3Ware 2003 Annual Report Download - page 17

commenced and is expected to continue throughout calendar year 2003, with expert discovery scheduled for
calendar year 2004 and trial for calendar year 2005.
In May 2001, a series of similar state derivative actions were filed against our directors and certain
executive officers. The state complaints have been coordinated and assigned to the Superior Court of California
in the County of San Diego. Applied Micro Circuits Shareholders Cases, No. JCCP No. 4193. In November
2001, the court appointed liaison plaintiffs’ counsel in the coordinated proceeding, and plaintiffs filed a
consolidated state complaint in December 2001. The consolidated state complaint alleges overstatement of our
financial prospects, mismanagement, inflation of stock value and sale of stock at inflated prices for personal gain
during the period from November 2000 through February 2001. Defendants demurred to the consolidated state
complaint, which demurrer was partially granted and partially overruled in February 2002. In February 2002, our
board of directors formed a special litigation committee to evaluate the claims in the consolidated state
complaint. The special litigation committee retained independent legal counsel and submitted a report to the
court in July 2002. Defendants filed a motion seeking dismissal of the consolidated action. On May 28, 2003, the
court issued a tentative ruling denying defendants’ motion. We expect oral argument regarding the court’s
tentative ruling to take place in June 2003. Limited discovery relating to the special litigation committee and its
report has taken place.
We believe that the allegations in these lawsuits are without merit and intend to defend against the lawsuits
vigorously. We cannot predict the likely outcome of these lawsuits, and an adverse result in either lawsuit could
have a material adverse effect on us. The lawsuits have been tendered to our insurance carriers.
We are currently involved in binding arbitration with Paxonet Communications, Inc. to determine whether
we had breached an alleged agreement to provide Paxonet with a loan of $4 million. We deny the existence of
any enforceable agreement to provide such a loan and are vigorously resisting Paxonet’s claim. The arbitration
hearing was held in May 2003, and the arbitrator’s decision is expected before July 2003.
Since 1993, we have been named as a PRP along with a large number of other companies that used Omega
Chemical Corporation in Whittier, California to handle and dispose of certain hazardous waste material. We are a
member of a large group of PRPs that has agreed to fund certain remediation efforts at the Omega Chemical site
for which we have accrued approximately $100,000. In September 2000, we entered into a consent decree with
the Environmental Protection Agency, pursuant to which we agreed to fund our proportionate share of the initial
remediation efforts at the Omega Chemical site.
We are also party to various claims and legal actions arising in the normal course of business, including
notification of possible infringement on the intellectual property rights of third parties.
Although the ultimate outcome of these matters is not presently determinable, we believe that the resolution
of all such pending matters, net of amounts accrued, will not have a material adverse effect on our financial
position or liquidity; however, there can be no assurance that the ultimate resolution of these matters will not
have a material impact on our results of operations in any period.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of the Company’s stockholders during the fourth quarter of the fiscal
year ended March 31, 2003.
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