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Health Discovery Settles Litigation with Former Director

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Health Discovery today said that it has reached a settlement with William Quirk, a former member of the board of directors of the firm who had filed suit against it earlier this year over the expiration of certain warrants.

The Savannah, Ga.-based developer of biomarker-based diagnostics announced the settlement in conjunction with the results of a warrant conversion tied to its 2007 private placement. The warrant conversion resulted in proceeds of nearly $1.7 million to the company. The company also noted that almost 11 million shares were issued to the 2007 private placement warrant holders who converted their warrants.

The settlement with Quirk resulted in him exchanging his 32.5 million warrants from the 2007 placement with 10 million new warrants. The new warrants consist of three tranches: two of which are for 3,333,333 warrants each and one for 3,333,334 warrants, with strike prices of $.20, $.25, and $.30, and exercise terms of 12 months, 18 months, and 24 months, respectively.

Quirk had filed the suit in May claiming that since he is a 10 percent shareholder of the firm the expiration date on his warrants should be Sep. 7, 2012, rather than Sep. 7, 2010.

As part of the settlement with Health Discovery, Quirk also has agreed to refrain from taking certain actions related to the firm's affairs for a period of five years. Among these actions are any proposals to enter into any tender or merger offer or recapitalization of the company unless approved by the company's board of directors and publicly announced, and any short selling of Health Discovery's stock.

In addition, Health Discovery has dropped its counterclaim against Quirk for breach of fiduciary duty.