Bernstein Litowitz Berger & Grossmann And Louisiana Pension Funds Announce Significant Corporate Governance Reforms Achieved In Partial Settlement Of Securities Class Action Against SkillSoft

Business Wire, Oct 19, 2004

NEW YORK -- Bernstein Litowitz Berger & Grossmann LLP, and its client the Louisiana Sheriffs' Pension and Relief Fund, together with the Teachers' Retirement System of Louisiana, (the two funds are "Lead Plaintiffs"), today announce that the United States District Court for the District of New Hampshire has granted final approval of the partial settlement reached in the securities class action litigation, In re SmartForce PLC Securities Litigation, pending against electronic-learning software developer SkillSoft PLC (the "Company" or "SkillSoft"), and certain of its current and former officers and directors (together, with SkillSoft, referred to as the "Settling Defendants").

The action continues against SmartForce/SkillSoft auditors Ernst & Young Chartered Accountants ("EYCA") and Ernst & Young LLP.

The settlement consists of (i) the payment of $30,500,000 in cash; (ii) SkillSoft's adoption of specified corporate governance improvements; (iii) the Settling Defendants' cooperation with Lead Plaintiffs' prosecution of claims asserted against EYCA; and (iv) SkillSoft's assignment to the Class of all rights or benefits the Company may have against EYCA arising out of the facts and circumstances alleged in this Action and EYCA's audits and quarterly reviews of the financial statements SmartForce issued for fiscal years 1999, 2000, 2001 and the first two quarters of fiscal year 2002.

The significant corporate governance improvements Lead Plaintiffs negotiated (the "Corporate Governance Reforms") are designed to assure the independence of the Board of Directors and several of its principal committees, and to require the Board to take specific monitoring actions designed to prevent the recurrence of securities law violations such as those alleged in this action. The Company's Board of Directors have already adopted the Corporate Governance Reforms, which include:

--Definition of Independence. At least two-thirds of the Company's Board must be comprised of independent directors (the "Independent Directors"), using a definition of independence that is more restrictive than any regulatory definition.

--Independent Directors. The Independent Directors must meet as a group in executive session at least four times each year, and shall be entitled to retain, at the Company's expense, legal counsel and other experts.

--Director Characteristics. All directors must meet specified performance criteria and core competencies, and are restricted to the number of other boards of directors on which they may participate.

--Board Processes and Evaluation. The Board must oversee the Company's internal control and corporate compliance, and must undertake numerous specific procedures, including those to be performed in the event the Board becomes aware of any material departure from corporate compliance programs or internal control programs, or of material violations of established corporate policies or legal and regulatory requirements.

--The Audit Committee. Among other improvements:

--The Audit Committee must be comprised solely of Independent Directors, a majority of whom joined the Audit Committee as a result of, or after, the merger of SkillSoft Corporation with SmartForce PLC.

--Beginning after the Company's independent auditor has completed three consecutive audits of the Company's annual financial statements, the Audit Committee must replace the Company's independent auditor every 5 years, unless the Audit Committee determines that not rotating external auditing firms is in the Company's best interests.

--The Audit Committee must cause SkillSoft to refrain from hiring, without the approval of the Audit Committee, any partner or senior manager of the Company's external auditor within 2 years of that person's performance of audit services for the Company.

--The Audit Committee must meet separately with management and the Company's external auditor prior to the filing of each Form 10-K or Form 10-Q to discuss, among other things, the appropriateness of the Company's accounting policies.

--The Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee must consider director candidates proposed by certain shareholders of the Company (as defined in the Reforms).

--Shareholder Approval of Equity-Based Compensation. Shareholders must be given the opportunity to vote on all stock option plans (except pre-existing plans, tax-qualified plans and plans related to employment inducement or promotions), and on the issuance of any equity compensation to any executive who, at the time of such issuance, is one of the Company's five highest paid executives, unless the equity compensation is issued pursuant to a plan previously approved by the Company's shareholders.

A copy of the Corporate Governance Reforms and more information about the action may be obtained at:

http://www.blbglaw.com/settlements/smartforce_securities.html

"This great result is attributable to the Lead Plaintiffs' commitment to corporate accountability and reform. The corporate governance plan being adopted by SkillSoft is another important milestone in improving the ways in which public companies are run," said Max Berger, a partner at Bernstein Litowitz Berger & Grossmann LLP.