On October 30, 2018, a putative derivative and class action complaint was filed against the members of the board of directors of Forest City Realty Trust, Inc. (“Forest City” or the “Company”) on behalf of the Company and the stockholders of the Company in the Circuit Court for Baltimore City under the captionScarantino v. Bacon et al., Case No.24-c-18-005838 (Md. Cir. Ct., Baltimore City) (the “Action”). The complaint alleges that the members of the board of directors of Forest City (“defendants”) breached fiduciary duties owed to Forest City stockholders because they, among other things, made inadequate disclosures in a definitive proxy statement on Schedule 14A filed with the U.S. Securities and Exchange Commission (the “SEC”) on October 12, 2018 (the “Proxy Statement”) regarding the transactions contemplated by the Agreement and Plan of Merger, dated as of July 30, 2018 (the “Merger Agreement”), by and among Forest City, Antlia Holdings LLC (“Parent”) and Antlia Merger Sub Inc. (“Merger Sub”), pursuant to which the parties agreed that, subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into Forest City, with Forest City surviving such merger and becoming a subsidiary of Parent (the “Merger”). The complaint filed in the Action alleges that the Proxy Statement omits material information, rendering the information disclosed misleading. The Action seeks, among other things, orders (i) enjoining the defendants from proceeding with or consummating the Merger, (ii) directing the defendants to account for all damages sustained by the putative class, and (iii) awarding plaintiff’s costs and attorneys’ and expert fees.
While the Company believes that the Action is without merit and that the disclosures in the Proxy Statement comply fully with applicable law, in order to avoid the expense and distraction of litigation, on November 2, 2018, the parties to the Action entered into an agreement in principle to settle and release all claims that were or could have been alleged by the plaintiff in his individual capacity in the Action. The settlement provides for the dismissal with prejudice of the plaintiff’s individual claims and dismissal without prejudice of the claims asserted derivatively on behalf of Forest City and those asserted on behalf of a purported class, subject to, among other things, the Company’s supplementation of the Proxy Statement with the amended and supplemental disclosures set forth below (the “Amended and Supplemental Disclosures”).
The Amended and Supplemental Disclosures should be read in conjunction with the Proxy Statement, which should be read in its entirety. Defined terms used but not defined in the Amended and Supplemental Disclosures have the meanings set forth in the Proxy Statement. The plaintiff has agreed that, following the filing of this Current Report on Form8-K (this “Report”), he will dismiss the Action in its entirety, with prejudice as to the named plaintiff’s individual claims only and without prejudice as to the claims asserted derivatively on behalf of Forest City and those asserted on behalf of a purported class.
The resolution of the Action will not affect the timing of the special meeting of Forest City stockholders, which is scheduled to be held on November 15, 2018, or the amount of the consideration to be paid to Forest City stockholders in connection with the Merger. The resolution of the Action is not, and should not be construed as, an admission of wrongdoing or liability by any defendant. Furthermore, nothing in this Report or the resolution of the Action shall be deemed an admission of the legal necessity or materiality of any of the disclosures set forth in this Report. Likewise, the Company does not believe that any further disclosure regarding the Merger is required under applicable laws other than that which has already been provided in the Proxy Statement. However, to avoid the risk of the putative shareholder class Action delaying or adversely affecting the Merger, to minimize the substantial expense, burden, distraction and inconvenience of continued litigation and to resolve the plaintiff’s claims asserted in the Action, the Company has agreed to make these Amended and Supplemental Disclosures to the Proxy Statement.
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SUPPLEMENT TO PROXY STATEMENT
The first full sentence on page 65 of the Proxy Statement is deleted in its entirety and replaced in its entirety by the following:
The following tables summarize the results of this review for the select comparable companies and the proportional contribution of the relevant Company segment to NOI for 2022:
The table immediately following the first partial paragraph on page 65 of the Proxy Statement is deleted in its entirety and replaced in its entirety by the following:
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