According to the docket, on December 7, 2004, the Court entered the Decision and Order by U.S. District Judge Charles J. Siragusa granting in part and denying in part the motion for settlement. The Court gives final certification to this action as a class action, and approves the settlement of the case for the sum of $12,500,000.00. The Court further directs that payments be made to lead counsel as follows: 1) an award of $3,125,000.00 for attorneys’ fees; 2) an award of $197,331.65 for expenses; 3) an award of $250.00 to Kenneth Slater; 4) an award of $550.00 to Agnes Tang; and 5) an award of $832.63 to Joseph Hannon. On December 20, 2004, the Court entered the Order and Final Judgment.
As reported by the Company’s FORM 10-Q For the Quarter Ended September 25, 2004, all direct claims against the Company’s CFO have been dismissed by the Court. Additionally, certain claims against the Company and certain direct claims against the Company’s former Chairman and CEO and the Company’s former President have been dismissed. In the plaintiffs' remaining direct and secondary claims it is alleged that the value of the Company's stock was inflated artificially by alleged false and misleading statements about expected financial results. The plaintiffs seek to represent a class of shareholders who purchased company Common stock between January 27, 2000 and August 24, 2000. On October 15, 2001, the April 13, 2001 matter was consolidated with other matters raising similar claims. On August 2, 2004, the parties executed a settlement agreement, which is subject to the Court's approval, to settle this matter for $12.5 million in cash, all of which will be paid by the Company's insurance carrier. The settlement agreement is subject to final review at a fairness hearing, which will be held on or about November 5, 2004.
The original class action lawsuit charges defendants with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. Specifically, the complaint alleges that defendants violated the federal securities laws by issuing false and misleading statements concerning the company’s business prospects, revenue and net income. When the company finally revealed an accurate description of the company’s true financial condition, the stock price dropped precipitously, thereby resulting in substantial damages to shareholders.