Texas-based Crossroads Systems Inc., a global provider for storage networking solutions, announced that it has reached an agreement in principle to settle the consolidated securities class action litigation, In re Crossroads Systems Inc. Securities Litigation, Master File No. A-00-CA-457-JN, pending in the U.S. District Court for the Western District of Texas, Austin Division.
The shareholder class will receive a total payment of $4.35 million. Of that amount, the company’s directors-and-officers insurance carriers have agreed to pay $3.35 million and the company will pay $1.0 million. As a result, Crossroads will take a charge to earnings in the fourth quarter of fiscal year 2004 of $1.0 million for the settlement and will report this with the earnings call scheduled for Dec. 20, 2004.
The settlement is subject to a number of conditions, including a definitive agreement and final court approval following completion of a fairness hearing. At this time, there can be no assurance that these conditions will be met and that the settlement of the securities class action litigation will receive final court approval.
In the agreement, Crossroads and the individual defendants named in the litigation continue to deny any and all allegations of wrongdoing, and they will receive a full release of all claims asserted in the litigation.
“While we were prepared to mount a vigorous defense, the management team concluded that settlement was in the best fiscal interest of the company,” stated Robert Sims, president and chief executive officer, Crossroads Systems. “We also appreciate the services of the Akin Gump securities litigation team in their efforts to bring this matter to a conclusion.”