SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
2010 (April 27, 2010)
Date of Report (Date of earliest event reported)
EPIQ SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction
(Commission File Number)
501 Kansas Avenue
Kansas City, Kansas 66105
(Address of principal executive offices)
(Registrants telephone number, including area code)
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425
under the Securities Act (17 CFR 230.425).
o Soliciting material pursuant to Rule 14a-12
under the Exchange Act (17 CFR 240.14a-12).
o Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b)).
o Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c)).
Item 8.01. Other Events
previously reported, on July 29, 2008, the Alaska Electrical Pension Fund
filed a putative shareholder derivative action on behalf of Epiq Systems, Inc.
in the U.S. District Court for the District of Kansas (the Court) (Civil
Action No. 08-CV-2344 CM/JPO) alleging, among other things, improper
conduct by each of our current directors and certain current and former
executive officers and directors regarding stock option grants. The company has
stated consistently that the claims made in the action are meritless.
April 27, 2010, on the determination of the companys Board of Directors,
the company entered into a Stipulation of Settlement (the Settlement Agreement)
with plaintiff and defendants relating to the settlement of this litigation and
mutual release of claims. Upon the Courts
final approval, this Settlement Agreement will result in the dismissal with
prejudice of the lawsuit and all claims contained therein. There can be no assurance that the Court will
approve the Settlement Agreement.
company has determined that the settlement is in the best interests of the
company and its shareholders because, among other things, it will avoid the
continuing expense and distraction involved in further defending against the
claims, and it is expected to terminate this litigation in a more favorable
time frame for Epiq Systems and its shareholders.
set forth more fully in the Settlement Agreement, the agreement contains an
express denial of liability, denial of wrongdoing, and a denial of any improper
conduct by the defendants, and requires no disgorgement, no payment of damages,
no cancellation of stock options nor any recovery from any of the
defendants. The company and its
insurance carrier will pay plaintiffs counsels fees and expenses, which
plaintiffs counsel will seek in an amount not to exceed $3.5 million. The Settlement Agreement requires dismissal
of the complaint with prejudice following final Court approval of the
settlement and provides for the implementation and/or maintenance of certain
corporate governance measures by the company during a specified period of time.
foregoing summary of the settlement is qualified entirely by reference to Exhibit 99.1
of this Current Report on Form 8-K, the content of which is incorporated
by reference herein.
connection with the Settlement Agreement, the company has accrued a net
provision for the litigation composed of approximately $1.6 million recorded in
the first quarter of 2010 in addition to approximately $0.5 million, which was
previously recorded in the year ended December 31, 2009 and disclosed in
the companys Annual Report on Form 10-K.
The provision for litigation includes the amounts expected to be paid to
the plaintiff for its counsels fees and expenses as set forth in the
Settlement Agreement, along with other costs incurred in 2010 related to the
litigation, and is net of the amount that is expected to be paid by our
insurance carrier. Because there can be
no assurance that the Court will provide final approval of the Settlement Agreement,
the ultimate resolution of this matter may materially differ from amounts
recorded as of March 31, 2010.
Item 9.01. Financial Statements and Exhibits.
Stipulation of Settlement (Alaska Electrical Pension Fund v. Tom W. Olofson,
et al., Case No.: 08-CV-2344 CM/JPO)