CAMBRIDGE, MA December 20, 2000 -- BUSINESS WIRE -- Pegasystems settled two separate securities class action lawsuits the week that related to restatements of revenue for certain quarters in 1997 and 1998. The US District Court granted final approval earlier this week.
In the Chalverus litigation, brought on behalf of purchasers of Pegasystems stock between July 29, 1997 and October 29, 1997, the company will issue to the Settlement Fund 1,385,000 shares of Pegasystems stock. Certain members of Pegasystems' Board of Directorshave agreed to purchase such shares from the Settlement Fund for $5 million in cash. Together with cash previously advanced, the total value of the consideration paid to the class for the settlement of the Chalverus litigation amounts to $5.25 million.
In the Gelfer litigation, brought on behalf of common stock purchasers between April 2, 1998 and November 23, 1998, a Settlement Fund of 1,740,000 shares of Pegasystems stock will be issued and along with a cash contribution of $2,389,060. Certain members of the Board of Directors have agreed to purchase such shares from the Settlement Fund for $5,360,940 in cash. Together with cash previously advanced, the total value of the consideration paid to the class for the settlement of the Gelfer litigation was $12.25 million.
Pegasystems previously received $4.3 million in cash from its insurer in connection with these settlements.
Company officials cited material weaknesses in its financial control as the reason for a restatement of revenue.
"We are delighted to have these lawsuits behind us and look forward to working to increase shareholder value in the coming year," said Rick Jones, president of Pegasystems. "The financial support by the Board clearly reinforces their confidence in our Company and its future."
Pegasytems provides eCRM applications.