According to a press release dated October 30, 2006, the action against EIS International Inc. and the Individual Defendants has been certified as a class action and a settlement totaling $3,800,000 in cash against the Defendants has been proposed. A hearing will be held before the Honorable Christopher F. Droney in the Abraham Ribicoff Federal Building and United States Courthouse, 450 Main Street, Hartford, Connecticut 06103, at 4:00 p.m., on December 20, 2006 to determine whether the proposed settlement, plan of allocation and distribution of attorneys' fees and expenses should be approved by the Court as fair, reasonable, and adequate.
Recently, on August 17, 2006, the Court entered the Order signed by U.S. District Judge Christopher F. Droney denying the defendants’ motions for summary judgment. The case is currently in the process of settlement negotiations.
Previously, on November 29, 1999, the plaintiffs filed a Second Consolidated and Amended Class Action Complaint, and on January 19, 2000, the defendants responded by filing a motion to dismiss the Second Consolidated and Amended Class Action Complaint. On July 11, 2000, the Court entered the ruling by U.S. District Judge Christopher F. Droney denying the motion to dismiss. Discovery then commenced. On August 30, 20002, the defendants filed a motion for summary judgment, which was later denied by the judge in a ruling entered on December 19, 2003. On October 25, 2005, defendant EIS International filed a motion for summary judgment, and on November 30, 2005, certain individual defendants also filed a motion for summary judgment. On December 27, 2005, a Stipulation and Agreement of Settlement was filed by the plaintiffs.
As previously disclosed by the Company’s FORM 10-Q for the quarterly period ended September 30, 1999, EIS and certain current and former officers of EIS were named as defendants in five securities lawsuits, each of which was filed during 1997 in the United States District Court for the District of Connecticut, allegedly on behalf of certain of the Company's shareholders. Each of those claims alleged securities fraud based upon certain alleged misleading representations regarding the Company's acquisitions of Surefind and Cybernetics and their operations, each of which seek damages in an unspecified amount. These lawsuits were consolidated, and a consolidated and amended class action complaint, In Re EIS International, Inc. Securities Litigation, was filed in the United States District Court for the District of Connecticut on April 29, 1998. On June 15, 1998, EIS and the other defendants filed a motion to dismiss the case. In a ruling on defendant's Motion to Dismiss (the "Ruling"), dated October 20, 1999, the Court granted the motion to dismiss, holding that the plaintiffs had failed to allege with sufficient particularity the falsity of the individual statements at issue. The Ruling is without prejudice to plaintiff amending their complaint within 30 days provided the pleading is consistent with the Ruling and that plaintiffs allege with specificity the violations of Section 10(b) and Rule 10b-5 allegedly committed by the defendants.
The original complaint in the action alleges that during the Class Period, Defendants caused, allowed and permitted false and misleading representations to be made
and omitted to state material facts regarding the operations and acquisitions
of Surefind Inc., and Cybernetics, Systems International Inc. It is further alleged that Defendants' misrepresentations and omissions violated federal securities laws, Connecticut statutory and common law, caused a steep rise in the price of EIS common stock and allowed certain officers and directors to reap substantial profits by selling company stock at artificially inflated prices in all in violation of their fiduciary duties. Following the announcement of EIS' financial results for the quarter ended December 31, 1996, the price of EIS' common stock dropped significantly causing substantial losses to the plaintiff and the Class.
By the Order and Final Judgment issued by U.S. District Judge Christopher F. Droney on December 27, 2006, the settlement was approved and the complaint was dismissed with prejudice.