CNET » Topics » Melzer v. Bonnie, et al., and Finn v. Bonnie et al.

This excerpt taken from the CNET DEF 14A filed Apr 30, 2007.

Melzer v. Bonnie, et al., and Finn v. Bonnie et al.

The purported stockholder derivative complaints, which were consolidated, were filed in the United States District Court for the Northern District of California in 2006 by parties identifying themselves as stockholders of the Company purporting to act on behalf of the Company against our directors and certain of our present and former officers. We are also named as “nominal defendants.” The suits alleged violations of federal securities law arising from stock options granted between 1997 and 2003. The amended complaint seeks unspecific monetary damages, disgorgement, an accounting and a constructive trust and other relief against the defendants on behalf of the Company, including an award of attorneys’ fees and costs. The amended complaint also seeks an order directing us to undertake certain corporate governance procedures.

On April 11, 2007, the District Court granted our motion to dismiss for failure to present a litigation demand, but ordered further briefing from the parties regarding possible discovery. While the District Court indicated that it is inclined to deny leave for plaintiffs to further amend the derivative complaint, the Court reserved its final ruling on that issue. On April 25, 2007, plaintiffs filed a motion for leave to file motion for reconsideration.

For more information regarding these stockholder derivative suits, please see Part I, Item 3, “Legal Proceedings” of our Annual Report on Form 10-K for the year ended December 31, 2006.



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