According to the docket, on May 6, 2002, a hearing was held before U.S. District Judge John Antoon II to consider the motions to approve the proposed settlement and the application for attorney fees and reimbursement of expenses. On May 8, 2002, the Court entered the Order and Final Judgment approving both the settlement and attorney fees and reimbursement of expenses. The case is closed.
As reported by the Company’s FORM 10-Q for the quarterly period ended September 30, 2000, on November 23, 1999, a lawsuit was filed in the District Court for the Middle District of Florida as a purported class action initiated by George Taylor, a former Phoenix employee. Initially, Phoenix and the Company's chief executive officer were named as defendants. The lawsuit alleges, among other things, that Phoenix and its chief executive officer improperly recognized revenues, overstated revenues and failed to disclose that the Company's revenues were allegedly in decline, all of which allegedly caused the Company's stock price to be higher than it otherwise would have been during the class period. The lawsuit alleges that these purported actions violate Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On May 5, 2000, the plaintiffs filed an Amended Complaint which, among other things, (1) added four additional investors as named plaintiffs and proposed class representatives; (2) expanded the purported class period to the period from May 5, 1997 to April 15, 1999; and (3) added Phoenix's president as an additional named defendant. Phoenix and the other two defendants filed Motions to Dismiss, which were denied by the Court without opinion in August 2000. The parties are beginning to conduct discovery. The Company’s insurance carriers have denied coverage for the claims in this lawsuit. On October 24, 2000, the Company entered into an agreement in principle to settle the consolidated securities class action litigation with a settlement class comprising shareholders who acquired Phoenix common stock during the period between May 5, 1997 and August 22, 2000. The settlement of this action, which was filed on November 23, 1999, provides that the Company will pay $4,225,000 in cash to the putative shareholder class. The settlement is subject to certain customary conditions, notice to the proposed settlement class and preliminary and final court approval.
The original Class Action Complaint seeks damages for all persons who purchased Phoenix common stock between May 4, 1998 and April 15, 1999. Milberg attorney Vianale stated that the "price of Phoenix's stock was artificially inflated during the period, due to the Company's accounting machinations." Vianale added that when the truth was revealed about the Company on April 15, 1999, the price of Phoenix's stock dropped drastically.