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EXHIBIT 99.3
ROYALTY AGREEMENT
BETWEEN
INTERNEURON PHARMACEUTICALS, INC.
and
THE PLAINTIFFS' MANAGEMENT COMMITTEE
ON BEHALF OF CLASS REPRESENTATIVE
XXXXXX WISH AND THE INTERNEURON
CLASS ACTION SETTLEMENT FUND
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ROYALTY AGREEMENT
THIS ROYALTY AGREEMENT effective this 21 day of September, 1998 (the
"Effective Date"), between Interneuron Pharmaceuticals, Inc., a corporation
organized and existing under the laws of Delaware and having its principal
office at 00 Xxxxxx Xxxxxx, Xxxxxxxxx, XX 00000 ("Interneuron") and the
Plaintiffs' Management Committee (as defined in the Settlement Agreement) on
behalf of Class Representative Xxxxxx Wish and the Interneuron Class Action
Settlement Fund (the "PMC").
W I T N E S S E T H:
WHEREAS, in connection with an Agreement of Compromise and Settlement
entered into on the Effective Date (the "Settlement Agreement"), Interneuron and
the PMC have agreed to the terms of a limited fund, mandatory class action
settlement (the "Settlement");
WHEREAS, pursuant to the terms of the Settlement Agreement, the PMC, at
the direction of the Court, will establish the Interneuron Class Action
Settlement Fund Trust (the "Fund"); and
WHEREAS, as partial consideration for the Settlement, Interneuron has
agreed to pay Royalty Payments (as defined herein) to the Fund, upon the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Unless specifically set forth to the contrary herein, the following terms,
whether used in the singular or plural, shall have the respective meanings set
forth below:
1.1 "Affiliate" shall mean (i) any Person of which more than fifty percent
(50%) of the securities or other ownership interests representing the
equity, the voting stock or general partnership interest are owned,
controlled or held, directly or indirectly, by a Party; or (ii) any Person
which, directly or indirectly, owns, controls or holds more than fifty
percent (50%) (or the maximum ownership interest permitted by law) of the
securities or other ownership interests representing the equity, the
voting stock or, if applicable, the general partnership interest, of a
Party.
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1.2 "Cash Dividends" shall mean any cash dividends received by Interneuron
from its Subsidiaries related to Product sales generated in any country in
the world.
1.3 "Common Stock" shall mean the common stock, $.001 par value, of
Interneuron.
1.4 "Final Settlement Date" shall have the meaning set forth in the Settlement
Agreement to which this Royalty Agreement is attached as APPENDIX A.
1.5 "GAAP" shall mean generally accepted accounting principles in the United
States.
1.6 "Gross Sales" shall mean the actual gross amount invoiced for the sale in
any country in the world of Interneuron Product by Interneuron to a Third
Party. If an Interneuron Product is sold or otherwise transferred as a
part of a package with other items to a Third Party, the Gross Sales for
Interneuron Product shall be the Gross Sales applicable to Interneuron
Product as if it were sold separately.
1.7 "Interneuron Product" shall mean a Product which is sold directly by
Interneuron.
1.8 "Interneuron Receipts" shall mean Gross Sales, License Revenue and/or Cash
Dividends.
1.9 "Letter of Understanding" shall mean the letter of understanding between
Interneuron and PMC, dated September 3, 1998.
1.10 "License Revenues" shall mean license fees, royalties or milestone
payments received by Interneuron from a Sublicensee related to Product
sales generated in any country in the world. License Revenues shall not
include any amounts received by Interneuron as reimbursements for research
and development expenses or as equity investments in Interneuron.
1.11 "Party" shall mean Interneuron, on the one hand, or the PMC or the Fund,
on the other, as applicable.
1.12 "Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, trust association, unincorporated
organization, other entity, or governmental body.
1.13 "PMC" shall have the meaning set forth in the Settlement Agreement to
which this Royalty Agreement is attached as APPENDIX A.
1.14 "Product" shall mean any product in final form for commercial sale by
prescription, over-the-counter, or by any other method.
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1.15 "Representative of the Fund" shall mean the PMC. By execution of this
Royalty Agreement, the Fund grants the PMC the right and authority to act
on behalf of the Fund to the extent set forth herein.
1.16 "Royalty Amount" shall mean $55 million.
1.17 "Royalty Conversion Price" shall mean $7.49, subject to adjustment as
provided in SECTION 6.1.
1.18 "Royalty Term" shall mean the period commencing on the Final Settlement
Date and ending seven (7) years from the Final Settlement Date.
1.19 "Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
1.20 "Sublicensed Product" shall mean a Product other than an Interneuron
Product.
1.21 "Sublicensee" shall mean a Third Party to which Interneuron has
sublicensed or otherwise granted rights to market a Product.
1.22 "Subsidiary" shall mean a corporation of which Interneuron owns at least
20% of the outstanding voting securities.
1.23 "Termination Date" shall mean the last day of the Royalty Term; provided,
however, that the Termination Date may be accelerated pursuant to the
provisions of SECTION 7.1; further provided that if such date shall in the
State of New York be a holiday or a day on which banks are authorized to
close, the Termination Date shall be on the next following day which in
the State of New York is not a holiday or a day on which banks are
authorized to close.
1.24 "Third Party" shall mean a Person which is neither a Party nor an
Affiliate or Subsidiary of a Party.
1.25 "Transfer" shall mean any sale, bequest, exchange, assignment or gift, the
creation of any security interest or other encumbrance and any other
disposition of any kind, whether voluntary or involuntary, affecting title
to or possession of any of the Royalty Shares.
1.26 "Trustee" shall mean the financial institution appointed by the Xxxxxxxxx
Xxxxx X. Xxxxxxx, of the United States District Court for the Eastern
District of Pennsylvania, in connection with the Settlement.
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ARTICLE II
ROYALTY PAYMENTS AND REPORTS
2.1 ROYALTY PAYMENTS. Subject to the terms and conditions of this Royalty
Agreement, Interneuron shall pay to the Fund as partial consideration for
the Settlement, cash payments (the "Royalty Payments") equal to a portion
of Interneuron Receipts received during the Royalty Term, not to exceed in
the aggregate, the Royalty Amount, as follows:
(a) seven percent (7%) of Gross Sales of Interneuron Product by
Interneuron during each Royalty Calculation Period (as defined in
SECTION 2.4) subject to the following conditions:
(i) that only one Royalty Payment shall be due with respect to the
same unit of Interneuron Product; and
(ii) no Royalty Payments shall accrue on the disposition of
Interneuron Product in reasonable quantities by Interneuron as
samples (promotion or otherwise) or as donations (for example,
to non-profit institutions or government agencies for a
non-commercial purpose);
(b) fifteen percent (15%) of Cash Dividends received by Interneuron
during each Royalty Calculation Period; and
(c) fifteen percent (15%) of License Revenues received by Interneuron
during each Royalty Calculation Period.
2.2 ROYALTY PAYMENT OBLIGATION. Interneuron's Royalty Payment obligation
pursuant to SECTION 2.1 shall be effective as of the Final Settlement Date
and shall continue until the earlier of the Termination Date or the date
at which Interneuron has made payments to the Fund equal to the Royalty
Amount; provided however, if, as of the Termination Date, Interneuron has
not made Royalty Payments equal in the aggregate to the Royalty Amount,
the provisions of SECTION 2.3 herein shall apply.
2.3 FINAL ROYALTY PAYMENT. If, on the last day of the Royalty Term the
aggregate Royalty Payments paid by Interneuron to the Fund do not equal
the Royalty Amount, then Interneuron shall make a payment (the "Final
Royalty Payment") to the Fund, within ninety (90) days following the
Termination Date, consisting of the issuance to the Fund of the number of
shares of Common Stock (the "Royalty Shares"), rounded to the nearest
whole number, equal to the quotient obtained by dividing (a) the number
obtained by subtracting from the Royalty Amount the aggregate Royalty
Payments paid to the Fund as of the Termination Date (the "Royalty
Balance") by (b) the then effective Royalty Conversion Price.
Notwithstanding the foregoing, Interneuron, in its sole discretion, may
elect (the "Cash Election") to pay all or a portion of the Final Royalty
Payment in cash
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instead of issuing all or any portion of any Royalty Shares which may be
payable to the Fund pursuant to the terms of this SECTION 2.3. If
Interneuron makes a Cash Election, it shall (i) notify the Fund of such
election within ten (10) days after the Termination Date and (ii) pay to
the Fund cash in an amount equal to ninety percent (90%) of the fair
market value of the Royalty Shares payable as the Final Royalty Payment
which Interneuron has elected to be paid in cash.
2.4 REPORTS; PAYMENT OF ROYALTY. Interneuron shall furnish to the Trustee a
written report (the "Royalty Report") on March 31, June 30, September 30,
and December 31 of each year during the Royalty Term (the "Royalty Payment
Dates") for each prior three month period ending December 31, March 31,
June 30, and September 30, respectively (the "Royalty Calculation
Periods") showing all Interneuron Receipts subject to Royalty Payments and
the Royalty Payments accrued under this Royalty Agreement during such
Royalty Calculation Period. Royalty Payments shown to have accrued during
each Royalty Calculation Period shall be due and payable on the applicable
Royalty Payment Date. Interneuron shall keep complete and accurate records
in sufficient detail to enable the Royalty Payments hereunder to be
determined.
2.5 AUDITS.
(a) Upon the written request of the Trustee and not more than once in
each calendar year of the Royalty Term, Interneuron shall permit an
independent certified public accounting firm of nationally
recognized standing selected by the Trustee and acceptable to
Interneuron, to have access during normal business hours at times
mutually convenient to the parties and upon reasonable notice to
Interneuron to such of the records of Interneuron as may be
reasonably necessary to verify the accuracy of the Royalty Reports
hereunder for any Royalty Calculation Period ending not more than
eighteen (18) months prior to the date of such request. The
accounting firm shall disclose to the Trustee only whether the
Royalty Reports are correct or incorrect and the specific details
concerning any discrepancies.
(b) If such accounting firm correctly concludes that additional Royalty
Payments were owed during such period, Interneuron shall pay the
additional Royalty Payments within sixty (60) days of the date the
Trustee delivers to Interneuron such accounting firm's written
report. If such accounting firm correctly concludes that Interneuron
paid an excess amount, Interneuron will credit the excess amount
that was paid against the next Royalty Payment due. The fees charged
by such accounting firm shall be paid by the Fund through a credit
against future Royalty Payments; provided, however, that if an error
in favor of the Fund in the payment of Royalty Payments of more than
ten percent (10%) of the Royalty Payments due hereunder for the
period being reviewed is discovered, then the fees and expenses of
the accounting firm shall be borne by Interneuron.
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(c) Upon the expiration of eighteen (18) months (subject to extension in
the event the accounting firm correctly concludes that Interneuron
has committed fraud in the calculation of Royalty Payments)
following the end of any Royalty Calculation Period the calculation
of Royalty Payments payable with respect to such Royalty Calculation
Period shall be binding and conclusive upon the Fund, and
Interneuron shall be released from any liability or accountability
with respect to Royalty Payments for such Royalty Calculation
Period.
(d) The Fund shall treat all financial information subject to review
under this SECTION 2.5 in accordance with the confidentiality
provisions of this Royalty Agreement.
2.6 PAYMENT EXCHANGE RATE. All cash Royalty Payments to the Fund under this
Royalty Agreement shall be in United States dollars. In the case of sales
outside of the United States, the rate of exchange to be used in computing
the amount of currency equivalent in United States dollars shall be
calculated monthly in accordance with GAAP based on the average of the
conversion rates on the first and last business day of the month during
each Royalty Calculation Period published in the Wall Street Journal,
Eastern edition.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE PMC. The PMC represents and warrants
to Interneuron that as of the Effective Date:
(a) this Royalty Agreement has been duly authorized, executed and
delivered by it; and
(b) except as set forth in the Settlement Agreement, no approval,
authorization, consent, or other order or action of or filing with
any court, administrative agency or other governmental authority is
required for the execution and delivery by it of this Royalty
Agreement or the consummation by it of the transactions contemplated
hereby.
3.2 INVESTMENT REPRESENTATIONS AND WARRANTIES OF THE PMC ON BEHALF OF THE
FUND. The PMC represents and warrants to Interneuron on behalf of the Fund
that:
(a) the Royalty Shares, if any, payable to the Fund pursuant to the
terms hereof will be acquired for investment for its own account,
without any view to the unregistered public distribution or resale
thereof, all without prejudice, however, to the right of the Fund,
subject to the terms and conditions of this Royalty Agreement, at
any time lawfully to sell or otherwise to dispose of all or any part
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of the Royalty Shares pursuant to registration or any exemption
therefrom under the Securities Act and applicable state securities
laws;
(b) The PMC understands that the Royalty Shares, if any, to be received
by the Fund pursuant to the terms hereof have not been registered
under the Securities Act inasmuch as they are issuable by
Interneuron in a transaction not involving a public offering and
exempt from the registration requirements under the Securities Act,
and that under the federal securities laws and applicable
regulations the Royalty Shares may be resold without registration
under the Securities Act only in certain limited circumstances;
(c) The PMC has, and the Fund will have, the capacity to evaluate the
merits and high risks of an investment in the Royalty Shares and is
able to bear the economic risk of this investment. The PMC has been
provided access to all information requested by it in order to
evaluate the merits and risks of an investment by the Fund in the
Royalty Shares;
(d) The PMC acknowledges that the certificates evidencing the Royalty
Shares to be issued to the Fund, if any, shall bear a legend
substantially as follows:
"THESE SECURITIES (A) ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
ROYALTY AGREEMENT, DATED SEPTEMBER 21, 1998, A COPY OF WHICH IS ON
FILE WITH THE COMPANY AND (B) HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED, EXCEPT IN ACCORDANCE WITH THE
TERMS OF THE ROYALTY AGREEMENT AND UNLESS A REGISTRATION STATEMENT
IS IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT."
The foregoing legend shall be removed by Interneuron from any
certificate at such time as the holder of the Royalty Shares
represented by the certificate delivers to Interneuron an opinion of
counsel to the effect that (i) the Transfer provisions of this
Royalty Agreement have been met and that (ii) such legend is not
required in order to establish compliance with any provisions of the
Securities Act or at such time as the holder of such Royalty Shares
satisfies the requirements of Rule 144(k) under the Securities Act
(provided that Rule 144(k) as then in effect does not differ
substantially from Rule 144(k) as in effect as of the date of this
Royalty Agreement), and provided further that Interneuron has
received from the holder a written representation that such holder
has (i) complied with the Transfer provisions of this Royalty
Agreement and (ii) satisfies the requirements of Rule 144(k) as then
in effect with respect to such Royalty Shares.
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3.3 INTERNEURON REPRESENTATIONS AND WARRANTIES. Interneuron represents and
warrants to the PMC on behalf of the Fund that as of the Effective Date:
(a) this Royalty Agreement has been duly authorized, executed and
delivered by it;
(b) except as set forth in the Settlement Agreement, no approval,
authorization, consent, or other order or action of or filing with
any court, administrative agency or other governmental authority is
required for the execution and delivery by it of this Royalty
Agreement or the consummation by it of the transactions contemplated
hereby; and
(c) the issuance and delivery by Interneuron of shares of Common Stock
which may be issuable to the Fund as Royalty Shares, if any, have
been duly authorized by all requisite corporate action of
Interneuron and, when so issued and delivered, if ever, the Royalty
Shares will be validly issued and outstanding, fully paid and
nonassessable.
ARTICLE IV
CONFIDENTIALITY
4.1 NON-DISCLOSURE AND NON-USE OBLIGATIONS. All information disclosed by one
Party to another Party hereunder shall be maintained in confidence and
shall not be disclosed to any Third Party or used for any purpose except
as expressly permitted herein without the prior written consent of the
disclosing Party. The foregoing non-disclosure and non-use obligations
shall not apply to the extent that such information:
(a) is known by the receiving Party at the time of its receipt, and not
through a prior disclosure by the disclosing Party, as documented by
business records;
(b) is properly in the public domain; or
(c) is subsequently disclosed to a receiving Party by a Third Party who
may lawfully do so and is not under an obligation of confidentiality
to the disclosing Party.
4.2 PERMITTED DISCLOSURE OF INFORMATION. Notwithstanding SECTION 4.1, a Party
receiving information from another Party may disclose such information if
required to be disclosed by law or court order, provided that notice is
promptly delivered to the non-disclosing Party in order to provide an
opportunity to challenge or limit the disclosure obligations; provided,
however, without limiting any of the foregoing, it is understood that any
Party may make disclosure of this Royalty Agreement and the terms hereof
in a press release and in any filings required by the United States
Securities and Exchange Commission and other regulatory agencies.
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ARTICLE V
RESTRICTION ON VOTING AND TRANSFER OF ROYALTY SHARES.
5.1 LIMITATION ON TRANSFER. The Fund may not Transfer (other than to
Interneuron) any Royalty Shares except as permitted in accordance with the
terms of this Royalty Agreement. Any purported Transfer of any Royalty
Shares in any other manner shall be void.
5.2 RIGHT OF FIRST REFUSAL UPON PROPOSED TRANSFER OF ROYALTY SHARES.
Interneuron shall have the right of first refusal (the "Right of First
Refusal") to purchase Royalty Shares in the event of any proposed Transfer
of Royalty Shares by the Fund. Accordingly, if the Fund intends to seek to
Transfer any Royalty Shares, the Fund shall give written notice to
Interneuron of such intention and of the proposed price, terms and, if
known by the Fund, the name of the potential purchaser of the Royalty
Shares. In connection with a proposed Transfer in a private transaction,
the notice by the Fund shall also include, if known by the Fund, the names
of the directors and majority stockholders of any corporation or the
principals of any other entity proposed as the potential purchaser. The
Right of First Refusal shall entitle Interneuron to purchase Royalty
Shares on the same terms as the proposed Transfer described in the notice.
The Right of First Refusal shall be exercisable by notice given to the
Fund at any time within twenty (20) days of the receipt by Interneuron of
the notice given by the Fund (the "Option Period").
If Interneuron does not exercise its Right of First Refusal prior to the
expiration of the Option Period, the Fund may, at any time within ten (10)
days (the "Sale Period") following the expiration of the Option Period,
sell for cash all, but not less than all, of the offered Royalty Shares on
the terms proposed in the notice at a cash price per share not less than
the minimum price proposed in the notice, provided that prior to any sale,
counsel for the Fund shall have delivered to Interneuron its opinion, in
form and substance acceptable to Interneuron, that the sale will not
violate any applicable federal or state securities law. If the offered
Royalty Shares remain unsold at the end of the Sale Period, such Royalty
Shares may not thereafter be Transferred by the Fund unless the Fund again
complies with this SECTION 5.2. The failure by Interneuron to exercise its
Right of First Refusal in any particular instance shall not affect in any
way such right with respect to any other proposed Transfer of Royalty
Shares.
5.3 RULE 144 RESTRICTIONS ON TRANSFER. The Fund agrees that any Royalty Shares
Transferred by the Fund shall be Transferred in accordance with the volume
restrictions contained in paragraph (e) of Rule 144 of the Securities Act,
or any successor rule.
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5.4 VOTING RESTRICTIONS.
(a) So long as the Fund owns any Royalty Shares, with respect to all
actions to be taken by Interneuron or its stockholders (whether by
proxy or consent) on which holders of Common Stock have the right,
by statute or otherwise, to vote, whether as a separate class or
together with other classes of Interneuron capital stock (a
"Stockholder Action"), the Fund hereby agrees and hereby irrevocably
(i) makes, constitutes and appoints the Trustee (the "Fund Voting
Designee") to act as the Fund's true and lawful proxy and
attorney-in-fact in the name and on behalf of the Fund, with full
power to appoint a substitute or substitutes with respect to any
Royalty Shares owned by the Fund, and (ii) directs the Fund Voting
Designee to vote the Royalty Shares owned by it, at the time and
from time to time, with respect to all Stockholder Actions, in the
place and stead of the Fund, in the same manner and proportion as
the holders of outstanding shares of Common Stock, other than the
Fund, and other securities of Interneuron entitled to vote on a
Stockholder Action, voting as one class ("Voting Securities") and
represented in person or by proxy, vote their shares in connection
with a Stockholder Action. For example, if a particular Stockholder
Action receives the affirmative vote of holders of sixty percent
(60%) of the Voting Securities represented in person or by proxy,
then sixty percent (60%) of the Royalty Shares shall be voted in
favor of the Stockholder Action. By giving this proxy the Fund
hereby revokes any other proxy granted by the Fund to vote any of
the Royalty Shares owned by it. The proxy granted herein shall
expire when all of the Royalty Shares owned by the Fund have been
sold.
(b) All power and authority hereby conferred is coupled with an interest
and is irrevocable, shall not be terminated by any act of the Fund
or by operation of law, by lack of appropriate power or authority,
or by the occurrence of any other event or events and shall be
binding upon all beneficiaries, heirs at law, legatees,
distributees, successors, assigns and legal representatives of the
Fund. If after the execution of this Royalty Agreement the Fund
shall cease to have appropriate power or authority, or if any other
such event or events shall occur, the Fund Voting Designee is
nevertheless authorized and directed to vote any Royalty Shares
owned by the Fund in accordance with the terms of this Royalty
Agreement as if such lack of appropriate power or authority or other
event or events had not occurred and regardless of notice thereof.
(c) The Fund shall perform such further acts and execute such further
documents as may be required to vest in the Fund Voting Designee the
sole power to vote any Royalty Shares owned by the Fund as required
herein.
(d) Notwithstanding the terms and conditions set forth in this SECTION
5.4, the Fund shall not, by virtue hereof, be entitled to any voting
or other rights as a stockholder of Interneuron unless and until
such time, if ever, as Interneuron shall issue Royalty Shares to the
Fund.
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ARTICLE VI
ADJUSTMENT PROVISIONS; MERGER, CONSOLIDATION OR SALE
6.1 ADJUSTMENT TO ROYALTY CONVERSION PRICE. The Royalty Conversion Price in
effect at any time shall be subject to adjustment from time to time upon
the happening of certain events as follows:
In case Interneuron shall (i) declare a dividend or make a distribution on
its outstanding shares of Common Stock in shares of Common Stock, (ii)
subdivide or reclassify its outstanding shares of Common Stock into a
greater number of shares, or (iii) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares, the Royalty
Conversion Price in effect at the time of the record date for such
dividend or distribution or of the effective date of such subdivision,
combination or reclassification shall be adjusted so that it shall equal
the price determined by multiplying the Royalty Conversion Price by a
fraction, the denominator of which shall be the number of shares of Common
Stock outstanding after giving effect to such action, and the numerator of
which shall be the number of shares of Common Stock outstanding
immediately prior to such action. Such adjustment shall be made
successively whenever any event listed above shall occur.
6.2 OFFICER'S CERTIFICATE. Whenever the Royalty Conversion Price shall be
adjusted as required by the provisions of the SECTION 6.1, Interneuron
shall file in the custody of its Treasurer or an Assistant Treasurer at
its principal office an officer's certificate showing the adjusted Royalty
Conversion Price determined as herein provided, setting forth in
reasonable detail such facts as shall be necessary to show the reason for
and the manner of computing such adjustment. Each such officer's
certificate shall be made available at all reasonable times for inspection
by the Fund, and Interneuron shall, forthwith after each such adjustment,
mail a copy by certified mail of such certificate to the Fund.
6.3 MERGER, CONSOLIDATION OR SALE. In case Interneuron shall at any time prior
to the earlier of (a) the Termination Date or (b) the date on which
Interneuron has made payments to the Fund equal to the Royalty Amount, (i)
consolidate or merge with or into another corporation (other than a merger
in which Interneuron is the continuing or surviving corporation); or (ii)
sell or transfer to another corporation all or substantially all of the
assets of Interneuron (a "Corporate Transaction") in which holders of
Common Stock are entitled to receive stock, other securities or property
in exchange for Common Stock held by them then, in lieu of any further
Royalty Payments or right to receive Royalty Shares under this Royalty
Agreement, the Fund shall be entitled to receive upon the later of (a) the
effectiveness of the Corporate Transaction, or (b) the Final Settlement
Date, if such date is subsequent to the effectiveness of the Corporate
Transaction, the kind and amount of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock which
the Fund would have been entitled as Royalty Shares pursuant to the terms
of SECTION 2.3 herein as if the provisions of SECTION 2.3 had been
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applicable at such time, based on the Royalty Balance outstanding
immediately prior to the effectiveness of such Corporate Transaction or,
if subsequent to such time, on the Final Settlement Date. If (i) at the
time of any Corporate Transaction, Interneuron has made payments to the
Fund equal to the Royalty Amount such that there is no Royalty Balance, or
(ii) as a result of any Corporate Transaction this SECTION 6.3 becomes
applicable, then any further obligations of Interneuron pursuant to
ARTICLE 2 hereunder shall immediately expire and this Royalty Agreement
shall terminate.
ARTICLE VII
TERM AND TERMINATION
7.1 TERM AND TERMINATION. This Royalty Agreement shall be effective as of the
Effective Date and shall continue in effect for the Royalty Term, unless
(i) this Royalty Agreement is terminated earlier pursuant to SECTION 2.2
OR 6.3 above, or (ii) the Settlement Agreement terminates in accordance
with its terms. In addition, if a Party is in breach of any of the
material terms or conditions of this Royalty Agreement or the Settlement
Agreement and such breach is not cured within the period set forth in
SECTION 8.2 hereof, the non-breaching Party shall have the right to
terminate this Royalty Agreement. The date on which this Royalty Agreement
is terminated is the "Termination Date".
7.2 EFFECT OF TERMINATION. Termination of this Royalty Agreement shall not
relieve the Parties of any obligation accruing prior to such termination.
In addition to any other provisions of this Royalty Agreement which by
their terms continue after the Termination Date, (i) the provisions of
ARTICLE 3 shall survive the termination of this Royalty Agreement and
shall continue in effect for five (5) years from the Termination Date and
(ii) the provisions of ARTICLE 5 shall survive the termination of this
Royalty Agreement (except a termination under SECTION 6.3 hereof) and
shall continue in effect until all of the Royalty Shares are sold pursuant
to SECTION 5.2 herein. The termination of this Royalty Agreement shall be
without prejudice to the rights of any Party against the other accrued or
accruing under this Royalty Agreement prior to the Termination Date.
ARTICLE VIII
MISCELLANEOUS
8.1 FORCE MAJEURE. Neither Party shall be held liable or responsible to the
other Party nor be deemed to have defaulted under or breached the Royalty
Agreement for failure or delay in fulfilling or performing any term of the
Royalty Agreement during the period of time when such failure or delay is
caused by or results from causes beyond the reasonable control of the
affected Party including, but not limited to, fire, flood, embargo, war,
acts
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of war (whether war be declared or not), insurrection, riot, civil
commotion, strike, lockout or other labor disturbance, act of God or act,
omission or delay in acting by the other Party. The affected Party shall
notify the other Party of such force majeure circumstances as soon as
reasonably practicable.
8.2 CURE PERIOD FOR BREACH. If a Party is in breach of any material obligation
hereunder or, to the extent applicable, the Settlement Agreement, it shall
have thirty (30) days after receipt of notice from the other Party
requesting cure of the breach, to cure such breach; provided however, that
if the breach is not capable of being cured within thirty (30) days of
receipt of such written notice for causes or reasons beyond such Party's
control, such Party may remain in breach of such obligation so long as it
has commenced and is taking commercially reasonable actions to cure such
breach as promptly as practicable.
8.3 SEVERABILITY. In the event that any of the provisions contained in this
Royalty Agreement are held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby, unless the absence of the invalidated provision(s) adversely
affect the substantive rights of the Parties. The Parties shall replace
the invalid, illegal or unenforceable provision(s) with valid, legal and
enforceable provision(s) which, insofar as practical, implement the
purposes of this Royalty Agreement.
8.4 NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered
personally, sent by facsimile (and promptly confirmed by personal
delivery, registered or certified mail or overnight courier), sent by
nationally-recognized overnight courier or sent by registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:
if to Interneuron to: Interneuron Pharmaceuticals, Inc.
One Ledgemont Center
00 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: President
Fax No.: 000-000-0000
with copies to: Bachner, Tally, Xxxxxxx Xxxxxx LLP
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx, Esq.
Fax No.: 000-000-0000
and
15
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx, 00-00
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Fax No.: 000-000-0000
if to the Fund, to: Plaintiffs' Management Committee
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx, Esq.
Fax No.: 000-000-0000
with a copy to the Trustee, at such address as is provided in
writing to each Party within thirty (30) days of the Effective Date
or to such other address as the Party to whom notice is to be given may
have furnished to the other Parties in writing in accordance herewith. Any
such communication shall be deemed to have been given when delivered if
personally delivered or sent by facsimile on a business day, on the
business day after patch if sent by nationally-recognized overnight
courier and on the third business day following the date of mailing if
sent by mail.
8.5 APPLICABLE LAW. The Royalty Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware and the United States
without reference to any rules of conflict of laws.
8.6 WAIVER. The waiver by a Party hereto of any right hereunder or the failure
to perform or of a breach by another Party shall not be deemed a waiver of
any other right hereunder or of any other breach or failure by said other
Party whether of a similar nature or other:
wise.
8.7 COUNTERPARTS. The Royalty Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16
IN WITNESS WHEREOF, the Parties have executed this Royalty Agreement as of
the date first set forth above.
INTERNEURON PHARMACEUTICALS, INC.
By:/S/ Xxxxx X. Xxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxx, M.D.
Title: President and Chief Executive
Officer
PLAINTIFFS' MANAGEMENT COMMITTEE
ON BEHALF OF CLASS REPRESENTATIVE
XXXXXX WISH AND THE INTERNEURON
CLASS ACTION SETTLEMENT FUND
By:/S/ Xxxxxx Xxxxx
------------------------------------
Name:
By:/S/ Xxxx Xxxxxxxx
------------------------------------
Name:
By:/S/ Xxxxxxx Xxxxxxx
------------------------------------
Name:
17
APPENDIX A
Royalty Agreement (filed as Exhibit 99.3 hereto)
00
XXXXXXXX X
SCHEDULE OF INTERNEURON PHARMACEUTICALS, INC.'S INSURANCE
Columbia Casualty Co. (CNA)
Policy No. ADT 1028639694
(efeective May 15, 1997 to May 15, 1998)
$20 million per occurrence and in the aggregate
Reliance Insurance Co. of Illinois
Policy No. NPD 0137779
(effective May 15, 1997 to May 15, 1998)
$5 million per occurrence and in the aggregate
New Hampshire Insurance Co./ AIG Europe (UK) Ltd.
Policy No. 3200810697
(effective May 15, 1997 to May 15, 1998)
$15 million per occurance and in the aggregate
-1-
00
XXXXXXXX X
XX XXX XXXXXX XXXXXX DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
IN RE: DIET DRUGS (PHENTERMINE, :
FENFLURAMINE, DEXFENFLURAMINE) : MDL DOCKET NO.
PRODUCTS LIABILITY LITIGATION : 1203
:
THIS DOCUMENT RELATES TO ALL :
CASES :
XXXXXX WISH v. INTERNEURON : CIVIL ACTION NO.
PHARMACEUTICALS, INC. : 98-CV-20594
:
ORDER CONDITIONALLY CERTIFYING A MANDATORY CLASS,
PRELIMINARILY APPROVING THE SETTLEMENT AGREEMENT,
INSTRUCTING THE PARTIES TO PREPARE NOTICE, AND
TEMPORARILY STAYING AND ENJOINING PENDING AND FUTURE
LITIGATION AGAINST INTERNEURON PHARMACEUTICALS, INC.
The Plaintiffs' Management Committee ("PMC"), on behalf of Plaintiff
Xxxxxx Wish, and Interneuron Pharmaceuticals, Inc. ("Interneuron") have made
application for an Order preliminarily approving the settlement of this action
in accordance with the Agreement of Compromise and Settlement (with attached
Royalty Agreement) dated September __, 1998 (the "Settlement Agreement"), a copy
of which is attached hereto. Having read and considered the Settlement Agreement
and the Memoranda submitted by the parties in support of class certification,
and being satisfied that the proposed Settlement Agreement meets the applicable
criteria for preliminary approval, the Court hereby preliminarily approves the
proposed class action settlement on the terms set forth in the Settlement
Agreement and further orders as follows:
1. The capitalized terms used in this Order shall have the same meaning
as those in the Settlement Agreement.
2. The Settlement Class is conditionally certified, and is defined as
follows:
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The "Class" is a mandatory, non-opt out class under Fed. R. Civ. P.
23(b)(1)(B) that includes:
(a) All persons who obtained Redux(TM) in the United States or its
territories and used the product prior to the Notice Date;
(b) All persons (except the United States Government) asserting or
who may in the future assert standing to xxx Interneuron or
any Released Party as a result of another person's obtaining
Redux(TM) in the United States or its territories and using
the product prior to the Notice Date (including spouses,
children, other family members, heirs, beneficiaries,
executors, administrators, legal representatives, successors,
subrogees or assigns of any person who used Redux(TM));
(c) All persons in the United States and its territories who used
a Diet Drug other than Redux(TM) prior to the Notice Date and
who seek or may in the future seek to hold Interneuron or any
Released Party liable on a theory of conspiracy, concert of
action, aiding and abetting, negligent undertaking, "Good
Samaritan" liability, deceptive trade practices, consumer
fraud, unfair business practices or any similar legal theory;
(d) All persons in the United States and its territories (except
the United States Government) asserting or who may in the
future assert standing to xxx Interneuron or any Released
Party based upon a theory of conspiracy, concert of action,
aiding and abetting, negligent undertaking, "Good Samaritan"
liability, deceptive trade practices, consumer fraud, unfair
business practices or any similar legal theory as a result of
another person's use of a Diet Drug other than Redux(TM) prior
to the Notice Date, including spouses, children, other family
members, heirs, beneficiaries, executors, administrators,
legal representatives, successors, subrogees or assigns of any
person who used a Diet Drug other than Redux(TM).
3. Plaintiff Xxxxxx Wish is appointed as the Representative Plaintiff
to represent the Settlement Class. The Plaintiffs' Management Committee is
appointed as Class Counsel.
4. In light of the foregoing, and after having considered the arguments
and evidence submitted by both parties on Plaintiff's motion for class
certification, the Court finds that:
(a) The Class is so numerous that joinder of all members is
impracticable;
-2-
21
(b) There are questions of law and fact common to the Class;
(c) The claims of Plaintiff Xxxxxx Wish are typical of the claims of
the Class;
(d) Plaintiff Xxxxxx wish will fairly and adequately protect the
interests of the Class, and her counsel, the PMC, are free from
intraclass conflicts and will fairly and adequately represent the
class;
(e) The continued prosecution of separate actions by individual Class
Members would create a risk of adjudications with respect to individual
Class Members that would, as a practical matter, be dispositive of the
interests of other Class Members not parties to the adjudications and
substantially impair their ability to protect their interests.
Interneuron's financial condition presents a substantial risk that the
continued defense of Diet Drug Litigation nationwide would deplete the
company's resources and leave no fund from which plaintiffs could
recover.
These findings are without prejudice to Interneuron's rights under Federal Rule
of Civil Procedure 23 and the Settlement Agreement if the Settlement is not
finally approved. In particular, these findings in no way suggest that this
action could be certified under Rule 23(1,)(2) or Rule 23(1,)(3).
5. The Court will hold a formal fairness hearing (the "Fairness
Hearing") to determine whether the Agreement is fair, adequate, and reasonable
and should be finally approved and any other matters deemed appropriate by the
Court. The Fairness Hearing will be held on ________________________, at 10:00
a.m., in Courtroom 17B of the United States District Court for the Eastern
District of Pennsylvania, to determine: (a) whether the Class should be
certified as a class action under Federal Rule of Civil Procedure 23(a) and
23(b)(1)(B); (b) whether the Agreement is fair, reasonable, and adequate and
whether final judgment should be entered dismissing the action on the merits,
with prejudice and without costs; (c) whether
-3-
22
the Court should enter an order barring and enjoining all claims for
contribution and/or indemnity against Interneuron and/or the Released Parties
arising out of Released Claims; and (d) to consider any other matters deemed
appropriate by the Court.
6. To maintain orderly proceedings and to afford a reasonable
opportunity to be heard to those who wish it, any Class Member or other
interested party wishing to appear at the Fairness Hearing in person or through
his or her attorney must submit a written request, including a summary of the
issue(s) to be presented at the hearing, postmarked no later than
_________________, and mailed to the address provided in the Notice of
Settlement. This requirement ensures that the parties will have adequate notice
of the issues and arguments to be addressed at the hearing.
7. Any Class Member or other interested party wishing to submit
comments to support or oppose any aspect of the Agreement may do so in writing,
without the necessity of retaining counsel or making any formal appearance. All
written comments must be postmarked no later than _____________________ and
mailed to the address provided in the Notice of Settlement. Any Class Member or
other interested party who does not make an objection in the manner provided
shall be deemed to have waived such objection and shall be forever foreclosed
from making any objection to the certification of the Class, the fairness,
adequacy or reasonableness of the proposed Settlement Agreement, the entry of
the Final Order and Judgment, and the issuance of a permanent injunction and bar
against all claims for contribution and/or indemnity against Interneuron and/or
the Released Parties arising out of Released Claims.
8. The parties shall jointly propose a long form and short form of
notice within two weeks of the date of this Order. The Court will then evaluate
the content of the notice to ensure that it comports with the requirements of
due process. Notice of the settlement shall be given in the manner set forth
below. The Court finds that such manner
-4-
23
of notice meets the requirements of due process and is the best notice
practicable under the circumstances and shall constitute due and sufficient
notice to all persons entitled thereto.
(a) As soon as practicable after this Court's approval of the
forms of notice, but no later than ________________________,
the long form notice shall be sent by First Class mail to all
Class Members with currently pending litigation against
Interneuron, all parties to such litigation, and all attorneys
of record in such litigation. Class Counsel also shall cause
the long form notice to be posted by computer on the World
Wide Web.
(b) As soon as practicable after the Court approves the short form
notice and no later than _____________________, Class Counsel
shall cause the short form notice to be published on two
consecutive Fridays in USA Today, once in Parade Magazine
(national edition), and once in TV Guide.
(c) The costs of notice shall be paid by the Interneuron Class
Action Settlement Fund, as stipulated in section 10.3 of the
Settlement Agreement.
9. Counsel for Interneuron is directed to cooperate with Class Counsel
by providing Class Counsel a list of all parties involved in pending state and
or federal products liability or health-related claims against the company, and
their counsel, together with a computer disk formatted for mailing labels as
soon as practical, but no later than 21 days after this Order.
10. No later than one month after the Notice Date (as defined in the
Settlement Agreement), Class Counsel shall file with the Court a report
describing their notification efforts, with copies of published notices and
lists of the persons notified by mail attached.
11. The Settlement Agreement, with appendices thereto, will be made
available for public inspection in the Clerk's office during regular business
hours.
-5-
24
12. In necessary aid of the Court's jurisdiction over this limited fund
and to assure the fair and orderly conduct and completion of the settlement
consideration process, the Court is contemplating entry of an Order staying and
enjoining all Class Members, defendants in Diet Drug Litigation, and any other
interested parties from initiating, asserting, prosecuting, or otherwise
litigating any Released Claims, including claims for contribution and indemnity,
against Interneuron or the Released Parties until such time as the Court holds a
fairness hearing and determines whether or not to finally approve the Settlement
Agreement.
13. The Court will hold a hearing to permit Class Members and any other
interested parties to appear and show cause why the Court should not enter the
stay and injunction contemplated in paragraph 12 of this Order. This hearing
shall be held on ________________________, at 10:00 a.m., in Courtroom 17B of
the United States District Court for the Eastern District of Pennsylvania.
14. The stay entered by Pretrial Order No. 270 (which related to
federal cases only) shall continue and remain in effect until further Order of
the Court. ORDERED this ____ day of September, 1998.
__________________________________
United States District Court Judge
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00
XXXXXXXX X
XX XXX XXXXXX XXXXXX DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
IN RE: DIET DRUGS (PHENTERMINE, :
FENFLURAMINE, DEXFENFLURAMINE) : MDL DOCKET NO.
PRODUCTS LIABILITY LITIGATION : 1203
:
THIS DOCUMENT RELATES TO ALL :
CASES :
:
XXXXXX WISH v. INTERNEURON : CIVIL ACTION NO.
PHARMACEUTICALS, INC. : 98-CV-20594
:
CLASS MEMBER RELEASE AND INDEMNITY AGREEMENT
STATE OF ___________________________________________ )
) ss.
COUNTY OF __________________________________________ )
This Release and Indemnity Agreement is being executed in light of the
settlement of class action litigation involving the diet drug Redux(TM), which
was memorialized in an Agreement of Compromise and Settlement executed September
___, 1998 (the "Settlement Agreement") on behalf of a Class as defined in that
Settlement Agreement. The undersigned Class Member submits to the personal
jurisdiction of the Court in the above-captioned action and hereby ratifies the
acts of the Plaintiffs' Management Committee ("PMC") in entering into the
Settlement Agreement on his or her behalf. The undersigned Class Member also
ratifies the Settlement Agreement as executed by the PMC and agrees to be bound
by its terms and conditions and to perform every requirement necessary to
satisfy the conditions and obligations set forth in the Settlement Agreement and
ordered by the Court supervising the settlement of Diet Drug Litigation against
the Released Parties.
I,_____________, individually [and as personal
-1-
26
representative/administrator/executor of the estate of ______________] [and as
the surviving spouse and/or child and/or heir of ___________________][and as the
parent/guardian/next friend of ____________], hereinafter [collectively]
referred to as "Class Member," in consideration of the amounts already
deposited and amounts to be deposited in the future by Interneuron
Pharmaceuticals, Inc. ("Interneuron") into the Interneuron Class Action
Settlement Fund (the "Fund") established in the above-captioned action and
pursuant to the Settlement Agreement, and for other good and valuable
consideration, receipt and sufficiency of which is hereby acknowledged and
confessed, hereby RELEASE, ACQUIT, AND FOREVER DISCHARGE the Released Parties,
as defined below and in the Agreement, from any and all claims that the Class
Member may presently have or in the future may have against the Released
Parties arising out of "Released Claims" as defined below and in the Agreement.
These "Released Claims" include all claims that have, might have been,
or in the future could be asserted by the Class Member against Interneuron or
any Released Parties arising out of the Class Member's use of Redux(TM),
including without limitation all claims for damages or remedies of whatever kind
or character, known or unknown, that are now recognized by law or that may be
created or recognized in the future by statute, regulation, judicial decision,
or in any other manner, for actual damages, exemplary and punitive damages,
penalties of any kind, personal injuries or death, mental or physical pain or
suffering, loss of wages, income, earnings, and earning capacity, doctor,
hospital, nursing and drug bills, medical expenses, Derivative Claims, loss of
consortium, companionship, society or affection, damage to familial relations,
loss of enjoyment of life, economic or business losses, disgorgement of profits,
prejudgment and postjudgment interest, medical monitoring or screening,
injunctive or declaratory relief, and any other loss or detriment of any kind.
These "Released Claims" also include all claims based upon a theory of
conspiracy, concert of action, aiding and abetting, negligent undertaking, "Good
Samaritan"
-2-
27
liability, deceptive trade practices, consumer fraud, unfair business practices
or any similar legal theory that have, might have been, or in the future could
be asserted by any Class Member against Interneuron or any Released Parties
arising out of the Class Member's use of a Diet Drug other than Redux(TM);
including without limitation all claims for damages or remedies of whatever kind
or character, known or unknown, that are now recognized by law or that may be
created or recognized in the future by statute, regulation, judicial decision,
or in any other manner, for actual damages, exemplary and punitive damages,
penalties of any kind, personal injuries or death, mental or physical pain or
suffering, loss of wages, income, earnings, and earning capacity, doctor,
hospital, nursing and drug bills, medical expenses, Derivative Claims, loss of
consortium, companionship, society or affection, damage to familial relations,
loss of enjoyment of life, economic or business losses, disgorgement of profits,
prejudgment and postjudgment interest, medical monitoring, injunctive or
declaratory relief, and any other loss or detriment of any kind.
The "Released Parties" include Interneuron, Boehringer Ingelheim
Pharmaceuticals, Inc., their respective parents, subsidiaries, affiliates,
divisions, current and former officers, directors, employees, attorneys, and
agents; and each of their insurers (including Columbia Casualty Co., Reliance
Insurance Company of Illinois, and New Hampshire Insurance Company), but only to
the extent of the insurance set forth in Appendix B to the Settlement Agreement
dated September __, 1998, and only to the extent that the insurer has tendered
its unimpaired policy limits without reservation of rights; provided, however,
that Boehringer Ingelheim Pharmaceuticals, Inc. shall not be a Released Party
for any claim arising from defects in the manufacture or packaging of Redux(TM).
The "Released Parties" also shall include any and all predecessors
and/or shareholders of Interneuron and/or Boehringer Ingelheim Pharmaceuticals,
Inc.; provided, however, that (i) any predecessor and/or shareholder of
Interneuron and/or Boehringer
-3-
28
Pharmaceuticals, Inc. who is or becomes a defendant in Diet Drug Litigation
shall be considered a Released Party pursuant to this paragraph only to the
extent that such entity is sued in its capacity as a predecessor and/or
shareholder of Interneuron and/or Boehringer Pharmaceuticals, Inc. and (ii) no
person or entity described in this paragraph shall be released from any claims
based upon its own independent negligence or culpable conduct.
The "Released Parties" also include all distributors of Redux(TM),
including wholesale distributors, private label distributors, pharmacists,
retail distributors, physicians, hospitals and clinics, and their respective
predecessors, successors, parents, subsidiaries, affiliates and divisions, and
their respective current and former shareholders, officers, directors,
employees, attorneys, agents, and insurers; provided that (i) such persons and
entities described in this paragraph shall be released only as to Released
Claims as to which such persons would have a contractual, common law, or
statutory right of indemnity against Interneuron, and (ii) no person or entity
described in this paragraph shall be released from claims based, in whole or in
part, upon its own independent negligence or culpable conduct (including without
limitation negligence claims or claims for professional malpractice asserted
against physicians, health care providers, and diet centers).
The "Released Parties" also shall include any and all successors to
Interneuron and/or Boehringer Ingelheim Pharmaceuticals, Inc.; provided,
however, that (i) any current or future defendant in Diet Drug Litigation who
becomes a successor to Interneuron and/or Boehringer Ingelheim Pharmaceuticals,
Inc. by reason of a merger, acquisition, consolidation or otherwise shall be
considered a Released Party pursuant to this paragraph only to the extent that
such entity is sued in its capacity as a successor of Interneuron and/or
Boehringer Pharmaceuticals, Inc. and (ii) no person or entity described in this
paragraph shall be released from any claims based upon its own independent
negligence or culpable conduct.
It is explicitly acknowledged that the Released Parties under this
Release and
-4-
29
Indemnity Agreement do not include American Home Products Corporation, Les
Laboratoires Servier, S.A., or either company's subsidiaries, divisions,
affiliates, and other related entities.
As part of the consideration for Interneuron's payment of sums into the
Fund, the Class Member expressly warrants and represents to each and all of the
Released Parties that: (1) the Class Member is legally competent to execute this
Release; and (2) the Class Member has not assigned, pledged, sold or otherwise
transferred in any manner whatsoever, either by instrument in writing or
otherwise, any right, title, interest or claim that the Class Member may
currently have or may have in the future (except to counsel, if counsel is
executing this instrument).
To the extent that the Class Member receives a judgment against any
person in an action arising out of a Released Claim, the Class Member will
reduce and satisfy that judgment by an amount equal to the total amount, if any
that the Class Member has received pursuant to the Settlement Agreement (before
deductions of any amounts for costs and legal fees). The Class Member has agreed
and does hereby INDEMNIFY, DEFEND and HOLD HARMLESS each and all of the Released
Parties -- but only up to the amount the Class Member has received from the Fund
pursuant to the Settlement Agreement (before deductions of any amounts for costs
and legal fees) -- from any and all claims, demands, actions, and causes of
action of whatever nature or character that arise out of or are related to
Released Claims, including all costs, expenses and legal fees in defending same,
that have been or hereafter may be asserted by any person, firm or corporation
claiming by, through or under the Class Member, and from any and all legal
actions, including third-party actions and cross-actions, asserted or brought
against any of the Released Parties by any firm, person or corporation against
whom the Class Member has asserted or brought, or may hereafter assert or bring,
any action, arising out of or in any manner connected with the Released Claims.
The Class Member acknowledges and understands that attorneys' fees and
-5-
30
expenses shall be paid from any disbursement the Class Member receives from the
Interneuron Class Action Settlement Fund, and the Class Member authorizes and
agrees to payment of that disbursement. The Class Member also acknowledges and
understands that certain costs and expenses associated with the administration
of the Fund will be paid from the Fund and therefore may reduce the amount of
money available to compensate the Class Member.
It is intended by the undersigned that this Release shall be complete
and shall not be subject to the claim of mistake of fact or law by the
undersigned, and that it expresses a full and complete settlement of liability
claimed and denied as against each and all of the Released Parties for Released
Claims, and regardless of the adequacy or inadequacies of the consideration,
this Release is intended to avoid litigation and to be final and complete.
This Release is the result of a compromise of a disputed claim and
shall never at any time for any purpose be considered as an admission of
liability or responsibility of the Released Parties, who continue to deny such
liability and to disclaim such responsibility.
The Class Member fully understands that the execution of this Release
and Indemnity Agreement does not automatically or immediately entitle the Class
Member to any monies that have been deposited by Interneuron into the Fund. The
Class Member may receive a share of the settlement proceeds deposited into the
Fund by Interneuron. The amount will be paid to the Class Member only upon
approval by the Fund's Claims Administrator. The procedures for registering a
claim with the Claims Administrator and receiving a disbursement from the Fund
will be set by order of the Court. The Class Member expressly acknowledges that
his or her total damages and claims may amount to more than what the Claims
Administrator determines is the Class Member's proportionate share of the Fund.
Also, the Class Member acknowledges that the Released Parties may not ultimately
be paying the total of the Class Member's damages arising out of the Released
Claims.
The Class Member also expressly agrees and understands that if
subrogation
-6-
31
claims have been asserted by insurers, employers, health care providers, or the
government against the proportionate share allocated by the Claims Administrator
to the Class Member, the Class Member's proportionate share may be reduced
because of the Class Member's indemnity obligation. In the event this occurs,
the Class Member understands and intends that this Release and Indemnity
Agreement is still valid. The Class Member is also aware of section 6.7 of the
Settlement Agreement, which limits the amount of time in which a subrogation
claim may be asserted.
The Class Member expressly warrants and represents to the Released
Parties, as part of the consideration for the money paid and to be paid by
Interneuron into the Fund, that before executing this instrument, the
undersigned has conferred with counsel, or declined the opportunity to do so,
and agrees that, in light of the Court's recognition of Interneuron as a limited
fund, the payment of money and other consideration given in exchange for this
Release and Indemnity constitutes a fair and reasonable compromise and
settlement of the Class Member's Released Claims.
The Class Member hereby declares and represents that the injuries the
Class Member sustained as a result of the use of a Diet Drug and/or the Released
Parties' alleged conduct may be permanent and progressive, and that the Class
Member's damages and losses may not now be fully known and may be more numerous
or more serious than the Class Member now expects. The Class Member represents
that he or she has not been influenced to any extent in making this Release and
Indemnity Agreement by any representations or statements made by the Released
Parties regarding the Class Member's injuries or the legal liability therefor.
The Class Member acknowledges and states that if this Release and
Indemnity Agreement becomes ineffective as to any Released Party or if the
Settlement Agreement identified above becomes ineffective for any reason
whatsoever, this Release and Indemnity Agreement shall not be affected thereby,
and shall remain in effect as to all other Released
-7-
32
Parties.
A copy of the Settlement Agreement identified above has been provided
to the Class Member's counsel and was made available to the Class Member to
review and read, if so requested, before the Class Member signed this Release
and Indemnity Agreement.
[Where required by state statute, additional disclosures
or language may be added here.]
-8-
33
CAUTION: READ BEFORE SIGNING BELOW
I HAVE READ THE FOREGOING RELEASE AND HAD THE OPPORTUNITY TO READ THE SETTLEMENT
AGREEMENT IDENTIFIED ABOVE. I FULLY UNDERSTAND THIS RELEASE. I REALIZE AND
UNDERSTAND THAT THIS RELEASE HAS IMPORTANT LEGAL CONSEQUENCES. I HAVE HAD THE
OPPORTUNITY TO GET A LAWYER'S ADVICE. I UNDERSTAND THAT MY INJURIES MAY BE
PROGRESSIVE AND THAT I MAY BE PRESENTLY UNAWARE OF CLAIMS THAT I MIGHT BE ABLE
TO ASSERT AGAINST THE RELEASED PARTIES IN THE FUTURE. EVEN SO, I INTEND THIS TO
BE A COMPLETE AND UNEQUIVOCAL RELEASE OF ALL CLAIMS THAT I MAY EVER HAVE AGAINST
THE RELEASED PARTIES ARISING OUT OF THE USE OF DIET DRUGS, EVEN THOSE CLAIMS
ABOUT WHICH I PRESENTLY AM UNAWARE.
EXECUTED in multiple originals on __________________________________.
(date)
______________________________________
CLASS MEMBER
______________________________________
Date signed
BEFORE ME, the undersigned authority, on this day personally appeared
_____________________, known to me to be the person whose name is subscribed to
the foregoing instrument, and acknowledged to me that he/she executed the same
for the purposes and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE on __________________________.
(date)
______________________________________
Notary Public in and for
the State of _________________________
______________________________________
Printed Name of Notary
My Commission Expires:________________
-9-
00
XXXXXXXX X
XX XXX XXXXXX XXXXXX DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
IN RE: DIET DRUGS (PHENTERMINE, :
FENFLURAMINE, DEXFENFLURAMINE) : MDL DOCKET NO.
PRODUCTS LIABILITY LITIGATION : 1203
:
THIS DOCUMENT RELATES TO ALL :
CASES :
:
XXXXXX WISH v. INTERNEURON : CIVIL ACTION NO.
PHARMACEUTICALS, INC. : 98-CV-20594
:
ORDER ENJOINING DEFENDANT INTERNEURON
PHARMACEUTICALS, INC. AND ITS SUBSIDIARIES
AND AFFILIATES FROM PARTICIPATING IN FORMAL
OR INFORMAL DISCOVERY IN DIET DRUG LITIGATION
The PMC and Interneuron Pharmaceuticals, Inc. ("Interneuron") have
entered into a Settlement Agreement, dated September __, 1998, to bring about an
end to Interneuron's involvement in Diet Drug Litigation. The Court has
conditionally certified the above-captioned action as a mandatory, limited fund
class action under Federal Rule of Civil Procedure 23(b)(1)(B), preliminarily
approved the settlement, and stayed and enjoined Diet Drug Litigation against
Interneuron. The Court specifically finds that the costs and burdens of
Interneuron's continuing participation in discovery related to Diet Drug
litigation on a nationwide basis present a substantial risk of impairing
Interneuron's ability to meet its financial obligations under the Settlement
Agreement and of thereby significantly prejudicing the recovery rights of all
parties with Redux-related claims against the company.
Accordingly, this Court hereby preliminarily enjoins and bars
Interneuron, its subsidiaries and affiliates from participating in any
discovery, formal or informal, related to Diet Drug Litigation (as that term is
defined in the Settlement Agreement) in any court, state, federal or foreign,
without the express approval of this Court. Interneuron has acknowledged
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that certain additional discovery, including document discovery and some limited
depositions, may be warranted for the benefit of the parties involved in
continuing Diet Drug Litigation. Conducting such discovery, however, threatens
to seriously deplete the limited available resources from which the class
members must draw any recovery. Therefore, this Court will closely supervise any
additional discovery from Interneuron and allow it only on a tightly coordinated
basis.
This preliminary injunction is necessary in aid of the Court's
jurisdiction over the limited fund and to assure the fair and orderly conduct
and completion of the settlement consideration process. Accordingly, this
injunction shall remain in effect until the Court has rendered a final decision
on the fairness and adequacy of the settlement, which will occur after the
Fairness Hearing.
Interneuron is directed to provide a copy of this Order to any parties
and/or courts that should seek to compel its participation in formal or informal
discovery in Diet Drug Litigation.
SO ORDERED this ____ day of September, 1998.
__________________________________
United States District Court Judge
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