Spartech Corporation

Spartech Corporation

Spartech Corporation, Securities Settlement

The lawsuit was settled for additional disclosures in the proxy statement mailed to shareholders. The following is a summary of the proceedings in the litigation: ‘The Action arises out of a transaction agreed to on October 23, 2012, among Spartech Corporation, PolyOne Corporation, 2012 RedHawk, Inc.), and 2012 RedHawk, LLC (n/k/a PolyOne Designed Structures and Solutions LLC), by way of an Agreement and Plan of Merger pursuant to which Spartech stockholders would receive $2.67 in cash, without interest, and 0.3167 shares of PolyOne common stock in exchange for each share of Spartech common stock. On November 15, 2012, plaintiff Steven Weinreb filed a purported class action styled Steven Weinreb v. Spartech Corporation et al., No. 12SL-CC04360 in the Circuit Court of St. Louis County, Missouri, alleging the Spartech Board breached its state law fiduciary duties to Spartech shareholders, and that PolyOne, Merger Sub, and Merger LLC aided and abetted the alleged breaches of fiduciary duty. On November 19, 2012, plaintiff Thomas Warren filed a purported class action styled Warren v. Spartech Corporation et al.; No. 12SL-CCO04430 in the Circuit Court of St. Louis County, Missouri, alleging substantially the same claims and seeking substantially the same relief against the Defendants as the Weinreb Action. On November 21, 2012, plaintiffs Weinreb and Warren filed their motion in the Circuit Court of St. Louis County, Missouri seeking an Order of Consolidation and Appointment of Lead Counsel, which the Court granted on December 14, 2012. A Form S-4 Registration Statement relating to the Merger was filed with the United States Securities and Exchange Commission on December 17, 2012, was subsequently amended, and was declared effective on February 11, 2013. The Form S-4 contained a proxy statement and prospectus relating to the Merger, which was distributed to Spartech stockholders On December 26, 2012, pursuant to consolidation of the Weinreb Action and the Warren Action, the Amended Consolidated Class Action Complaint was filed in the captioned action, incorporating the original allegations from the previously-filed complaints in the Weinreb Action and the Warren Action and alleging additional claims that the Form S-4 was materially deficient. On December 27, 2012, plaintiff Yechiel Gross filed a purported class action complaint in the Delaware Court of Chancery styled Gross v. Spartech et al., C.A. No. 8154-VCL, alleging that the Spartech Board breached its fiduciary duties owed to Spartech stockholders by approving the Merger and by failing to disclose all material information to Spartech stockholders and that the PolyOne Defendants aided and abetted the Spartech Board breaches of fiduciary duties, and also seeking to enjoin the Merger. On December 28, 2012, plaintiff Samuel Pill filed a purported class action complaint in the Delaware Court of Chancery styled Pill v. Spartech et al., C.A. No. 8155-VCL, alleging that the Spartech Board breached its fiduciary duties owed to Spartech stockholders by failing to disclose all material information to Spartech stockholders and also seeking to enjoin the Merger. On January 2, 2013, plaintiff Gross filed his Motion for Expedited Proceedings and Motion for Preliminary Injunction in the Delaware Chancery Court. On or around January 6, 2013, Defendants produced in the Missouri State Action certain confidential documents, including Spartech Board minutes, Spartech Board presentations, and forecasts and projections, which were then thoroughly reviewed by plaintiffs counsel in the Missouri State Action. Additionally, plaintiffs counsel in the Missouri State Action engaged and consulted extensively with their financial expert for the purpose of evaluating and prosecuting the claims in the Missouri State Action. On January 7, 2013, Defendants filed their Motion to Dismiss or Stay the Missouri State Action, which Motion was opposed by Plaintiffs. On or around January 10, 2013, Defendants produced in the Delaware Actions certain confidential documents, including Spartech Board minutes, Spartech Board presentations, and forecasts and projections, which were then thoroughly reviewed by plaintiffs counsel in the Delaware Actions. Additionally, plaintiffs counsel in the Delaware Actions engaged and consulted extensively with their financial expert for the purpose of evaluating and prosecuting the claims in the Delaware Actions. On or around January 10, 2013, counsel for plaintiffs Gross and Pill agreed to coordinate the Delaware Actions with the Missouri State Action, and subsequently agreed, on behalf of their respective clients, to cooperate on behalf of all holders of Spartech common stock through the effective date of the Merger. On January 17, 2013, Defendants filed their Motion to withdraw their previously-filed Motion to Dismiss or Stay the Missouri State Action. On January 18, 2013, counsel for plaintiffs Gross and Pill filed a proposed order staying the Delaware Actions. On January 21, 2013, plaintiff Dallas M. Faulkner filed a purported class action complaint styled Faulkner v. Holt et al., C.A. No. 4:13-cv-00129 in the United States District Court for the Eastern District of Missouri, alleging certain federal securities law violations and also making substantially the same claims, and seeking substantially the same relief, as the Missouri State Action and the Delaware Actions (the Missouri State Action, the Delaware Actions and the Missouri Federal Action are collectively referred to as the Class Actions, and plaintiffs counsel in the Missouri State, Missouri Federal, and Delaware Actions are collectively referred to as Plaintiffs Counsel). On or around January 23, 2013, Defendants produced in the Missouri State Action and Delaware Actions additional confidential documents, which were then thoroughly reviewed by plaintiffs counsel in those actions. On January 28, 2013 plaintiff Faulkner in the Missouri Federal Action agreed to cooperate with counsel to the plaintiffs in the Missouri State Action and the Delaware Action, on behalf of all holders of Spartech common stock through the effective date of the Merger. Between January 29, 2013 and February 26, 2013, counsel engaged in extensive arm-length negotiations concerning a possible settlement of the Missouri State Action, including multiple exchanges of demands and offers. On January 29, 2013, counsel to plaintiffs in the Missouri State Action sent a demand letter to Defendants counsel seeking: (i) increased consideration to Spartech shareholders; (ii) adjustment of the termination fee; and (iii) supplemental disclosures to the Form S-4 Registration Statement filed with the SEC on December 17, 2012. On or about January 31, 2013, a Notice and Proposed Order of Dismissal of the Delaware Actions was filed and, on or about February 1, 2013, the Delaware Actions were voluntarily dismissed without prejudice. On February 7, 2013, Defendants counsel sent a letter by email responding to the January 29, 2013 demand letter. On February 11, 2013, Spartech and the Director Defendants filed a motion to dismiss the Missouri State Action, and on February 21, 2013, the PolyOne Defendants filed a motion to dismiss the Missouri State Action. On February 18, 2013, counsel to plaintiffs in the Missouri State Action sent an additional demand letter to Defendants counsel seeking: (i) an adjustment in the termination fee, and (ii) additional supplemental disclosures. On February 20, 2013, Defendants counsel sent a letter by email responding to the February 18, 2013 Demand Letter. On February 26, 2013, after arm-length negotiations regarding the demands made in the January 29 and February 18 Demand Letters, counsel reached an agreement in principle to settle the Missouri State Action on the terms reflected in this Stipulation, certain of which terms were documented in a March 5, 2013 Memorandum of Understanding signed by the parties to the Class Actions. Also on March 5, 2013, pursuant to the agreement in principle set forth in the MOU, Spartech and PolyOne each filed with the SEC a Current Report on Form 8-K, which included additional disclosures regarding the Merger. On March 7, 2013, plaintiff Faulkner filed a notice of voluntary dismissal with prejudice of the Missouri Federal Action, and the court entered a corresponding order of dismissal on March 11, 2013. A special meeting of Spartech stockholders to approve the Merger took place on March 12, 2013, at which meeting Spartech stockholders voted in favor of adoption of the Merger Agreement. The effective date of the Merger was March 13, 2013. On May 15, 2013, Plaintiffs Counsel took the confirmatory deposition of Ralph B. Andy, former Chairman of the Board of Spartech. On May 30, 2013, Plaintiffs Counsel took the confirmatory deposition of Kenneth Grahame, a representative of Barclays Capital Inc.’

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