Plaintiffs and Lead Counsel believe that the claims asserted against Defendants have merit. They recognize, however, the expense and length of continued proceedings necessary to pursue their claims against the remaining Defendants through trial and appeals, as well as the very substantial risks they would face in establishing liability and damages. For example, Plaintiffs and Lead Counsel recognized that Defendants had numerous avenues of attack that could preclude a recovery as to Defendants’ allegedly false statements. Defendants have asserted that their statements were not materially false and misleading, and that even if they were, they were not made with the requisite state of mind to support the securities fraud claims alleged. Even if the hurdles to establishing liability were overcome, the amount of damages that could be attributed to the allegedly false statements would be contested. Plaintiffs would have to prevail at several stages – motions for summary judgment, trial, and (if they prevailed on those) the appeals that would be likely to follow. Thus, there were very significant risks attendant to the continued prosecution of the Action. Furthermore, the limited ability of these Defendants or their insurers to pay a judgment on these claims greatly reduced the likelihood of any additional recovery.
In light of these risks, the amount of the Settlement and the certainty and immediacy of recovery by settlement to the Settlement Class, Plaintiffs and Lead Counsel believe that the proposed Settlement is fair, reasonable and adequate, and in the best interests of the Settlement Class. Plaintiffs and Lead Counsel believe that the Settlement provides a significant benefit to the Settlement Class, namely $6,500,000 in cash (less the various deductions described in the Notice), as compared to the high risk that the claims in the Action would produce a smaller or no recovery after summary judgment, trial and appeals, possibly years in the future.
Defendants have denied the claims asserted against them in the Action and deny having engaged in any wrongdoing or violation of law. Defendants have agreed to the Settlement solely to eliminate the burden and expense of continued litigation. Accordingly, the Settlement is not and may not be construed as or be deemed to be evidence or an admission of any wrongdoing by Defendants.