According to the docket dated January 3, 2002, on July 13, 2000, the Court entered the Judge’s decision granting the motion for final approval of the proposed class action settlement and request for attorney’s fees and expenses. In addition, the Court further entered the Final Judgment and Order of Dismissal by U.S. District Judge Colleen McMahon dismissing the action. The case was closed. Earlier, on March 22, 2000, the Court entered the Order granting the motion to certify class action, preliminarily approving the proposed settlement, approving the form and manner of notice to the members, and providing for a notice of hearing to determine if the settlement should be approved.
In a press release dated February 2, 2000, Candie's, Inc. announced that it has reached a settlement agreement regarding the class action lawsuit filed against the Company and certain of its officers, directors, and former employees. The structure of the settlement includes $4 million in cash and $6 million in common and convertible preferred stock. The Company will apply insurance proceeds towards a part of the cash portion of the settlement. The common stock, with the value of $2 million, will be issued in May 2000. The $4 million of the preferred stock will convert into common shares based on the price of the Company's stock on the first and second anniversary dates of the court approval of the settlement. The settlement agreement is subject to Court approval. The court hearing on approval of the settlement is expected to be conducted in or about May 2000.
The Complaint charges Candie's and certain of its officers and directors with violations of federal securities laws by materially misrepresenting Candie's financial results to the public. The misrepresentations caused Candie's stock price to be artificially inflated. The complaint further alleges that on or around May 12, 1999, Candie's announced that it may restate earnings for fiscal 1998 and the first three quarters of 1999, due to the material overstatement of revenue and earnings. Further, the financial statements could no longer be relied upon, and the Company would not report fiscal 1999 results within the time frame allotted by a previously granted file extension. Following the Candie's disclosure after the close of the market on May 12, 1999, Nasdaq halted trading in Candie's common stock on May 13, 1999.