According to the docket, on November 15, 1999, the case was called for a hearing before Judge Reena Raggi on the fairness of the settlement, pursuant to Rule 23(e) of the FRCP. The Court found the settlement to be fair, and awarded attorneys' fees and expenses.

By the Order and Final Judgment entered on December 2, 1999, the settled Class Claims asserted in the Action as against the Defendants only, were dismissed with prejudice, on the merits, without costs, and with all rights of appeal waived. The Plaintiffs’ Counsel was awarded 25% of the Gross Settlement Fund, or $618,750.00, as their fee and $128,766.85 in reimbursement of reasonable expenses.

According to the Company’s Form 10-K for the fiscal year ended April 30, 1997, the Company and Messrs. Nicol, Jurewicz and Mieszala have been named as defendants in an alleged class action lawsuit filed on April 3, 1997 in the United States District Court for the Eastern District of New York entitled Nicholas Volonnino et al. v. Health Management, Inc., W. James Nicol, Paul S. Jurewicz and James Mieszala, 97 Civ. 1646. This action alleges claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder arising out of misrepresentations and omissions by the Company in connection with certain of its securities filings and press releases. The action purports to represent a class of persons who purchased shares between September 15, 1996 and March 17, 1997, the date the Company announced that it would have to restate certain of its financial statements and that it was renegotiating its deal with Transworld. The action seeks unspecified compensatory damages. The Company has not responded to the complaint and plaintiff has indicated that it will file an amended complaint by September 2, 1997.