Litigation and Contingencies | 3 Months Ended |
Sep. 29, 2013 |
Commitments And Contingencies Disclosure [Abstract] | ' |
Litigation and Contingencies | ' |
Note 10. Litigation and Contingencies |
Litigation—The Company is or was a party to the following material litigations: |
Former Texas Facility Environmental Cleanup |
We formerly leased a tract of land in Texas for our operations. Those operations involved the use of solvents and, at the end of the lease, we remediated an area where the solvents had been deposited on the ground and obtained regulatory approval for that remedial activity. In 1996, an environmental investigation of the property detected those same contaminants in groundwater in excess of then current regulatory standards. The groundwater contamination has migrated to some adjacent properties. We have entered into the Texas Natural Resource Conservation Commission’s Voluntary Cleanup Program (the “Voluntary Cleanup Program”) to obtain regulatory approval for closure of this site and a release from liability to the State of Texas for subsequent landowners and lenders. We have notified adjacent property owners affected by the contamination of participation in the Voluntary Cleanup Program. On May 20, 2004, we received a demand from the owner of several adjacent lots for damages in the amount of $1.3 million, as well as seeking an indemnity for the contamination and a promise to remediate the contamination. On March 14, 2006, the adjacent property owner filed suit in Probate Court No. 1, Travis County, Texas (Anna B. Miller, Individually and as Executrix of the Estate of Robert L. Miller, et al. vs. Austron, Inc., et al.), seeking damages. Symmetricom has not yet been served in this matter, but we intend to defend this lawsuit vigorously. We are continuing to work on the remediation of the formerly leased site as well as the adjacent properties, and have also taken steps to begin work on the Miller property. As of September 29, 2013, we had an accrual of $75,000 for remediation costs and other ongoing monitoring costs which has been included within “other accrued liabilities” on our condensed consolidated balance sheet. |
Michael E. McNeil, et al. vs. Jason Book, et al. |
On or around May 25, 2010, Symmetricom was served with the first amended complaint in the case of Michael E. McNeil, et al. vs. Jason Book, et al. (Case No. CV165643) filed in Santa Cruz County Superior Court, California. The first amended complaint added Symmetricom and several other parties to the lawsuit, which had been originally filed in 2009 by plaintiffs against their former attorney for legal malpractice in connection with certain settlement agreements in 1999 between plaintiffs and Datum (a company acquired by Symmetricom) in which they assigned to Datum certain intellectual property rights. Symmetricom was served with the second amended complaint on or around January 7, 2011. The second amended complaint alleges several causes of action, including claims against Symmetricom for contract rescission, breach of contract, conversion and unjust enrichment, and seeks unspecified monetary damages along with equitable relief. On or around October 8, 2013, plaintiffs dismissed their state court claim without prejudice and filed a complaint in the United States District Court for the Northern District of California. The federal complaint asserts claims for breaches of the same settlement agreements at issue in the prior state court complaints, as well as related claims for unjust enrichment, tortuous interference and declaratory relief. Management believes that this lawsuit has no merit or basis and intends to defend this lawsuit vigorously and as a result, no accrual has been made in relation to this litigation. Management believes the final outcome of this matter will not have a material adverse effect on our financial position and results of operations. |
Barron Young vs. Symmetricom, Inc., et al. |
On October 29, 2013, the Company, members of the Company’s board of directors, and Microsemi Corporation were named as defendants in an alleged class action lawsuit brought by a purported Company stockholder challenging the transactions contemplated by the Merger Agreement (described in further detail below in Note 12 – Subsequent Event), which was filed in the Superior Court of the State of California, County of Santa Clara, and captioned Barron Young vs. Symmetricom, Inc. et al., Case Number 3CV255292 (the “Young Action”). The Young Action purports to be brought individually and as a class action on behalf of the Company’s stockholders and generally alleges that, among other things, (i) each member of the Company’s board of directors breached his or her fiduciary duties in connection with the transactions contemplated by the Merger Agreement, (ii) the Company and Microsemi Corporation aided and abetted those breaches, and (iii) the proposed compensation payable to plaintiff and the class in the transactions contemplated by the Merger Agreement is unfair and inadequate. The Young Action seeks, among other relief, to enjoin the defendants from consummating the transactions contemplated by the Merger Agreement, rescission to the extent such transactions are consummated, and attorneys’ fees and costs. |
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William Rapien v. Symmetricom, Inc., et al. |
On November 4, 2013, the Company, members of the Company’s board of directors, and Microsemi Corporation were named as defendants in an alleged class action lawsuit brought by a purported Company stockholder challenging the transactions contemplated by the Merger Agreement, which was filed in the Court of Chancery of the State of Delaware, and captioned William Rapien v. Symmetricom, Inc., et al., Case Number 9058 (the “Rapien Action” and, together with the Young Action, the “Lawsuits”). The Rapien Action purports to be brought individually and as a class action on behalf of the Company’s stockholders and generally alleges that, among other things, (i) each member of the Company’s board of directors breached his or her fiduciary duties in connection with the transactions contemplated by the Merger Agreement, including by making inadequate and misleading disclosures to Company stockholders relating to the transactions contemplated by the Merger Agreement, (ii) the Company and Microsemi Corporation aided and abetted those breaches, and (iii) the proposed compensation payable to plaintiff and the class in the transactions contemplated by the Merger Agreement is unfair and inadequate. The Rapien Action seeks, among other relief, to enjoin defendants from consummating the transactions contemplated by the Merger Agreement, rescission and rescissory damages to the extent the transactions are consummated, damages and attorneys’ fees and costs. |
The Company’s management believes that the claims asserted in each of the Lawsuits are without merit and intends to defend its position against the allegations in each Lawsuit. However, a negative outcome in either Lawsuit could have a material adverse effect on the Company if either Lawsuit results in preliminary or permanent injunctive relief or rescission of the Merger Agreement. The Company is not currently able to predict the outcome of either Lawsuit with any certainty. Additional lawsuits arising out of or relating to the Merger Agreement may be filed in the future. If additional similar complaints are filed, absent new or different allegations that are material, the Company will not necessarily announce such additional filings. |
General |
Under the indemnification provisions of our standard sales contracts, we agree to defend the customer against First party claims asserting infringement of certain intellectual property rights, which may include patents, copyrights, trademarks or trade secrets, and to pay any judgments entered on such claims against the reseller/customer. The exposure to us under these indemnification provisions is generally limited to the total amount paid by the customer under the agreement. However, certain agreements include indemnification provisions that could potentially expose us to losses in excess of the amount received under the agreement. To date, there have been no claims under such indemnification provisions. We believe the estimated fair value of these indemnification agreements is not material. |
We are also a party to certain other claims in the normal course of our operations. While the results of these claims cannot be predicted with any certainty, we believe that the final outcome of these matters will not have a material adverse effect on our consolidated financial position and results of operations. |