Case 1:22-cv-05392 Document 1 Filed 06/26/22 Page 1 of 18
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`-------------------------------------------------------------
`CHARLES WOOLARD,
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`Plaintiff,
`
`v.
`
`
`THERAPEUTICSMD, INC., HUGH
`O’DOWD, MARLAN D. WALKER, TOMMY
`G. THOMPSON, PAUL M. BISARO,
`COOPER C. COLLINS, KAREN L. LING,
`JULES A. MUSING, GAIL NAUGHTON and
`ANGUS C. RUSSELL.
`
` Defendants.
`
`
`
`
`
`Case No. 1:22-cv-05392
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`COMPLAINT FOR VIOLATIONS OF
`SECTIONS 14(d), 14(e) AND 20(a) OF
`THE SECURITIES EXCHANGE ACT
`OF 1934
`
`
`JURY TRIAL DEMAND
`
`
`
`COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
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`Plaintiff Charles Woolard (“Plaintiff”), by his undersigned attorneys, alleges as follows
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`based (i) upon personal knowledge with respect to himself and his own acts, and (ii) upon
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`information and belief as to all other matters based on the investigation conducted by his attorneys,
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`which included, among other things, a review of relevant U.S. Securities and Exchange
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`Commission (“SEC”) filings, and other publicly available information.
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`NATURE OF THE ACTION
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`1.
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`This action is brought by Plaintiff against TherapeuticsMD, Inc. (“TXMD” or the
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`“Company”) and the members of the Company’s board of directors (“Board”) for violations of (i)
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`Sections 14(d), 14(e) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”), 15
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`U.S.C. § 78n(d), § 78n(e) and § 78t(a), and (ii) 17 CFR § 240.14d-101. Plaintiff’s claims arise in
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`connection with the Board’s recommendation that the stockholders of the Company (“TXMD
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`Stockholders”) tender their shares to an affiliate of EW Healthcare Partners (“EWHP”), pursuant
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`to the offer of EWHP’s affiliate to acquire all of the issued and outstanding shares of TXMD for
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`Case 1:22-cv-05392 Document 1 Filed 06/26/22 Page 2 of 18
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`$10.00 per share in cash via a tender offer (“Tender Offer”).
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`2.
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`On May 31, 2022, TXMD and EWHP announced that they had entered into an
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`agreement (“Merger Agreement”) providing for EWHP’s affiliate to purchase all of the
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`outstanding shares of TXMD for $10.00 per share in cash (“Merger Consideration”) via a Tender
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`Offer.
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`3.
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`On June 6, 2022, EWHP’s affiliate commenced the Tender Offer by filing a Tender
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`Offer Statement on Schedule TO (“TO Statement”) with the Securities and Exchange Commission
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`(“SEC”). The TO Statement provides that the Tender Offer expires one minute after 11:59 p.m.,
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`Eastern Time, on July 5, 2022 (“Expiration Date”), unless extended or earlier terminated in
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`accordance with the Merger Agreement. Upon satisfaction of various conditions described in the
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`TO Statement, and consummation of the Tender Offer, TXMD will survive as a wholly-owned
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`subsidiary of EWHP’s affiliate under Nevada law (“Merger”).
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`4.
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`On June 10, 2022, Defendants filed a materially false and misleading Schedule
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`14D-9 Solicitation/Recommendation Statement (“Recommendation Statement”) with the SEC
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`recommending that TXMD Stockholders tender their shares to EWHP pursuant to the Tender
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`Offer. The material misrepresentations and omissions in the Recommendation Statement render it
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`false and misleading in violation of the above-referenced Exchange Act provisions.
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`5.
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`It is imperative that such violations are promptly cured to enable TXMD
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`Stockholders to make an informed decision concerning whether to tender their shares to EWHP
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`before the Expiration Date. Therefore, Plaintiff seeks to enjoin Defendants from closing the
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`Tender Offer and/or taking any steps to consummate the Merger, until such violations are cured.
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`Alternatively, if the Tender is closed and the Merger is consummated, Plaintiff reserves the right
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`to recover damages suffered by himself and similarly-situated investors as a result of such
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`Case 1:22-cv-05392 Document 1 Filed 06/26/22 Page 3 of 18
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`violations.
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`JURISDICTION AND VENUE
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`6.
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`This Court has subject matter jurisdiction over the claims asserted herein for
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`violations of Sections 14(d), 14(e) and 20(a) of the Exchange Act pursuant to Section 27 of the
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`Exchange Act, 15 U.S.C. § 78aa, and 28 U.S.C. § 1331 (federal question jurisdiction).
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`7.
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`This Court has personal jurisdiction over each of the Defendants because each
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`defendant has sufficient minimum contacts with the United States so as to make the exercise of
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`jurisdiction by this Court permissible under traditional notions of fair play and substantial justice.
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`See Moon Joo Yu v. Premiere Power LLC, No. 14 CIV. 7588 KPF, 2015 WL 4629495, at *5
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`(S.D.N.Y. Aug. 4, 2015) (because Exchange Act provides for nationwide service of process, and
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`Defendant resides within the United States, and conducts business within the United States, he
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`should reasonably anticipate being haled into court in the United States, and Court’s exercise of
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`personal jurisdiction over Defendant with respect to Plaintiffs’ securities fraud claim is proper); In
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`re LIBOR-Based Fin. Instruments Antitrust Litig., No. 11 MDL 2262 NRB, 2015 WL 6243526, at
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`*23 (S.D.N.Y. Oct. 20, 2015) (“[w]hen the jurisdictional issue flows from a federal statutory grant
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`that authorizes suit under federal-question jurisdiction and nationwide service of process . . .
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`Second Circuit has consistently held that the minimum-contacts test in such circumstances looks
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`to contacts with the entire United States rather than with the forum state.”).
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`8.
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`Venue is proper under 28 U.S.C. § 1391(b) because Defendants transact business
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`in this District. In particular, TXMD’s common stock trades under the ticker “TXMD” on Nasdaq,
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`which is headquartered in this District, and the false and misleading Recommendation Statement
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`was filed with the SEC, which has a regional office in this District. See Mariash v. Morrill, 496
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`F.2d 1138, 1144 (2d Cir. 1974) (venue appropriate in the Southern District of New York where an
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`act or transaction constituting the alleged violation occurred in the Southern District of New York);
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`United States v. Svoboda, 347 F.3d 471, 484 n.13 (2d Cir. 2003) (venue in tender offer fraud
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`prosecution appropriate in District).
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`PARTIES
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`9.
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`Plaintiff is, and has been at all relevant times, a continuous stockholder of TXMD
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`stock.
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`10.
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`Defendant TXMD is a Nevada corporation with its principal executive offices
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`located at 951 Yamato Road, Suite 220, Boca Raton, Florida 33431.
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`11.
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`Defendant Hugh O’Dowd (“O’Dowd”) has served as the Company’s President
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`since August 3, 2021, the Company’s Chief Executive Officer since December 14, 2021, and as a
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`member of the Board since December 18, 2021.
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`12.
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`Defendant Marlan D. Walker (“Walker”) has served as General Counsel and
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`Secretary of the Company at all relevant times. Walker signed the Recommendation Statement in
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`his capacity as General Counsel and Secretary of TXMD.
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`13.
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`Defendant Tommy G. Thompson has served as the Chairman of the Board at all
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`relevant times.
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`14.
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`15.
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`16.
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`17.
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`Defendant Paul M. Bisaro has served as a member of the Board at all relevant times.
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`Defendant Cooper C. Collins has served as a member of the Board at all relevant
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`Defendant Karen L. Ling has served as a member of the Board at all relevant times.
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`Defendant Jules A. Musing has served as a member of the Board at all relevant
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`18.
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`Defendant Gail Naughton has served as a member of the Board at all relevant times.
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`4
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`times.
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`times.
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`19.
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`Defendant Angus C. Russell has served as a member of the Board at all relevant
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`times.
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`20.
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`Defendants identified in paragraphs 11 to 19 are collectively referred to herein as
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`the “Individual Defendants,” and together with TXMD, collectively, the “Defendants.”
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`SUBSTANTIVE ALLEGATIONS
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`Company Background
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`21.
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`TXMD is a women’s healthcare company with three FDA-approved products: (i)
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`IMVEXXY®, a prescription medicine for the treatment of moderate-to-severe dyspareunia; (ii)
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`ANNOVERA®, a ring-shaped, reversible contraceptive insert; and (iii) BIJUVA®, a prescription
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`medicine for the treatment of moderate-to-severe vasomotor symptoms due to menopause. TXMD
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`also previously operated a prescription drug service called vitaCare.
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`Background to the Merger
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`22.
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`On April 24, 2019, the Company entered into a Financing Agreement with Sixth
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`Street Specialty Lending, Inc. (“Sixth Street”), which provided a $300 million first lien secured
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`term loan credit facility to the Company.
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`23.
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`On July 29, 2021, TXMD engaged Greenhill & Co., LLC (“Greenhill”) to advise
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`the Company with respect to various strategic and business alternatives.
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`24.
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`On September 15, 2021, TXMD received a deficiency letter from Nasdaq notifying
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`the Company that it was out of compliance with the minimum bid price requirement of $1.00 per
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`share for continued listing of the Company’s Common Stock on Nasdaq. As discussed below,
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`TXMD subsequently regained compliance by effecting a 1-to-50 reverse stock split (which had
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`the effect of increasing the stock price by a multiple of 50, and reducing the number of shares
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`outstanding by a multiple of 50).
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`25.
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`On October 8, 2021, TXMD engaged Locust Walk to act as the Company’s
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`financial advisor with respect to disposition of the Company’s vitaCare prescription drug service.
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`26.
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`On December 15, 2021, TXMD notified Sixth Street that it would likely be in
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`breach of the minimum liquidity covenant contained in the Financing Agreement in the first
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`quarter of 2022, at which point Sixth Street indicated that they would not entertain further
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`amendments to the Financing Agreement and encouraged the Company to begin a process to sell
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`the Company as a means to address the pending default and potential acceleration of maturity of
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`the Financing Agreement.
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`27.
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`Beginning on January 7, 2022, at the direction of the Board, Greenhill initiated
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`contact with EWHP and other parties to gauge their interest in participating in a strategic process
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`to acquire the Company.
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`28.
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`A total of 27 parties engaged in the process signed confidentiality agreements with
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`the Company, including six potential strategic parties and 21 potential financial sponsors. The
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`Recommendation Statement discloses that all of the confidentiality agreements included a
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`customary standstill provision for the benefit of the Company that permitted the counterparty and
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`its affiliates to initiate private discussions with, and submit confidential private proposals to, the
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`Company. Of the 27 parties that signed confidentiality agreements, four ultimately submitted non-
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`binding indications of interest to acquire the Company – EWHP, “Bidder Party A,” “Bidder Party
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`B” and “Bidder Party C.”
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`29.
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`On February 4, 2022, EWHP submitted a non-binding indication of interest
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`proposing to acquire 100% of the outstanding shares of the Company for a price of $18.00 ($0.36
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`pre-reverse split) in cash per share. Also on February 4, 2022, Bidder Party A submitted a non-
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`binding indication of interest proposing to acquire 100% of the outstanding shares of the Company
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`at an enterprise value of $300 million, representing an implied per share price of $12.00 ($0.24
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`pre-reverse split). The Recommendation Statement further discloses that, after initially submitting
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`indications of interest, Bidder Parties B and C dropped out of the bidding process.
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`30.
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`Throughout late February and early March 2022, EWHP and the other potential
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`bidders engaged in detailed financial and business due diligence with respect to the Company,
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`including a series of due diligence calls with the Company and its representatives concerning the
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`vitaCare, the Financing Agreement with Sixth Street, and matters related to finance, tax, legal, and
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`human resources.
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`31.
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`On March 16, 2022, Greenhill notified EWHP that EWHP would be permitted to
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`speak with Sixth Street about a potential transaction under certain parameters set out by the
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`Company.
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`32.
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`On April 13, 2022, EWHP submitted a revised non-binding offer that contemplated
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`an acquisition of the Company at a price per share of Common Stock of (i) $16.50 ($0.33 pre-
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`reverse split) in cash, and (ii) contingent value rights to receive (1) $2.00 ($0.04 pre-reverse split)
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`per share if the Company’s annual sales reached $126 million in 2022, and (2) $6.50 ($0.13 pre-
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`reverse split) per share if the Company’s annual sales reached $236 million in 2023, with EWHP
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`funding all of the equity required to complete the transaction.
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`33.
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`On April 14, 2022, the Company closed on an agreement to sell vitaCare to
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`GoodRx, Inc. for $150.0 million in cash, subject to a working capital adjustment, and an additional
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`$7.0 million in earn-out consideration, contingent upon vitaCare’s financial performance through
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`2023. The majority of the proceeds from the sale of the vitaCare business were paid to Sixth Street.
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`34.
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`On April 15, 2022, EWHP verbally revised its non-binding offer to (i) $17.50
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`($0.35 pre-reverse split) in cash per share, and (ii) a contingent value right to receive $7.50 ($0.15
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`pre-reverse split) per share if the Company’s annual sales reached $236 million in 2023.
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`35.
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`On May 6, 2022, EWHP submitted a revised, non-binding offer to acquire the
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`Company at a price per share of (i) $14.50 ($0.29 pre-reverse split) in cash, and (ii) contingent
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`value rights to receive (1) $4.00 ($0.08 pre-reverse split) per share if the Company’s annual sales
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`reached $126 million in 2022, and (2) $6.50 ($0.13 pre-reverse split) per share if the Company’s
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`annual sales reached $236 million in 2023.
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`36. Meanwhile, effective May 6, 2022, after the market closed, TXMD regained
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`compliance with Nasdaq’s listing rules by effecting a 1-for-50 reverse stock split (“Reverse Stock
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`Split”). As a result of the Reverse Stock Split, TXMD’s common stock price increased by a
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`multiple of 50, while every fifty (50) shares of common stock issued and outstanding were
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`converted into one (1) share of common stock, and the number of authorized shares of common
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`stock was reduced from 600,000,000 shares to 12,000,000 shares.
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`37.
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`Beginning on May 9, 2022, the first trading day after the Reverse Stock Split,
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`TXMD’s stock began declining precipitously from a close of $7.67 per share (post reverse-split)
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`on May 6, 2022, to a close of $2.98 per share (post-reverse split) on May 12, 2022.
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`38.
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`On May 12, 2022, EWHP communicated to Greenhill that the contingent value
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`rights would need to be transferable, which would have likely required the merger to close in the
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`third quarter of 2022. EWHP’s purported rationale was that it was not prepared to accept the risk
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`of the dissenters’ rights that shareholders of the Company would have under Nevada law if the
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`contingent value rights were not transferable.
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`39.
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`On May 16, 2022, EWHP verbally submitted a revised, non-binding offer to acquire
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`the Company at a price per share of $14.50 ($0.29 pre-reverse split) in cash. The revised offer did
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`not include contingent value rights as EWHP advised that it was not willing to accept the risk of
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`dissenters’ rights from non-transferable contingent value rights, and the Company was unable to
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`agree to a transaction structure to accommodate registrable contingent value rights due to the fact
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`that doing so would materially extend the proposed closing of the Transaction beyond the maturity
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`of the Financing Agreement.
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`40.
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`On May 16, 2022, after receipt of EWHP’s revised, non-binding offer to acquire
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`the Company, Greenhill e-mailed Sixth Street with a request that Sixth Street extend the maturity
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`of its debt, waive cash interest payments through maturity, and provide additional debt funding to
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`the Company so that contingent value rights could be registered under the Securities Act of 1933
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`(and therefore included as consideration in an offer from EWHP). On May 17, 2022, Sixth Street
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`denied these requests.
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`41. Meanwhile, TXMD common stock price continued to drop from a close of $2.98
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`per share on May 12, 2022, to a close of $2.27 on May 19, 2022.
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`42.
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`On May 19, 2022, EWHP submitted a revised, non-binding offer to acquire the
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`Company at a price per share of $10.00 ($0.20 pre-reverse split) in cash.
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`43.
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`On May 20, 2022, the Company received FDA approval of revisions to the release
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`testing specification for ANNOVERA that the Company’s management believed would enhance
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`the Company’s ability to scale and supply the amount of the product that could enter its supply-
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`chain.
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`44.
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`On May 21, 2022, Greenhill asked EWHP to increase the price of its final offer to
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`at least $18.50 per share ($0.37 per share pre-reverse split) in light of revised revenues the
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`Company believed would follow from the FDA approval of revised testing specifications for
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`ANNOVERA.
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`45.
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`On May 23, 2022, EWHP advised that $10.00 per share in cash was its best and
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`final offer.
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`46.
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`On May 27, 2022, Greenshill provided an oral fairness opinion (later confirmed in
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`writing) that the Merger Consideration to be paid to TXMD Stockholders in connection with the
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`proposed Merger was fair, from a financial point of view, to such stockholders.
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`47.
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`After receipt of Greenhill’s oral opinion, the Board unanimously (i) approved,
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`adopted and declared advisable the Merger Agreement and the transactions contemplated thereby,
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`including the Tender Offer and the Merger, (ii) determined that the transactions contemplated by
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`the Merger Agreement, including the Tender Offer and the Merger, to be in the best interests of
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`the Company and its stockholders, (iii) agreed that Merger Agreement would be effected under
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`Nevada law, and (iv) resolved to recommend that TXMD Stockholders tender their shares to
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`EWHP’s affiliate pursuant to the Tender Offer. The parties then executed the Merger Agreement.
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`48.
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`On May 31, 2022, before the opening of trading on Nasdaq, TXMD and EWHP
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`issued a joint press release announcing the Merger and Tender Offer.
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`The Recommendation Statement Contains Material Misrepresentations and Omissions
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`49.
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`Defendants disseminated a false and misleading Recommendation Statement to
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`TXMD Stockholders that misrepresents or omits material information that is necessary for TXMD
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`Stockholders to make an informed decision concerning whether to tender their shares to EWHP
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`pursuant to the Tender Offer.
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`50.
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`First, as noted, the Recommendation Statement discloses that a total of 27 parties
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`engaged in the process signed confidentiality agreements with the Company, and that all of the
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`confidentiality agreements contained a customary standstill provision for the benefit of the
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`Company that permitted the counterparty and its affiliates to initiate private discussions with, and
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`submit confidential private proposals to, the Company. The Recommendation Statement does not
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`disclose, however, whether any of the confidentiality agreements executed by these parties
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`contained (i) customary “fall away” provisions providing that the standstill obligations terminated
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`following the Company entering into a definitive agreement like the Merger Agreement, thereby
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`allowing such parties to submit competing proposals to the Board after announcement of the
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`Merger, or (ii) “don't ask, don't waive” (“DADW”) provisions prohibiting such parties from asking
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`the Company to amend or waive the standstills, thereby preventing them from submitting
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`competing proposals to the Board after announcement of the Merger. The failure to disclose the
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`existence of DADW provisions in the confidentiality agreements would be a material omission
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`that would render statements in the Recommendation Statement misleading because TXMD
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`Stockholders could reasonably conclude from the Recommendation Statement that other bidders
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`were free to submit competing proposals after the announcement of the Merger (when, in fact, they
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`were prevented from doing so by the standstill provisions).
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`51.
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`Second, the Recommendation Statement discloses that on February 4, 2022, Party
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`Bidder A had submitted a non-binding indication of interest proposing to acquire 100% of the
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`outstanding shares of the Company at an implied price of $12.00 per share—which exceeds the
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`Merger Consideration—and that on April 26, 2022, representatives from Bidder Party A conducted
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`a manufacturing site visit to the Sever Pharma facility in Sweden where TXMD manufactures
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`ANNOVERA. The Recommendation Statement, however, does not disclose whether Bidder Party
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`A submitted a revised bid after visiting the Sever Pharma facility (as EWHP had done after it
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`visited the Sever Pharm facility on April 6, 2022), or whether Bidder Party A was prevented from
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`making a competing bid after the announcement of the Merger by a DADW provision. Given that
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`the Recommendation Statement disclosed that Bidder Parties B and C expressly advised Greenhill
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`that they were no longer pursuing an acquisition of TXMD after submitting initial indications of
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`interest, the failure to disclose whether Bidder Party A remained a bidder after the visit to the Sever
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`Pharma facility is a material omission that renders statements in the Recommendation Statement
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`misleading because TXMD Stockholders could reasonably conclude that Bidder Party A never
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`advised Greenhill that it was no longer pursuing an acquisition, and instead was prevented from
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`submitting a competing bid after the announcement of the Merger.
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`52. Third, the Recommendation Statement discloses that the Board reviewed certain
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`financial forecasts prepared by management (“Forecasts”), and directed Greenhill to utilize the
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`Forecasts in connection with its fairness opinion. The Recommendation Statement, however, fails
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`to disclose the details of the Forecasts, or when they were prepared. The failure to disclose the
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`Forecasts used by Greenhill to prepare its fairness opinion is a material omission that renders the
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`Recommendation Statement misleading.
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`53.
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`Instead, the Recommendation Statement only discloses the details of certain
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`projections (“Projections”) prepared by the Company in February 2022, and provided to Greenhill
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`and all bidders who signed confidentiality agreements with the Company. There is no disclosure
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`concerning how the Projections differed from the Forecasts, or from other “projections” provided
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`exclusively to affiliates of EWHP in January 2022, and certain “updated Projections” prepared by
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`the Company in April 2022, and then revised again in May 2022, and apparently provided
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`exclusively to affiliates of EWHP.
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`CLAIMS FOR RELIEF
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`COUNT I
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`Against All Defendants for Violations of Section 14(e) of the Exchange Act
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`54.
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`Plaintiff incorporates and repeats each and every allegation above as if fully set
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`forth herein.
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`55.
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`Section 14(e) of the Exchange Act provides that it is unlawful “for any person to
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`make any untrue statement of a material fact or omit to state any material fact necessary in order
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`to make the statements made, in the light of the circumstances under which they are made, not
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`misleading . . . in connection with any tender offer or request or invitation for tenders, or any
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`solicitation of security holders in opposition to or in favor of any such offer, request, or invitation.”
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`15 U.S.C. § 78n(e).
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`56.
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`Defendants disseminated the Recommendation Statement to TXMD Stockholders
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`recommending that TXMD Stockholders tender their shares to EWHP in connection with the
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`Tender Offer.
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`57.
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`By virtue of their positions within the Company, and/or roles in the process of
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`preparing, reviewing, and/or disseminating the Recommendation Statement, Defendants were
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`aware of their duty not to make false and misleading statements in the Recommendation Statement,
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`and not to omit material facts from the Recommendation Statement necessary to make statements
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`made therein— in light of the circumstances under which they were made—not misleading.
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`58.
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`Yet, as specified in paragraphs 49-53 above, in violation of Section 14(e) of the
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`Exchange Act, Defendants knowingly or recklessly (i) made untrue statements of material fact in
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`the Recommendation Statement, and (ii) omitted material facts from the Recommendation
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`Statement necessary to make statements therein—in light of the circumstances under which they
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`were made—not misleading, in order to induce TXMD Stockholders to tender their shares in the
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`Tender Offer, and thereby maximize their own personal gain by converting their illiquid TXMD
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`equity holdings into cash through the immediate sale of all of their TXMD shares for cash, and the
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`immediate conversion of their TXMD equity awards into cash (as detailed in the sections of the
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`Recommendation Statement entitled “Quantification of Payments Related to Company
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`Compensatory Awards” and “Golden Parachute Compensation to the Company’s Named
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`Executive Officers in Connection with the Transaction”). In particular, Defendant O’Dowd stands
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`to reap over $4 million upon consummation of the Merger from cash severance and equity awards.
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`As such, the material misrepresentations and omissions in the Recommendation Statement
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`specified above were made by Defendants with scienter.
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`59.
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`The material misrepresentations and omissions in the Recommendation Statement
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`specified above are material insofar as there is a substantial likelihood that a reasonable TXMD
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`Stockholder would consider them important in deciding whether to tender their shares. In addition,
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`a reasonable TXMD Stockholder would view disclosures of the omitted facts specified above as
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`significantly altering the “total mix” of information made available to TXMD Stockholders.
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`60.
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`Because of the material misrepresentations and omissions in the Recommendation
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`Statement specified above, Plaintiff and other TXMD Stockholders are threatened with irreparable
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`harm insofar as Plaintiff and other TXMD Stockholders will be deprived of their entitlement to
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`make a fully informed decision as to whether to tender their shares in connection with the Tender
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`Offer if such material misrepresentations and omissions are not corrected prior to the Expiration
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`Date. Therefore, injunctive relief is appropriate.
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`COUNT II
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`Against All Defendants for Violations of Section 14(d) of the Exchange Act
`and 17 CFR § 240.14d-101
`
`Plaintiff incorporates and repeats each and every allegation above as if fully set
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`61.
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`forth herein.
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`62.
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`Section 14(d)(4) of the Exchange Act provides that it is unlawful “[a]ny solicitation
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`or recommendation to the holders of such a security to accept or reject a tender offer or request or
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`invitation for tenders shall be made in accordance with such rules and regulations as the
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`Case 1:22-cv-05392 Document 1 Filed 06/26/22 Page 15 of 18
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`Commission may prescribe as necessary or appropriate in the public interest or for the protection
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`of investors.” 15 U.S.C. § 78n(d)(4).
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`63.
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`17 CFR § 240.14d-101 (addressing the contents of a Schedule 14D-9
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`recommendation statement) provides that Item 8 of a recommendation statement shall “[f]urnish
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`the information required by Item 1011(b) and (c) of Regulation M-A (§ 229.1011 of this chapter).
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`64.
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`17 CFR § 229.1011(c) provides for the furnishing of “additional material
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`information, if any, as may be necessary to make the required statements, in light of the
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`circumstances under which they are made, not materially misleading.”
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`65.
`
`As set forth above, Defendants knowingly or recklessly omitted material facts from
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`the Recommendation Statement necessary to make statements therein—in light of the
`
`circumstances under which they were made—not misleading, in order to induce TXMD
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`Stockholders to tender their shares in the Tender Offer, and thereby maximize their own personal
`
`gain. Accordingly, Defendants have violated Section 14(d)(4) of the Exchange Act and 17 CFR §
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`240.14d-101.
`
`66.
`
`forth herein.
`
`COUNT III
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`Against the Individual Defendants for
`Violations of Section 20(a) of the Exchange Act
`
`Plaintiff incorporates and repeats each and every allegation above as if fully set
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`67.
`
`The Individual Defendants acted as controlling persons of TXMD within the
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`meaning of Section 20(a) of the Exchange Act, as alleged herein. By virtue of their positions as
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`officers and/or directors of TXMD, and participation in, and/or awareness of TXMD’s operations,
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`and/or intimate knowledge of the contents of the Recommendation Statement filed with the SEC,
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`they had the power to influence and control, and did influence and control, directly or indirectly,
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`Case 1:22-cv-05392 Document 1 Filed 06/26/22 Page 16 of 18
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`the decision-making of TXMD with respect to the Recommendation Statement, including the
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`content and dissemination of the various statements in the Recommendation Statement that
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`Plaintiff contends are materially false and misleading, and the omission of material facts specified
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`above.
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`68.
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`Each of the Individual Defendants was provided with or had unlimited access to
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`copies of the Recommendation Statement and other statements alleged by Plaintiff to be
`
`misleading prior to and/or shortly after these statements were issued and had the ability to prevent
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`the issuance of the statements or cause the statements to be corrected. In particular, Defendant
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`Walker personally signed the Recommendation Statement.
`
`69.
`
`Each of the Individual Defendants had direct and supervisory involvement in the
`
`day-to-day operations of TXMD, and, therefore, is presumed to have had the power to control or
`
`influence the particular transactions giving rise to the securities violations alleged herein, and
`
`exercised same. In particular, the Recommendation Statement at issue references the unanimous
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`recommendation of the Board to approve the Merger, and recommend that TXMD Stockholders
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`tender their shares pursuant to the Tender Offer. The Individual Defendants were thus directly
`
`involved in the making of the Recommendation Statement.
`
`70.
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`In addition, as the Recommendation Statement sets forth at length, and as described
`
`herein, the Individual Defendants were involved in negotiating, reviewing, and approving the
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`Merger. The Recommendation Statement purports to describe the various issues and information
`
`that the Individual Defendants reviewed and considered in connection with such negotiation,
`
`review and approval. The Individual Defendants thus directly participated in the drafting of the
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`Recommendation Statement.
`
`71.
`
`By virtue of the foregoing, the Individual Defendants have violated Section 20(a)
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`Case 1:22-cv-05392 Document 1 Filed 06/26/22 Page 17 of 18
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`of the Exchange Act.
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`72.
`
`As set forth above, the Individual Defendants had the ability to exercise control
`
`over and did control a person or persons who have each violated Section 14(d) and Section 14(e),
`
`by their acts and omissions as alleged herein. By virtue of their positions as controlling persons,
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`these defendants are liable pursuant to Section 20(a) of the Exchange Act. As a direct and
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`proximate result of Individual Defendants’ conduct, Plaintiff will be irreparably harmed.
`
`73.
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`Plaintiff has no adequate remedy at law. Only through the exercise of this Court’s
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`equitable powers can Plaintiff be fully protected from the immediate and irreparable injury that
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`Defendants’ actions threaten to inflict, and can Plaintiff and other TXMD Stockholders make an
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`informed decision about whether to tender their shares pursuant to the Tender Offer.
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`PRAYER FOR RELIEF
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`WHEREFORE, Plaintiff prays for judgment and relief as follows:
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`A.
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`Preliminarily and permanently enjoining Defendants and their cou