CLST Holdings Inc.

CLST Holdings Inc.

CLST Holdings Inc. Securities Settlement

The lawsuit was settled for $3.5 million in cash plus certain corporate governance changes to CLST Holdings Inc. The following is a summary of the proceedings in the lawsuit: ‘On June 23, 2010, the Plaintiffs filed their Shareholder Derivative Petition Based Upon Self-Dealing, Breach of Fiduciary Duty, Waste of Corporate Assets, and Unjust Enrichment against the Directors in the above-captioned lawsuit, in which Plaintiffs asserted putative stockholder derivative claims on behalf of CLST against the Directors, alleging that the Directors breached their fiduciary duties to the Company by causing CLST to enter into certain transactions related to the purchase of consumer receivables. Plaintiffs also alleged that the Directors engaged in multiple self-dealing transactions that increased their voting power in order to remain entrenched in their positions, at the expense of Plaintiffs, who were allegedly deprived of the ability to nominate new directors and set forth business proposals to be voted on by the Company’s stockholders. After litigating their respective claims and/or defenses over the course of several years, counsel for the Settling Parties engaged in arm’s-length negotiations concerning the terms and conditions of a potential resolution of the Action, including hotly contested mediations before a neutral mediator, Jed D. Melnick of JAMS (the ‘Mediator’), and numerous follow-up communications with the Mediator. Following the mediations and negotiations, counsel for the Settling Parties reached an agreement providing for the settlement of the Action as documented by a Memorandum of Understanding, dated October 7, 2013 (the ‘MOU’).’

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