This excerpt taken from the ATVI DEF 14A filed Jul 29, 2008.
Legal Fees Advanced on Behalf of Officers and Directors
In July 2006, individuals and/or entities claiming to be our stockholders filed derivative lawsuits (purportedly on our behalf) in federal and state court against certain current and former officers and directors of the Company, alleging purported improprieties in our issuance of stock options, among other allegations. The U.S. District Court for the Central District of California entered an order finally approving a stipulation of settlement and dismissing all claims with prejudice with respect to the federal lawsuits on July 22, 2008 and in the Los Angeles Superior Court, a stipulation of dismissal with respect to the state lawsuits was filed and signed by the court on July 28, 2008. In entering into the stipulation of settlement, neither the Company nor the settling parties admitted to any liability or wrongdoing.
In July 2006, we also received a letter of informal inquiry from the SEC requesting certain documents and information relating to our stock option grant practices. Thereafter, in June 2007, the SEC issued a formal order of non-public investigation with respect to such practices. The Company has made an offer of settlement to the SEC staff with respect to this investigation, and the SEC staff indicated it would recommend the settlement offer to the SEC. The tentative settlement is subject to agreement on the specific language of the settlement documents, and review and approval by the SEC. Under the proposed settlement, the Company would settle this matter without admitting or denying the SEC's findings.
From April 1, 2007 through March 31, 2008, pursuant to the Bylaws, the Company advanced, on behalf of the Company's present and former directors and officers, approximately $5.2 million for legal fees and expenses incurred in connection with the legal proceedings described above. For a more complete description of such legal proceedings and the related settlement agreements, see Note 13 of the Company's annual report on Form 10-K for the year ended March 31, 2008.