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Technology Stocks : Zitel-ZITL What's Happening

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To: Michael who wrote (17876)	4/23/1999 12:29:00 PM
From: Jim Mc Burney	Read Replies (1) of 18263

Big News - Zitel vs VLSI lawsuit worth $15/share! I just found out that ZITEL CORPORATION [ZITL] has filed a huge lawsuit that asks for damages that could be in excess of $300M or about $15 per share against VLSI TECHNOLOGY [VLSI]. When Zitel announces this lawsuit the effect on the Zitel stock price should be huge since ZITL is trading at 1 ¾. I got a copy of the case from the Santa Clara County, CA Clerks office by calling 408-299-2964 and asking for a copy of the complaint in the file of case number CV778678 and charging copy fees to a credit card. The action was filed by one of the best business trial attorneys in the Silicon Valley - Anthony J Treple 408-0275-0501 of Treple and Clark in San Jose. This firm only takes selected cases on a contingent fee basis so they must think it's a good case. The lawsuit lists six causes of action 1) Breach of Contract, 2) Breach of Implied Covenant of Good Faith and Fair Dealing, 3) Fraud, 4) Negligent Misrepresentation, 5) Negligence and 6) Intentional Interference with Prospective Economic Advantage. The lawsuit accuses VLSI of forcing Zitel to withdraw from the storage industry thereby causing Zitel huge damages. This was directly caused by VLSI's failure to deliver custom chips for Zitel's third generation storage product line. The lawsuit alleges that VLSI was the reason Zitel had to sell its storage business resulting in multi-million dollar damages. Allegedly, VLSI's sales and engineering staffs continuously misled the company in their ability to deliver the critical custom chips. There are many references to contracts, quotations, purchase orders, letters and emails supporting Zitel's claim and defining the technical reasons why VLSI never had the ability to do what their sales and engineering people said they could. The lawsuit alleges damages as follows - $8M from a voided development investment in Zitel's third generation storage product line - $300M in lost revenue from this product line [which would have netted about $30M in profit] - lost royalty revenue to Zitel - special damages - punitive and exemplary damages [which can be three times actual damages] - accounting and legal costs of the suit and divestiture of the Intelligent Storage Systems Division. Lost future profit streams from Zitel's future participation in the storage industry, can easily be estimated in the hundreds of millions of dollars in future years.

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