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Item 3. Legal Proceedings

2024-03-28 compared with 2023-03-24 · 2 added, 96 removed, 4 unchanged (96% of the section changed)

Legal Proceedings

On June 10, 2021, we received a letter from the SEC notifying us of an investigation and document subpoena.

The subpoena sought documents regarding projected financial information in CLA’s Form S-4 registration statement filed on December 22, 2020.

To date, the Company has complied with all SEC requests and produced all requested documents;

however, the SEC may request additional documents or information.

On June 14, 2022, Velodyne filed a lawsuit against the Company relating to two patents and requested an International Trade Commission proceeding with respect to the same two patents.

On July 8, 2022, the Company filed a complaint against Velodyne, alleging multiple claims including intellectual property misappropriation and false advertising.

These matters were dismissed during the three months ended December 31, 2022.

Velodyne Legacy Proceedings

Following the Velodyne Merger, the Company is now indirectly a party to certain legal proceedings to which Velodyne had previously been named as a party.

On December 1, 2022, December 20, 2022, December 29, 2022, and January 9, 2023, purported stockholders of Velodyne filed the following lawsuits against Velodyne and certain of its directors and officers in the Southern District of New York for violations of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 and U.S.

Securities and Exchange Commission (“SEC”) Rule 14a-9:

Velodyne, et.

al., Carlisle v.

Velodyne, et.

al., Wheeler v.

al., and Cristino v.

Velodyne, et.

The complaints allege that Velodyne’s disclosures in connection with the merger with Ouster were materially incomplete and misleading.

The plaintiff in O’Dell v.

voluntarily dismissed his complaint on January 17, 2023 and the plaintiff in Carlisle v.

Velodyne, et.

voluntarily dismissed his complaint on February 21, 2023.

Velodyne also received eleven demand letters from stockholders making similar allegations regarding Velodyne’s disclosures relating to the Velodyne Merger.

The Company does not believe the allegations in the complaints and demand letters are meritorious, and intends to defend against them vigorously.

In September 2016, Quanergy Systems, Inc.

(“Quanergy”) pre-emptively filed a complaint against Velodyne seeking a declaratory judgment of non-infringement on one of Velodyne's patents.

Velodyne filed a counterclaim alleging patent infringement against Quanergy.

On February 4, 2022, Velodyne received a ruling in its favor against Quanergy.

On November 23, 2022, Quanergy and Velodyne entered into a settlement agreement (the “Settlement Agreement”) whereby Quanergy agreed to:

(i) pay Velodyne $2.75 million pursuant to a two (2) payment schedule;

(ii) assign five patents to Velodyne;

and (iii) grant Velodyne a non-exclusive, irrevocable, worldwide, royalty-free license under certain licensed patents.

Quanergy satisfied the first payment of $0.5 million due and owing to Velodyne under the Settlement Agreement on December 1, 2022.

However, on December 13, 2022, Quanergy filed for protection under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.

As a result of the bankruptcy, Quanergy stopped making any further payments under the Settlement Agreement to Velodyne and, as of the date of the bankruptcy, filing Quanergy owe, and continues to owe, $2.25 million to Velodyne under the Settlement Agreement.

On March 1, 2023, Velodyne filed a proof of claim in the Quanergy bankruptcy case.

The proof of claim asserts a claim against Quanergy in the minimum amount of $2.25 million, plus costs, interest and any calculable royalty payments.

The proof of claim also reserves all of Velodyne’s rights and claims against Quanergy, including all of Velodyne’s rights as a licensee of certain of Quanergy’s licensed patents.

On March 6, 2023 Quanergy rejected the Settlement Agreement with Velodyne pursuant to Section 365 of the United States Bankruptcy Code.

While Quanergy rejected the Settlement Agreement, the Order Authorizing the Rejection of Executory Contracts entered by the Delaware Bankruptcy Court reserves all rights, claims, causes of action, or rights of election Velodyne has or holds, as a licensee of Quanergy’s licensed patents pursuant to Sections 365(n)(1)(A)-(B), 365(n)(2)(A)-(B), 365(n)(3)(A)-(B), and 365(n)(4)(A)-(B) of the United States Bankruptcy Code.

Velodyne intends to continue to utilize and maintain its license rights to the Quanergy licensed patents.

The allowance and ultimate payment of Velodyne’s proof of claim against Quanergy remains uncertain, as the Quanergy bankruptcy is ongoing and it is not known what assets, if any, Quanergy will have to pay allowed claims in the bankruptcy case.

On January 18, 2022, David and Marta Hall filed a lawsuit in the Superior Court of California, County of Alameda, against current and former officers and directors of Velodyne, as well as Jeff Vetter, Velodyne’s outside counsel.

The Halls are seeking to recover damages for financial and other injuries they allegedly sustained as a result of the merger between Graf Industrial Corp.

(“Graf”) and Velodyne.

On May 3, 2022, certain defendants filed motions to compel arbitration and other defendants filed motions to quash service of process for lack of personal jurisdiction.

The court conducted a hearing on the motions on July 20, 2022.

On August 30, 2022, the court granted the motion to quash service with respect the out of state defendants.

On October 3, 2022, the court granted the motion to compel Mr.

Hall to arbitrate his claims, and stayed proceedings on Ms.

Hall’s claims pending arbitration of Mr.

Hall’s claims.

On October 20, 2022, David and Marta

Table of C ontents

voluntarily dismissed the action without prejudice.

On January 3, 2023, the Halls filed an arbitration demand with the same allegations as the prior lawsuit.

On March 3, 2021, a purported shareholder of Velodyne filed a complaint for a putative class action against Velodyne, Anand Gopalan and Andrew Hamer in the United States District Court, Northern District of California, entitled Moradpour v.

Velodyne Lidar, Inc., et al., No.

3:21-cv-01486-SI.

The complaint alleged purported violations of the federal securities laws and that, among other things, the defendants made materially false and/or misleading statements and failed to disclose material facts about Velodyne’s business, operations and prospects, including with respect to David Hall’s role with Velodyne and removal as Chairman of Velodyne’s Board of Directors.

The complaint alleged that purported class members have suffered losses and sought, among other things, an award of compensatory damages on behalf of a putative class of persons who purchased or otherwise acquired Velodyne’s securities between November 9, 2020 and February 19, 2021.

On March 12, 2021, a putative class action entitled Reese v.

Velodyne Lidar, Inc., et al., No.

3:21-cv-01736-VC, was filed against Velodyne, Mr.

Gopalan and Mr.

Hamer in the United States District Court for the Northern District of California, based on allegations similar to those in the earlier class action and seeking recovery on behalf of the same putative class.

On March 19, 2021, another putative class action entitled Nick v.

Velodyne Lidar, Inc., et al., No.

4:21-cv-01950-JST, was filed in the United States District Court for the Northern District of California, against Velodyne, Mr.

Hamer, two current or former directors, and three other entities.

The complaint was based on allegations similar to those in the earlier class actions and sought, among other things, an award of compensatory damages on behalf of a putative class of persons who purchased or otherwise acquired Velodyne’s securities between July 2, 2020 and March 17, 2021.

The class actions have been consolidated, lead plaintiffs have been appointed and an amended consolidated complaint was filed on September 1, 2021, based on allegations similar to those in the earlier class actions.

Velodyne filed a motion to dismiss the amended and consolidated complaint on November 1, 2021.

The plaintiffs filed a first amended complaint on February 11, 2022.

Velodyne filed a motion to dismiss on March 4, 2022.

On July 1, 2022, the court denied the motion to dismiss as it relates to the claims related to David Hall’s role with Velodyne, but granted the motion to dismiss as to all other claims.

The Company intends to defend the actions vigorously.

On March 12, 2021, a putative shareholder derivative lawsuit entitled D’Arcy v.

Gopalan, et al., No.

1:21-cv-00369-MN, was filed in the United States District Court for the District of Delaware against current and former directors and/or officers Anand Gopalan, Andrew Hamer, David S.

Hall, Marta Thoma Hall, Joseph B.

Culkin, Michael E.

Dee, James A.

Graf, Barbara Samardzich, and Christopher A.

Thomas, and names Velodyne as a nominal defendant.

The complaint asserted claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets against all of the individual defendants, and asserted a contribution claim under the federal securities laws against Mr.

Gopalan and Mr.

On March 16, 2021, a second shareholder derivative lawsuit entitled Kondner, et al.

Culkin, et al., No.

1:21-cv-00391-MN, was filed in the United States District Court for the District of Delaware against most of the same defendants named in the earlier derivative complaint, and asserted claims against the individual defendants for alleged breaches of fiduciary duty and waste of corporate assets.

Both derivative actions are based on allegations similar to those in the class actions discussed above, and have now been consolidated.

On January 3, 2022, the plaintiffs filed an amended complaint.

The litigation is still ongoing.

From time to time, we have been and may again become involved in legal proceedings arising in the ordinary course of our business.

Other than the foregoing, we are not presently a party to any litigation or legal proceedings that we believe to be material and we are not aware of any pending or threatened litigation against us that we believe could have a material adverse effect on our business, operating results, financial condition or cash flows.

Commitments and Contingencies included in the notes to our audited financial statements included elsewhere in the Annual Report on Form 10-K.

We are, from time to time, party to various claims and legal proceedings arising in the ordinary course of our business.

Commitments and Contingencies included in the notes to our audited financial statements included elsewhere in the Annual Report on Form 10-K for a discussion of our material legal proceedings.

Mine Safety Disclosures

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings