Centerline Holding Company

Centerline Holding Company

Centerline Holding Company Securities Settlement

The lawsuit was settled for additional disclosures in the proxy statement mailed to shareholders. The fiollowing is a summary of the proceedings in the lawsuit: ‘On June 10, 2013, Centerline Holding Company (Centerline or the Company) entered into an Agreement and Plan of Merger with Otsego Shares LLC (Otsego), an affiliate of Hunt Capital Partners (Hunt Capital), an affiliate of Hunt Capital Partners, LLC (Hunt), whereby Hunt Capital would purchase all outstanding common shares of Centerline that Hunt or its affiliates did not already own for $39.89 per share (the Merger). On or about June 12, 2013, shareholders of Centerline holding a majority of the Company outstanding common shares delivered written consents to approve and adopt the Merger Agreement. With that action, the shareholder approval condition to the closing of the Merger was satisfied. On June 21, 2013, plaintiff E. Randolphe Hille (Hille) filed a putative class action in the Supreme Court of the State of New York, County of New York captioned E. Randolphe Hille v. Centerline Holding Company et al., Index No. 652202-2013 (the Hille Action), which named as defendants Centerline, the members of the Centerline Board, Hunt, Hunt Capital and Otsego and which alleged, among other things, claims for breach of fiduciary duty in connection with the Merger and that Centerline, Hunt, Hunt Capital and Otsego aided and abetted such breaches of fiduciary duty, and sought to enjoin preliminarily the Merger. On June 21, 2013, plaintiffs Brad Hoffman, Joseph A. Seedman and Jessie Greenfield filed a putative class action in the Supreme Court of the State of New York, County of New York, captioned Brad Hoffman et al. v. Centerline Holding Company et al., Index No. 652214/2013 (the Hoffman Action), which made substantially similar allegations to the Hille Action. On June 26, 2013 plaintiff Hille filed an Order to Show Cause seeking expedited discovery and the scheduling of a preliminary injunction hearing. On June 27, 2013, the New York Court entered plaintiff Hille Order to Show Cause with respect to expedited discovery and scheduled oral argument on the matter for July 17, 2013. On July 2, 2013, plaintiff Robert Bushnell filed a putative class action in the Supreme Court of the State of New York, County of New York, captioned Robert Bushnell v. Centerline Holding Company et al., Index No. 652348/2013 (the Bushnell Action, together with the Hille Action and Hoffman Action, the Action), which made substantially similar allegations to the Hille Action. On July 2, 2013, counsel for the plaintiffs in the Actions filed a motion to consolidate and appoint lead counsel. The Actions were consolidated by order of the New York Court on July 17, 2013 (the Consolidated New York Action), which appointed Wolf Popper LLP, Glancy Binkow & Goldberg LLP, and Brodsky & Smith, LLC as Co-Lead Counsel and designated an amended class action complaint filed by plaintiff Hille on July 2, 2013 as the operative amended complaint in the consolidated action. The amended complaint alleged, among other things, claims for breach of fiduciary duty in connection with the Merger and that Centerline, Hunt, Hunt Capital and Otsego aided and abetted such breaches of fiduciary duty, and sought, to preliminarily enjoin the Merger. On July 11, 2013, the parties to the Consolidated New York Action negotiated an informal exchange of expedited discovery and an agreed-to schedule for briefing of Plaintiffs anticipated motion for preliminary injunction. On July 12, 2013, the parties to the Consolidated New York Action entered into a Stipulation and Order Governing the Production and Exchange of Confidential Information. Between July 15, 2013 and August 2, 2013, Defendants produced over 21,000 pages of documents to Plaintiffs Co-Lead Counsel in the Consolidated New York Action, including, among other things, certain of Centerline emails regarding the Merger, minutes of meetings of the Centerline Board concerning the Merger, written presentations made to the Centerline Board by Rothschild Inc. (Rothschild), which served as Centerline financial advisor and which rendered a fairness opinion to the Centerline Board in connection with the Merger. On August 6, 2013, after reviewing and analyzing the documents that had been produced by Defendants, Plaintiffs conducted the deposition of Robert Levy, a Centerline Trustee and Chief Executive Officer of the Company. On August 8, 2013, Plaintiffs conducted the deposition of Stephen Antinelli, a Managing Director of Rothschild. On August 14, 2013, Plaintiffs conducted the deposition of Alan Fair, President of Hunt Capital. During the period from August 10, 2013, through August 20, 2013, as Plaintiffs continued to engage in discovery efforts and the preparation of their opening brief in support of the motion to preliminarily enjoin the Merger, Co-Lead Counsel and Defendants Counsel engaged in arm-length negotiations concerning the potential resolution of the claims asserted in the Consolidated New York Action. On August 23, 2013, plaintiff Bibiano Lopez filed a Verified Complaint in the Court of Chancery of the State of Delaware seeking to inspect the books and records of Centerline, captioned Bibiano Lopez v. Centerline Holding Company, a Delaware Statutory Trust, C.A. No. 8832-ML (the Delaware Action), which named Centerline as a defendant and sought to inspect Centerline books and records for the purpose of investigating potential breaches of fiduciary duties by Centerline officers and/or directors related to the Merger and for valuing the shares allegedly held by plaintiff Lopez. On August 26, 2013, counsel for the parties hereto (the Parties) reached an agreementin- principle set forth in a Memorandum of Understanding (the MOU) to settle the Consolidated New York Action, which provided that Centerline would make a filing with the Securities and Exchange Commission (SEC) summarizing the background of the Merger and the factors considered by the Centerline Board in evaluating the Merger, including the receipt of the written opinion of Rothschild (the Disclosures) and that, prior to filing the Disclosures with the SEC, Defendants would consult with Plaintiffs regarding the information to be contained therein and Plaintiffs would have the right to review and comment upon the Disclosures, which comments would be considered by Defendants in good faith. On September 16, 2013, Centerline moved to dismiss the Delaware Action. On September 27, 2013, consistent with the terms of the MOU, Centerline filed a Form 8-K with the SEC which reflected the Disclosures.’

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