Support.com 2007 Annual Report Download - page 73

SUPPORTSOFT, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 4. Commitments and Contingencies (Continued)
could arise from similar assessments in accordance with Statement of Financial Accounting Standard No. 5, "Accounting for Contingencies." We consider such
factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss.
Legal contingencies
White v Basu et al. was dismissed with prejudice in February 2008. This matter was a derivative shareholder complaint filed in the Superior Court of the
State of California for the County of San Mateo. This complaint was filed on behalf of the Company as a nominal plaintiff against certain of our directors and
former directors and alleged that the director defendants harmed the Company by making or permitting the Company to make false and misleading statements
between January 20, 2004 and October 1, 2004. On October 4, 2006, the court denied the defendants' demurrer to the plaintiffs' First Amended Complaint.
Plaintiffs filed a Second Amended Complaint on October 27, 2006, which the defendants answered on November 6, 2006. In September, 2007, the parties
reached an agreement in principle to settle the lawsuit. The court approved the settlement and dismissed the lawsuit with prejudice on February 15, 2008. The
settlement was fully funded by insurance.
In November 2001, a class action lawsuit was filed against us, two of our former officers, and certain underwriters in the United States District Court for the
Southern District of New York. The lawsuit alleged that our registration statement and prospectus dated July 18, 2000 for the issuance and initial public offering
of 4,250,000 shares of our common stock contained material misrepresentations and/or omissions related to alleged inflated commissions received by the
underwriters of the offering. The lawsuit seeks unspecified damages as well as interest, fees and costs. Similar complaints have been filed against 55 underwriters
and more than 300 other companies and other individual officers and directors of those companies. All of the complaints against the underwriters, issuers and
individuals have been consolidated for pre-trial purposes before U.S. District Court Judge Scheindlin of the Southern District of New York. On June 26, 2003,
the plaintiffs announced that a proposed settlement between the issuer defendants and their directors and officers had been reached. Under the proposed
settlement, which is subject to court approval, our insurance carrier would be responsible for any payments other than attorneys' fees prior to June 1, 2003. A
final settlement approval hearing on the proposed issuer settlement was held on April 24, 2006. The district court took the matter under submission. Meanwhile
the consolidated case against the underwriters has proceeded. On October 13, 2004, the district court certified a class in the underwriters' proceeding. On
December 5, 2006, however, the Second Circuit reversed, holding that the proposed class could not be certified, and denied a petition for rehearing on April 6,
2007. On June 25, 2007, the district court entered a stipulated order terminating the proposed issuer settlement. Plaintiffs are proceeding with discovery as to
underwriters and issuers, although principally with respect to focus or test cases that do not name the Company as a defendant. The court set a briefing schedule
for a new class certification motion, which is expected to be heard in early 2008. While we cannot predict with certainty the outcome of the litigation or whether
the settlement will be approved, we believe we and our officers have meritorious defenses to the claims in the litigation.
We are also subject to other routine legal proceedings, as well as demands, claims and threatened litigation, that arise in the normal course of our business,
including assertions that we may be infringing patents or other intellectual property rights of others. We currently do not believe that the ultimate amount of
liability, if any, for any pending claims of any type (alone or combined) will materially affect our financial position, results of operations or cash flows. The
ultimate outcome of any litigation is
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Source: SUPPORTSOFT INC, 10-K, March 13, 2008