of the Settlement and reached an agreement in principal to resolve the Action. Plaintiffs'
Counsel and counsel for OCZ and its insurers, with the assistance of Judge Infante, then separately
negotiated the Fee and Expense Amount. After days of direct negotiation involving Judge Infante,
the negotiations were near a point of impasse before Judge Infante made a mediator's proposal on the
Fee and Expense Amount that the Settling Parties eventually accepted. In light of the substantial
benefits conferred upon the Company, the Settling Parties agreed that OCZ will pay Plaintiffs’
Counsel $925,000. On July 19, 2013, the Settling Parties finalized and executed the Stipulation
filed concurrently with this motion.
III. TERMS OF THE PROPOSED SETTLEMENT
The principal terms, conditions and other matters that are part of the Settlement, which are
subject to approval by the Court, are summarized below. This summary should be read in
conjunction with, and is qualified in its entirety by reference to, the text of the Stipulation, which has
been filed with the Court and is available for public inspection and can be obtained at the Company's
website http://ir.ocz.com or at Plaintiffs' Counsel's website at http://www.robbinsarroyo.com/notices.
To fully, finally, and forever resolve the Action, and following extensive, arm's-length settlement
negotiations, the Settling Parties have agreed as set forth in the Stipulation as follows:
A. Corporate Governance Measures
In connection with the settlement of the Action, OCZ's Board shall adopt such resolutions
and amend appropriate committee charters to the extent applicable to ensure adherence to the
Corporate Governance Measures ("Measures"). These Measures constitute the consideration for the
Stipulation, and OCZ acknowledges and agrees that the Measures confer substantial benefits upon
OCZ and its shareholders. OCZ also acknowledges that the prosecution and settlement of the Action
was a substantial contributing cause in the implementation, amendment, and/or maintenance of the
Measures set forth below.
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Pursuant to the Action and the Settlement, OCZ has implemented or will implement and
maintain for a period of no less than five (5) years within ninety (90) calendar days after final
approval of the Settlement, a comprehensive set of corporate governance measures. A non-
exhaustive summary of the negotiated Measures includes measures that, among other things:
strengthen Audit Committee procedures; enhance the independence of OCZ's Board, including the
addition of new independent Board members; strengthen the Company's internal controls and audit
procedures; improve monitoring of inventory levels; enhance procedures for ensuring proper
information flows within the Company; require appointment of a Lead Independent Director in the
absence of an independent Chairman of the Board with enhanced duties and responsibilities;
establish director tenure limit procedures; adopt a compensation "clawback" policy in the event of
financial restatements; and mandate director training on GAAP and SEC financial reporting issues.
A summary of these measures is set forth below.
I. AUDIT COMMITTEE AND REVIEW OF FINANCIAL STATEMENTS AND REPORTS
A. The Audit Committee shall review and discuss with the appropriate members
of management and the independent auditors at least four (4) times annually:
1. The Audit Committee's recommendations for additions or variations
in external auditing and internal control functions as it may deem
desirable; and
2. Management's assessment of internal control over financial reporting
and any related reports and attestations.
B. The Audit Committee shall ask members of management and others to attend
Audit Committee meetings to provide pertinent information as necessary.
C. The Audit Committee shall discuss legal and regulatory compliance with the
Company's counsel.
D. The Audit Committee shall annually review the overall plan of the audit as
proposed by the independent auditors.
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E. The Audit Committee shall review on an annual basis the results of the
internal controls review described herein in Section II, with the appropriate
consultants and/or OCZ personnel.
F. The Audit Committee's duties shall include assessing and, if necessary,
appropriately responding to Management's oversight of internal controls, the
process for establishing and monitoring internal controls, and any special
auditing steps adopted in the event of material control deficiencies.
G. In carrying out its duties and responsibilities, the Audit Committee shall also
have the authority to meet with and seek any information it requires from
employees, officers, directors, or external parties.
H. The Audit Committee shall conduct or authorize investigations into any
activities it deems necessary and appropriate.
II. AUDITING AND ACCOUNTING PROCEDURES
A. The Company shall establish a financial reporting checklist. The Company's
Chief Financial Officer ("CFO") or his or her designee(s), which designee
shall report to the CFO, shall complete the checklist, which shall be reviewed
by the Audit Committee and independent auditors prior to the issuance of any
filings on Forms 10-Q or 10-K.
B. The Company shall provide training at least annually to the CFO, finance,
accounting, and other relevant personnel of the Company with respect to
proper revenue recognition, impairment of assets, inventory obsolescence,
and other GAAP and U.S. Securities and Exchange Commission ("SEC")
financial reporting updates.
C. The Company shall design, implement, and maintain an internal system to
monitor all customer incentive programs issued by the Company.
D. The Company shall establish a system of review to monitor inventory levels
at the Company.
E. Review of Internal Controls and Procedures
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1. At least annually for the next two years, the Company shall conduct a
comprehensive review that includes testing of internal controls and
procedures.
2. The review shall be conducted by external consultants and/or
designated OCZ personnel with internal audit responsibilities.
3. After two years, such review shall be done at least once every three
years.
4. The CFO or his or her designees, which designee shall report to the
CFO, shall keep the Audit Committee informed of emerging trends in
relevant regulatory matters, internal control issues, and provide the
Audit Committee with a report of outstanding audit issues and the
current status of management's efforts to resolve and improve the
control environment.
III. BOARD OF DIRECTORS
A. Composition of Board
1. Prior to the annual shareholder meeting that takes place after the
resolution of the related securities class action, the Board will
consider in good faith whether to eliminate the classification of the
Board or to reduce the length of Board terms.
2. As soon as practicable, but in no event later than three months after
the resolution of the related securities class action, the OCZ Board
shall be expanded to add one or two independent directors. The
Board shall solicit input from major long-term shareholders regarding
director candidates.
B. Director Tenure
1. No person shall serve as a member of the Board for a period of time
exceeding ten years, unless his/her continued tenure is ratified by a
shareholder vote.
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C. Lead Independent Director
1. In the absence of an independent Chairman of the Board, the
independent members of the Board shall annually elect a Lead
Independent Director.
2. The Lead Independent Director shall coordinate the activities of the
independent directors, coordinate with the Chief Executive Officer
and corporate secretary to set the agenda for Board meetings, chair
executive sessions of the independent directors, and perform other
duties assigned from time to time by the Board.
3. The Lead Independent Director shall meet with the Compensation
Committee to discuss, along with the members of the Compensation
Committee and the full Board, the Chief Executive Officer's ("CEO")
performance. The Chairman of the Compensation Committee shall
deliver to the CEO the Board's evaluation, and the Lead Independent
Director shall attend the performance review meeting.
IV. RESTATEMENT CLAWBACK PROVISION
A. The Board shall adopt a resolution providing that, following an accounting
restatement due to material noncompliance, as a result of misconduct, with
any financial reporting requirements under the securities laws the Company
will seek repayment from the chief executive officer and chief financial
officer of any incentive-based compensation that was: (i) based on the
erroneous data; (ii) paid during the 12-month period preceding the date of the
accounting restatement; and (iii) in excess of what would have been paid
under the accounting restatement.
B. Any monies recovered under this provision may be held in constructive trust
for the benefit of the Company.
C. This provision does not purport to limit Section 304 of the Sarbanes-Oxley
Act of 2002 in any way, but any monies recovered under this provision shall
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be deemed by the Company to have been recovered under Section 304 of the
Sarbanes-Oxley Act of 2002.
D. The Nominating and Governance Committee shall ensure that this provision
is modified, as appropriate, to comply with applicable statutes, rule, and
regulations.
V. DIRECTOR TRAINING, CONTINUING EDUCATION, EVALUATION AND REPORTING, AND ANNUAL SELF-ASSESSMENT
A. Each director shall attend, on an annual basis, a director education program
that includes training in GAAP and SEC financial reporting, to the extent
funds are available for such training.
B. Dismissal and Release of Claims
The full terms of the dismissal and release of claims are set forth in the Stipulation. The
following is only a summary. The Stipulation provides for the entry of judgment dismissing the
Action against OCZ and the Individual Defendants with prejudice and, as explained in more detail in
the Stipulation, barring and releasing known or Unknown Claims that have been or could have been
brought in any court by the Plaintiffs individually or derivatively on behalf of OCZ, by any of its
shareholders derivatively on behalf of OCZ against any of the Individual Defendants, or by
Plaintiffs' Counsel relating to any of the claims or matters that were or could have been alleged or
asserted in the Action. The Stipulation further provides that the entry of judgment will bar and
release any known or Unknown Claims that have been or could have been brought in any court by
the Defendants against Plaintiffs or Plaintiffs' Counsel related to any of the claims or matters that
were or could have been alleged or asserted in any of the pleadings or papers filed in the Action or
based upon or arising out of the institution, prosecution, assertion, settlement, or resolution of the
Action.
C. Plaintiffs' Attorneys' Fees and Expenses
After negotiating the substance of the Measures described above, the parties engaged in
arm's-length negotiations, which included a formal mediation, regarding the attorneys' fees and
expenses of Plaintiffs' Counsel in the Action. As a result of these negotiations, the Company shall
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pay the agreed-to amount of $925,000 for Plaintiffs' Counsel's attorneys' fees and expenses, subject
to Court approval (the "Fee and Expense Amount"). To date, Plaintiffs' Counsel have not received
any payment for their efforts in the Action. The Fee and Expense Amount will compensate
Plaintiffs' Counsel for the results achieved in the Action and for undertaking the prosecution of the
Action on an entirely contingent basis.
IV. REASONS FOR THE SETTLEMENT
Counsel for the Settling Parties believe the Settlement is in the best interests of OCZ and
Current OCZ shareholders.
A. Why Did the Plaintiffs Agree to Settle?
Plaintiffs' Counsel conducted an extensive investigation relating to the claims and the
underlying events and transactions alleged in the Action. Plaintiffs' Counsel have analyzed the
evidence adduced during their investigation, and have researched the applicable law with respect to
the potential claims of Plaintiffs, OCZ, and Current OCZ Shareholders against the Defendants, as
well as the potential defenses thereto.
Based upon the investigation and analysis described above, Plaintiffs and their counsel have
concluded that the terms and conditions of the Stipulation are fair, reasonable, and adequate to
Plaintiffs, OCZ, and Current OCZ Shareholders, and in their best interests, and have agreed to settle
the claims raised in the Action pursuant to the terms and provisions of the Stipulation after
considering, among other things: (i) the substantial benefits that OCZ and Current OCZ Shareholders
have received or will receive from the Settlement; (ii) the attendant risks of continued litigation of
the Action; and (iii) the desirability of permitting the Settlement to be consummated.
In particular, Plaintiffs and their counsel considered the significant litigation risk inherent in
the Action. The law imposes significant burdens on plaintiffs for pleading and proving a shareholder
derivative claim. While Plaintiffs believe their claims are meritorious, Plaintiffs acknowledge that
there is a substantial risk that the Action may not succeed in producing a recovery in light of the
applicable legal standards and possible defenses. Plaintiffs and their counsel believe that, under the
circumstances, they have obtained the best possible relief for OCZ and for Current OCZ
Shareholders.
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B. Why Did the Defendants Agree to Settle?
The Defendants have strenuously denied and continue to deny each and every allegation of
wrongdoing or liability made against them or that could have been made against them in the Action.
The Defendants have further asserted that, at all times, they acted in good faith, and in a manner they
reasonably believed to be and that was in the best interests of OCZ and Current OCZ Shareholders.
The Defendants assert that they have meritorious defenses to the claims in the Action, and that
judgment should be entered dismissing all claims against them with prejudice. Nonetheless, the
Defendants have entered into the Stipulation solely to avoid the continuing additional expense,
inconvenience, and distraction of this litigation and to avoid the risks inherent in any lawsuit, and
without admitting any wrongdoing or liability whatsoever.
V. FINAL COURT HEARING REGARDING THE SETTLEMENT
On _________________, 2013, at _______ __.m., the Court will hold the Settlement
Hearing before the Honorable Richard Seeborg, U.S. District Court for the Northern District of
California, San Francisco Courthouse, Courtroom 3, 17th Floor, 450 Golden Gate Avenue, San
Francisco, California 94102. At the Settlement Hearing, the Court will consider whether the terms
of the Settlement are fair, reasonable, and adequate and thus should be finally approved and whether
the Action should be dismissed with prejudice pursuant to the Stipulation. The Court also will
determine whether the Plaintiffs' Fee and Expense Amount should be approved.
VI. YOUR RIGHT TO ATTEND THE SETTLEMENT HEARING
Any Current OCZ Shareholder may, but is not required to, appear in person at the Settlement
Hearing. CURRENT OCZ SHAREHOLDERS WHO HAVE NO OBJECTION TO THE
SETTLEMENT DO NOT NEED TO APPEAR AT THE SETTLEMENT HEARING OR TAKE
ANY OTHER ACTION. If you want to be heard at the Settlement Hearing, then you must comply
with the procedures for objecting, which are set forth below.
The Court has the right to change the Settlement Hearing date or time without further notice.
Thus, if you are planning to attend the Settlement Hearing, you should confirm the date and time
before going to the Court.
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VII. YOUR RIGHT TO OBJECT AND PROCEDURES FOR DOING SO
You have the right to object to any aspect of the Settlement. You must object in writing, and
you may request to be heard at the Settlement Hearing. IF YOU CHOOSE TO OBJECT, THEN
YOU MUST COMPLY WITH THE FOLLOWING PROCEDURES.
A. You Must Make Detailed Objections in Writing
Any objections must be submitted in writing and must contain the following information:
1. your name, legal address, and telephone number;
2. proof of current ownership of OCZ common stock, including the number of shares of
OCZ common stock and the date of purchase, as well as documentary evidence of when such stock
ownership was acquired;
3. a detailed statement of your specific position with respect to the matters to be heard at
the Settlement Hearing, including a statement of each objection being made;
4. the grounds for each objection or the reasons for your desiring to appear and to be
heard;
5. written notice of whether you intend to appear at the Settlement Hearing, including a
statement that indicates the basis for such appearance (this is not required if you have lodged your
objection with the Court); and
6. copies of any papers you intend to submit to the Court, along with the names of any
witness(es) you intend to call to testify at the Settlement Hearing and the subject(s) of their
testimony.
The Court will not consider any objection that does not substantially comply with the above
requirements.
B. You Must Timely Deliver Written Objections to the Court, Plaintiffs' Counsel, and Defendants' Counsel
YOUR WRITTEN OBJECTIONS MUST BE ON FILE WITH THE CLERK OF THE
COURT NO LATER THAN _________, 2013. The Clerk's address is:
Clerk of the Court UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA San Francisco Courthouse
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450 Golden Gate Avenue San Francisco, California 94102
YOU ALSO MUST DELIVER COPIES OF THE MATERIALS TO PLAINTIFFS' COUNSEL
AND DEFENDANTS' COUNSEL SO THEY ARE RECEIVED NO LATER THAN ________,
2013. Counsel's addresses are:
George C. Aguilar, Esq. ROBBINS ARROYO LLP 600 B Street, Suite 1900 San Diego, CA 92101 Telephone: (619) 525-3990 Jeffrey D. Light, Esq. ROBBINS GELLER RUDMAN & DOWD LLP Post Montgomery Center One Montgomery Street, Suite 1800 San Francisco, CA 94104 Telephone: (415) 288-4545 Co-Lead Counsel for Plaintiffs in the Action
Boris Feldman, Esq. Caz Hasemi, Esq. WILSON SONSINI GOODRICH & ROSATI 650 Page Mill Road Palo Alto, CA 94304 Telephone: (650) 493-9300
Counsel for Nominal Defendant OCZ Technology Group, Inc. and Defendants Adam J. Epstein, Richard L. Hunter, Russell J. Knittel, and Ralph H. Schmitt Daniel P. Leffler, Esq.
IRELL & MANELLA, LLP 1800 Avenue of the Stars, Suite 900 Los Angeles, CA 90067
Telephone: (310) 277-1010 Counsel for Defendant Ryan Petersen
Norman J. Blears, E.sq. Maren J. Clouse, Esq. HOGAN LOVELLS US LLP 525 University Ave., 4th Floor Palo Alto, CA 94301
Telephone: (650) 463-4000 Attorneys for Defendant Arthur F. Knapp, Jr.
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The Court will not consider any objection that is not timely filed with the Court or not timely
delivered to Plaintiffs' Counsel and Defendants' counsel. Any Person or entity who fails to object or
otherwise request to be heard in the manner prescribed above will be deemed to have waived the
right to object to any aspect of the Settlement or otherwise request to be heard (including the right to
appeal), and will be forever barred from raising such objection or request to be heard in this or any
other related action or proceeding.
VIII. HOW TO OBTAIN ADDITIONAL INFORMATION
This Notice summarizes the Stipulation. It is not a complete statement of the events of the
Action or the Stipulation. You may inspect the Stipulation and other papers filed in the Action at the
United States District Clerk's office at any time during regular business hours of each business day.
The Clerk's office is located at the United States District Court for the Northern District of
California, San Francisco Courthouse, 450 Golden Gate Avenue, San Francisco, California 94102.
However, you must appear in person to inspect these documents. The Clerk's office will not mail
copies to you. You may also contact a representative of Plaintiffs' Counsel: Darnell Donahue, Esq.,
Robbins Arroyo LLP, 600 B Street, Suite 1900, San Diego, California 92101, Telephone: (800) 350-
6003, or Rick Nelson, Shareholder Relations, Robbins Geller Rudman & Dowd LLP, 655 West
Broadway, Suite 1900, San Diego, CA 92101 Telephone (800) 449-4900, for additional information
concerning the Settlement.
PLEASE DO NOT CALL, WRITE, OR OTHERWISE DIRECT QUESTIONS ABOUT
THIS NOTICE, THE SETTLEMENT, OR THE ACTION TO EITHER THE COURT OR THE
CLERK'S OFFICE. Any questions you have about matters in this Notice should be directed by
telephone or in writing to Plaintiffs' Counsel, at the address or telephone numbers set forth above.
DATED __________, 2013 BY ORDER OF THE COURT UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA
874882
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ROBBINS ARROYO LLP BRIAN J. ROBBINS (190264) [email protected] GEORGE C. AGUILAR (126535) [email protected] LAUREN N. OCHENDUSZKO (274227) [email protected] MICHAEL J. NICOUD (272705) [email protected] 600 B Street, Suite 1900 San Diego, CA 92101 Telephone: (619) 525-3990 Facsimile: (619) 525- 3991 Co-Lead Counsel for Plaintiffs
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION
IN RE OCZ TECHNOLOGY GROUP, INC. SHAREHOLDER DERIVATIVE LITIGATION
)))))))))))))
Lead Case No.: C-12-05556-RS (Consolidated with Case Nos. C-12-06058-RS, C-12-06343-RS) SUMMARY NOTICE OF PROPOSED SETTLEMENT AND SETTLEMENT HEARING EXHIBIT C Judge: Hon. Richard Seeborg
This Document Relates to:
ALL ACTIONS
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TO: ALL CURRENT RECORD HOLDERS AND BENEFICIAL OWNERS OF COMMON STOCK OF OCZ TECHNOLOGY GROUP, INC. ("OCZ"OR THE "COMPANY") AS OF JULY 19, 2013 ("CURRENT OCZ SHAREHOLDERS").
YOU ARE HEREBY NOTIFIED that the Settling Parties to the consolidated shareholder
derivative action captioned In re OCZ Technology Group, Inc. S'holder Derivative Litigation,
Lead Case No. C-12-05556-RS (the "Action"), have entered into a Stipulation of Settlement (the
"Stipulation") to resolve the claims raised by the Action. This Summary Notice should be read
in conjunction with, and is qualified in its entirety by reference to, the text of the Stipulation,
which is available on Plaintiffs' Counsel's website at http://www.robbinsarroyo.com/notices/ and
on the Investor Relations section of OCZ's website at http://ir.ocz.com. All capitalized terms
herein have the same meaning as set forth in the Stipulation.
PLEASE BE FURTHER ADVISED that pursuant to an Order of the United States
District Court for the Northern District of California, San Francisco Division (the "Court"), a
hearing will be held on ______________, 2013, at _______ ___.m., before the Honorable
Richard Seeborg, San Francisco Courthouse, Courtroom 3, 17th Floor, 450 Golden Gate Avenue,
San Francisco, California 94102 for the purpose of determining, among other matters: (a)
whether the settlement of the Action by way of the adoption of certain corporate governance
measures (as set forth in more detail in the Stipulation on file with the Court and available on the
Company's website at http://ir.ocz.com. and Plaintiffs' Counsel's website at
http://www.robbinsarroyo.com/notices/) should be finally approved by the Court as fair,
reasonable, and adequate to OCZ and Current OCZ Shareholders; (b) whether the Action should
be dismissed with prejudice; (c) whether the Released Claims against the Released Persons
should be fully and finally released;(d) whether the agreed-to amount of Plaintiffs' attorneys' fees
and reimbursement of expenses in the amount of $925,000 (the "Fee and Expense Amount")
should be finally approved; and (e) such other matters as the Court may deem appropriate (the
"Settlement Hearing").
The Action was brought derivatively on behalf of OCZ against certain current and former
officers and directors and asserted claims for alleged breaches of fiduciary duties, waste, and
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unjust enrichment. A proposed settlement of the Action has been reached, subject to Court
approval. The terms of the Settlement provide, in part, for releases of the Released Claims
against the Released Persons, and for the adoption and implementation of certain corporate
governance measures.
If you are a Current OCZ Shareholder, your rights to pursue certain derivative claims on
behalf of OCZ may be affected by this Settlement. A detailed Notice of Proposed Settlement
and Settlement Hearing, describing the proposed Settlement and the rights of OCZ shareholders
with regard to the Settlement (the "Notice"), was filed with the U.S. Securities and Exchange
Commission and is posted on the Company's website at http://ir.ocz.com and Plaintiffs' Counsel's
website at http://www.robbinsarroyo.com/notices/.
Current OCZ Shareholders wishing to assert an objection to the Settlement should, no
later than _____________, 2013:
1. file with the Clerk of the United States District Court for the Northern District of
California, San Francisco Courthouse, 450 Golden Gate Avenue, San Francisco, California
94102, a written objection to the Settlement setting forth: (a) the shareholder's name, legal
address, and telephone number; (b) the nature and grounds of the objection; (c) proof of current
ownership of OCZ common stock, including the number of shares of OCZ common stock and
the date of purchase, as well as documentary evidence of when such stock ownership was
acquired; and (d) any documentation in support of such objection; and
2. if a Current OCZ Shareholder intends to appear and requests to be heard at
the Settlement Hearing, such shareholder must, in addition to the requirements of subsection (1)
above, file with the Clerk of the Court: (a) a written notice of such shareholder's intention to
appear; (b) a statement that indicates the basis for such appearance; and (c) copies of any papers
you intend to submit to the Court, along with the names of any witness(es) you intend to call to
testify at the Settlement Hearing and the subject(s) of their testimony
3. if a Current OCZ Shareholder files a written objection and/or written
notice of intent to appear, such shareholder must also simultaneously serve copies of such notice,
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proof, statement and documentation, together with copies of any other papers or briefs such
shareholder files with the Court (either by hand delivery or by first class mail) so they are
received no later than ________________, 2013 upon each of the following:
SHAWN A. WILLIAMS ROBBINS GELLER RUDMAN & DOWD LLP Post Montgomery Center One Montgomery Street, Suite 1800 San Francisco, CA 94104 Telephone: (415) 288-4545 GEORGE AGUILAR ROBBINS ARROYO LLP 600 B Street, Suite 1900 San Diego, CA 92101 Telephone: (619) 525-3990 Co-Lead Counsel for Plaintiffs
BORIS FELDMAN WILSON SONSINI GOODRICH & ROSATI 650 Page Mill Road Palo Alto, CA 94304 Telephone: (650) 493-9300 Counsel for Nominal Defendant OCZ Technology Group, Inc. and Individual Defendants Adam J. Epstein, Richard L. Hunter, Russell J. Knittel, and Ralph H. Schmitt NORMAN J. BLEARS MAREN J. CLOUSE HOGAN LOVELLS US LLP 525 University Ave., 4th Floor Palo Alto, CA 94301 Telephone: (650) 463-4000 Counsel for Defendant Arthur F. Knapp, Jr. DANIEL P. LEFLER IRELL & MANELLA, LLP 1800 Avenue of the Stars, Suite 900 Los Angeles, CA 90067 Telephone: (310) 277-1010 Counsel for Defendant Ryan Petersen
Any Current OCZ Shareholder who does not timely make his, her, or its objection to the
Settlement shall be deemed to have waived such objection and shall forever be foreclosed from
making any objection to the fairness, reasonableness, or adequacy of the proposed Settlement,
and shall otherwise be bound by the Judgment to be entered on the releases given.
PLEASE DO NOT TELEPHONE THE COURT OR OCZ
REGARDING THIS NOTICE
875108
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[PROP] FINAL JUDGMENT AND ORDER OF DISMISSAL WITH PREJUDICE LEAD CASE NO. C-12-05556-RS
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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION
IN RE OCZ TECHNOLOGY GROUP, INC. SHAREHOLDER DERIVATIVE LITIGATION
)))))))))))))
Lead Case No.: C-12-05556-RS (Consolidated with Case Nos. C-12-06058-RS, C-12-06343-RS) [PROPOSED] FINAL JUDGMENT AND ORDER OF DISMISSAL WITH PREJUDICE EXHIBIT D Judge: Hon. Richard Seeborg
This Document Relates to:
ALL ACTIONS
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This matter came before the Court for hearing pursuant to the Order of this Court, dated
_____________, 2013 ("Preliminary Approval Order"), on the application of the Settling Parties
for approval of the settlement ("Settlement") set forth in the Stipulation of Settlement dated July
19, 2013 (the "Stipulation"). Due and adequate notice having been given to the current OCZ
Technology Group, Inc. ("OCZ") shareholders as required in said Preliminary Approval Order,
and the Court having considered all papers filed and proceedings had herein and otherwise being
fully informed in the premises and good cause appearing therefore, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that:
1. This Judgment incorporates by reference the definitions in the Stipulation, and all
capitalized terms contained herein shall have the same meanings as set forth in the Stipulation (in
addition to those capitalized terms defined herein).
2. This Court has jurisdiction over the subject matter of the Action, including all
matters necessary to effectuate the Settlement, and over all parties to the Action, including the
Plaintiffs, the current OCZ shareholders, and the Defendants.
3. The Court finds that the Notice and Summary Notice provided to OCZ
shareholders was the best notice practicable under the circumstances and fully satisfied the
requirements of Federal Rule of Civil Procedure 23.1 and due process.
4. The Action and all claims contained therein, as well as all of the Released Claims,
are dismissed with prejudice. As between Plaintiffs and Defendants, the Settling Parties are to
bear their own costs, except as otherwise provided in the Stipulation.
5. The Court finds that the Stipulation and Settlement are fair, reasonable, and
adequate as to each of the Settling Parties and further finds that the Settlement is in the best
interests of OCZ and its shareholders. The Court hereby finally approves the Stipulation and
Settlement in all respects, and orders the Settling Parties to perform its terms to the extent the
Settling Parties have not already done so.
6. Except as provided in paragraph 7.4 of the Stipulation, upon the Effective Date,
Plaintiffs on their own behalf and derivatively on behalf of OCZ, OCZ, and each of OCZ's
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shareholders (solely in their capacity as OCZ shareholders) shall be deemed to have, and by
operation of the Judgment shall have, fully, finally, and forever released, relinquished, and
discharged the Released Claims, including Unknown Claims, against the Released Persons.
Nothing herein shall in any way impair or restrict the rights of any of the Settling Parties to
enforce the terms of the Stipulation.
7. Upon the Effective Date, each of the Defendants and their Released Persons shall
be deemed to have, and by operation of the Judgment shall have, fully, finally, and forever
released, relinquished, and discharged each and all of the Plaintiffs and Plaintiffs' Counsel from
all claims (including Unknown Claims) arising out of, relating to, or in connection with, the
institution, prosecution, assertion, settlement, or resolution of the Action or the Released Claims.
Nothing herein shall in any way impair or restrict the rights of the Settling Parties to enforce the
terms of the Stipulation.
8. All OCZ shareholders are hereby barred and enjoined from prosecuting the
Released Claims against the Released Persons.
9. The Court hereby approves the Fee and Expense Amount in accordance with the
Stipulation and finds that the Fee and Expense Amount is fair and reasonable.
10. Neither the Stipulation nor the Settlement, nor any act performed or document
executed pursuant to or in furtherance of the Stipulation or the Settlement: (i) is or may be
deemed to be or may be offered, attempted to be offered, or used in any way by the Settling
Parties or any other Person as a presumption, a concession or an admission of, or evidence of,
any fault, wrongdoing, or liability of the Defendants or of the validity of any Released Claims; or
(ii) is intended by the Settling Parties to be offered or received as evidence or used by any other
Person in any civil, criminal, administrative, or other proceeding whatsoever, including before
any court, administrative agency, or other tribunal. The Released Persons may file the
Stipulation and/or the Judgment in any action brought against them in order to support a defense
or counterclaim based on principles of res judicata, collateral estoppel, full faith and credit,
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release, good faith settlement, judgment bar or reduction, or any other theory of claim preclusion
or issue preclusion or similar defense or counterclaim.
11. During the course of the litigation, the parties and their respective counsel at all
times complied with the requirements of Federal Rule of Civil Procedure 11 and all other similar
laws.
12. Without affecting the finality of this Judgment in any way, this Court hereby
retains continuing jurisdiction over the Action and the parties to the Stipulation to enter any
further orders as may be necessary to effectuate the Stipulation, the Settlement provided for
therein, and the provisions of this Judgment.
13. No proceeding, appeal, or petition pertaining solely to the Fee and Expense
Amount or reversal or modification thereof, shall operate to terminate, modify or cancel the
Stipulation, or affect or delay the Effective Date or the finality of this Judgment.
14. In the event that the Settlement does not become effective in accordance with the
terms of the Stipulation, this Judgment shall be vacated, and all orders entered and releases
delivered in connection with the Stipulation and this Judgment shall become null and void,
except as otherwise provided for in the Stipulation.
15. This Judgment is a final, appealable judgment and should be entered forthwith by
the Clerk in accordance with Rule 58, Federal Rules of Civil Procedure.
IT IS SO ORDERED.
DATED HONORABLE RICHARD SEEBORGUNITED STATES DISTRICT JUDGE
Submitted by, ROBBINS ARROYO LLP BRIAN J. ROBBINS GEORGE C. AGUILAR LAUREN N. OCHENDUSZKO MICHAEL J. NICOUD
GEORGE C. AGUILAR
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600 B Street, Suite 1900 San Diego, CA 92101 Telephone: (619) 525-3990 Facsimile: (619) 525-3991 [email protected] [email protected] [email protected] [email protected] ROBBINS GELLER RUDMAN & DOWD LLP SHAWN A. WILLIAMS Post Montgomery Center One Montgomery Street, Suite 1800 San Francisco, CA 94104 Telephone: (415) 288-4545 Facsimile: (415) 288-4534 [email protected] Co-Lead Counsel for Plaintiffs
874915
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ENTRY OF JUDGMENT LEAD CASE NO. C-12-05556-RS
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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION
IN RE OCZ TECHNOLOGY GROUP, INC. SHAREHOLDER DERIVATIVE LITIGATION
)))))))))))
Lead Case No.: C-12-05556-RS (Consolidated with Case Nos. C-12-06058-RS, C-12-06343-RS) ENTRY OF JUDGMENT EXHIBIT E Judge: Hon. Richard Seeborg
This Document Relates to:
ALL ACTIONS
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Judgment is hereby entered for purposes of Rule 58(a) and/or Rule 79(b) of the Federal
Rules of Civil Procedure on ____________________, 2013.
IT IS SO ORDERED.
HONORABLE RICHARD SEEBORGUNITED STATES DISTRICT JUDGE
Submitted by, ROBBINS ARROYO LLP BRIAN J. ROBBINS GEORGE C. AGUILAR LAUREN N. OCHENDUSZKO MICHAEL J. NICOUD
GEORGE C. AGUILAR
600 B Street, Suite 1900 San Diego, CA 92101 Telephone: (619) 525-3990 Facsimile: (619) 525-3991 [email protected] [email protected] [email protected] [email protected] ROBBINS GELLER RUDMAN & DOWD LLP SHAWN A. WILLIAMS Post Montgomery Center One Montgomery Street, Suite 1800 San Francisco, CA 94104 Telephone: (415) 288-4545 Facsimile: (415) 288-4534 [email protected] Co-Lead Counsel for Plaintiffs
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Case3:12-cv-05556-RS Document41-5 Filed07/22/13 Page3 of 3