According to a press release dated July 16, 2007, Copernic Inc., (the "Company"), formerly Mamma.com Inc., previously announced on March 8, 2007, that an order by the U.S. District Court for the Southern District of New York in the consolidated securities class action was filed preliminarily approving the proposed settlement of the class action. The court has approved the settlement following a hearing on July 9, 2007, at which time the Court heard from all parties before concluding that the settlement is fair and all procedural requisites were met. As a result, all claims asserted in the class actions against the Company and the individual officer defendants have been resolved, with the exception of three shareholders who have indicated they will exclude themselves from the settlement so as to preserve rights to maintain separate actions should they elect to do so. The amount paid into escrow, along with any interest earned, will be distributed as provided under the settlement to pay class members, plaintiffs' attorney fee, and the costs of claims administration.
In a press release dated March 8, 2007, on March 1, 2007, an order by the court in the consolidated securities class action was filed preliminarily approving the proposed settlement of the class action. Among other things, the order directs that on or before Friday, March 9, we "shall pay and/or cause to be paid $3,150,000 (the "Cash Settlement Amount") into escrow for the benefit of Plaintiffs and the Class." Under the settlement agreement, we are responsible for paying $650,000 and our insurance carrier for paying the balance of the Cash Settlement Amount.
In a press release dated November 9, 2006, Mamma.com Inc.(NASDAQ: MAMA), (the "Company"), announced that it has entered into an agreement to settle the class action lawsuit currently pending in the U.S. District Court for the Southern District of New York. The settlement, which must be approved by the Court, would resolve all claims asserted against the Company and the individual officer defendants. Under the terms of the settlement agreement, plaintiffs would receive US$3.15 million, $2.5 million of which would be paid by the Company's insurance carrier and $650,000 from the Company. The settlement contains no admission of wrongdoing by the Company or the officers of the Company who are individual defendants. The Company has always maintained and continues to believe that neither the Company nor any of the individual officers named committed any wrongdoing. However, given the potential cost and uncertainty of continued litigation, the Company believes that the settlement is in the Company's best interests.
As previously reported by the Company’s FORM 20-F For The Fiscal Year Ended December 31, 2005, on February 22, 2005, the first of several purported securities class action lawsuits was filed in the United States District Court, Southern District of New York against the Company, and certain of the Company’s current officers and directors. The plaintiffs allege, among other things, violations of the Securities Exchange Act of 1934 for purportedly failing to disclose and misrepresenting certain allegedly material facts relative to the market for and trading in the Company’s stock, and seek unspecified damages. The purported class actions appear to be based on unsubstantiated rumours and newspaper reports. All of these lawsuits have been consolidated. On March 28, 2006, the court in the consolidated case denied a motion the Company filed for dismissal of the consolidated complaint.
The original class action lawsuit was filed on behalf of all purchasers of the common stock of Mamma.com Inc. The complaint charges Mamma.com and certain of it officers with violations of the Securities Exchange Act of 1934. Mamma.com provides information retrieval on the Internet through its metasearch engine, http://www.mamma.com. The Company derives its revenues from two sources, including search services and banner advertising services, with customers located in the United States and Canada.
Specifically, the complaint alleges the defendants failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that Irving Kott, a legendary Canadian stock promoter with a long history of stock manipulation, had a significant undisclosed interest in the Company; (2) that Kott and his associates were manipulating the Company's stock price by engaging in a classic "pump and dump" scheme to defraud; and (3) that the Company itself was manipulating its financial results in order to maintain its artificially inflated share price so that the "pump and dump" scheme would endure. Additionally, the complaint alleges that during the Class Period, and with its stock trading at artificially inflated levels, the Company was able to acquire Digitalarrow LLC and High Performance Broadcasting Inc. (collectively "Digital Arrow") for $1,050,000 and the issuance of 90,000 common shares of Mamma.com, and was able to enter into a letter of intent ("LOI") whereby Mamma.com would acquire all of the shares of Copernic Technologies for a combination of cash and shares of Mamma.com. Moreover, the Company was able to raise $16.6 million through a private placement while its shares traded at artificially inflated levels.
The complaint further alleges on or around February 16, 2005, shares of Mamma.com were halted. Shortly thereafter, Mamma.com announced that it had been unable to reach an agreement on the terms of the audit engagement with PricewaterhouseCoopers LLP ("PWC") for the year ended December 31, 2004. Accordingly, PWC would not act as the Company's independent auditor for the audit of the Company's financial statements for the year ended December 31, 2004. News of this sent the stock into a downward spiral. As a result, shares of Mamma.com fell $2.02 per share, or 32.27% to close at $4.25 per share.