Janex Agrees to Settle Lawsuit by Shareholders

Janex International Inc. in Woodland Hills, formerly named With Design in Mind International Inc., said it has agreed to settle a class-action lawsuit accusing the toy company of securities law violations.

The company agreed to pay $75,000, including $15,000 in cash and the remainder in a combination of cash and stock. The settlement also includes 200,000 warrants issued by Janex to acquire its common stock, with each warrant exercisable at 50 cents above the closing price of Janex stock on the trading day preceding the date of the final agreement.

A lawsuit was filed by shareholders against the company in 1993 after the former top executives of With Design were ousted and accused of embezzling company funds. The original shareholder complaint was dismissed by the court earlier this year, but an amended complaint was filed in U. S. District Court in Los Angeles in July.

Last month, Steven Zuloff, former With Design chief executive, and Barry Benjamin, its former chief financial officer, each pleaded guilty in federal court to two counts of tax evasion and one count of securities fraud for siphoning more than $1 million from the company. Both men agreed to repay about $1.17 million--the amount diverted from With Design between 1988 and 1991. They each face up to 20 years in prison and a $1.5-million fine.

While the company denied any liability for the embezzlement, it said the settlement is in the best interests of shareholders and was weighed against the risks of continuing litigation. It said final settlement is subject to court approval.