Litigation over 2005 buyout by Carlyle

• CEO initiated and drove the sale process
• Special committee approved deal after Carlyle offer
  was increased from $37 to $37.25 per share
• For more on the deal, see SS&C Technology Buyout

Delaware Chancery (V.C. Lamb) disapproves settlement for two independent reasons:

1) parties were dilatory in presenting [the settlement] for approval.

• Deal was closed in Dec 2005
• Settlement hearing wasn't held until Sept 2006
• Only part of settlement that hadn't been performed
  was payment of plaintiff lawyer fees

• Court relied on Chickering v Giles (Del Ch 1970)
• the courts function is to consider contested issues, not those which have been made moot by the parties or by events.

• Court could not conclude from the record presented that the potential claims belonging to the class were adequately or diligently investigated or pursued.

2) Potential claims weren't adequately investigated or pursued

• Court was critical of CEO's dominating role in the buyout
• Settlement only provided for supplemental proxy disclosure

• Supplemental disclosure 11.04.05

Opinion 11.29.06
C.A. No. 1525-N

Vice Chancellor Lamb

Top of opinion ++

Court disapproves proposed settlement I.

Background facts II.

Chickering v Giles  III.

Claims weren't adequately represented  IV.

Conclusion V.

Law firms

• Cleary Gottlieb  At page 2
• Morris Nichols