Attached files
| file | filename |
|---|---|
| EX-99.2 - AIM ImmunoTech Inc. | v209665_ex99-2.htm |
| 8-K - AIM ImmunoTech Inc. | v209665_8k.htm |
Exhibit
99.1
IN
THE UNITED STATES DISTRICT COURT
FOR
THE EASTERN DISTRICT OF PENNSYLVANIA
|
:
|
|||
|
MICHAEL
HANNA, derivatively on
|
:
|
||
|
behalf
of HEMISPHERX BIOPHARMA,
|
:
|
||
|
INC.,
|
:
|
||
|
:
|
|||
|
Plaintiff,
|
:
|
||
|
:
|
|||
|
v.
|
:
|
||
|
:
|
|||
|
WILLIAM
A. CARTER, THOMAS K.
|
:
|
Lead
Case No. 2:09-cv-06160-PD
|
|
|
EQUELS,
IRAJ E. KIANI, WILLIAM M.
|
:
|
||
|
MITCHELL,
DAVID R. STRAYER, and
|
:
|
||
|
RICHARD
C. PIANI,
|
:
|
||
|
:
|
|||
|
Defendants,
|
:
|
||
|
and
|
:
|
||
|
:
|
|||
|
HEMISPHERX
BIOPHARMA, INC.,
|
:
|
||
|
:
|
|||
|
Nominal
Defendant.
|
:
|
||
|
:
|
NOTICE
OF PENDENCY AND PROPOSED SETTLEMENT
OF SHAREHOLDER DERIVATIVE
ACTION
|
TO:
|
ALL
OWNERS OF HEMISPHERX BIOPHARMA, INC. (“HEMISPHERX” OR “THE COMPANY”)
COMMON STOCK AS OF DECEMBER 10, 2010 (“CURRENT HEMISPHERX
SHAREHOLDERS”).
|
PLEASE
READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR RIGHTS MAY BE
AFFECTED. THIS NOTICE RELATES TO A PROPOSED SETTLEMENT AND DISMISSAL
OF SHAREHOLDER DERIVATIVE LITIGATION AND CONTAINS IMPORTANT INFORMATION
REGARDING YOUR RIGHTS. YOUR RIGHTS MAY BE AFFECTED BY LEGAL
PROCEEDINGS IN THIS ACTION.
IF
THE COURT APPROVES THE SETTLEMENT AND DISMISSAL OF THE ACTION, SHAREHOLDERS OF
HEMISPHERX WILL BE FOREVER BARRED FROM CONTESTING THE APPROVAL OF THE PROPOSED
SETTLEMENT AND FROM PURSUING THE SETTLED CLAIMS. THIS ACTION IS NOT A
“CLASS ACTION.” THUS, THERE IS NO COMMON FUND UPON WHICH YOU CAN MAKE
A CLAIM FOR A MONETARY PAYMENT.
- 1
-
THE
COURT HAS MADE NO FINDINGS OR DETERMINATIONS RESPECTING THE MERITS OF THE
ACTION. THE RECITATION OF THE BACKGROUND AND CIRCUMSTANCES OF THE
SETTLEMENT CONTAINED HEREIN DOES NOT CONSTITUTE THE FINDINGS OF THE
COURT. IT IS BASED ON REPRESENTATIONS MADE TO THE COURT BY COUNSEL
FOR THE PARTIES.
IF
YOU WERE NOT THE BENEFICIAL OWNER OF HEMISPHERX COMMON STOCK ON THE RECORD DATE,
PLEASE TRANSMIT THIS DOCUMENT TO SUCH BENEFICIAL OWNER.
YOU ARE HEREBY NOTIFIED,
pursuant to Federal Rule of Civil Procedure 23.1 and an Order of the U.S.
District Court for the Eastern District of Pennsylvania (the “Court”), that a
proposed settlement agreement (the “Settlement”) has been reached among
Plaintiffs,1 on
behalf of themselves and derivatively on behalf of Hemispherx, Individual
Defendants, and Hemispherx in connection with the consolidated shareholder
derivative action entitled Hanna, et al. v. Carter, et
al., Lead Case No. 2:09-cv-06160-PD, pending before the Court
(collectively with Rank v.
Carter, et al. 2:10-cv-262-PD, and Bonnet v. Carter, et al.,
2:10-cv-326-PD, the “Action”).
Plaintiffs
filed the Action derivatively on behalf of Hemispherx to remedy the alleged harm
caused to the Company by the Individual Defendants’ alleged breach of their
fiduciary duties. The proposed Settlement, if approved by the Court,
would fully, finally and forever resolve the Action on the terms set forth in
the Stipulation and summarized in this Notice, including the dismissal of the
Action with prejudice.
1 For
purposes of this Notice, the Court incorporates by reference the definitions in
the Parties’ Stipulation and Agreement of Settlement (“Stipulation”) fully
executed as of December 10, 2010, and all capitalized terms used herein, unless
otherwise defined, shall have the same meanings as set forth in the
Stipulation. A copy of the Stipulation may be inspected at the Clerk
of the Court’s Office for the U.S. District Court for the Eastern District of
Pennsylvania, James A. Byrne Federal Courthouse, 601 Market Street, Room 2609,
Philadelphia, Pennsylvania 19106, and is also available for viewing on the
websites of Robbins Umeda LLP at www.robbinsumeda.com and Hemispherx at
www.hemispherx.net.
- 2
-
As
explained below, a hearing (the “Settlement Hearing”) shall be held before this
Court on March
21, 2011 at 10:00 a.m. to
determine whether, inter
alia, the proposed Settlement is fair, reasonable, and adequate, and
should be finally approved by the Court. You have the right to object
to the Settlement in the manner provided herein. If you fail to
object in the manner provided herein at least ten (10)
business days prior to the Settlement Hearing, you will be deemed to have
waived your objections and will be bound by the Final Order and Judgment to be
entered and the releases to be given, unless otherwise ordered by the
Court.
This
Notice is not intended to be and should not be construed as an expression of any
opinion by the Court with respect to the merits of the claims made in the
Action, but is merely to advise you of the proposed Settlement and of your
rights as a Current Hemispherx Shareholder.
I. BACKGROUND
According
to its public filings, Hemispherx is a Philadelphia-based biopharmaceutical
company engaged in the development of new drug entities for the treatment of
viral and immune-based disorders, including Ampligen®, an
experimental drug being developed for the treatment of chronic fatigue syndrome
(“CFS”). On July 7, 2008, the U.S. Food and Drug Administration (the
“FDA” or “Agency”) accepted for substantive review the Company’s New Drug
Application (“NDA”) for Ampligen® in the
treatment of CFS. Under the Prescription Drug User Fee Act (“PDUFA”),
the original deadline for the FDA’s decision on the Ampligen® NDA was
February 25, 2009. In a February 18, 2009 press release, Hemispherx
announced that the FDA had extended the PDUFA deadline for completing its review
of the NDA until May 25, 2009. In a May 26, 2009 press release, the
Company reported, inter
alia, that the FDA had advised “that it may require up to 1-2 additional
weeks to take action beyond the scheduled [PDUFA] action date of May 25, 2009 on
the [Ampligen®
NDA].” The FDA did not complete its review of the Ampligen® NDA
until the end of November 2009 and, as Hemispherx announced on December 1, 2009,
issued a Complete Response Letter to the Company, advising that the Agency could
not approve the NDA at that time and outlining steps that Hemispherx needed to
take to receive approval, including the design and completion of an additional
clinical trial.
- 3
-
On
December 29, 2009, plaintiff Michael K. Hanna filed a shareholder derivative
action on behalf of Hemispherx under the caption, Hanna v. Carter, et al.,
2:09-cv-06160-PD, alleging, inter alia, that the
Individual Defendants breached their fiduciary duties to Hemispherx by causing
the Company to issue a series of allegedly materially false and misleading
statements and omissions between February 18, 2009 and December 1, 2009
regarding the timing and status of the FDA’s review of the Ampligen®
NDA. On January 21, 2010, and January 26, 2010, respectively,
plaintiffs Robert Rank and Gary Bonnet filed substantially similar shareholder
derivative complaints on behalf of Hemispherx. These actions were
captioned Rank v. Carter, et
al. 2:10-cv-262-PD, and Bonnet v. Carter, et al.,
2:10-cv-326-PD. The Court subsequently consolidated all three
derivative lawsuits, forming the Action.
On August
12, 2010, counsel for the Parties to the Action, among others, participated in
an all-day mediation before retired U.S. District Court Magistrate Judge Diane
M. Welsh (the “Mediation”). Plaintiffs, as part of the settlement
dialogue, issued a settlement demand to Defendants which included, among other
things, proposed corporate governance reforms. At the conclusion of
the Mediation, however, the parties were not able to resolve the
Action.
On
September 15, 2010, Plaintiffs filed a consolidated complaint in the
Action. On October 18, 2010, Defendants filed a motion to dismiss the
Action. From the Mediation through November 5, 2010, the Parties to
the Action continued to engage in arm’s-length settlement discussions, which
ultimately culminated in an agreement in principle to resolve the
Action.
- 4
-
|
II.
|
PLAINTIFFS’
COUNSEL’S INVESTIGATION AND RESEARCH, PLAINTIFFS’ CLAIMS AND THE BENEFITS
OF SETTLEMENT
|
Plaintiffs’
Counsel conducted an extensive investigation relating to the claims and the
underlying events alleged in the Action including, but not limited to: (1)
inspecting, analyzing, and reviewing Hemispherx’s public filings with the U.S.
Securities and Exchange Commission (“SEC”), press releases, announcements,
transcripts of investor conference calls, and news articles; (2) drafting and
filing the various complaints in the Action, including a detailed consolidated
complaint; (3) preparing a mediation brief and participating in the Mediation;
(4) researching the applicable law with respect to the claims asserted in the
Action and the potential defenses thereto; (5) researching corporate governance
issues; and (6) participating in extensive settlement discussions with counsel
for the Defendants. Plaintiffs’ Counsel believe that the claims
asserted in the Action have merit and that their investigation supports the
claims asserted. Without conceding the merit of any of Defendants’
defenses or the lack of merit of any of their own allegations, and solely in
order to avoid the potentially protracted time, expense, and uncertainty
associated with continued litigation, including potential trial and appeals,
Plaintiffs have concluded that it is desirable that the Action be fully and
finally settled in the manner and upon the terms and conditions set forth in
this Stipulation. Plaintiffs and Plaintiffs’ Counsel recognize the
significant risk, expense, and length of continued proceedings necessary to
prosecute the Action against the Individual Defendants through trial and through
possible appeals. Plaintiffs’ Counsel also have taken into account
the uncertain outcome and the risk of any litigation, especially in complex
cases such as the Action, as well as the difficulties and delays inherent in
such litigation. Based on their evaluation, Plaintiffs and
Plaintiffs’ Counsel have determined that the Settlement is in the best interests
of Plaintiffs, Hemispherx, and Current Hemispherx Shareholders (as defined
herein), and have agreed to settle the Action upon the terms and subject to the
conditions set forth herein.
III. DEFENDANTS'
DENIALS OF WRONGDOING AND LIABILITY
The
Individual Defendants have denied and continue to deny that they have committed
or attempted to commit any violations of law, any breach of fiduciary duty owed
to Hemispherx, or any wrongdoing whatsoever. Without admitting the
validity of any of the claims Plaintiffs have asserted in the Action, or any
liability with respect thereto, the Individual Defendants and Hemispherx have
concluded that it is desirable that the claims be settled on the terms and
subject to the conditions set forth herein. Defendants are entering
into this Settlement because it will eliminate the uncertainty, distraction,
disruption, burden, risk, and expense of further litigation. Further,
Defendants acknowledge that the Settlement is fair, reasonable, adequate, and in
the best interests of Hemispherx and Current Hemispherx
Shareholders.
- 5
-
Neither
this Stipulation, nor any of its terms or provisions, nor entry of the Judgment,
nor any document or exhibit referred or attached to this Stipulation, nor any
action taken to carry out this Stipulation, is or may be construed or used as
evidence of the validity of any of Plaintiffs’ Released Claims (defined herein),
or as an admission by or against Defendants of any fault, wrongdoing, or
concession of liability whatsoever.
IV. THE
SETTLEMENT HEARING
The
Settlement Hearing will be held before the Honorable Paul S. Diamond on
____March 21,
2011 at 10:00
a.m. at the United States District Court for the Eastern District of
Pennsylvania, James A. Byrne Federal Courthouse, located at 601 Market Street,
Room 6613, Philadelphia, Pennsylvania 19106 to determine: (i) whether the
proposed Settlement, upon the terms set forth in the Stipulation, should be
finally approved in all respects as fair, reasonable, and adequate; (ii) whether
the Final Order and Judgment approving the Settlement should be entered; and
(iii) whether Plaintiffs’ Counsel’s agreed-to Fee Award should be finally
approved. The Settlement Hearing may be continued by the Court at the
Settlement Hearing, or at any adjourned session thereof without further
notice.
V. THE
SETTLEMENT
The terms
and conditions of the proposed Settlement are set forth fully in the Stipulation
described above. The Stipulation has been filed with the Court and is
also available for viewing on the websites of Robbins Umeda LLP at
www.robbinsumeda.com and Hemispherx at www.hemispherx.net. The
following is only a summary of its terms.
Hemispherx’s
Board of Directors (the “Board”) has agreed to adopt, or to maintain where
already implemented, certain corporate governance measures set forth in full at
Exhibit A attached to the Stipulation. These corporate governance and
internal control reforms include: (i) the establishment and maintenance of a
Disclosure Controls Committee; (ii) amendment of the Company’s Audit Committee
Charter to include oversight of the Disclosure Controls Committee; and (iii) the
maintenance of a Lead Independent Director. Hemispherx acknowledges
that the Board’s decision to implement these corporate governance measures is
substantially due to the institution, prosecution, and settlement of the
Action. Hemispherx further acknowledges that the corporate governance
measures are significant and extensive and confer substantial benefits upon the
Company and Current Hemispherx Shareholders.
- 6
-
VI. DISMISSAL
AND RELEASES
In
connection with the Court’s approval of the Settlement, the Parties will jointly
request entry of the Final Order and Judgment by the Court, dismissing with
prejudice of all claims alleged by Plaintiffs against the Individual Defendants
in the Action.
Upon the
entry of the Final Order and Judgment, Plaintiffs, Hemispherx, and Current
Hemispherx Shareholders, on behalf of themselves, and each of the Plaintiffs’
Released Persons, shall be deemed to have - and by operation of a final judgment
in the Action shall have - released, waived, discharged, and dismissed any and
all of Plaintiffs’ Released Claims, and shall forever be barred and enjoined
from instituting, commencing, or prosecuting any and all Plaintiffs’ Released
Claims, against Defendants and Defendants’ Released Persons.
Further,
upon entry of the Final Order and Judgment, Defendants, on behalf of themselves,
each of the Defendants’ Released Persons, shall be deemed to have - and by
operation of a final judgment in the Action shall have - released, waived,
discharged, and dismissed any and all Defendants’ Released Claims, and shall
forever be barred and enjoined from instituting, commencing, or prosecuting any
and all Defendants’ Released Claims, against Plaintiffs and Plaintiffs’ Released
Persons.
VII. ATTORNEYS'
FEES AND EXPENSES
In
recognition of the substantial benefits conferred upon Hemispherx and Current
Hemispherx Shareholders as a result of the settlement of the Action, Hemispherx
shall cause to be paid to Plaintiffs’ Counsel an award of attorneys’ fees and
expenses in the Action in the total amount of $200,000. The Parties
mutually agree that this Fee Award is fair and reasonable in light of the
benefits bestowed upon Hemispherx and Current Hemispherx Shareholders by the
Stipulation. Plaintiffs’ Counsel shall request final approval of the
Fee Award at the Settlement Hearing. To date, Plaintiffs’ Counsel
have neither received any payment for their services in conducting the Action,
nor have they been reimbursed for their out-of-pocket expenses
incurred. Plaintiffs’ Counsel believe that the Fee Award agreed to is
within the range of attorneys’ fees approved by courts under similar
circumstances in litigation of this type.
- 7
-
VIII.
THE RIGHT TO OBJECT AND/OR BE HEARD AT THE HEARING
Any
Current Hemispherx Shareholder may object and/or appear and show cause, if he,
she, or it has any concern, why the Settlement should not be approved as fair,
reasonable, and adequate, or why the Final Order and Judgment should not be
entered thereon, or why the Fee Award should not be approved; provided, however,
unless otherwise ordered by the Court, no Current Hemispherx Shareholder shall
be heard or entitled to contest the approval of the terms and conditions of the
Settlement, or, if approved, the Final Order and Judgment to be entered thereon
approving the same, or the Fee Award, unless that shareholder has, at least ten (10)
business days prior to the Settlement Hearing: (1) filed with the Clerk
of the Court a written objection to the Settlement setting forth: (a) the nature
of the objection; (b) proof of ownership of Hemispherx common stock through the
date of the Settlement Hearing, including the number of shares of Hemispherx
common stock and the date of purchase; and (c) any documentation in support of
such objection; and (2) if a Current Hemispherx Shareholder intends to appear
and requests to be heard at the Settlement Hearing, such shareholder must have,
in addition to the requirements of (1) above, filed with the Clerk of the Court:
(a) a written notice of such shareholder’s intention to appear; (b) a statement
that indicates the basis for such appearance; and (c) the identities of any
witnesses the shareholder intends to call at the Settlement Hearing and a
statement as to the subjects of their testimony. If a Current
Hemispherx Shareholder files a written objection and/or written notice of intent
to appear, such shareholder must also simultaneously serve copies of such
notice, proof, statement, and documentation, together with copies of any other
papers or briefs such shareholder files with the Court (either by hand delivery
or by first class mail) upon each of the following:
- 8
-
|
Robert
B. Weiser
|
Robert
L. Hickok
|
|
THE
WEISER LAW FIRM, P.C.
|
PEPPER
HAMILTON LLP
|
|
121
N. Wayne Avenue, Suite 100
|
3000
Two Logan Square
|
|
Wayne,
PA 19087
|
18th
and Arch Streets
|
|
Philadelphia,
PA 19103
|
|
|
Counsel
for Plaintiffs
|
|
|
Counsel
for Defendants
|
Any
Current Hemispherx Shareholder who does not make his, her, or its objection in
the manner provided herein shall be deemed to have waived such objection and
shall forever be foreclosed from making any objection to the fairness,
reasonableness, or adequacy of the settlement and the Fee Award as incorporated
in the Stipulation, unless otherwise ordered by the Court, but shall otherwise
be bound by the Final Order and Judgment to be entered and the releases to be
given.
IX. CONDITIONS
FOR SETTLEMENT
The
settlement is conditioned upon the occurrence of certain events described in the
Stipulation, which requires, among other things: (1) entry of the requested
Final Order and Judgment by the Court; and (2) expiration of the time to appeal
from or alter or amend the judgment. If, for any reason, any one of
the conditions described in the Stipulation is not met and the entry of the
Final Order and Judgment does not occur, the Stipulation might be terminated
and, if terminated, will become null and void; and the Parties to the
Stipulation will be restored to their respective positions as of December 10,
2010.
X. EXAMINATION
OF PAPERS AND INQUIRIES
This
Notice contains only a summary of the terms of the Settlement. For a
more detailed statement of the matters involved in the Action, reference is made
to the Stipulation, which may be inspected at the Clerk of the Court's Office,
U.S. District Court for the Eastern District of Pennsylvania, 601 Market Street,
Room 2609, Philadelphia, Pennsylvania 19106, during business hours of each
business day. The Notice will also be available for viewing on the
websites of Robbins Umeda LLP at www.robbinsumeda.com and Hemispherx at
www.hemispherx.net.
- 9
-
Any other
inquiries regarding the Settlement or the Action should be addressed in writing
to the following:
ROBERT B.
WEISER
THE
WEISER LAW FIRM, P.C.
121 N.
Wayne Avenue, Suite 100
Wayne, PA
19087
Telephone:
(610) 225-2677
Facsimile:
(610) 225-2678
Counsel
for Plaintiffs
PLEASE
DO NOT TELEPHONE THE COURT OR HEMISPHERX
REGARDING
THIS NOTICE.
- 10
-