According to the Order and Final Judgment, entered on April 6, 2006, from U.S. District Judge Honorable James D. Whittemore of the U.S. District Court of the Middle District of Florida, the case was settled. Further, the parties' Motion for Final Approval of Class Action Settlement and Plan of Allocation and for Approval of Attorneys' Fees was also granted.
By the Notice of Pendency and Settlement of Class Action dated January 23, 2006, a settlement hearing will be held on March 30, 2006. The Settlement Hearing’s purpose will be to determine: (1) whether the Settlement, consisting of an $2,650,000 cash fund, plus accrued interest for the benefit of the Class, should be approved as fair, just, reasonable and adequate; (2) whether the proposed plan to distribute the Settlement proceeds described herein (the “Plan of Allocation”) is fair, just, reasonable, and adequate; (3) whether Lead Plaintiffs and Lead Counsel have adequately represented the Class; (4) whether Plaintiffs’ Counsel’s application for an attorneys’ fees and expenses award should be approved; and (5) whether the Action should be dismissed with prejudice.
As summarized in the latest docket posted, on September 27, 2002, the Court issued the Order consolidated the pending actions, and by another order issued the same day, the Action was stayed as to Uniroyal, which had filed for bankruptcy on August 25, 2002. On September 30, 2002, the Court issued the Order appointed Fuller & Thaler Asset Management, Inc. and Dwight Tracy Lead Plaintiffs and approved their choice of counsel, Bernstein Liebhard & Lifshitz, LLP, and liaison counsel. The plaintiffs filed Consolidated Class Action Complaint on December 5, 2002, and on January 17, 2003, Defendants filed a motion to dismiss the Complaint. On September 11, 2003, Magistrate Judge Thomas B. McCoun III issued a report recommending that the District Court sustain most of Lead Plaintiffs’ Exchange Act claims, and on October 20, 2005, the Court adopted the Report, granting the defendants’ motion to dismiss in part. On December 21, 2005, the plaintiffs filed a Settlement Agreement.
The original complaint charges that defendants Uniroyal, Uniroyal's Executive Vice President, Chief Financial Officer and Treasurer and the Company's Chairman of the Board and Chief Executive Officer, violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market between February 8, 2000 and May 13, 2002. According to the complaint, defendants issued a series of press releases touting its financial stability and its acquisition of Sterling Semiconductor, while strategically positioning Uniroyal to increase its participation in the explosive compound semiconductor industry via internal growth. However, unbeknownst to the investing public that purchased Uniroyal stock during the Class Period, (i) Uniroyal was not a financially stable company; (ii) its acquisition of Sterling was not lucrative at all; and (iii) it was not strategically positioning Uniroyal to increase its participation in the explosive compound semiconductor industry via acquisition and internal growth. But for Uniroyal's financial support, Sterling would probably have been forced to seek protection under the bankruptcy laws. Sterling was a development stage company and not, as defendants touted, "a leading developer of silicon carbide technology and materials." Moreover, in order to materially inflate Uniroyal's net worth and further foster the illusion of growth, defendants agreed to pay an inflated price for Sterling with materially overvalued stock serving as currency. On December 31, 2001, eighteen months after having acquired Sterling in exchange for stock, with a purported value of more than $40 million, the Company shocked the market by announcing that it recorded a write-down of Sterling goodwill of approximately $9,816,000. On January 2, 2002, Uniroyal stock closed at $1.69 down from $3.20 the previous day and substantially down from its class period high of $71.125 reached on February 23, 2000.