On December 10, 2007, the Settlement Hearing was held before Judge Andrew J. Guilford. At the Hearing, the Court issued the Final Judgment and Order approving the settlement and terminating the case. The Court also issued the Order granting attorneys' fees and reimbursement of expenses. According to the Order, the Court awarded Class Counsel: (1) 30% of the Gross Settlement Fund, in the amount of $888,193.95 and (2) reimbursement of their expenses, in the amount of $35,386.90. This award shall be immediately payable from the Gross Settlement Fund in accordance with the terms of the Settlement and this Order.
As summarized by the Company’s FORM 10-Q for the quarterly period ended November 30, 2007, on January 8, 2007, the court granted the named plaintiffs' motion to be appointed lead plaintiffs. On February 22, 2007, the plaintiffs filed their second amended complaint, which asserts claims for violations of Section 10(b), 14(a) and 20(a) of the Securities Exchange Act in connection with the Company's option granting practices. On May 23, 2007, the parties in both this action and the state derivative actions discussed above participated in a mediation. As a result of this mediation, the parties in both actions reached a preliminary settlement understanding, which included corporate governance reforms and an amount to cover plaintiffs' attorneys' fees. The parties submitted the settlement agreement and related paperwork for the court's approval, which was obtained in December 2007. The monetary portion of the proposed settlement was covered by the Company's director and officer liability insurance.
The original complaint alleges that, throughout the Class Period, Defendants misrepresented and omitted material facts concerning Meade's backdating of stock option grants to two of its officers. Specifically, Plaintiff alleges that at all times during the Class Period, Meade represented that the exercise price of all stock options would be no less than the fair market value of Meade's common stock, measured by the publicly traded closing price for Meade stock on the day of the grant.
However, in reality, those options were backdated so their exercise price correlated to a day on or near the day Meade's stock hit its low price for the year, or directly in advance of sharp increases in the price of Meade stock. A Company officer directly benefited by exercising these backdated options.
The complaint further alleges that as the truth concerning Meade's practice of backdating option grants gradually became known to the market from a variety of sources, the price of Meade's stock fell $0.70, or 25%, between May 22, 2006 and August 29, 2006.