According to the docket posted, on September 17, 1998, the Court entered the Order by U.S. District Judge John E. Sprizzo preliminarily approving the settlement and setting the Final Approval Hearing for November 13, 1998. The day of the Final Approval Hearing, the Court approved the settlement and dismissed the action with prejudice. The Court further approved the Plan of Allocation, and awarded attorneys' fees in the amount of 30% ($1,387,500) of the Settlement Fund and expenses in the amount of $92,121.15. The Final Judgment and Order of Dismissal was entered on November 24, 1998. The case is closed.
As reported by the Company’s FORM 10-Q for the quarterly period ended July 31, 1998, Versatility reached a settlement with the plaintiffs in all six putative securities class action lawsuits currently pending against the Company on July 9, 1998. The settlement is conditioned upon final Court approval of the settlement agreement. Under the proposed settlement, the class actions would be dismissed and a settlement fund would be created for the members of the proposed class consisting of $3.5 million in cash, which represents proceeds from Versatility's directors' and officers' liability insurance and related recoveries by the Company. In addition, as part of the settlement, an aggregate of 350,000 shares of Versatility Common Stock will be transferred to the Company by certain defendants other than the Company in settlement of the claims against them.Thereafter, the Company will issue 750,000 shares of its Common Stock for the benefit of the proposed plaintiff class, 350,000 shares of which will be in substitution of shares provided by those certain defendants in settlement of the claims against them.
Between March 6, 1998 and April 8, 1998 the Company and certain of its current and former officers and directors, among others, were sued in various putative securities class actions filed in the United States District Court for the Southern District of New York and the United States District for the Eastern District of Virginia, as follows: Thomas Esposito, et al. v. Versatility, Inc., et al. (S.D.N.Y.); Tammy Newsman v. Versatility, Inc., et al. (S.D.N.Y.); Sam Succar v. Versatility, Inc. et al. (S.D.N.Y.); Thomas K. Doyle v. Versatility, Inc. et al. (E.D. VA); and Steven Bowen v. Versatility, Inc. et al. (S.D.N.Y.) (together "the putative class actions"). Collectively, the putative class actions asserted claims under Sections 11, 12(2) and 15 of the Securities Act and Section 10(b) and 20(a) of the Exchange Act for alleged misrepresentations and omissions in connection with the SEC public filings and other public statements made by the Company. Among other allegations, each of the putative class actions alleged that the Company misrepresented its financial results and its accounting practices during the period December 12, 1996 through March 12, 1998, including in the Company's IPO Prospectus. The complaints in certain of the putative class actions also asserted, among other allegations, that the Company and certain of the other defendants made misrepresentations in the IPO Prospectus and thereafter regarding the performance capabilities of the Company's CALLCENTER product.
The original securities class action complaint charges the defendants engaged in a common plan and scheme to defraud by violating the federal securities laws (Sections 11, 12 and 15 of the Exchange Act of 1933 and Sections 10 and 20(a) of the Securities Exchange Act of 1934), by among other things, misrepresenting and/or omitting material information concerning operations, products and performance of the Company, including but not limited to the Company's CallCenter product, thereby artificially inflating the price of Versatility common shares and bringing Versatility common shares to market at artificially inflated prices, all to the damage of Versatility shareholders.