Facts

On May 26, 2016, Veeco Instruments, Inc., a company that produces high-tech electronic devices, merged with Ultratech, Inc. On December 21, 2018, Vladimir Gusinsky Revocable Trust, brought a shareholder derivative suit on behalf of Veeco Instruments, Inc. against John R. Peeler, John P. Kiernan, Shubham Maheshwari, Richard A. D'Amore, Peter J. Simone, Gordon Hunter, Keith D. Jackson, Thomas St. Dennis, and Kathleen A. Bayless for breach of fiduciary duty, unjust enrichment, and waste of corporate assets.

PLAINTIFF'S CONTENTIONS: Plaintiff alleged that defendants made false and misleading public statements in the company's registration statement and prospectus issued in connection with the 2017 merger. In particular, plaintiff contended that the individual defendants knew that the company's critical business in China faced substantial threats and expected significant margin pressure due to rapidly emerging Chinese competitors, including Advance Micro-Fabrication Equipment, Inc., which was backed and owned by the Chinese government and sells similar technology, and that Veeco had filed a lawsuit against Advance Micro-Fabrication Equipment, Inc.'s supplier, alleging it had stolen Veeco's intellectual property. Plaintiff argued that despite this knowledge, defendants represented that no third party had infringed Veeco's intellectual property and there were no legal disputes related to such claims. Finally, plaintiff alleged that the individual defendants failed to take any steps to correct the misleading statements before the merger closed and that once these facts were revealed, Veeco's stock price declined substantially.

DEFENDANTS' CONTENTIONS: Defendants denied all contentions, and the individual defendants denied and continue to deny all charges of wrongdoing or liability against them arising out of any of the conduct, statements, acts, or omissions alleged, or that could have been alleged, in the matter. The individual defendants denied, and continue to deny, among other things, that they breached their fiduciary duties or any other duty owed to Veeco or its stockholders; committed or engaged in any violation of law or wrongdoing whatsoever; or that Plaintiff, Veeco or its stockholders suffered any damage or were harmed as a result of any act, omission, or conduct by the individual defendants alleged in the matter, or otherwise. The individual defendants further asserted, and continue to assert, that at all relevant times, they acted in good faith and in a manner that they reasonably believed to be in the best interests of Veeco and its stockholders..

Result

The court dismissed Plaintiff's complaint twice, the second time with prejudice, for failure to adequately plead demand futility. Plaintiff filed a notice of appeal of the Superior Court's second dismissal order. The parties subsequently agreed to settle the action. As part of the settlement, Veeco agreed to make certain revisions to its internal Disclosure Committee Charter and its director education program. There is no monetary component of the settlement except for a payment of $300,000 for plaintiff's attorneys' fees and, costs.