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EXHIBIT 19
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding (the "Memorandum") is entered into by
and between the undersigned law firms on behalf of all plaintiffs in the class
action litigation generally described below (collectively, "Plaintiffs"), and
▇▇▇▇▇▇ Corporation ("▇▇▇▇▇▇" or the "Company"), Fujitsu Limited ("Fujitsu"),
Fujitsu International, Inc. ("Fujitsu International") and the individuals named
as defendants in such litigation, including directors and former directors of
▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇. ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, J. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (collectively,
"Defendants").
FACT RECITALS
A. Each of the Plaintiffs is and was as of the date of the filing of
such person's complaint herein the record and beneficial owner of shares of the
common stock of ▇▇▇▇▇▇ ("▇▇▇▇▇▇ common stock").
B. The Plaintiffs in the below-referenced stockholder class actions have
challenged a tender offer (the "Offer") and merger transaction contemplated by
the Agreement and Plan of Merger (the "Merger Agreement"), dated as of July 30,
1997, by and among Fujitsu, a Japanese corporation, Fujitsu International, a
wholly owned subsidiary of Fujitsu, and ▇▇▇▇▇▇, a Delaware corporation, pursuant
to which Fujitsu International offered to acquire all outstanding shares of
common stock of ▇▇▇▇▇▇ in the Offer, and, following the completion of the Offer,
Fujitsu International would be merged (the "Merger") with and into the Company,
with the Company continuing as the surviving corporation and becoming a
wholly-owned subsidiary of Fujitsu.
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C. Shortly after the July 30, 1997 public announcement of the Offer,
Merger and Merger Agreement, several putative class actions were filed in the
Delaware Court of Chancery and in the California Superior Court for the County
of Santa ▇▇▇▇▇ challenging the fairness of the proposed transaction to Company
stockholders. Cases filed in the Delaware Court of Chancery as of August 5, 1997
include: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Corp., et al. (Civ. Act. No. 15833NC), filed July 30,
1997; ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, et al. (Civ. Act. No. 15834NC), filed July 30, 1997;
▇▇▇▇ ▇. ▇▇▇▇▇, et al. (Civ. Act. No. 15837), filed July 31, 1997; O'▇▇▇▇ ▇.
▇▇▇▇▇▇, et al. (Civ. Act. No. 15838), filed July 31, 1997; Gachot & Gachot, Inc.
▇. ▇▇▇▇▇▇ Corp., et al. (Civ. Act. No. 15839), filed July 31, 1997; Crandon
Capital Partners ▇. ▇▇▇▇▇, et al. (Civ. Act. No. 15840), filed July 31, 1997;
Bodakian ▇. ▇▇▇▇▇▇ Corp., et al. (Civ. Act. No. 15841), filed July 31, 1997;
McCeady ▇. ▇▇▇▇▇▇ Corp. (Civ. Act. No. 15845), filed July 31, 1997; Halebian ▇.
▇▇▇▇▇, et al. (Civ. Act. No. 15850NC), filed August 1, 1997; ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Corp., et al. (Civ. Act. No. 15051), filed August 4, 1997; and Millet ▇. ▇▇▇▇▇▇
Corp., et al. (Civ. Act. No. 15057), filed on August 5, 1997 (collectively, the
"Delaware Actions"). Cases filed in the California Superior Court for the County
of Santa ▇▇▇▇▇ as of August 1, 1997 are: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Corp., et al. (Case
No. CV767860), filed July 30, 1997; and ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Corp., et al. (Case
No. CV767896), filed August 1, 1997 (collectively, the "California Actions").
D. Plaintiffs shall file a consolidated amended complaint (the "Amended
Complaint"), and agree to consolidate the Delaware Actions under the caption In
re ▇▇▇▇▇▇ Corporation Shareholders Litig., Consolidated C.A. No. 15833 (the
"Consolidated Action"). Plaintiffs' counsel shall cause the California Actions
to be dismissed with prejudice, and this
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agreement-in-principle is contingent upon a final dismissal with prejudice of
the California Actions.
E. The complaints referred to in paragraph C above and the proposed
Amended Complaint referred to in paragraph D (hereinafter collectively the
"Actions") challenge and seek to enjoin the Offer and the consummation of the
Merger between ▇▇▇▇▇▇ and Fujitsu International. Under the Merger Agreement,
subject to certain conditions, each shareholder of ▇▇▇▇▇▇ would receive $12 for
each share of ▇▇▇▇▇▇ stock tendered under the terms of the Offer, and any shares
of ▇▇▇▇▇▇ stock not purchased in the Offer would receive $12 per share in a
second-step Merger in which Fujitsu International would be merged with and into
▇▇▇▇▇▇.
F. In the Actions, Plaintiffs alleged, inter alia, that various of the
Defendants breached their fiduciary duties to plaintiffs in connection with the
Offer and Merger by, among other things: (i) failing to act independently to
maximize shareholder value in furtherance of the best interests of the
shareholders and the Company; (ii) failing to explore adequately all
alternatives available to the Company's stockholders; (iii) agreeing to sell the
Company to Fujitsu at an inadequate price; and (iv) inadequately disclosing to
▇▇▇▇▇▇'▇ shareholders the events leading up to the Offer and the Merger
Agreement and the factors relevant to the shareholders' decision whether to
tender their shares.
G. The Actions further allege that Fujitsu violated fiduciary
obligations it owed to the shareholders of ▇▇▇▇▇▇ by virtue of its affiliation
with, control of and ownership interest in ▇▇▇▇▇▇ by, inter alia, failing to pay
a fair price for the public shareholders' stock; failing to implement a fair
process for the purchase of the shares of ▇▇▇▇▇▇'▇ public stockholders; and
failing to make full and accurate disclosures concerning the events leading up
to the Offer, the
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Merger Agreement and factors relevant to ▇▇▇▇▇▇'▇ shareholders' decision whether
to tender their shares into the Offer.
H. After the filing of the Delaware and California Actions, Plaintiffs'
counsel and counsel for Defendants engaged in expedited discovery for the
purposes of preparing for a hearing on Plaintiffs' request for preliminary
injunctive relief. During this discovery period, counsel for Plaintiffs and
Defendants engaged in extensive and good faith discussions regarding the
possibility of settling the Litigation. On August 20, 1997, the parties to the
Litigation reached an agreement-in-principle concerning the proposed settlement
of the Litigation as set forth below.
NOW, THEREFORE, the parties hereto agree as follows:
1. Purpose And Scope Of This Memorandum. The purpose of this Memorandum
is to set forth the agreement-in-principle of the parties to the Consolidated
Action with respect to the matters addressed below. However, the obligations of
the parties pursuant to this Memorandum are subject to modifications, if
necessary. Any necessary adjustments will be made on a mutually agreeable basis
so as to preserve the economic, operational and other objectives of the parties
in reaching this agreement-in-principle.
2. Principal Terms Of The Settlement. The following are the principal
terms of the agreement-in-principle to be embodied in definitive documents to be
executed by the appropriate parties (the "Settlement"):
(a) Increased Offer Price. The Offer on August 5, 1997, provided for
an Offer Price, as defined in the Merger Agreement, of $12.00 net cash per
share. As a result of the Actions, Fujitsu and/or Fujitsu International agree to
increase the Offer Price by an additional
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$0.40 per share to $12.40 net cash per share, in consideration for a release
substantially in the form set forth below.
(b) Defendants' Right to Withdraw. Fujitsu and Fujitsu International
shall have the option to withdraw from the Settlement in the event that holders
of more than 20% of the common shares of ▇▇▇▇▇▇ owned at the time of the Merger
by persons other than the Defendants and any person, firm, trust, corporation or
other entity related to or affiliated with any of them or their successors in
interest, have demanded appraisal for their common shares and have not withdrawn
their demand.
(c) Disclosure. Counsel for Plaintiffs have reviewed and commented
upon the disclosure materials relating to the Offer, Merger Agreement and the
Merger. Based upon their investigation, Plaintiffs hereby agree and confirm that
such disclosure materials, as modified, adequately and reasonably disclose all
material facts about the Defendants, the relationship of ▇▇▇▇▇▇ and Fujitsu, the
history of the negotiations leading up to the Merger Agreement, the Offer, the
Merger and Merger Agreement.
3. The parties agree to enter into a stipulation of settlement (and such
other and related documentation as may be necessary) which will provide for the
settlement of the Consolidated Action (the "Settlement Agreement") on, among
other terms, the following conditions:
(a) for certification, for settlement purposes only, of a mandatory
non-opt-out class under Delaware Chancery Court Rule 23(b)(1) and 23(b)(2) of
all record and beneficial holders of ▇▇▇▇▇▇ common stock (other than the
Defendants and their affiliates) during the period beginning on and including
July 30, 1997 through and including the date of the
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consummation of the Merger (the "Merger Date"), including any and all of their
respective predecessors, trustees, executors, administrators, representatives,
heirs, transferees, successors in interest and assigns, immediate and remote,
and any person claiming under any of them, and each of them, and excluding the
Defendants and any person, firm, trust, corporation or other entity related to
or affiliated with any of them or their successors in interest (the "Class").
The terms of the Settlement Agreement will consist of the terms outlined above
in paragraph 2, as well as releases and covenants not to ▇▇▇ and other terms in
form customarily included in such agreements. The parties agree to use their
best efforts to obtain Court approval of such Settlement.
(b) for the complete discharge, dismissal with prejudice, settlement
and release of, and an injunction barring, all claims, demands, rights, actions
or causes of action, rights, liabilities, damages, losses, obligations,
judgments, suits, matters and issues of any kind or nature whatsoever, whether
known or unknown, contingent or absolute, suspected or unsuspected, disclosed or
undisclosed, matured or unmatured, that have been, could have been, or in the
future can or might be asserted in the Actions or in any court, tribunal or
proceedings (including, but not limited to, any claims arising under federal or
state law relating to alleged fraud, breach of any duty, negligence, violations
of the federal securities laws or otherwise) by or on behalf of any member of
the Class, whether individual, class, derivative, representative, legal,
equitable or any other type or in any other capacity against Defendants or any
of their families, parent entities, associates, affiliates or subsidiaries and
each and all of their respective past, present or future officers, directors,
stockholders, representatives, employees, attorneys, financial or investment
advisors, consultants, accountants, attorneys, investment bankers, commercial
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bankers, engineers, advisors or agents, heirs, executors, trustees, general or
limited partners or partnerships, personal representatives, estates,
administrators, predecessors, successors and assigns and all other persons
(collectively, the "Released Persons") which have arisen, could have arisen,
arise now or hereafter arise out of, or relate in any manner to, the
allegations, facts, events, transactions, acts, occurrences, statements,
representations, misrepresentations, omissions or any other matter, thing or
cause whatsoever, or any series thereof, embraced, involved, set forth or
otherwise related, directly or indirectly, to any of the Actions, the Offer,
Merger, the Merger Agreement, or any related transaction or documents, the
negotiation, consideration and approval thereof, or of the fiduciary or
disclosure obligation of any of the Released Persons in any tender offer
materials, proxy materials, public filings or statements (including, but not
limited to, public statements) by the Released Persons in connection with the
Offer, Merger, or the Merger Agreement (collectively, the "Settled Claims);
provided, however, that the Settled Claims shall not include (i) the right of
the Plaintiffs or any members of the Class or Released Persons to enforce the
terms of the Settlement Agreement, or (ii) any appraisal rights arising out of
the Merger;
(c) that the Defendants have denied, and continue to deny, that any
of them have committed or have threatened to commit any violations of law or
breaches of duty to the Plaintiffs, the members of the Class or anyone;
(d) that the Defendants are entering into this Memorandum, and will
be entering into the Settlement Agreement, because, among other reasons, the
proposed Settlement would eliminate the burden and expense of further
litigation; and
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(e) subject to the order of the Court, pending final determination
of whether the settlement provided for in the Settlement Agreement should be
approved, that Plaintiffs and all members of the Class, or any of them, are
barred and enjoined from commencing, prosecuting, instigating or in any way
participating in the commencement of any action asserting any claims, either
directly, representatively, derivatively or in any other capacity, against any
of the Released Persons which have been or could have been asserted, or which
arise out of, or relate in any way to, the Settled Claims, or which arise out of
or relate in any way to any of the transactions or events described in any
complaint in the Actions.
4. Cooperation. The parties, through their counsel, (i) agree to use
their best efforts to pursue the Settlement of the Consolidated Action in as
expeditious and comprehensive a manner as possible and acknowledge that time is
of the essence; and (ii) agree to cooperate in preparing any and all necessary
papers to define, pursue and effectuate the Settlement of the Consolidated
Action.
5. Pending negotiation, execution and approval of the Settlement by the
Delaware Court of Chancery (hereinafter, the "Court"), the Plaintiffs agree to
stay any discovery, to withdraw on August 21, 1997, their motion for a
preliminary injunction in the Delaware Actions, and to stay and not initiate any
and all other proceedings in the Consolidated Action other than those incident
to the Settlement itself. The parties also agree to use their best efforts to
prevent, stay or seek dismissal of or oppose entry of any interim or final
relief in favor of the Plaintiffs or any putative Class member in any other
litigation against any of the parties to this Memorandum which challenges the
Settlement, Offer, Merger, Merger Agreement, or related transactions.
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6. The parties to the Consolidated Action will use their best efforts
to agree upon, execute and present to the Court, on or before August 29, 1997, a
formal Stipulation of Settlement and such other documents as may be necessary
and appropriate to obtain the prompt approval by the Court contemplated herein
and by the Stipulation of Settlement.
7. The Settlement will not be binding upon any party until, and is
otherwise subject to:
(a) a formal Stipulation of Settlement (and such other documentation
as may be required to obtain final approval by the Court of the Settlement) has
been executed by counsel for the parties to the Consolidated Action; and
(b) final approval by the Court of the Settlement (and the
exhaustion of possible appeals, if any) and the dismissal of the Consolidated
Action by the Court with prejudice and without awarding costs to any party
(except as provided herein) have been obtained, and entry by the Court of a
final order and judgment containing such release language as is negotiated by
the parties and contained in the Stipulation of Settlement.
8. If the Settlement is not consummated in accordance with Paragraph 7,
this Memorandum shall be null and void and of no force and effect, and shall not
be deemed, used or offered to prejudice in any way the positions of the parties
or any Released Persons with respect to the Consolidated Action or otherwise,
nor to entitle any party to the recovery of costs and expenses incurred to
implement this Memorandum (except as provided in paragraph 10 hereof).
9. In connection with the Settlement contemplated by this Memorandum,
Plaintiffs' counsel will apply to the Court for an aggregate award of attorneys'
fees and expenses, including fees and expenses for or payable to any financial
advisors engaged by or for the
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Plaintiffs, in an amount not to exceed $7,000,000 in attorney's fees and
$250,000 in expenses (collectively, the "Fees and Expenses"). Defendants agree
that they will not oppose such application. Subject to the terms and conditions
of this Memorandum and the terms and conditions of the Settlement Agreement
contemplated hereby, Fujitsu, Fujitsu International and/or ▇▇▇▇▇▇ shall pay, on
behalf of and for the benefit of the Defendants in the Consolidated Action, such
Fees and Expenses as may be awarded by the Court in accordance with the terms of
the Stipulation in addition to the consideration referred to in paragraph 2(a)
above. Except as provided herein, the Released Persons shall bear no other
expenses, costs, damages or fees alleged or incurred by any of the named
Plaintiffs, by any member of the Class, or by any of their attorneys, experts,
advisors, agents or representatives.
10. Fujitsu, Fujitsu International and/or ▇▇▇▇▇▇ shall be responsible
for providing notice of the Settlement to the members of the Class. Fujitsu,
Fujitsu International and/or ▇▇▇▇▇▇, on behalf of and for the benefit of all
Defendants in the Consolidated Action, shall bear responsibility for all
reasonable costs and expenses incurred in providing notice of the Settlement to
the members of the Class.
11. The provisions contained in this Memorandum shall not be deemed a
presumption, concession or an admission by any Defendant in the Consolidated
Action of any fault, liability or wrongdoing as to any facts or claims alleged
or asserted in the Consolidated Action, or any other actions or proceedings, and
shall not be interpreted, construed, deemed, invoked, offered, or received in
evidence or otherwise used by any person in the Consolidated Action or in any
other action or proceedings, whether civil, criminal or administrative.
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12. This Memorandum constitutes the essential terms of the agreement
among the parties with respect to the subject matter hereof, and may not be
amended nor any of its provisions waived except by a writing signed by all of
the signatories hereto.
13. This Memorandum and the Settlement contemplated by it shall be
governed by, and construed in accordance with, the laws of the State of
Delaware, without regard to conflict of laws principles.
14. This Memorandum shall be binding upon, and inure to the benefit of,
the parties to the Consolidated Action, the Released Persons and their
respective agents, executors, heirs, successors and assigns.
15. This Memorandum will be executed by counsel for the parties to the
Consolidated Action. This Memorandum may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument. By signing this
Memorandum, Plaintiffs' counsel represent that they have authority to act on
behalf of all Plaintiffs and their counsel in all of the Actions.
16. The parties to this Memorandum agree (a) to use their best efforts
to achieve the expedited dismissal of the Consolidated Action in accordance with
the terms of this Memorandum and (b) to cause the timely occurrence of all
events, transactions or other circumstances described herein.
IN WITNESS WHEREOF, the parties have executed this Memorandum effective
as of the date set forth below.
DATED: August 20, 1997 ABBEY, GARDY & ▇▇▇▇▇▇▇▇▇, LLP
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
WOLF POPPER LLP
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ & LERACH, LLP
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ by ▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Co-Lead Counsel for Plaintiffs and the Proposed Class
MORRIS, NICHOLS, ARSHT & ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, III
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇
▇▇
▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Attorneys for Defendants
Fujitsu Limited, Fujitsu International, Inc.,
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & FINGER
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, PHLEGER & ▇▇▇▇▇▇▇▇, LLP
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Attorneys for Defendants
▇▇▇▇▇▇ Corporation, ▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇. ▇. ▇▇▇▇▇▇, ▇▇.,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and J. ▇▇▇▇▇▇ ▇▇▇▇
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