Attached files
| file | filename |
|---|---|
| EX-10.2 - MobileSmith, Inc. | v188663_ex10-2.htm |
| EX-10.1 - MobileSmith, Inc. | v188663_ex10-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): June 18, 2010
Smart
Online, Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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001-32634
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95-4439334
|
||
|
(State
or other Jurisdiction of Incorporation)
|
(Commission
File Number)
|
(IRS
Employer Identification No.)
|
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4505
Emperor Blvd., Suite 320
Durham,
North Carolina
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27703
|
|
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: 919-765-5000
|
Not
Applicable
|
|
(Former
name or former address if changed since last
report.)
|
Check 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:
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))
1.
Class Action Settlement
On June
18, 2010, the Company entered into a Stipulation and Agreement of Settlement
(the "Stipulation") with the lead plaintiff in the pending securities class
action. Also included in the
settlement are all the current and former officers, directors, shareholders and
employees of the Company who had also been named as defendants in the securities
class action, as well as Maxim Group. The Stipulation provides for the
settlement of the securities class action on the terms described below. The
settlement is subject to preliminary and final approval of the United States
District Court for the Middle District of North Carolina, which the Company
anticipates will occur in the second half of this year.
The
Stipulation provides for the certification of a class consisting of all persons
who purchased the Company's publicly-traded securities between May 2, 2005 and
September 28, 2007, inclusive. The settlement class will receive total
consideration of a cash payment of $350,000 to be made by the Company, a cash
payment of $112,500 to be made by Maxim Group, the transfer from Henry Nouri to
the class of 25,000 shares of Company common stock and the issuance
by the Company to the class of 1,475,000 shares of Company common stock. Under
the terms of the Stipulation, counsel for the settlement class may sell some or
all of the common stock received in the settlement before distribution to the
class, subject to the limitation that it cannot sell more than 10,000 shares on
one day or 50,000 shares in 30 calendar days.
All
claims against the settling defendants will be dismissed with
prejudice. The claims of the lead plaintiff against Jesup &
Lamont Securities Corp. and the Company’s former independent registered public
accounting firm, Sherb & Co., are not being dismissed and will continue. The
Stipulation contains no admission of fault or wrongdoing by the Company or the
other settling defendants.
The
securities class action and derivative action are more fully described in the
Company’s 2008 Form 10-K.
A copy of
the Stipulation is attached hereto as Exhibit 10.2 and is incorporated by
reference into this Item 1.01.
2.
Nouri Settlement.
On July
2, 2009, Dennis Michael Nouri, a former officer of Smart Online, Inc. (the
“Company”), and Reza Eric Nouri, a former employee of the Company (together, the
“Nouris”), were convicted of nine counts of criminal activity in a federal
criminal action brought against them in the United States District Court for the
Southern District of New York involving a fraudulent scheme to manipulate
the Company’s stock price. On May 19, 2010, Dennis Michael Nouri was
sentenced to eight years incarceration and two years supervised release; he
filed a notice of appeal on June 1, 2010. On May 10, 2010, Reza Eric Nouri was
sentenced to 18 months incarceration and 24 months supervised release; he filed
a notice of appeal on May 27, 2010 and was allowed to remain out on bail pending
appeal.
On
September 24, 2009, the Nouris filed a motion in the Court of
Chancery of the State of Delaware against the Company seeking the
appointment of a receiver for the Company for the purpose of
collecting a judgment in the amount of $826,798 entered against it by
order of the Court of Chancery on August 6, 2009 (the “Order”) for the
advancement of legal expenses incurred by the Nouris in their defense of
criminal proceedings brought against them by the United States, and in their
defense of civil proceedings brought against them by the Securities and Exchange
Commission and the Company’s stockholders. Such legal expenses were
in addition to legal fees and costs totaling $3 million that were
paid out by the Company’s insurance carrier under the Company’s insurance
policy, which exhausted the insurance coverage. The terms of the Order were
previously reported in the Form 10-Q filed by the Company for the quarterly
period ended June 30, 2009. The Company has recorded a total of unpaid legal
expense obligations of $1,798,595 for this matter based on invoices received
from the Nouris’ law firms through March 31, 2010, which figure does not include
invoices generated but not yet received.
On June
18, 2010, the Company entered into a Settlement Agreement (the "Settlement
Agreement") with Dennis Michael Nouri, Reza Eric
Nouri, Henry Nouri and Ronna Loprete Nouri (collectively, the “Nouri
Parties”). The Settlement Agreement provides for the payment by the Company of
up to $1,400,000. Of that amount, $500,000 is payable within ten days after the
date (the “Effective Date”) of preliminary judicial approval of the class action
settlement described above (“Class Action Preliminary Judicial Approval”), and
$900,000 is payable in twelve fixed monthly installments of $75,000 commencing
60 days after the Effective Date, with the last four scheduled installments
totaling $300,000 subject to reduction to the extent that fees and
disbursements for the Nouris’ appeal are below certain levels or if the appeal
is not taken to final adjudication. The Settlement Agreement provides for the
exchange of mutual releases by the parties.
The
Settlement Agreement is contingent upon Class Action Preliminary
Judicial Approval.
A copy of
the Settlement Agreement is attached hereto as Exhibit 10.1 and is incorporated
by reference into this Item 1.01.
Item
9.01 Financial
Statements and Exhibits
(d)
Exhibits
The
following Exhibits are furnished with this Report:
|
Exhibit
10.1
|
Settlement
Agreement, dated June 18, 2010, between the Company and Dennis Michael
Nouri, Reza Eric Nouri, Henry Nouri and Ronna Loprete
Nouri.
|
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Exhibit
10.2
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Stipulation
and Agreement of Settlement, dated June 18, 2010, by and among the Company
and the other parties thereto.
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Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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Smart
Online, Inc.
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June
18, 2010
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By:
/s/Dror Zoreff
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Name:
Dror Zoreff
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Title:
Interim President and Chief Executive
Officer
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Exhibit
Index
| Exhibit No. | Description |
|
Exhibit
10.1
|
Settlement
Agreement, dated June 18, 2010, between the Company and Dennis Michael
Nouri, Reza Eric Nouri, Henry Nouri and Ronna Loprete
Nouri.
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Exhibit
10.2
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Stipulation
and Agreement of Settlement, dated June 18, 2010, by and among the Company
and the other parties thereto.
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