In July 2011, a proposed class proceeding was commenced in the Ontario Superior Court of Justice (the "Court") against Cathay Forest Products Corp., (“Cathay”, CUSIP Number 14915N and stock symbol “CFZ”) and certain of its former directors and former executive officers (the "Defendants" and the “Action”). In the Action, it was alleged that Cathay’s December 11, 2009 prospectus and some of Cathay’s other disclosures were materially misleading. On September 13, 2013, the Court certified the Action as a class proceeding solely for the purposes of settlement and with the consent of the Defendants who had defended the Action. Certification of the Action by the Court was not a decision on the merits of the Action.
On August 21, 2013 the Plaintiff and the Defendants who defended the Action entered into an agreement to settle the Action (the “Settlement”). The Settlement provides for the payment of CAD $1,900,000 (the "Settlement Amount"). The Settlement Amount includes all legal fees, disbursements, taxes and administration expenses. In return for the Settlement Amount, the Action was dismissed and the Defendants, including those who have not defended the Action, received releases from the claims made and that could have been made against them in the Action. The Settlement was a compromise of disputed claims and was not an admission of liability, wrongdoing or fault on the part of any of the Defendants who defended the Action, all of whom denied, and continue to deny, the allegations against them.