Full Press Release Details
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
NOTICE OF PENDENCY AND PROPOSED SETTLEMENT OF STOCKHOLDER DERIVATIVE ACTION, SETTLEMENT HEARING, AND
IF YOU HOLD COMMON STOCK OF STOKE THERAPEUTICS, INC. FOR THE BENEFIT OF ANOTHER, PLEASE PROMPTLY TRANSMIT THIS DOCUMENT TO SUCH BENEFICIAL
The purpose of this Notice is to inform you of (i) the pendency of the above-captioned action (the Action ),
which was brought in the Court of Chancery of the State of Delaware (the Court ) by a stockholder of Stoke Therapeutics, Inc. ( Stoke or the Company ) asserting claims derivatively on behalf of the Company;
(ii) the proposed settlement of the Action (the Settlement ), subject to Court approval and subject to other conditions of the Settlement being satisfied, as provided for in a Stipulation and Agreement of Compromise, Settlement and
Release dated August 20, 2024 (the Stipulation ), which was filed with the Court and is publicly available for review; and (iii) your right to participate in a hearing to be held on October 28, 2024, at 11:00 a.m.,
before the Court at the Court of Chancery, Leonard L. Williams Justice Center, 500 North King Street, Wilmington, DE 19801 (the Settlement Hearing ). The purposes of the Settlement Hearing are to determine whether the Court should:
(i) approve the proposed Settlement as fair, reasonable and adequate; (ii) dismiss the Action with prejudice; (iii) enter an Order and Final Judgment approving the Settlement; (iv) approve a petition for an award of
attorneys fees and expenses to Plaintiff s counsel in the Action; (v) approve a petition for a service award to Plaintiff; and (vi) hear and determine any objections to the Settlement, Plaintiff s counsel s petition
for attorneys fees and expenses, or to Plaintiff s petition for a service award.
The Court directed that this Notice be mailed
to you because Stoke s records indicate that you are a Stockholder of Stoke. The Court has directed us to send you this Notice because you have a right to know about your options before the Court rules on the proposed Settlement. Additionally,
you have the right to understand how this Action generally affects your legal rights. The issuance of this Notice is not an expression by the Court of any findings of fact or any opinion concerning the merits of any claim in the Action, and the
Court has not yet decided whether to approve the Settlement.
PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. THIS NOTICE RELATES
TO A PROPOSED SETTLEMENT OF THE LITIGATION REFERRED TO IN THE
CAPTION AND CONTAINS IMPORTANT INFORMATION REGARDING YOUR RIGHTS. IF THE COURT APPROVES THE PROPOSED SETTLEMENT, YOU WILL BE FOREVER BARRED FROM CONTESTING THE FAIRNESS, REASONABLENESS OR
ADEQUACY OF THE PROPOSED SETTLEMENT, AND FROM PURSUING THE RELEASED CLAIMS (AS DEFINED BELOW).
The Stipulation was entered into as of
August 20, 2024, between and among Gerald J. Alsid ( Plaintiff ), individually and derivatively on behalf of Stoke; Defendants Edward M. Kaye, Seth L. Harrison, Arthur O. Tzianabos, Adrian R. Krainer, Garry E. Menzel, Julie Anne
Smith, Arthur A. Levin, Jennifer C. Burstein, and Samuel W. Hall (collectively, the Individual Defendants ); and Nominal Defendant Stoke (collectively with the Individual Defendants, Defendants ). Plaintiff, Defendants, and
Stoke are collectively referred to herein as the Parties.
This Notice describes the rights you may have in the Action and
pursuant to the Stipulation and what steps you may take, but are not required to take, in relation to the Settlement. If the Court approves the Settlement, the Parties will ask the Court at the Settlement Hearing to enter an Order and Final Judgment
dismissing the Action with prejudice in accordance with the terms of the Stipulation.
WHAT IS THE PURPOSE OF THIS NOTICE?
1. The purpose of this Notice is to explain the Action, the terms of the proposed Settlement, and how the Settlement affects the legal
rights of the Company s stockholders.
2. In a derivative action, one or more people and/or entities who are current
stockholders of a corporation sue on behalf of and for the benefit of the corporation, seeking to enforce the corporation s legal rights.
3. As described more fully below, current stockholders have the right to object to the proposed Settlement, the application by
Plaintiff s counsel for an award of fees and expenses and Plaintiff s application for a service award. They have the right to appear and be heard at the Settlement Hearing, which will be held before The Honorable Lori W. Will on
October 28, 2024, at 11:00 a.m., Court of Chancery, Leonard L. Williams Justice Center, 500 North King Street, Wilmington, DE 19801 or as may be undertaken via a remote proceeding such as Zoom or by telephone. At the Settlement Hearing, the
Court will: (a) determine whether the proposed
Settlement should be approved as fair, reasonable and adequate; (b) determine whether the Court should finally approve the Stipulation and enter the Order and Final Judgment as provided in
the Stipulation and dismiss the Action with prejudice, thereby extinguishing and releasing the Released Claims; (c) determine whether and in what amount an award of attorneys fees (including expenses) should be paid to Plaintiff s
Counsel; (d) determine whether and in what amount a service award should be paid to Plaintiff; (e) hear and determine any objections to the Settlement, Plaintiff s Counsel s petition for attorneys fees (including expenses),
or Plaintiff s petition for a service award; and (e) rule on any other matters the Court may deem appropriate.
Court has reserved the right to adjourn or continue the Settlement Hearing, including consideration of the application by Plaintiff s counsel for an award of attorney s fees and expenses and/or Plaintiff s application for a service
award, without further notice to you other than by announcement at the Settlement Hearing or any adjournment thereof, or notation on the docket in the Action. The Court has further reserved the right to approve the Settlement, at or after the
Settlement Hearing, with such modifications as may be consented to by the Parties and without further notice of any kind.
CASE ABOUT? WHAT HAS HAPPENED SO FAR?
THE FOLLOWING RECITATION DOES NOT CONSTITUTE FINDINGS OF THE COURT AND SHOULD NOT BE UNDERSTOOD
AS AN EXPRESSION OF ANY OPINION OF THE COURT AS TO THE MERITS OF ANY CLAIMS OR DEFENSES BY ANY OF THE PARTIES. IT IS BASED ON STATEMENTS OF THE PARTIES AND IS SENT FOR THE SOLE PURPOSE OF INFORMING YOU OF THE EXISTENCE OF THE ACTION AND OF A HEARING
ON A PROPOSED SETTLEMENT SO THAT YOU MAY MAKE APPROPRIATE DECISIONS AS TO STEPS YOU MAY, OR MAY NOT, WISH TO TAKE IN RELATION TO THIS LITIGATION.
5. On October 26, 2022, Plaintiff commenced this derivative action in this Court on behalf of Stoke against the Individual
Defendants current and former members of the Company s board of directors (the Board ) styled Alsid v. Kaye et. al., C.A. No. 2022-0966-LWW (the Action ) by filing a
Verified Stockholder Derivative Complaint (the Complaint );
6. The Complaint, which incorporated documents produced to Plaintiff resulting from a
books and records demand pursuant to 8 Del. C. 220 (the 220 Demand and 220 Documents ), includes claims for breach of fiduciary duty, unjust enrichment, aiding and abetting breaches of fiduciary duty, and waste
of corporate assets based upon allegations that during fiscal years 2019, 2020 and 2021, the Individual Defendants approved, awarded, and received excessive and improper compensation.
7. On March 13, 2023, Stoke and the Individual Defendants answered the Complaint.
8. Since the filing of the Action, the Parties have engaged in arm s-length negotiations,
through counsel, including through written correspondence, calls amongst counsel, and by way of Defendants production of additional documents and information to Plaintiff, to attempt to reach a settlement of the claims asserted by Plaintiff in
9. After months of negotiations, Plaintiff and Defendants reached an agreement to settle all of the claims asserted in
the Action on the terms set forth in the Stipulation and detailed below.
10. In order to avoid the uncertainty of litigation,
possible appeals, and further legal expenses, the Parties desire to end the Action, and to compromise and settle the Action in its entirety.
11. The Parties executed the Stipulation on August 20, 2024.
WHAT ARE THE TERMS OF THE SETTLEMENT?
12. Set forth below is a summary of the principal terms of the proposed Settlement, as agreed to by the Parties, subject to the approval
of the Court. The following statements are a summary, and reference is made to the Stipulation and Exhibits thereto, which are publicly available, for a full and complete statement of the terms of the Settlement.
13. In consideration for the full settlement and release of the Released Claims (as
defined below), and subject to the terms and conditions set forth in the Stipulation, Defendants shall implement within ten (10) days of entry of the Order and Final Judgment and maintain for a period of five years, the following Corporate
Governance Reforms (the Reforms ), which are fully set forth in Paragraphs 2 through 7 of the Stipulation:
14. Defendants shall pay, or shall cause to be paid, the reasonable and necessary
costs and expenses incurred in providing this Notice to the Public Stockholders (the Notice Costs ).
WHAT ARE THE PARTIES
REASONS FOR THE SETTLEMENT?
15. The Settlement set forth in the Stipulation reflects the results of the Parties negotiations
and the terms of the Stipulation, and an agreement-in-principle was reached only after arm s-length negotiations.
16. Plaintiff and Plaintiff s Counsel thoroughly considered the facts and law underlying the claims asserted in the Action.
Plaintiff s agreement to settle the Action is not intended to be and shall not be construed as an admission or concession concerning the relative strength or merit of the claims. However, Plaintiff and Plaintiff s Counsel also recognize
the significant risk, expense, and length of continued proceedings necessary to prosecute the Action through trial and possible appeals, and took these factors into account.
17. Plaintiff believes that the Released Claims had merit when filed and continue to have merit, and Plaintiff is settling the Released
Claims because Plaintiff believes that the Settlement will provide substantial value to the Company and its stockholders. Plaintiff has concluded that the Settlement is fair, reasonable, and in the best interests of the Company and its stockholders,
and that it is reasonable to pursue the Settlement based on the terms and procedures outlined in the Stipulation.
the changes to Stoke s practices and procedures for non-employee director compensation, and on the basis of information available to them, including publicly available information, Plaintiff and
Plaintiff s Counsel have determined that the proposed Settlement is fair, reasonable, adequate, and in the best interests of Stoke. The Settlement provides the needed changes to the Company s
non-employee director compensation practices and procedures without the risk that continued litigation could result in obtaining similar or lesser relief after continued extensive and expensive litigation,
including trial and possible appeals, the outcome of which is inherently uncertain.
19. Defendants have denied, and continue to
deny, that they have committed or threatened to commit any violations of law, breaches of duty, breaches of contract, or other wrongdoing toward the Company, Plaintiff, or anyone else concerning any of the claims, allegations, or requests for relief
set forth in the complaints filed in this Action. Defendants have agreed to the Settlement solely
because they consider it desirable that the claims against them in the Action be settled and dismissed with prejudice in order to, among other things, (i) avoid the substantial expense,
inconvenience and distraction of continued litigation, and (ii) avoid any possibility of a finding of liability, however remote, and finally put to rest the claims asserted against the Defendants in the Action.
WHAT WILL HAPPEN IF THE SETTLEMENT IS APPROVED?
WHAT CLAIMS WILL THE SETTLEMENT RELEASE?
20. If the Settlement is approved, the Court will enter an Order and Final Judgment approving the Settlement in accordance with the
Stipulation, at which time the Action will be dismissed with prejudice on the merits. The first date by which such order is finally affirmed on appeal or is no longer subject to appeal, and the time for any petition for re-argument, appeal or review, by leave, writ of certiorari, or otherwise, has expired, constitutes Final Approval. Upon receipt of Final Approval, and subject to the conditions set forth in the
Stipulation, the following releases will occur:
Stipulation 9(a)(b). (1) Plaintiff s Releasees (defined
below) shall fully, finally, and forever release and discharge each and all of the Defendants Releasees (defined below) from any and all of Plaintiff s Released Claims (defined below); and (2) Defendants Releasees shall fully,
finally, and forever release and discharge each and all of the Plaintiff s Releasees from any and of Defendants Released Claims (defined below).
Stipulation 1(b): Defendants Released Claims means and includes any and all manner of claims, debts, demands,
rights, liabilities, losses, obligations, duties, damages, costs, debts, expenses, interest, penalties, sanctions, fees, attorneys fees, actions, potential actions, causes of action, suits, agreements, judgments, decrees, matters, issues and
controversies alleged in or referred to in the Action, whether known or unknown, disclosed or undisclosed, accrued or unaccrued, apparent or not apparent, foreseen or unforeseen, matured or not matured, suspected or unsuspected, liquidated or not
liquidated, fixed or contingent, including Unknown Claims (as defined herein), whether based on state, local, foreign, federal, statutory, regulatory, common, or other law or rule, that are, have been, could have been, could now be asserted through
the date of the Settlement Hearing (as defined below), in the Action or in any other court, tribunal, or proceeding by Defendants Releasees against any of Plaintiff s Releasees that are based upon or arise out of relate in any way to, or