News Article
GigOptix and DBSI trustees resolve differences
As part of the settlement, the trustees have agreed to the cancellation and return of the existing warrants to purchase 660,473 shares of GigOptix stock.
GigOptix, a supplier of high performance electronic and electro-optic components that enable next generation 40G and 100G optical networks, has entered into a settlement with the trustees of the DBSI Liquidating Trust and the DBSI Estate Litigation Trust.
The settlement arises out of potential claims related to the bankruptcy of DBSI, Inc.
Affiliates of DBSI, Inc. were investors in a predecessor of GigOptix, which resulted in them becoming stockholders of GigOptix. DBSI, Inc. was the beneficial owner of the investment held by its affiliates. In November 2008, DBSI, Inc. filed for bankruptcy.
The DBSI Liquidating Trust now holds the shares of GigOptix stock and warrants to purchase 660,473 shares of GigOptix stock. The warrants have a weighted average exercise price of $32.35 per share with a range of exercise periods that expire between December 31, 2011 and April 23, 2017.
An affiliate of the DBSI Liquidating Trust, the DBSI Estate Litigation Trust, has been evaluating various potential claims which it might assert against a number of entities, including GigOptix and certain affiliated parties. GigOptix's management has engaged in discussions with the trustee regarding whether the DBSI Estate Litigation Trust has any claims against GigOptix. GigOptix has disputed the existence of any such claims, and intended to vigorously defend any claims made.
The settlement resolves the disputed claims and completely eliminates all potential litigation. As part of the settlement, the trustees have agreed to the cancellation and return of the existing warrants to purchase 660,473 shares of GigOptix stock. In exchange, GigOptix has agreed to issue to the DBSI Liquidating Trust two warrants which will not be exercisable for a period of six months from the date of issuance; one warrant for 500,000 shares of GigOptix stock which will have a term of three years and an exercise price of $2.60 per share, and the other warrant, also for 500,000 shares of GigOptix stock, which will have a term of four years and an exercise price of $3.00 per share (together, the "Warrants").
The Warrants may be exercised on a "cashless" exercise basis. The trustees have also agreed to release their claims against GigOptix, its subsidiaries, directors and employees.
GigOptix's Chairman of the Board and Chief Executive Officer, Avi Katz, stated, "I am happy to put this matter behind us. Although we believed that the trustees' claims would not have been successful, we were eager to avoid the legal expense, waste of management time and bandwidth and the risk that is always associated with litigation. I am pleased we were able to resolve this issue with this significant GigOptix stockholder without any out of pocket cash costs."
