On October 11, 2006, a Stipulation of Settlement was filed, and preliminarily approved by the Order entered on December 14, 2006, signed by U.S. District Judge Susan R Bolton. The Settlement Hearing was set for March 12, 2007. On March 19, 2007, the Court entered the Final Judgment and Order of Dismissal with Prejudice. According to the Order, this Court hereby approves the Settlement set forth in the Stipulation and finds that said Settlement is, in all respects, fair, reasonable and adequate to, and is in the best interests of, the Lead Plaintiff, the Class and each of the Class Members. The case is now closed.
According to a press release dated August 9, 2006, TASER International, Inc. (Nasdaq:TASR), a market leader in advanced electronic control devices announced today that it has reached agreements to settle the shareholder class action lawsuit pending in U.S. District Court for the District of Arizona; the derivative lawsuits pending in the U.S. District Court for the District of Arizona, the Arizona Superior Court, and the Delaware Chancery Court; and the Section 220 lawsuit for production of documents pending in Delaware Chancery Court. Under these agreements, all claims against the Company and individuals named as defendants will be dismissed without presumption or admission of any liability or wrongdoing.
Pursuant to the terms of the agreement to dismiss the shareholder class action litigation, TASER International will pay to the plaintiffs, for the benefit of the class, the total of $20 million payable by approximately $4.1 million from insurance proceeds, $7.9 million in Company cash, and $8 million in Company stock or cash at the Company's election. Pursuant to the terms of the agreement to dismiss the derivative lawsuit pending in the U.S. District Court for the District of Arizona, TASER International will pay the amount of $1.75 million in Company stock for plaintiffs' attorney fees and adopt certain corporate governance provisions consisting of the designation of a lead independent director who will be chosen from one of three independent directors now serving on the board. As part of the settlement of the derivative action pending in the District Court of Arizona, the two other derivative actions and the Section 220 action will be dismissed as well.
As disclosed by the Company’s Form 10-Q for the quarterly period ended June 30, 2006, beginning on or about January 10, 2005, numerous securities class action lawsuits were filed against the Company and certain of its officers and directors. These actions were filed on behalf of the purchasers of the Company’s stock in various class periods, beginning as early as May 29, 2003 and ending as late as January 14, 2005. The majority of these lawsuits were filed in the District of Arizona. Four actions were filed in the United States District Court for the Southern District of New York and one in the Eastern District of Michigan. The New York and Michigan actions were transferred to the District of Arizona. The class actions were consolidated by Judge Susan Bolton and Lead Plaintiff and Lead Counsel were selected. The Lead Plaintiff filed a consolidated complaint (which became the operative complaint for all of the class actions) on August 29, 2005. The operative class period is May 29, 2003 to January 11, 2005. The defendants filed a motion to dismiss the consolidated complaint, which has been fully briefed for the Court but has not yet been decided. On July 25, 2006, the Company participated in a mediation conference in an attempt to settle the pending securities class action and shareholder derivative lawsuits. Discussions continued and the parties have reached a tentative settlement agreement. Under the tentative settlement, defendants would provide the plaintiff class $20 million in exchange for a release of all claims based on or arising out of the allegations in the consolidated complaint.
Several purported shareholder class action lawsuits have been filed against TASER International, Inc. and certain of its present and former executive officers in various U.S. District Courts.
The first complaint filed in United States District Court for the Southern District of New York charges TASER and one or more of its officers and/or directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. More specifically, the complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the Company actively and continually obscured the truth about the safety of its TASERs; (2) that even after it was revealed that more than 70 people had died in North America in TASER-related incidents, the Company vehemently asserted that its weapons were safe, in order to maintain profitability; (3) that the Defendants accelerated the Davidson's deal in the fourth quarter of 2004, in order to book the revenue, so TASER did not have to report its first quarter-to-quarter revenue decline in nearly two years; and (4) as a result, the Company lacked any reasonable basis for any statements it made regarding profitability and safety.
Further, on January 6, 2005, TASER announced that it was cooperating with an informal inquiry letter from the SEC regarding the safety of TASER(r) products and a recent order received from Davidson's, Inc. This news shocked the market. As a result, shares of TASER fell $4.90 per share, or 17.74 percent, on January 7, 2005, to close at 22.72 per share. Then on Monday, January 10, 2005, TASER shares tumbled another $2.67 per share or 11.75 percent, to close at $20.05 per share. On January 11, 2005, TASER released a letter to its shareholders and customers regarding the SEC investigation and the general state of the Company. Following the announcement, shares of TASER were down another $5.95 per share or 29.68 percent on January 11, 2005, and last traded at $14.10 per share.