According to the docket, on May 24, 2002, a hearing was held before U.S. District Judge Edward F. Harrington to determine whether a proposed settlement as set forth in the Stipulation and Agreement of Settlement with Defendant PricewaterhouseCoopers LLP dated as of February 28, 2002, is fair, reasonable and adequate and to consider the proposed Plan of Allocation for the Settlement proceeds and the application of Plaintiffs' Counsel for attorneys' fees and reimbursement of expenses. By the Notice of Proposed Settlement, the settlement consists of $1,000,000 in cash, plus interest. At the hearing, the Court approved the settlement and awarded Plaintiff's counsel 33 1/3% of the gross settlement in fees and $24,885.75 in reimbursement of expenses. The complaint as against PWC was dismissed with prejudice and without costs. On May 28, 2002, the Court entered the Order and Final Judgment with respect to defendant PricewaterhouseCoopers LLP.
Earlier, on April 27, 2000, the Court entered the Final Judgment and Order of Dismissal as to SystemSoft and all the defendants other than PwC. The Court approved the settlement and the plan of allocation, and awarded attorneys’ fees in the amount of 30% of both the cash contributed to the settlement fund and potential bankruptcy value. The Court further awarded expenses in the amount of $172,135.09 to all counsel for the class. The action was not dismissed as against the non-settling defendant, PricewaterhouseCoopers LLP.
According to the Notice of Continuation of Settlement Hearing, and Diminution of Settlement Proceeds By Reason of Systemsoft's Bankruptcy, Class Members were previously notified of the proposed partial settlement of this action with certain defendants, including SystemSoft Corporation, for $2,900,000 in cash plus 5,200,000 shares of SystemSoft common stock. A Hearing on the Settlement was scheduled for March 30, 1999. On or about March 24, 1999 SystemSoft Corporation filed a petition in Bankruptcy Court under Chapter 11 of the Bankruptcy Code. The parties to the Stipulation then entered into a Second Amendment To Stipulation Of Compromise, Settlement And Dismissal pursuant to which the Settlement could go forward, subject to the Bankruptcy Court's approval of SystemSoft's participation in that agreement.
As a result of the compromise entered in the Bankruptcy Court, and after the amendments, the Plaintiff Class herein will receive $125,000 less cash than was anticipated in the Notice. The Plaintiff Class will also receive whatever value, if any, they would have received had they been shareholders of 5,200,000 shares of SystemSoft common stock prior to the filing of the Chapter 11 petition. By Order dated November 30, 1999 the Bankruptcy Court approved the compromise and gave SystemSoft permission to proceed with the modified Settlement.
In view of the bankruptcy filing, the District Court adjourned without date the original March 30, 1999 date for the Settlement Hearing. The Court has now set April 24, 2000 at 2:00 p.m. as the rescheduled date for the Final Approval Hearing to consider whether to approve the Settlement Stipulation, as amended, and to consider Plaintiffs' counsel's application for attorneys' fees.
On September 4, 1998, a First Amended Consolidated Class Action Complaint was filed with respect to the nine consolidated actions on behalf of purchasers of SystemSoft stock during the period from January 25, 1996 through February 5,
1998, inclusive (the “Consolidated Complaint”) alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
The original complaint charges SystemSoft, certain of its officers, directors and its outside auditor, Coopers & Lybrand, LLP, with violations of the Securities Exchange Act of 1934. The complaint alleges, among other things, that in January 1996, SystemSoft announced the development of a new "call-avoidance" software product called SystemWizard(TM), which supposedly had the ability to analyze and determine the cause of a PC malfunction and advise the user how to remedy it, thus allowing the user to avoid the frustration and expense of calls to the PC manufacturers' technical service centers. As SystemSoft reported
sequential revenues and earnings per share growth throughout the Class Period, it attributed its "record growth" to "customer acceptance of our products" and the "continued acceptance of SystemSoft's technologies by a growing customer base."