WILMINGTON, Del., June 6, 2014 /PRNewswire-USNewswire/ -- All current stockholders of Fragrancenet.com, Inc. (the "Company") at the close of business on June 4, 2014 are hereby notified that Plaintiffs and Defendants in the above-captioned derivative lawsuit (the "Action") have entered into a proposed settlement of the Action (the "Settlement").
PLEASE BE FURTHER ADVISED that pursuant to an Order of the Court of Chancery of the State of Delaware (the "Court of Chancery"), dated June 4, 2014, a hearing (the "Settlement Hearing") will be held on July 28, 2014, at 3:30 p.m., before The Honorable J. Travis Laster, in the Court of Chancery, New Castle County Courthouse, 500 North King Street, Wilmington, Delaware 19801. The purposes of the Settlement Hearing are (i) to determine whether the terms and conditions of the proposed Settlement provided for in the Stipulation of Settlement executed on May 23, 2014 (the "Stipulation") are fair, reasonable, adequate, and in the best interests of FGNT and its stockholders; (ii) to determine whether Judgment should be entered dismissing with prejudice the claims asserted in the Derivative Action by Plaintiffs on behalf of the Company, upon the conditions set forth in the Stipulation and described in this Notice; (iii) to hear and determine any objections to the Settlement; (iv) to determine whether Plaintiffs and their Counsel have adequately represented the interests of the Company and its stockholders; and (v) to consider other such matters as the Court deems appropriate.
The Action and the Settlement address claims alleging that certain directors of the Company breached their fiduciary duties, wasted the Company's assets and unjustly enriched themselves through certain transactions described in the Amended Verified Derivative Complaint filed on April 5, 2012, which include claims relating to the Defendants' employment and severance agreements and certain transactions between the Company and certain entities controlled by the Defendants, among other claims. Defendants believe that they have substantial defenses to the claims against them, and each of the Defendants denies and continues to deny all allegations of wrongdoing and denies liability on any of the claims asserted in the Action.
Under the Settlement, the parties have agreed to stay the Action and toll the running of limitation periods as to potential additional claims, and the Company and the individual Defendants have agreed to retain an investment bank to market the Company for potential sale, and to undertake good faith efforts to effect a sale of the Company in which all stockholders will receive liquidity. The finality of the proposed settlement is expressly conditioned upon a sale of the Company. In the event a sale of the Company closes, the claims against the Defendants will be released, and the Defendants will pay the Company $1,189,109.21 and make certain other financial and other concessions to the Company, described in the Stipulation. The parties have further agreed to a structure of equity options payable to the individual Defendants in the event of a sale of the Company that meets certain conditions described in the Stipulation. Plaintiffs' counsel are not making an application for an award of fees and expenses at this time, but have expressly reserved the right to do so at a later time, as described in the Stipulation. If the settlement becomes final, the Company will pay or cause to be paid the award of attorneys' fees and expenses, if such an award is entered by the Court.
ANY STOCKHOLDER OF THE COMPANY WHO WISHES TO CONTEST THE SETTLEMENT MAY DO SO BY FOLLOWING THE PROCEDURE SET FORTH IN PARAGRAPH SECTION 67 OF THE NOTICE OF PROPOSED SETTLEMENT OF DERIVATIVE CLAIMS, SETTLEMENT HEARING, AND RIGHT TO APPEAR (the "Notice"). The Notice, the Stipulation, and the Court of Chancery's Scheduling Order, are available on the Company's website at http://www.fragrancenet.com/f/net/investorrelations.html.
PLEASE DO NOT CONTACT THE COURT OR THE REGISTER IN CHANCERY.
BY ORDER OF THE COURT OF CHANCERY
OF THE STATE OF DELAWARE
SOURCE Fragrancenet.com, Inc.
