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Novatel Settles Class-Action Lawsuit

Novatel Wireless Inc. settled a securities class action lawsuit without admitting liability June 23, according to a securities filing, following a preliminary agreement to settle struck on Dec. 6.

The settlement agreement, entered June 23 in U.S. District Court in San Diego, calls for the company to pay $6 million in cash, issue $5 million in common stock and issue a $5 million secured promissory note to resolve the litigation. Novatel (Nasdaq: NVTL) said that its insurers will pay a portion of the cash settlement.

The company said in a July 2 securities filing that it has asked the court to make the settlement effective June 20, which will save the company $725,000.

Shareholders operating under the name Novatel Shareholders for Change complained of Novatel’s financial performance earlier this year, triggering changes to the board and to the executive suite. One of the shareholders’ complaints was the fact that Novatel settled the class action lawsuit. The $16 million settlement was “absolutely unconscionable,” said the letter from Novatel Shareholders for Change.

Shares of Novatel, a maker of data modems, closed July 2 at $1.95, unchanged from their closing price July 1.

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