According to the docket dated April 27, 2001, on February 3, 2000, a Notice of Settlement Agreement was filed, and on May 15, 2000, the Court entered the Order and Final Judgment of U.S. District Judge Denis Hurley. The settlement agreement was approved as fair, reasonable, adequate and in the best interests of the Class. The consolidated action and all claims were dismissed with prejudice. Attorneys' fees were awarded in the sum of $1,297,500.00 and disbursements in the amount of $166,044.25., paid out of the settlement amount in accordance with the terms of the settlement agreement.
As reported in the firm's 10-K dated February 28, 2000, the Great Neck complaint was consolidated by order dated June 1, 1998 with four other previously filed complaints: Giskan, Meyer, Mangold and Hagler. Also on June 1, 1998, the court approved the plaintiff's motion for the appointment of lead plaintiff and lead counsel. The firm of Wechsler Harwood Halebian & Feffer is counsel of record. Great Neck (as lead plaintiff) filed a consolidated amended complaint on behalf of lead plaintiff and the class on September 9, 1998 (the "Consolidated Complaint"). The Consolidated Complaint references a revised Class Period (it has been filed on behalf of all persons who purchased or otherwise acquired Corel common shares between January 15, 1997 and January 20, 1998); however, plaintiffs' theories from the individual complaints (as summarized above) remain the same.
On November 9, 1998, the Company filed a Motion to Dismiss the Consolidated
Complaint in its entirety. On December 30, 1998, Plaintiffs filed a related
Motion to strike certain documents referred to in the Company's Motion to
Dismiss. Both motions were fully briefed by February 12, 1999. On June 18, 1999,
the Company filed a second Motion to Dismiss on the grounds of forum non
conveniens. On September 1, 1999, the parties entered into a Memorandum of
Understanding and agreed in principle to settle this litigation. On January 13,
2000, the parties executed a Settlement Agreement, subject to approval of the
Court. On January 14, 2000, the parties requested that the Court (a)
preliminarily approve the proposed settlement; (b) schedule a final settlement
hearing; and, (c) direct that notice of the proposed settlement be given to the
members of the class. Corel's motions to dismiss (as described above) have been
denied as moot, pending approval of the proposed settlement. On February 7,
2000, the Court preliminarily approved the proposed settlement and fixed May 12,
2000 as the date for the settlement hearing.
The original complaint alleges that defendants violated the federal securities laws (Sections 10(b) and 20(a) of the Securities Exchange Act of 1934) by misrepresenting or failing to disclose material information about Corel's financial condition. The complaint alleges that defendants issued false and misleading press releases and financial statements for the first three quarters of fiscal 1997. In particular, plaintiff alleges that defendants (a) failed to disclose that they were overstating Corel's reported profits by, among other things, inflating reported revenue and earnings through improperly recognizing revenue on technology exchange transactions, and (b) overstated revenues and earnings, and understated reserves in connection with sales to distributors who had no obligation to keep or pay for the products.