Leonard J. Brandt Issues Statement Regarding CNS Response, Inc.: Delaware Court of Chancery Issues Status Quo Order
IRVINE, Calif.-(Business Wire)-September 29, 2009 - Len Brandt announced that the Delaware Court of Chancery today granted Mr. Brandt a status quo order, which will remain in effect pending the Court's ultimate decision on the validity of the Special Meeting of Stockholders of CNS Response, Inc. held on September 4, 2009.
The status quo order, which was requested by Mr. Brandt, restrains CNS Response, Inc. from, among other things, concluding any additional debt or equity financings or further altering company bylaws. It also requires the company to notice Mr. Brandt with adequate time to object on other actions of significance including entering into contracts, making expenditures, or altering employment or consulting agreements. Mr. Brandt stated, "I am very pleased that the Court granted this status quo order.”
Because under the terms of the status quo order, Mr. Brandt and incumbent Directors will continue as the Board until the trial’s conclusion, the Annual Meeting (expected to be held tomorrow) will be of no effect until the trial is completed and only if the Court rules against the validity of the Special Meeting.
The Court also scheduled a two-day trial to commence on Tuesday, December 1, 2009. Following trial, the Court will rule on whether the Special Meeting was validly held. If the Court affirms the validity of the Special Meeting, William E. Bunney, Jr., M.D., William Murray, Mordechay Yekutiel, Andy Goren, David W. Mazepink and Mr. Brandt shall be directors of CNS Response, Inc., replacing five out of six of seven of the CNS directors who were in office prior to the Special Meeting. Len Brandt filed a lawsuit in the Delaware Court of Chancery to enforce the results of the stockholder vote because incumbent management at the Company has not accepted the validity of the Special Meeting. A majority of the incumbents of CNS Response object to affirming the results of the Special Meeting.
CNS's proxy materials asserted that "[i]n order to justify the entry of a status quo order, Mr. Brandt must demonstrate (i) that the order will avoid irreparable harm, (ii) that he has a reasonable likelihood of success on the merits of his case and (iii) that the harm to Mr. Brandt in not having the order outweighs the harm to the Company." The Court’s letter accompanying the status quo order did not explicitly address Mr. Brandt’s likelihood of success on the merits.
The complete text of the status quo order, the accompanying letter, and the scheduling order can be found on Mr. Brandt's web site at http://www.leonardjbrandt.com.
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