Microsoft and North Carolina Plaintiffs Settle North Carolina Class Action Lawsuits

RALEIGH, N.C., and REDMOND, Wash., Nov. 6, 2003 — The Shanahan Law Group of North Carolina, Milberg, Weiss, Bershad, Hynes & Lerach LLP, and Lieff, Cabraser, Heimann & Bernstein LLP, lead counsel for a proposed class of North Carolina consumers, and Microsoft Corp. today jointly announced that a settlement has been reached in a class action lawsuit alleging that Microsoft violated North Carolina’s antitrust and unfair competition laws.

The settlement, which last Thursday received preliminary approval from the North Carolina Business Court, will make vouchers available to class members that may be used to buy any manufacturer’s desktop, laptop and tablet computers, any software available for sale to the general public and used with those computer products, and specified peripheral devices for use with computers. If all class members claim and are issued the vouchers for which they are eligible under the settlement, the maximum value of the vouchers issued to class members will total approximately $89 million.

Under the terms of the settlement agreement, Microsoft will provide one-half of the value of the “unissued vouchers” — i.e., one-half of the difference between $89 million and the value of vouchers issued to class members — to North Carolina’s public schools in the form of vouchers that may be used by schools to purchase a broad range of hardware products, Microsoft®
and non-Microsoft software, and professional development services. In the event any vouchers issued to class members are not redeemed, Microsoft will provide one-half of the value of those unredeemed vouchers to the North Carolina Department of Public Instruction.

It is estimated that approximately 1,000 schools, just under half of all K–12 schools in North Carolina, will be eligible to receive assistance. This represents nearly 45 percent of all North Carolina students.

Kieran Shanahan, attorney for the plaintiffs, said, “This settlement is surely a positive development for North Carolina businesses and consumers, and knowing that it will have a dramatically positive impact on school children throughout North Carolina makes it even better.”

“We are pleased to learn that the court has given preliminary approval to the participation of the North Carolina public schools in the cy pres provisions of the proposed settlement in Salvatore v. Microsoft Corporation, et al. and Rankin & Huwe v. Microsoft Corporation, et al.,” said Dr. Bob Bellamy, associate state superintendent and chief technical officer of North Carolina Schools. “Depending upon the degree to which the class members exercise their options under the settlement, the cy pres fund could be substantial. Whatever the ultimate size of the cy pres fund, we are committed to using those funds to enhance the technology resources available to the neediest North Carolina public schools and look forward to receiving those funds as soon as possible.”

“We’re pleased by the opportunity to help schools all across North Carolina get the computers and software they need,” said Brad Smith, general counsel for Microsoft. “This settlement allows us to focus on the future and building great software, and avoids the cost and uncertainty of litigation.”

Details of the settlement are set forth in a settlement agreement filed in the North Carolina Business Court. Under the settlement, consumers who, between Dec. 9, 1995, and Dec. 31, 2002, and while residing in North Carolina, indirectly purchased certain Microsoft operating system, productivity suite, spreadsheet or word processing software for use in North Carolina and not for resale will be eligible to apply for the vouchers.

Microsoft is a registered trademark of Microsoft Corp. in the United States and/or other countries.

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

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