Cole Real Estate Investments, Inc.

Cole Real Estate Investments, Inc.

Cole Real Estate Investments, Inc. Securities Settlement

The lawsuit was settled whereby defendants agreed to to reduce by $50 million the maximum amount of contingent payments that would be payable to them under the Cole Holdings Merger Agreement (Contingent Payment Reduction), and ARCP agreed to increase the aggregate merger consideration payable to CREI stockholders by a corresponding $50 million. Additionally, Defendants agreed to a one time payment of $14 million to be paid to Cole Real Estate Investments shareholders and certain supplemental disclosures. The following is a summary of the proceedings in this lawsuit:’On March 6, 2013, Cole Real Estate Investments, Inc., f/k/a Cole Credit Property Trust III, Inc. (CREI), announced that its board of directors had unanimously approved an agreement and plan of merger (Cole Holdings Merger Agreement) pursuant to which CREInvestments, LLC, a wholly owned subsidiary of CREI, would acquire Cole Holdings Corporation (Cole Holdings Acquisition). Following the announcement of the Cole Holdings Acquisition, on March 20, 2013 and March 29, 2013, respectively, two putative derivative and class action lawsuits challenging the Cole Holdings Acquisition were filed in the Court, Strub v. Cole Holdings Corp., et al., C.A. No. 24-C-13-001563 (Md. Cir. Ct.) (Strub Action), and Fortner, et al. v. Andruskevich, et al., C.A. No. 24-C-13-001761 (Md. Cir. Ct.) (Fortner Action). On March 26, 2013, a putative class action lawsuit challenging the Cole Holdings Acquisition was filed in the Court, Rodgers v. Cole Credit Property Trust III, Inc., et al., C.A. No. 24-C-13-001643 (Md. Cir. Ct.) (Rodgers Action). On March 27, 2013 and April 8, 2013, two putative derivative and class action lawsuits challenging the Cole Holdings Acquisition, including claims arising under the federal securities laws, were filed in United States District Court for the District of Arizona (Arizona Court): Carter v. Cole Holdings Corp., et al., C.A. No. 2:13-cv-00629 (D. Ariz.) (Carter Action) and Schindler v. Cole Holdings Corp., et al., C.A. No. 2:13-cv-00712 (D. Ariz.) (Schindler Action). On April 5, 2013, CREI announced the closing of the Cole Holdings Acquisition. Also, on April 5, 2013, the Court denied Plaintiff Motion for Temporary Restraining Order And Motion Setting A Briefing Schedule On Plaintiff Motion for Permanent Injunctive and Declaratory Relief in the Strub Action. On April 8, 2013, counsel for Bernice Polage, a CREI stockholder, made a demand upon the CREI board of directors challenging the Cole Holdings Acquisition and demanding that the board of directors take certain actions with respect to the Cole Holdings Acquisition (Polage Demand), which, among other things, alleged that the Director Defendants breached their fiduciary duties to CREI in pursuing the Cole Holdings Acquisition while rejecting a proposed business combination with ARCP, and further demanded (i) the disgorgement by Defendant Cole of $20 million in cash and 10,711,225 shares of CREI stock that he received in connection with the Cole Holdings Acquisition, (ii) rescission of the employment agreements of Defendants Cole and Nemer that were entered into in connection with the Cole Holdings Acquisition; and (iii) the recovery for the benefit of the Company and its stockholders the damages they have sustained as a result of the Cole Holdings Acquisition. Thereafter, a committee of outside directors on the CREI board of directors (Special Committee) took under advisement and investigated the allegations of the Polage Demand. On April 22, 2013, the Court consolidated the Strub, Fortner, and Rodgers Actions (Consolidated Cole Holdings Action). On May, 20, 2013, counsel for plaintiffs and defendants in the Consolidated Cole Holdings Action met in-person in New York City to discuss positions on the propriety of the consideration exchanged in the Cole Holdings Acquisition, and counsel for plaintiffs demanded that any settlement framework of the Consolidated Cole Holdings Action include a reduction in contingent payments made to Christopher Cole and his affiliates in connection with the Cole Holdings Acquisition. On August 2, 2013, the parties to the Consolidated Cole Holdings Action entered into a Confidentiality Agreement to govern the exchange of confidential settlement information. On August 12, 2013, plaintiffs in the Consolidated Cole Holdings Action made a confidential settlement demand on defendants in the Consolidated Cole Holdings Action, demanding, among other things, a reduction in the contingent payments payable to Defendants Cole and Nemer and certain other executives. On October 22, 2013, the Court dismissed with prejudice the Consolidated Cole Holdings Action. Subsequently, on November 19, 2013, plaintiffs in the Consolidated Cole Holdings Action filed a Notice of Appeal in the Court of Special Appeals for the State of Maryland. On July 31, 2014, the appeal was dismissed. Defendants agreed to reimburse plaintiffs in the Consolidated Cole Holdings Action in the amount of $100,000. On October 23, 2013, CREI and ARCP announced that their respective boards of directors had unanimously approved an agreement and plan of merger (Merger Agreement) pursuant to which ARCP would acquire CREI for 1.0929 shares of ARCP common stock or $13.82 in cash for each share of CREI common stock, with the cash consideration not to exceed 20% of CREI outstanding shares of common stock, in a transaction valued at approximately $11.2 billion (Transaction). Upon the request of the Special Committee in connection with its investigation of the Polage Demand and in consideration of plaintiffs demands in the Consolidated Cole Holdings Action, Defendants Cole and Nemer and certain other CREI executives agreed in connection with the Transaction to reduce by $50 million the maximum amount of contingent payments that would be payable to them under the Cole Holdings Merger Agreement (Contingent Payment Reduction), and ARCP agreed to increase the aggregate merger consideration payable to CREI stockholders by a corresponding $50 million. Following the announcement of the Transaction, on October 25, 2013 and November 18, 2013, respectively, two putative class action lawsuits challenging the Transaction were filed in the Arizona Court: Wunsch v. Cole Real Estate Investments, Inc., et al., C.A. No. 2:13-cv-02186 (D. Ariz.) (Wunsch Action) and Sobon v. Cole Real Estate Investments, Inc., et al., C.A. No. 2:13-cv-02361 (D. Ariz.) (Sobon Action). Between October 30, 2013 and November 14, 2013, eight putative class action lawsuits challenging the Transaction were filed in the Court: Polage v. Christopher H. Cole, et al., C.A. No. 24-C-13-006665 (Md. Cir. Ct.) (Polage Action); Operman, et al. v. Cole Real Estate Investments, Inc., et al., C.A. No. 24-C-13-006610 (Md. Cir. Ct.) (Operman Action); Branham, et al. v. Cole Real Estate Investments, Inc., et al., C.A. No. 24-C-13-006619 (Md. Cir. Ct.) (Branham Action); Wilfong v. Cole Real Estate Investments, Inc., et al., C.A. No. 24-C-13-006639 (Md. Cir. Ct.) (Wilfong Action); Flynn v. Cole Real Estate Investments, Inc., et al., C.A. No. 24-C-13-006713 (Md. Cir. Ct.) (Flynn Action); Corwin v. Cole Real Estate Investments, Inc., et al., C.A. No. 24-C-13-006715 (Md. Cir. Ct.) (Corwin Action); Green, et al. v. Cole Real Estate Investments, Inc., et al., C.A. No. 24-C-13- 006758 (Md. Cir. Ct.) (Green Action); and Morgan v. Cole Real Estate investments, Inc., et al., C.A. No. 24-C-13-006851 (Md. Cir. Ct.) (Morgan Action), each alleging that the Director Defendants breached their fiduciary duties to CREI stockholders in connection with the Transaction and that CREI, ARCP, and Merger Sub aided and abetted those breaches, and each seeking, among other things, an order enjoining the Transaction. The plaintiffs in the actions set forth in this paragraph are referred to herein as Plaintiffs. The Polage Action also purported to bring derivative claims on behalf of CREI challenging the Cole Holdings Acquisition. Finally, on April 11, 2014, Co-Lead Counsel deposed former CREI director and current director of ARCP Thomas A. Andruskevich, who was a member of the Special Committee which negotiated the terms of the Cole Holdings Acquisition and demanded the Contingent Payment Reduction. On August 12, 2014, the parties signed the Stipulation. Plaintiffs and Co-Lead Counsel believe that the terms contained in the Stipulation are fair and adequate to both CREI and its stockholders and that it is reasonable to pursue a settlement of the Action based upon the substantial benefits and protections offered therein.’

© copyright 2015, Liquid Claims. All Rights Reserved. www.liquidclaims.com