The Settlement Hearing on the proposed Settlement of this lawsuit has been rescheduled to a new date: September 10, 2010 before the Honorable Ronald A. Guzmán in Courtroom 1219, 219 South Dearborn Street, Chicago, Illinois 60604. The Court must determine whether to approve the Settlement and the payment of attorneys’ fees and expenses to Plaintiffs’ attorneys. If you are satisfied with the outcome of the lawsuit as described in the notice that was previously mailed to you, you do not need to do anything. You may attend the hearing, but you are not required to do so.
Objections must have been made in writing by no later than August 20, 2010.
|August 20, 2010
|Objection Deadline (received)|
|September 10, 2010||Fairness Hearing|
If you are an owner of Sears Holdings Corporation Common Stock, please be advised of a proposed settlement (the “Settlement”) of a shareholder derivative lawsuit (the “Lawsuit”) brought against certain current and former directors of Sears Holdings Corporation (“Sears” or the “Company”).
In August 2009, the first derivative complaint was filed in the Northern District of Illinois. In September 2009, another, similar shareholder action was filed in the same court. The two cases were later consolidated into the single action entitled Robert Booth Trust v. William Crowley, No. 1:09-cv-05314 (the “Lawsuit”). On October 13, 2009, Plaintiffs filed an Amended Consolidated Verified Derivative Complaint (the “Complaint”) against the Individual Defendants and nominally against Sears.
The Lawsuit makes claims on behalf of Sears against the following present and former directors of Sears: William C. Crowley (“Mr. Crowley”), Edward S. Lampert (“Mr. Lampert”), Steven T. Mnuchin, Richard C. Perry, Ann N. Reese (“Ms. Reese”), Kevin B. Rollins, Emily Scott, and Thomas J. Tisch (collectively referred to as the “Individual Defendants”).
The Complaint alleged that two directors of Sears, Mr. Crowley and Ms. Reese, committed violations of Section 8 of the Clayton Antitrust Act (“Section 8”). Section 8 prohibits individuals from serving at the same time as directors of corporations which compete with each other. This situation is sometimes referred to as having “interlocking directors.” The antitrust laws prohibit the boards of competing companies from sharing directors because such interlocks can potentially lead to conduct that results in the stifling of competition between the companies. Director interlocks are only unlawful, however, if the competing companies sharing a director have at least a certain percentage of competing sales.
The Defendants have denied and continue to deny each and every allegation of liability and wrongdoing on their part and contend that the claims asserted against them in the Lawsuit are without merit. The Defendants deny that they have breached any duty, violated any law, or engaged in wrongdoing of any form.
The Plaintiffs, the Defendants and Sears each believe that the proposed Settlement is fair, reasonable and adequate, and is in the best interests of Sears and its current shareholders. The Settlement removed Mr. Crowley from the Sears Board entirely and placed limitations on Ms. Reese’s board service to eliminate any potential anti-competitive effect from her alleged interlocking board memberships. In addition, the Settlement will require Sears to add an independent director to the Board. Even if Plaintiffs had prevailed at a trial, they could not have forced Sears to add such a director to its Board; this beneficial relief could only be achieved through a Settlement. Likewise, the Settlement requires Mr. Lampert to remove himself from Board discussions of the operation of Sears’ auto parts and service business. This relief was not sued for in the Lawsuit and was only obtained through the Settlement.
The Company believes that the Settlement provides substantial benefits to the Company, including assisting in the prevention and detection of potential violations of law, regulation or Company policy and is in the best interests of Sears and its current shareholders. The Company further believes that the Settlement allows Sears to avoid expensive and time-consuming litigation the outcome of which was uncertain and to maintain Ms. Reese, a highly-experienced independent director who is chair of the audit committee, on the Board.
The Notice reflects only the statements and opinions of the parties to the proposed Settlement, and not the views of the Court.
What Does the Settlement Provide?
The Lawsuit was not brought to recover money for Sears shareholders. There is no process for shareholders to file claims or receive any money from the Settlement. Rather, it sought injunctive relief, that is, an order requiring the defendants to take certain action. The Lawsuit was brought under the federal antitrust laws by two shareholders of Sears. The Lawsuit asked the Court to issue an order requiring Sears to remove two directors from the Sears Board of Directors (the “Sears Board”). The parties to the Lawsuit have entered into a settlement agreement called a Stipulation of Settlement (the “Stipulation”), which the Court must approve before it can become final.
For more details, please consult the Notice.
Class Member Options
If you are a current shareholder of Sears as of the date of the Settlement Hearing and you wanted to object to any feature of the Settlement, you must have done so in writing by August 20, 2010. If you filed your objection in a timely manner, you also may, if you wish, attend the hearing and speak to the Court about your objection. If you wrote to the Court with an objection, you do not need to also go to the hearing. The Court will read and consider your written objection whether you are at the hearing or not.
The Court has scheduled a Settlement Hearing to be held before the Honorable Ronald A. Guzmán in the United States District Court for the Northern District of Illinois, Everett McKinley Dirksen United States Courthouse, Courtroom 1219, 219 South Dearborn Street, Chicago, Illinois 60604, on September 10, 2010 to determine whether the proposed settlement should be approved by the Court as fair, reasonable, and adequate, and to consider the application of plaintiffs’ counsel for attorneys’ fees and reimbursement of expenses. If you are satisfied with the outcome of the Lawsuit as described in the Notice, you do not need to do anything. You may attend the hearing, but you are not required to do so.