Medi-Hut Announces U.S. District Court Approval of Class Action Settlement, Partial Settlement of Other Litigations, Relocation of Principal Offices and Other Developments

Business Wire, May 28, 2004

Business Editors/Legal Writers/Health/Medical Writers

SPRING LAKE, N.J.--(BUSINESS WIRE)--May 28, 2004

Medi-Hut Co., Inc. ("Medi-Hut" or the "Company") announced today that (i) the United States District Court for the District of New Jersey has approved the class action settlement reached by the Company last year, (ii) it has settled its action against Joseph A. Sanpietro, a former director and the former President and Chief Executive Officer of the Company, Vincent J. Sanpietro, a former director and the former Chief Operating Officer and Secretary of the Company, and Robert S. Russo, a former director and a former Treasurer of the Company, (iii) it has settled its action against Scott Schrader and certain of his affiliates, Schrader & Associates, LLC, Bluegrass Drug Company, LLC and Medpharm Corporation (collectively, the "Schrader Group"), (iv) it has relocated its principal offices to 215 Morris Avenue, Spring Lake, New Jersey 07762, and (v) National Union Fire Insurance Co. has commenced an action against the Company for alleged unpaid insurance premiums. The Company also reported on the status of its filings with the Securities and Exchange Commission and certain other business developments.

In August 2003, the Company reached an agreement, subject to the approval of the United States District Court for the District of New Jersey, to settle the consolidated class action lawsuits filed against the Company. As part of the settlement, the Company agreed to pay $400,000 in cash and issue 861,990 shares of Medi-Hut common stock to the plaintiffs. On May 3, 2004, the United States District Court for the District of New Jersey approved the settlement. Consequently, the Company has issued 861,990 shares of Medi-Hut common stock to the plaintiffs and their counsel in accordance with the settlement. The $400,000 cash payment was funded by proceeds received by the Company from its July 2003 settlement with Executive Risk Indemnity, Inc., the insurance company that provided the Company with its director and officer insurance coverage for a portion of the class period.

In December 2003, Medi-Hut commenced litigation, Medi-Hut Co., Inc. v. Joseph A. Sanpietro, et al. (Docket No. MON-L-5471-03), in the Superior Court of the State of New Jersey, Monmouth County, against certain of its former officers and directors and other defendants. On April 14, 2004, the Company entered into a settlement and release agreement with Joseph A. Sanpietro. In exchange for the return of 3,179,200 shares of the Company's common stock and certain other monetary and non-monetary consideration, the Company agreed to discharge its claims against Joseph A. Sanpietro. In addition, on February 4, 2004, the Company entered into a settlement and release agreement with Vincent J. Sanpietro. In exchange for the return of 554,800 shares of the Company's common stock and certain other monetary and non-monetary consideration, the Company agreed to discharge its claims against Vincent J. Sanpietro. Further, on May 14, 2004, the Company entered into a settlement and release agreement with Robert S. Russo. In exchange for the return of 125,000 shares of the Company's common stock and other monetary and non-monetary consideration, the Company agreed to discharge its claims against Mr. Russo. The Company's action against the remaining defendants remains ongoing.

On April 21, 2004, the Company entered into a settlement agreement and limited release with the Schrader Group. Pursuant to this agreement, the Company and the Schrader Group agreed to dismiss with prejudice the actions which were pending in the United States District Court for the District of Kentucky, Medpharm v. Medi-Hut (Docket No. CV 03 26 (JMH)), Bluegrass v. Medi-Hut (Docket No. CV 03 27 (JMH)), and Schrader & Associates v. Medi-Hut (Docket No. CV 03 25 (JMH)), and the actions against each other which were pending in the United States District Court for the Eastern District of New York, Medi-Hut v. Syntho Pharmaceuticals, Inc. (Docket No. CV 03-2387 (ERK) (ACS)). As part of the settlement reached by the Company and the Schrader Group, the Schrader Group paid to the Company a cash payment of $375,000. In addition, the parties released each other from certain claims arising out of the distribution and sale of Syntest, the hormone replacement therapy drug developed and manufactured by Syntho Pharmaceuticals, Inc. ("Syntho") and previously distributed and sold by the Company pursuant to an exclusive license agreement between the Company and Syntho (the "Syntho Agreement"). The Company is continuing its action against the other defendants in the Medi-Hut v. Syntho Pharmaceuticals, Inc. litigation pending in the United States District Court for the Eastern District of New York.

In early May 2004, the Company relocated its principal offices to 215 Morris Avenue, Spring Lake, New Jersey 07762 in order to reduce its monthly operating expenses and to more appropriately accommodate its current operations. The telephone number for this location is (732) 919-2799. In connection with the relocation of its principal offices, the Company and the landlord of the Company's former office space in Wall Township, New Jersey reached an agreement to terminate the remaining term of the existing lease (3.5 years) for a one-time payment by the Company of $100,000.