Item 3. Legal Proceedings
Item
3. Legal Proceedings
See
Note 12, Commitment and Contingencies - Legal Proceedings , of the consolidated financial statements included in this Annual Report,
for a description of certain material legal proceedings involving the Company, which description is incorporated herein by reference.
Delaware
Court of Chancery Complaint
On
November 2, 2020, a stockholder of the Company, on behalf of himself and other similarly situated stockholders, filed a complaint in
the Delaware Court of Chancery alleging broker non-votes were not properly counted in accordance with the Company’s bylaws at the
Company’s Annual Meeting of Stockholders on July 24, 2020, and, as a result, asserted certain matters deemed to have been approved
were not so approved (including matters relating to the increase in the size of the PAVmed Inc. 2014 Long-Term Incentive Equity Plan
and the PAVmed Inc. Employee Stock Purchase Plan). The relief sought under the complaint included certain corrective actions by the Company,
but did not seek any specific monetary damages. The Company did not believe it was clear the prior approval of these matters was invalid
or otherwise ineffective. However, to avoid any uncertainty and the expense of further litigation, on January 5, 2021, the Company’s
board of directors determined it would be advisable and in the best interests of the Company and its stockholders to re-submit these
proposals to the Company’s stockholders for ratification and/or approval. In this regard, the Company held a special meeting of
stockholders on March 4, 2021, at which such matters were ratified and approved. The parties reached agreement on a Settlement Term Sheet
Agreement, dated January 28, 2021, to settle the complaint, the terms of which did not contemplate payment of monetary damages to the
putative class in the proceeding. In connection with the foregoing, on August 3, 2022, the parties agreed that plaintiff’s counsel
would not seek an award from the Court in excess of $450,000, to be paid by the Company, upon Court approval, as compensation for the
benefits conferred by the settlement, and the Company would not object to an award of up to such maximum amount. The settlement and a
plaintiff’s fee award of $450,000 were approved by the Court on November 3, 2022, with such award having been subsequently paid
by the Company in December 2022.
Benchmark
Investments, Inc. / Benchmark Investments LLC
On
December 23, 2020, Benchmark Investments, Inc. filed a complaint against the Company in the U.S. District Court of the Southern District
of New York alleging the registered direct offerings of shares of common stock of the Company completed in December 2020 were in violation
of provisions set forth in an engagement letter between the Company and Kingswood Capital Markets, a “division” of Benchmark
Investments, Inc. On December 16, 2021, the court granted PAVmed’s motion to dismiss the case for lack of subject matter jurisdiction.
On February 7, 2022, Benchmark Investments LLC, which claimed to be a successor to Benchmark Investments, Inc., filed a new complaint
in the Supreme Court of the State of New York, New York County, asserting claims similar to those in the federal action, and adding to
its allegations that financings conducted by the Company in January 2021 and February 2021 also violated the Company’s engagement
letter with Kingswood Capital Markets. In November 2022, the Company filed its answer to such complaint and asserted certain counterclaims
against Kingswood Capital Markets, including for fraudulent inducement and breach of contract. The Company disagrees with the allegations
made by Kingswood Capital Markets set forth in the complaint and intends to vigorously contest the complaint. On February 13, 2023, the
Company entered into a settlement agreement (the “Settlement Agreement”) with EF Hutton, a division of Benchmark Investments,
LLC (f/k/a Kingswood Capital Markets, a division of Benchmark Investments, Inc.) (“EF Hutton”) and Benchmark Investments,
LLC (f/k/a Benchmark Investments, Inc.). Under the Settlement Agreement, the Company agreed to pay EF Hutton $450,000 in full and final
satisfaction of all claims and disputes the parties made or could have made against one another arising out of or relating in any way
to the above described actions. The Settlement Agreement also included a mutual release and certain other covenants that are customary
for agreements of this nature. On February 17, 2023, the Company wired the settlement payment to EF Hutton. On that same date, the parties
filed a stipulation of discontinuance, ending the action and resolving the dispute.
In
the ordinary course of our business, particularly as it begins commercialization of its products, the Company may be subject to certain
other legal actions and claims, including product liability, consumer, commercial, tax and governmental matters, which may arise from
time to time. Except as otherwise noted herein, the Company does not believe it is currently a party to any other pending legal proceedings.
Notwithstanding, legal proceedings are subject-to inherent uncertainties, and an unfavorable outcome could include monetary damages,
and excessive verdicts can result from litigation, and as such, could result in a material adverse impact on the Company’s business,
financial position, results of operations, and /or cash flows. Additionally, although the Company has specific insurance for certain
potential risks, the Company may in the future incur judgments or enter into settlements of claims which may have a material adverse
impact on the Company’s business, financial position, results of operations, and /or cash flows.
Item
4. Mine Safety Disclosures
Not
applicable.
34
PART
II