Exhibit 10.33

 

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

 

IN RE BIOVAIL CORPORATION
SECURITIES LITIGATION

 

Master File No. 03-CV-8917 (GEL)

 

STIPULATION AND AGREEMENT OF SETTLEMENT

 

This Stipulation and Agreement of Settlement (the “Stipulation”) is entered into
in the above-captioned action (the “Action”) by and among Lead Plaintiffs
Ontario Teachers’ Pension Plan Board and Local 282 Welfare Trust Fund (“Lead
Plaintiffs”) on behalf of themselves and the other members of the Class (as
hereinafter defined) and Defendants Biovail Corporation (“Biovail”), and
individual defendants Eugene N. Melnyk, Brian H. Crombie, John R. Miszuk,
Kenneth Howling, and Rolf Reininghaus (the “Individual Defendants”) (Biovail and
the Individual Defendants are collectively referred to hereinafter as the
“Defendants”), by and through their undersigned respective counsel, subject to
approval of the United States District Court for the Southern District of New
York pursuant to Rule 23(e) of the Federal Rules of Civil Procedure.

 

WHEREAS:

 

A.            BEGINNING ON OR ABOUT NOVEMBER 12, 2003, THIRTEEN CLASS ACTION
COMPLAINTS WERE FILED IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AGAINST CERTAIN OF THE DEFENDANTS.  THE ACTIONS WERE STYLED
HAYS V. BIOVAIL CORP., ET AL., CIVIL ACTION NO. 03-8917 (RO); CHRAPKO V. BIOVAIL
CORP ET AL., CIVIL ACTION NO. 03-8979 (RO); FELGOISE V. BIOVAIL CORP. ET AL.,
CIVIL ACTION NO. 03-09002 (UNASSIGNED); NEWBY V. BIOVAIL CORP. ET AL., CIVIL
ACTION NO. 03-9011 (UNASSIGNED); WELSH V. BIOVAIL CORP. ET AL., CIVIL ACTION
NO. 03-9293 (UNASSIGNED); SOBEL V. BIOVAIL CORP. ET AL., CIVIL ACTION
NO. 03-9480 (UNASSIGNED); SHI V. BIOVAIL CORP. ET AL.,

 

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Civil Action No. 03-9590 (RO); Abrahamson v. Biovail Corp. et al., Civil Action
No. 03-9616 (JFK); Gokhale v. Biovail Corp. et al., Civil Action No. 03-9701
(GBD); Pierce v. Biovail et al., Civil Action No. 03-9914 (RO); Emery v. Biovail
Corp. et al., Civil Action No. 03-10058 (unassigned); Wojciechowski v. Biovail
Corp. et al., Civil Action No. 03-10221 (HB); Rand v. Biovail Corp. et al.,
Civil Action No. 04-00188 (unassigned).  By Order Consolidating All Related
Actions, Appointing Co-Lead Plaintiffs and Approving Their Selection of Co-Lead
Counsel entered March 9, 2004 (“March 9, 2004 Order”), these actions, together
with any subsequently filed or transferred actions on behalf of investors who
purchased Biovail securities related to the claims asserted in these actions
were consolidated for all purposes.  The March 9, 2004 Order also appointed
Ontario Teachers’ Pension Plan Board and Local 282 Welfare Trust Fund as Co-Lead
Plaintiffs and approved their selection of co-lead counsel for the Action;(1)

 

B.            ON JUNE 18, 2004, LEAD PLAINTIFFS FILED THE CONSOLIDATED AMENDED
CLASS ACTION COMPLAINT ASSERTING CLAIMS UNDER SECTIONS 10(B) AND 20(A) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND RULE 10B-5 PROMULGATED THEREUNDER (THE
“FIRST AMENDED COMPLAINT”).  THE FIRST AMENDED COMPLAINT GENERALLY ALLEGES
VIOLATIONS OF THE FEDERAL SECURITIES LAWS THROUGH, AMONG OTHER THINGS,
MISSTATEMENTS AND OMISSIONS BY DEFENDANTS IN COMMUNICATIONS (AS DEFINED BELOW)
REGARDING TWO DRUGS THAT WOULD BE LAUNCHED IN 2003, CARDIZEM LA AND WELLBUTRIN
XL, AND THE PROJECTIONS THAT THEY GAVE WALL STREET WHICH WERE BASED ON THE
SUCCESSFUL LAUNCHES OF THOSE DRUGS.  THE FIRST AMENDED COMPLAINT SOUGHT TO
PROCEED ON BEHALF OF A CLASS CONSISTING OF ALL PERSONS WHO PURCHASED BIOVAIL
PUBLICLY TRADED COMMON STOCK DURING THE PERIOD FEBRUARY 7, 2003 THROUGH AND
INCLUDING MARCH 2, 2004, EXCLUDING CERTAIN NAMED PERSONS AND ENTITIES;

 

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(1)  THE MARCH 9, 2004 ORDER ALSO APPOINTED A THIRD LEAD PLAINTIFF WHOSE MOTION
TO VOLUNTARILY WITHDRAW AS SUCH WAS GRANTED BY ORDER ENTERED ON APRIL 7, 2005.

 

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C.            ON SEPTEMBER 28, 2004 DEFENDANTS MOVED TO DISMISS THE FIRST
AMENDED COMPLAINT.  THE MOTION WAS DENIED BY ORDER ENTERED DECEMBER 22, 2004. 
DEFENDANTS ANSWERED THE FIRST AMENDED COMPLAINT ON FEBRUARY 4, 2005;

 

D.            ON FEBRUARY 28, 2006, LEAD PLAINTIFFS’ FILED THEIR MOTION (I) TO
CERTIFY THE ACTION AS A CLASS ACTION, (II) TO CERTIFY LEAD PLAINTIFFS AS WELL AS
PLAINTIFF CITY OF DEARBORN HEIGHTS ACT 345 PENSION SYSTEM AS
CLASS REPRESENTATIVES, AND (III) TO CERTIFY CO-LEAD COUNSEL AS CLASS COUNSEL. 
THE MOTION WAS FULLY BRIEFED AND ARGUED TO THE COURT AND WAS SUB JUDICE AT THE
TIME THE AGREEMENT IN PRINCIPLE TO SETTLE THE ACTION WAS REACHED;

 

E.             ON AUGUST 25, 2006, LEAD PLAINTIFFS FILED THE CONSOLIDATED SECOND
AMENDED CLASS ACTION COMPLAINT (THE “COMPLAINT”) WHICH GENERALLY ALLEGES, AMONG
OTHER THINGS, THAT, IN COMMUNICATIONS IN CONNECTION WITH THE LAUNCHING AND
MARKETING OF CARDIZEM LA AND REPORTING TO THE PUBLIC ABOUT THE LAUNCH OF
CARDIZEM LA, BIOVAIL, WITH THE PARTICIPATION OF THE INDIVIDUAL DEFENDANTS ISSUED
MATERIALLY FALSE AND MISLEADING PRESS RELEASES AND OTHER STATEMENTS, INCLUDING
FINANCIAL STATEMENTS FILED WITH THE SEC, REGARDING CARDIZEM LA AND BIOVAIL’S
FINANCIAL CONDITION DURING THE CLASS PERIOD IN A SCHEME TO ARTIFICIALLY INFLATE
THE VALUE OF BIOVAIL’S COMMON STOCK;

 

F.             THE COMPLAINT FURTHER ALLEGES THAT LEAD PLAINTIFFS AND THE OTHER
MEMBERS OF THE CLASS PURCHASED THE COMMON STOCK OF BIOVAIL DURING THE
CLASS PERIOD AT PRICES ARTIFICIALLY INFLATED AS A RESULT OF THE DEFENDANTS’
DISSEMINATION IN COMMUNICATIONS OF MATERIALLY FALSE AND MISLEADING STATEMENTS
REGARDING BIOVAIL IN VIOLATION OF SECTIONS 10(B) AND 20(A) OF THE SECURITIES
EXCHANGE ACT OF 1934, AND RULE 10B-5 PROMULGATED THEREUNDER;

 

G.            ON OCTOBER 20, 2006, DEFENDANTS ANSWERED THE COMPLAINT;

 

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H.            THE DEFENDANTS DENY ANY WRONGDOING WHATSOEVER AND THIS STIPULATION
SHALL IN NO EVENT BE CONSTRUED OR DEEMED TO BE EVIDENCE OF OR AN ADMISSION OR
CONCESSION ON THE PART OF ANY DEFENDANT WITH RESPECT TO ANY CLAIM OR OF ANY
FAULT OR LIABILITY OR WRONGDOING OR DAMAGE WHATSOEVER, OR ANY INFIRMITY IN THE
DEFENSES THAT THE DEFENDANTS HAVE ASSERTED.  THE PARTIES TO THIS STIPULATION
RECOGNIZE, HOWEVER, THAT THE LITIGATION HAS BEEN FILED BY PLAINTIFFS AND
DEFENDED BY DEFENDANTS IN GOOD FAITH AND IN COMPLIANCE WITH FEDERAL RULE OF
CIVIL PROCEDURE 11, THAT THE LITIGATION IS BEING VOLUNTARILY SETTLED AFTER
ADVICE OF COUNSEL, AND THAT THE TERMS OF THE SETTLEMENT ARE FAIR, ADEQUATE AND
REASONABLE.  THIS STIPULATION SHALL NOT BE CONSTRUED OR DEEMED TO BE A
CONCESSION BY ANY PLAINTIFF OF ANY INFIRMITY IN THE CLAIMS ASSERTED IN THE
ACTION;

 

I.              PLAINTIFFS’ CO-LEAD COUNSEL HAVE CONDUCTED AN EXTENSIVE
INVESTIGATION AND THOROUGH DISCOVERY RELATING TO THE CLAIMS AND THE UNDERLYING
EVENTS AND TRANSACTIONS ALLEGED IN THE COMPLAINT, INCLUDING THE REVIEW OF
MILLIONS OF PAGES OF DOCUMENTS PRODUCED BY DEFENDANTS AND THIRD PARTIES AND THE
DEPOSING OF APPROXIMATELY FIFTEEN (15) FACT WITNESSES AS OF THE DATE THE
AGREEMENT IN PRINCIPLE TO SETTLE WAS REACHED.  PLAINTIFFS’ CO-LEAD COUNSEL HAVE
ANALYZED THE EVIDENCE ADDUCED DURING PRETRIAL DISCOVERY AND HAVE RESEARCHED THE
APPLICABLE LAW WITH RESPECT TO THE CLAIMS OF LEAD PLAINTIFFS AND THE OTHER
MEMBERS OF THE CLASS AGAINST THE DEFENDANTS AND THE POTENTIAL DEFENSES THERETO;

 

J.             IN THE FALL OF 2005, THE PARTIES MEDIATED BEFORE FORMER JUDGE
NICHOLAS POLITAN BUT WERE UNABLE TO REACH AN AGREEMENT TO RESOLVE THE ACTION. 
IN DECEMBER 2007, WITH THE BENEFIT OF THE DEVELOPMENT OF THE ACTION AND THE
EXTENSIVE DISCOVERY HAD SINCE THE EARLIER MEDIATION AND WITH THE ASSISTANCE OF
GARY V. MCGOWAN, ESQ. ACTING AS A MEDIATOR, LEAD PLAINTIFFS, BY THEIR COUNSEL,
CONDUCTED DISCUSSIONS AND ARM’S-LENGTH NEGOTIATIONS WITH COUNSEL FOR DEFENDANTS
WITH

 

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respect to a compromise and settlement of the Action with a view to settling the
issues in dispute and achieving the best relief possible consistent with the
interests of the Class; and

 

K.            BASED UPON THEIR INVESTIGATION AND PRETRIAL DISCOVERY AS SET FORTH
ABOVE, LEAD PLAINTIFFS AND PLAINTIFFS’ CO-LEAD COUNSEL HAVE CONCLUDED THAT THE
TERMS AND CONDITIONS OF THIS STIPULATION ARE FAIR, REASONABLE AND ADEQUATE TO
LEAD PLAINTIFFS AND THE OTHER MEMBERS OF THE CLASS, AND IN THEIR BEST INTERESTS,
AND HAVE AGREED TO SETTLE THE CLAIMS RAISED IN THE ACTION PURSUANT TO THE TERMS
AND PROVISIONS OF THIS STIPULATION, AFTER CONSIDERING (I) THE CASH AND OTHER
BENEFITS THAT LEAD PLAINTIFFS AND THE OTHER MEMBERS OF THE CLASS WILL RECEIVE
FROM SETTLEMENT OF THE ACTION, (II) THE ATTENDANT RISKS OF LITIGATION, INCLUDING
IN PARTICULAR THE RISKS OF ESTABLISHING RECOVERABLE DAMAGES, AND (III) THE
DESIRABILITY OF PERMITTING THE SETTLEMENT TO BE CONSUMMATED AS PROVIDED BY THE
TERMS OF THIS STIPULATION.

 

NOW THEREFORE, without any admission or concession on the part of Lead
Plaintiffs of any lack of merit of the Action whatsoever, and without any
admission or concession of any liability or wrongdoing or lack of merit in the
defenses whatsoever by Defendants, it is hereby STIPULATED AND AGREED, by and
among the parties to this Stipulation, through their respective attorneys,
subject to approval of the Court pursuant to Rule 23(e) of the Federal Rules of
Civil Procedure, in consideration of the benefits flowing to the parties hereto
from the Settlement, that all Settled Claims (as defined below) as against the
Released Parties (as defined below) and all Settled Defendants’ Claims (as
defined below) shall be compromised, settled, released and dismissed with
prejudice, upon and subject to the following terms and conditions:

 

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CERTAIN DEFINITIONS

 

1.             AS USED IN THIS STIPULATION, THE FOLLOWING TERMS SHALL HAVE THE
FOLLOWING MEANINGS:

 

(A)           “AUTHORIZED CLAIMANT” MEANS A CLASS MEMBER WHO SUBMITS A TIMELY
AND VALID PROOF OF CLAIM FORM TO THE CLAIMS ADMINISTRATOR.

 

(B)           “CLAIMS ADMINISTRATOR” MEANS THE FIRM OF COMPLETE CLAIM SOLUTIONS,
LLC, WHICH SHALL ADMINISTER THE SETTLEMENT.

 

(C)           “CLASS” MEANS, FOR THE PURPOSES OF THIS SETTLEMENT ONLY, ALL
PERSONS AND ENTITIES WHO PURCHASED THE COMMON STOCK OF BIOVAIL ON THE NEW YORK
STOCK EXCHANGE OR OTHER U.S. STOCK EXCHANGES OR THE TORONTO STOCK EXCHANGE OR
OTHER CANADIAN STOCK EXCHANGES DURING THE PERIOD FROM FEBRUARY 7, 2003, THROUGH
AND INCLUDING MARCH 2, 2004.  EXCLUDED FROM THE CLASS ARE BIOVAIL, ITS
SUBSIDIARIES, AFFILIATES, PREDECESSOR AND SUCCESSOR ENTITIES; ERNST & YOUNG LLP
[U.S. AND CANADA] AND ANY OF THEIR AFFILIATES, SUBSIDIARIES, AND PREDECESSOR AND
SUCCESSOR ENTITIES; ERNST & YOUNG LLP [U.S. AND CANADA] PARTNERS AND PARTNERS OF
ANY OF THEIR AFFILIATES, SUBSIDIARIES, AND PREDECESSOR AND SUCCESSOR ENTITIES;
INDIVIDUAL DEFENDANTS EUGENE N. MELNYK, BRIAN H. CROMBIE, JOHN R. MISZUK,
KENNETH HOWLING, AND ROLF REININGHAUS; MEMBERS OF THEIR IMMEDIATE FAMILIES; ANY
ENTITY IN WHICH ANY DEFENDANT HAS A CONTROLLING INTEREST; ANY PERSON WHO WAS AN
OFFICER OR DIRECTOR OF BIOVAIL DURING THE CLASS PERIOD; AND THE LEGAL
REPRESENTATIVES, HEIRS, SUCCESSORS OR ASSIGNS OF ANY OF THE FOREGOING EXCLUDED
PERSONS OR ENTITIES.  ALSO EXCLUDED FROM THE CLASS ARE ANY PUTATIVE
CLASS MEMBERS WHO EXCLUDE THEMSELVES BY FILING A REQUEST FOR EXCLUSION IN
ACCORDANCE WITH THE REQUIREMENTS SET FORTH IN THE NOTICE.  “CLASS MEMBER” MEANS
A MEMBER OF THE CLASS.

 

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(D)           “CLASS PERIOD” MEANS, FOR THE PURPOSES OF THIS SETTLEMENT ONLY,
THE PERIOD BETWEEN AND INCLUDING FEBRUARY 7, 2003, AND MARCH 2, 2004.

 

(E)           “COMMUNICATIONS” MEANS COMMUNICATIONS MADE BY BIOVAIL, AND THE
INDIVIDUAL DEFENDANTS (AS DEFINED BELOW) IN THEIR CAPACITIES AS OFFICERS AND/OR
EMPLOYEES AND/OR DIRECTORS OF BIOVAIL, IN COMMUNICATING FINANCIAL AND BUSINESS
INFORMATION TO SHAREHOLDERS AND THE GENERAL PUBLIC IN THE ORDINARY COURSE OF
BIOVAIL’S BUSINESS.

 

(F)            “COURT” MEANS THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK.

 

(G)           “DEFENDANTS” MEANS BIOVAIL AND THE INDIVIDUAL DEFENDANTS.

 

(H)           “DEFENDANTS’ COUNSEL” MEANS THE LAW FIRMS OF HOWREY LLP AND
CURTIS, MALLET-PREVOST, COLT & MOSLE LLP FOR DEFENDANT BIOVAIL AND FOR THE
INDIVIDUAL DEFENDANTS.

 

(I)            “EFFECTIVE DATE” MEANS THE DATE UPON WHICH THE SETTLEMENT
CONTEMPLATED BY THIS STIPULATION SHALL BECOME EFFECTIVE, AS SET FORTH IN ¶ 23
BELOW.

 

(J)            “ESCROW ACCOUNT” MEANS ONE OR MORE INTEREST-BEARING ACCOUNTS
CREATED, ESTABLISHED, DESIGNATED, CONTROLLED AND MAINTAINED BY BERNSTEIN
LITOWITZ BERGER & GROSSMANN LLP, ACTING AS AGENT FOR THE CLASS, WHEREIN THE
SETTLEMENT AMOUNT (AS SPECIFIED IN ¶ 4 HEREIN) SHALL BE DEPOSITED BY OR AT ITS
DIRECTION ON BEHALF OF THE CLASS AND HELD IN ESCROW.

 

(K)           “ESCROW AGENT” MEANS VALLEY NATIONAL BANK, OR SUCH OTHER FINANCIAL
INSTITUTION(S) AS PLAINTIFFS’ CO-LEAD COUNSEL SHALL SELECT, WHICH SHALL BE
RESPONSIBLE FOR OVERSEEING, SAFEGUARDING AND DISTRIBUTING THE ESCROW ACCOUNT,
ACTING AS AGENT FOR THE CLASS.

 

(L)            “FINAL,” WITH RESPECT TO THE JUDGMENT (AS DEFINED HEREIN), MEANS:
(I) IF NO APPEAL IS FILED, THE EXPIRATION DATE OF THE TIME FOR FILING OR
NOTICING OF ANY APPEAL FROM THE COURT’S JUDGMENT APPROVING THE SETTLEMENT
SUBSTANTIALLY IN THE FORM OF EXHIBIT B HERETO, I.E.,

 

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thirty (30) days after entry of the Judgment; or (ii) if there is an appeal from
the Judgment, the date of final dismissal of any appeal from the Judgment, or
the final dismissal of any proceeding on certiorari to review the Judgment; or
(iii) the date of final affirmance on an appeal of the Judgment, the expiration
of the time to file a petition for a writ of certiorari, or the denial of a writ
of certiorari to review the Judgment, and, if certiorari is granted, the date of
final affirmance of the Judgment following review pursuant to that grant.  Any
proceeding or order, or any appeal or petition for a writ of certiorari
pertaining solely to any plan of allocation and/or application for attorneys’
fees, costs or expenses, shall not in any way delay or preclude the Judgment
from becoming Final.

 

(M)          “GROSS SETTLEMENT FUND” MEANS THE SETTLEMENT AMOUNT PLUS ANY INCOME
OR INTEREST EARNED THEREON, WHILE HELD BY THE ESCROW AGENT.

 

(N)           “INDIVIDUAL DEFENDANTS” MEANS EUGENE N. MELNYK, BRIAN H. CROMBIE,
JOHN R. MISZUK, KENNETH HOWLING, AND ROLF REININGHAUS.

 

(O)           “JUDGMENT” MEANS THE PROPOSED JUDGMENT TO BE ENTERED APPROVING THE
SETTLEMENT SUBSTANTIALLY IN THE FORM ATTACHED HERETO AS EXHIBIT B.

 

(P)           “NET SETTLEMENT FUND” HAS THE MEANING DEFINED IN ¶ 5 HEREIN.

 

(Q)           “NOTICE” MEANS THE NOTICE OF PENDENCY OF CLASS ACTION AND PROPOSED
SETTLEMENT, MOTION FOR ATTORNEYS’ FEES AND SETTLEMENT FAIRNESS HEARING, WHICH IS
TO BE SENT TO MEMBERS OF THE CLASS SUBSTANTIALLY IN THE FORM ATTACHED HERETO AS
EXHIBIT 1 TO EXHIBIT A.

 

(R)            “ORDER FOR NOTICE AND HEARING” MEANS THE PROPOSED ORDER
PRELIMINARILY APPROVING THE SETTLEMENT AND DIRECTING NOTICE THEREOF TO THE
CLASS SUBSTANTIALLY IN THE FORM ATTACHED HERETO AS EXHIBIT A.

 

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(S)           “PLAINTIFFS’ COUNSEL” MEANS PLAINTIFFS’ CO-LEAD COUNSEL AND ALL
OTHER COUNSEL REPRESENTING CLASS MEMBER PLAINTIFFS IN THE ACTION.

 

(T)            “PLAINTIFFS’ CO-LEAD COUNSEL” MEANS THE LAW FIRMS OF BERNSTEIN
LITOWITZ BERGER & GROSSMANN LLP (“BERNSTEIN LITOWITZ”) AND MILBERG LLP
(“MILBERG”).

 

(U)           “PROOF OF CLAIM” MEANS THE PROPOSED PROOF OF CLAIM AND RELEASE TO
BE EXECUTED BY CLASS MEMBERS SUBSTANTIALLY IN THE FORM ATTACHED HERETO AS
EXHIBIT 2 TO EXHIBIT A.

 

(V)           “PUBLICATION NOTICE” MEANS THE SUMMARY NOTICE OF PENDENCY OF
CLASS ACTION, PROPOSED SETTLEMENT AND SETTLEMENT HEARING FOR PUBLICATION
SUBSTANTIALLY IN THE FORM ATTACHED AS EXHIBIT 3 TO EXHIBIT A.

 

(W)          “RELEASED PARTIES” MEANS BIOVAIL AND THE INDIVIDUAL DEFENDANTS,
THEIR PAST OR PRESENT SUBSIDIARIES, PARENTS, SUCCESSORS AND PREDECESSORS,
OFFICERS, DIRECTORS, AGENTS, EMPLOYEES, ATTORNEYS, INSURERS, ADVISORS, AND
INVESTMENT ADVISORS, AND ANY PERSON, FIRM, TRUST, CORPORATION, OFFICER, DIRECTOR
OR OTHER INDIVIDUAL OR ENTITY IN WHICH ANY DEFENDANT HAS A CONTROLLING INTEREST
OR WHICH IS RELATED TO OR AFFILIATED WITH ANY OF THE DEFENDANTS, AND THE LEGAL
REPRESENTATIVES, HEIRS, SUCCESSORS IN INTEREST OR ASSIGNS OF ANY OF THE
DEFENDANTS.

 

(X)            “SETTLED CLAIMS” MEANS ANY AND ALL CLAIMS, DEBTS, DEMANDS, RIGHTS
OR CAUSES OF ACTION OR LIABILITIES WHATSOEVER (INCLUDING, BUT NOT LIMITED TO,
ANY CLAIMS FOR DAMAGES, INTEREST, ATTORNEYS’ FEES, EXPERT OR CONSULTING FEES,
AND ANY OTHER COSTS, EXPENSES OR LIABILITY WHATSOEVER), WHETHER BASED ON
FEDERAL, STATE, LOCAL, STATUTORY OR COMMON LAW OR ANY OTHER LAW, RULE OR
REGULATION, WHETHER FIXED OR CONTINGENT, ACCRUED OR UN-ACCRUED, LIQUIDATED OR
UN-LIQUIDATED, AT LAW OR IN EQUITY, MATURED OR UN-MATURED, WHETHER CLASS OR
INDIVIDUAL IN NATURE, INCLUDING BOTH KNOWN CLAIMS AND UNKNOWN CLAIMS (AS DEFINED
HEREIN), (I) THAT HAVE BEEN ASSERTED IN THIS ACTION BY THE CLASS MEMBERS OR ANY
OF THEM AGAINST ANY OF THE RELEASED PARTIES,

 

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OR (II) THAT COULD HAVE BEEN ASSERTED IN ANY FORUM BY THE CLASS MEMBERS OR ANY
OF THEM ON BEHALF OF THE CLASS AGAINST ANY OF THE RELEASED PARTIES WHICH ARISE
OUT OF, ARE RELATED TO, OR ARE BASED UPON THE ALLEGATIONS, TRANSACTIONS, FACTS,
MATTERS OR OCCURRENCES, REPRESENTATIONS OR OMISSIONS INVOLVED, SET FORTH, OR
REFERRED TO IN THE COMPLAINT AND WHICH RELATE TO THE PURCHASE, SALE OR OWNERSHIP
OF THE SECURITIES OF BIOVAIL DURING THE CLASS PERIOD.

 

(Y)           “SETTLED DEFENDANTS’ CLAIMS” MEANS ANY AND ALL CLAIMS, RIGHTS OR
CAUSES OF ACTION OR LIABILITIES WHATSOEVER, WHETHER BASED ON FEDERAL, STATE,
LOCAL, STATUTORY OR COMMON LAW OR ANY OTHER LAW, RULE OR REGULATION, INCLUDING
BOTH KNOWN CLAIMS AND UNKNOWN CLAIMS (AS DEFINED HEREIN), THAT HAVE BEEN OR
COULD HAVE BEEN ASSERTED IN THE ACTION OR ANY FORUM BY ANY OR ALL OF THE
RELEASED PARTIES AGAINST ANY OF THE LEAD PLAINTIFFS, ANY OF THE OTHER NAMED
PLAINTIFFS IN THESE CONSOLIDATED ACTIONS OR ANY OF THEIR ATTORNEYS, WHICH ARISE
OUT OF OR RELATE IN ANY WAY TO THE INSTITUTION, PROSECUTION, OR SETTLEMENT OF
THE ACTION (EXCEPT FOR CLAIMS THAT ARISE OUT OF, OR ARE PURSUANT TO, THE
PROVISIONS OF THIS SETTLEMENT).

 

(Z)            “SETTLEMENT” MEANS THE SETTLEMENT CONTEMPLATED BY THIS
STIPULATION.

 

(AA)         “SETTLEMENT AMOUNT” MEANS THE AMOUNT SPECIFIED IN ¶ 4 HEREIN.

 

(BB)         “TAXES” MEANS COLLECTIVELY (I) ANY AND ALL TAXES, DUTIES AND
SIMILAR CHARGES (INCLUDING ANY ESTIMATED TAXES, WITHHOLDINGS, INTEREST OR
PENALTIES AND INTEREST THEREON) ARISING IN ANY JURISDICTION WITH RESPECT TO THE
INCOME OR GAINS EARNED BY OR IN RESPECT OF THE GROSS SETTLEMENT FUND, INCLUDING,
WITHOUT LIMITATION, ANY TAXES OR TAX DETRIMENTS THAT MAY BE IMPOSED UPON THE
DEFENDANTS OR THEIR COUNSEL WITH RESPECT TO ANY INCOME EARNED BY THE GROSS
SETTLEMENT FUND FOR ANY PERIOD DURING WHICH THE GROSS SETTLEMENT FUND MAY BE
FINALLY DETERMINED TO NOT QUALIFY AS A QUALIFIED SETTLEMENT FUND (WITHIN THE
MEANING CONTEMPLATED IN PARAGRAPH 5(B) HEREIN) FOR FEDERAL OR STATE INCOME TAX
PURPOSES OR ANY DISTRIBUTION OF ANY PORTION OF THE GROSS

 

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SETTLEMENT FUND TO AUTHORIZED CLAIMANTS AND OTHER PERSONS ENTITLED HERETO
PURSUANT TO THIS STIPULATION AND (II) EXPENSES AND COSTS INCURRED IN CONNECTION
WITH THE TAXATION OF THE GROSS SETTLEMENT FUND (INCLUDING, WITHOUT LIMITATION,
EXPENSES OF TAX ATTORNEYS AND ACCOUNTANTS).

 

(CC)         “UNKNOWN CLAIMS” MEANS ANY AND ALL SETTLED CLAIMS WHICH ANY LEAD
PLAINTIFF OR OTHER CLASS MEMBER DOES NOT KNOW OR SUSPECT TO EXIST IN HIS, HER OR
ITS FAVOR AT THE TIME OF THE RELEASE OF THE RELEASED PARTIES, AND ANY SETTLED
DEFENDANTS’ CLAIMS WHICH ANY DEFENDANT DOES NOT KNOW OR SUSPECT TO EXIST IN HIS
OR ITS FAVOR, WHICH IF KNOWN BY HIM OR IT MIGHT HAVE AFFECTED HIS OR ITS
DECISION(S) WITH RESPECT TO THE SETTLEMENT.  WITH RESPECT TO ANY AND ALL SETTLED
CLAIMS AND SETTLED DEFENDANTS’ CLAIMS, THE PARTIES STIPULATE AND AGREE THAT UPON
THE EFFECTIVE DATE, THE LEAD PLAINTIFFS AND THE DEFENDANTS SHALL EXPRESSLY
WAIVE, AND EACH OTHER CLASS MEMBER SHALL BE DEEMED TO HAVE WAIVED, AND BY
OPERATION OF THE JUDGMENT SHALL HAVE EXPRESSLY WAIVED, ANY AND ALL PROVISIONS,
RIGHTS AND BENEFITS CONFERRED BY ANY LAW OF ANY STATE OR TERRITORY OF THE UNITED
STATES, OR PRINCIPLE OF COMMON LAW, WHICH IS SIMILAR, COMPARABLE, OR EQUIVALENT
TO CAL. CIV. CODE § 1542, WHICH PROVIDES:

 

A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.

 

Lead Plaintiffs and Defendants acknowledge, and all other Class Members by
operation of law shall be deemed to have acknowledged, that the inclusion of
“Unknown Claims” in the definition of Settled Claims and Settled Defendants’
Claims was separately bargained for and was a key element of the Settlement.

 

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SCOPE AND EFFECT OF SETTLEMENT

 

2.             THE OBLIGATIONS INCURRED PURSUANT TO THIS STIPULATION SHALL BE IN
FULL AND FINAL DISPOSITION OF THE ACTION AND ANY AND ALL SETTLED CLAIMS AS
AGAINST ALL RELEASED PARTIES AND ANY AND ALL SETTLED DEFENDANTS’ CLAIMS.

 

3.             (A)           UPON THE EFFECTIVE DATE OF THIS SETTLEMENT, LEAD
PLAINTIFFS AND THE OTHER MEMBERS OF THE CLASS ON BEHALF OF THEMSELVES, THEIR
HEIRS, EXECUTORS, ADMINISTRATORS, PREDECESSORS, SUCCESSORS AND ASSIGNS, SHALL,
WITH RESPECT TO EACH AND EVERY SETTLED CLAIM, RELEASE AND FOREVER DISCHARGE, AND
SHALL FOREVER BE ENJOINED FROM PROSECUTING, ANY SETTLED CLAIMS AGAINST ANY OF
THE RELEASED PARTIES.

 

(b)           Upon the Effective Date of this Settlement, each of the
Defendants, on behalf of themselves, their heirs, executors, administrators,
predecessors, successors and assigns, and the other Released Parties, shall
release and forever discharge each and every of the Settled Defendants’ Claims,
and shall forever be enjoined from prosecuting the Settled Defendants’ Claims
against any of the Lead Plaintiffs, any of the other named plaintiffs in these
consolidated actions and any of their attorneys.

 

(c)           Notwithstanding the provisions of ¶¶ 3(a) and (b) herein, in the
event that any of the Released Parties asserts against either or both of the
Lead Plaintiffs, any of the other named plaintiffs in these consolidated actions
or any of their counsel, any claim that is a Settled Defendants’ Claim, then
Lead Plaintiff(s), such other named plaintiff(s) or counsel shall be entitled to
use and assert such factual matters included within the Settled Claims only
against such Released Party in defense of such claim but not for the purposes of
affirmatively asserting any claim against any Released Party.

 

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THE SETTLEMENT CONSIDERATION

 

4.             IN CONSIDERATION FOR THE RELEASES AND DISCHARGES PROVIDED FOR IN
¶ 3:

 

(A)          WITHIN THIRTY (30) DAYS OF PRELIMINARY APPROVAL OF THE SETTLEMENT,
BIOVAIL SHALL PAY AND SHALL CAUSE THE INSURERS TO PAY THEIR AGREED UPON PORTIONS
OF THE SETTLEMENT AMOUNT, I.E., ONE HUNDRED THIRTY-EIGHT MILLION DOLLARS
($138,000,000.00) IN CASH, EITHER BY WIRE TRANSFER OR CHECK, TO THE ESCROW
AGENT, AS AGENT FOR THE BENEFIT OF LEAD PLAINTIFFS AND THE OTHER MEMBERS OF THE
CLASS.

 

(B)         IN ADDITION, WITHIN SIX MONTHS AFTER THE EFFECTIVE DATE, DEFENDANT
BIOVAIL WILL ADOPT THE CORPORATE GOVERNANCE ENHANCEMENTS DESCRIBED IN SECTION A
OF EXHIBIT C TO THIS STIPULATION, AND DEFENDANT BIOVAIL HAS AGREED TO MAINTAIN
THE CORPORATE GOVERNANCE ENHANCEMENTS DESCRIBED IN SECTION B OF EXHIBIT C.

 

5.             (A)           THE GROSS SETTLEMENT FUND, NET OF ANY TAXES, SHALL
BE USED TO PAY (I) THE NOTICE AND ADMINISTRATION COSTS REFERRED TO IN ¶ 7
HEREIN, (II) THE ATTORNEYS’ FEE AND EXPENSE AWARD REFERRED TO IN ¶ 8 HEREIN, AND
(III) THE REMAINING ADMINISTRATION EXPENSES REFERRED TO IN ¶ 9 HEREIN. 
ADDITIONALLY, TAXES SHALL BE PAID OUT OF THE GROSS SETTLEMENT FUND, SHALL BE
CONSIDERED TO BE A COST OF ADMINISTRATION OF THE SETTLEMENT AND SHALL BE TIMELY
PAID BY THE ESCROW AGENT WITHOUT PRIOR ORDER OF THE COURT.

 

(B)         THE BALANCE OF THE GROSS SETTLEMENT FUND AFTER THE ABOVE PAYMENTS
SHALL BE THE “NET SETTLEMENT FUND.”  THE NET SETTLEMENT FUND SHALL BE
DISTRIBUTED TO THE AUTHORIZED CLAIMANTS AS PROVIDED IN ¶¶ 10-12 HEREIN, SUBJECT
TO THE OBLIGATION, TO THE EXTENT REQUIRED BY LAW, TO WITHHOLD FROM ANY
DISTRIBUTIONS TO AUTHORIZED CLAIMANTS AND OTHER PERSONS ENTITLED THERETO
PURSUANT TO THIS STIPULATION ANY FUNDS NECESSARY TO PAY TAXES INCLUDING THE
ESTABLISHMENT OF ADEQUATE RESERVES FOR TAXES AS WELL AS ANY AMOUNT THAT MAY BE
REQUIRED TO BE WITHHELD UNDER

 

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UNITED STATES TREASURY REG. 1.468B-(L)(2) OR OTHERWISE UNDER APPLICABLE LAW IN
RESPECT OF SUCH DISTRIBUTIONS. FURTHER, THE RELEASED PARTIES, LEAD PLAINTIFFS
AND THEIR RESPECTIVE COUNSEL SHALL BE INDEMNIFIED AND HELD HARMLESS BY THE
ESCROW ACCOUNT UP TO THE AMOUNT IN THE ESCROW ACCOUNT FOR TAXES (INCLUDING,
WITHOUT LIMITATION, TAXES PAYABLE BY REASON OF ANY SUCH INDEMNIFICATION
PAYMENTS).  ANY SUMS REQUIRED TO BE HELD IN ESCROW HEREUNDER SHALL BE HELD BY
BERNSTEIN LITOWITZ, ACTING AS AGENT FOR THE CLASS.  ALL FUNDS SO HELD IN THE
ESCROW ACCOUNT SHALL BE DEEMED TO BE IN THE CUSTODY OF THE COURT FOR THE BENEFIT
OF THE CLASS AND SHALL REMAIN SUBJECT TO THE JURISDICTION OF THE COURT UNTIL
SUCH TIME AS THE FUNDS SHALL BE DISTRIBUTED PURSUANT TO THIS STIPULATION AND/OR
FURTHER ORDER OF THE COURT OR THE SETTLEMENT IS TERMINATED AS PROVIDED HEREIN. 
THE ESCROW AGENT SHALL INVEST ANY FUNDS HELD IN ESCROW IN SHORT-TERM UNITED
STATES AGENCY OR TREASURY SECURITIES (OR A MUTUAL FUND INVESTED SOLELY IN SUCH
INSTRUMENTS), PURSUANT TO INSTRUCTIONS FROM BERNSTEIN LITOWITZ, ACTING AS AGENT
FOR THE CLASS, AND SHALL COLLECT AND REINVEST ALL INTEREST ACCRUED THEREON.  THE
PARTIES HERETO AGREE THAT THE GROSS SETTLEMENT FUND IS INTENDED TO BE A
QUALIFIED SETTLEMENT FUND WITHIN THE MEANING OF UNITED STATES TREASURY
REGULATION § 1.468B-1 AND THAT PLAINTIFFS’ CO-LEAD COUNSEL, AS ADMINISTRATORS OF
THE GROSS SETTLEMENT FUND WITHIN THE MEANING OF UNITED STATES TREASURY
REGULATION §1.468B-2(K)(3), SHALL BE RESPONSIBLE FOR FILING TAX RETURNS FOR THE
GROSS SETTLEMENT FUND AND PAYING FROM THE GROSS SETTLEMENT FUND ANY TAXES OWED
WITH RESPECT TO THE GROSS SETTLEMENT FUND.  THE PARTIES HERETO AGREE THAT THE
GROSS SETTLEMENT FUND SHALL BE TREATED AS A QUALIFIED SETTLEMENT FUND FROM THE
EARLIEST DATE POSSIBLE, AND AGREE TO ANY RELATION-BACK ELECTION REQUIRED TO
TREAT THE GROSS SETTLEMENT FUND AS A QUALIFIED SETTLEMENT FUND FROM THE EARLIEST
DATE POSSIBLE.   COUNSEL FOR DEFENDANTS AGREE TO PROVIDE PROMPTLY TO THE ESCROW
AGENT THE STATEMENT DESCRIBED IN UNITED STATES TREASURY REGULATION
§ 1.468B-3(E).

 

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ADMINISTRATION

 

6.             THE CLAIMS ADMINISTRATOR SHALL ADMINISTER THE SETTLEMENT FOR THE
BENEFIT OF THE CLASS, SUBJECT TO THE JURISDICTION OF THE COURT.  EXCEPT AS
STATED IN ¶ 14 HEREIN, DEFENDANTS SHALL HAVE NO RESPONSIBILITY FOR THE
ADMINISTRATION OF THE SETTLEMENT AND SHALL HAVE NO LIABILITY TO THE CLASS IN
CONNECTION WITH SUCH ADMINISTRATION.  IN PARTICULAR, THE DEFENDANTS, RELEASED
PARTIES AND THEIR RESPECTIVE COUNSEL HAVE NO RESPONSIBILITY FOR OR LIABILITY
WHATSOEVER WITH RESPECT TO (A) ACTS, OMISSIONS OR DETERMINATIONS OF PLAINTIFFS’
CO-LEAD COUNSEL, THE CLAIMS ADMINISTRATOR OR THE ESCROW AGENT IN CONNECTION WITH
THE ADMINISTRATION OF THE GROSS SETTLEMENT FUND OR OTHERWISE; (B) THE
MANAGEMENT, INVESTMENT OR DISTRIBUTION OF THE GROSS SETTLEMENT FUND; (C) LOSSES
SUFFERED BY OR FLUCTUATIONS IN THE VALUE OF THE GROSS SETTLEMENT FUND;
(D) PAYMENT OR WITHHOLDING OF ANY TAXES, EXPENSES OR COSTS INCURRED IN
CONNECTION WITH THE TAXATION OF THE GROSS SETTLEMENT FUND OR THE FILING OF ANY
RELATED RETURNS; (E) THE PLAN OF ALLOCATION; OR (F) THE DETERMINATION,
ADMINISTRATION, CALCULATION OR PAYMENT OF ANY CLAIMS ASSERTED AGAINST THE GROSS
SETTLEMENT FUND (WITH THE EXCEPTION OF PROVIDING THE INFORMATION REFERENCED IN
THE FOLLOWING SENTENCE).  DEFENDANTS’ COUNSEL SHALL COOPERATE IN THE
ADMINISTRATION OF THE SETTLEMENT TO THE EXTENT REASONABLY NECESSARY TO
EFFECTUATE ITS TERMS, INCLUDING PROVIDING WITHOUT CHARGE ALL INFORMATION FROM
BIOVAIL’S TRANSFER RECORDS CONCERNING THE IDENTITY OF CLASS MEMBERS AND THEIR
TRANSACTIONS.

 

7.             PLAINTIFFS’ CO-LEAD COUNSEL MAY PAY UP TO $500,000 FROM THE
SETTLEMENT AMOUNT, WITHOUT FURTHER ORDER OF THE COURT, FOR THE REASONABLE COSTS
AND EXPENSES ASSOCIATED WITH IDENTIFYING MEMBERS OF THE CLASS AND EFFECTING MAIL
NOTICE AND PUBLICATION NOTICE TO THE CLASS, AND THE ADMINISTRATION OF THE
SETTLEMENT, INCLUDING, BUT NOT LIMITED TO, THE ACTUAL COSTS OF PUBLICATION,
PRINTING AND MAILING THE NOTICE, REIMBURSEMENTS TO NOMINEE OWNERS FOR FORWARDING
NOTICE TO THEIR BENEFICIAL OWNERS, AND THE ADMINISTRATIVE EXPENSES INCURRED AND
FEES CHARGED BY

 

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THE CLAIMS ADMINISTRATOR IN CONNECTION WITH PROVIDING NOTICE AND PROCESSING THE
SUBMITTED CLAIMS.

 

ATTORNEYS’ FEES AND EXPENSES

 

8.             AS PART OF THEIR MOTION FOR FINAL APPROVAL OF THE SETTLEMENT,
PLAINTIFFS’ CO-LEAD COUNSEL WILL APPLY TO THE COURT FOR AN AWARD FROM THE GROSS
SETTLEMENT FUND OF ATTORNEYS’ FEES AND REIMBURSEMENT OF EXPENSES, INCLUDING THE
FEES OF ANY EXPERTS OR CONSULTANTS INCURRED IN CONNECTION WITH PROSECUTING THE
ACTION.  SUCH AMOUNTS AS ARE AWARDED BY THE COURT SHALL BE PAYABLE FROM THE
GROSS SETTLEMENT FUND TO PLAINTIFFS’ CO-LEAD COUNSEL IMMEDIATELY UPON AWARD,
NOTWITHSTANDING THE EXISTENCE OF ANY TIMELY FILED OBJECTIONS THERETO, OR
POTENTIAL FOR APPEAL THEREFROM, COLLATERAL ATTACK ON THE SETTLEMENT OR ANY PART
THEREOF, SUBJECT TO PLAINTIFFS’ CO-LEAD COUNSEL’S JOINT AND SEVERAL LIABILITY
AND OBLIGATION TO MAKE APPROPRIATE REFUNDS OR REPAYMENTS TO THE GROSS SETTLEMENT
FUND PLUS ACCRUED INTEREST AT THE SAME NET RATE AS IS EARNED BY THE GROSS
SETTLEMENT FUND, IF AND WHEN, AS A RESULT OF ANY APPEAL AND/OR FURTHER
PROCEEDINGS ON REMAND, SUCCESSFUL COLLATERAL ATTACK, OR FOR ANY OTHER REASON,
THE SETTLEMENT IS TERMINATED OR THE FEE OR COST AWARD IS REDUCED OR REVERSED. 
SUCH REFUNDS OR REPAYMENTS WILL BE MADE WITHIN THIRTY (30) DAYS OF ANY APPEAL
AND/OR FURTHER PROCEEDINGS ON REMAND, OR SUCCESSFUL COLLATERAL ATTACK, PURSUANT
TO WHICH THE SETTLEMENT IS TERMINATED OR THE FEE OR COST AWARD IS REDUCED OR
REVERSED.  PLAINTIFFS’ CO-LEAD COUNSEL SHALL ALLOCATE THE ATTORNEYS’ FEES
AMONGST PLAINTIFFS’ COUNSEL IN A MANNER IN WHICH THEY IN GOOD FAITH BELIEVE
REFLECTS THE CONTRIBUTIONS OF SUCH COUNSEL TO THE PROSECUTION AND SETTLEMENT OF
THE ACTION WITH DEFENDANTS.  THE RELEASED PARTIES HAVE NO LIABILITY OR
OBLIGATION TO LEAD PLAINTIFFS, THE OTHER MEMBERS OF THE CLASS, OR PLAINTIFFS’
COUNSEL, WITH RESPECT TO ANY ATTORNEYS’ FEES, COSTS OR EXPENSES, OTHER THAN THE
OBLIGATION TO PAY

 

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OR CAUSE TO BE PAID THE SETTLEMENT AMOUNT.  IT IS NOT A CONDITION OF THIS
SETTLEMENT THAT ANY PARTICULAR ATTORNEYS’ FEES, COSTS OR EXPENSES BE AWARDED BY
THE COURT.

 

DISTRIBUTION TO AUTHORIZED CLAIMANTS

 

9.             PLAINTIFFS’ CO-LEAD COUNSEL WILL APPLY TO THE COURT, ON NOTICE TO
DEFENDANTS’ COUNSEL, FOR AN ORDER (THE “CLASS DISTRIBUTION ORDER”) APPROVING THE
CLAIMS ADMINISTRATOR’S ADMINISTRATIVE DETERMINATIONS CONCERNING THE ACCEPTANCE
AND REJECTION OF THE CLAIMS SUBMITTED HEREIN AND APPROVING ANY FEES AND EXPENSES
NOT PREVIOUSLY APPLIED FOR, INCLUDING THE FEES AND EXPENSES OF THE CLAIMS
ADMINISTRATOR, AND, IF THE EFFECTIVE DATE HAS OCCURRED, DIRECTING PAYMENT OF THE
NET SETTLEMENT FUND TO AUTHORIZED CLAIMANTS.

 

10.           THE CLAIMS ADMINISTRATOR SHALL DETERMINE EACH AUTHORIZED
CLAIMANT’S PRO RATA SHARE OF THE NET SETTLEMENT FUND BASED UPON EACH AUTHORIZED
CLAIMANT’S RECOGNIZED CLAIM (AS DEFINED IN THE PLAN OF ALLOCATION DESCRIBED IN
THE NOTICE ANNEXED HERETO AS EXHIBIT 1 TO EXHIBIT A, OR IN SUCH OTHER PLAN OF
ALLOCATION AS THE COURT APPROVES).

 

11.           THE PLAN OF ALLOCATION PROPOSED IN THE NOTICE IS NOT A NECESSARY
TERM OF THIS STIPULATION AND IT IS NOT A CONDITION OF THIS STIPULATION THAT ANY
PARTICULAR PLAN OF ALLOCATION BE APPROVED.

 

12.           EACH AUTHORIZED CLAIMANT SHALL BE ALLOCATED A PRO RATA SHARE OF
THE NET SETTLEMENT FUND BASED ON HIS, HER OR ITS RECOGNIZED CLAIM COMPARED TO
THE TOTAL RECOGNIZED CLAIMS OF ALL ACCEPTED CLAIMANTS.  THIS IS NOT A
CLAIMS-MADE SETTLEMENT.  THE ENTIRE NET SETTLEMENT FUND SHALL BE DISTRIBUTED TO
THE AUTHORIZED CLAIMANTS.  THE DEFENDANTS SHALL NOT BE ENTITLED TO GET BACK ANY
OF THE GROSS SETTLEMENT FUND AND, PRIOR TO THE SETTLEMENT BECOMING FINAL, SHALL
BE LIMITED TO THE TERMINATION PROVISIONS OUTLINED IN ¶ 25.  THE DEFENDANTS SHALL
HAVE NO INVOLVEMENT IN REVIEWING OR CHALLENGING CLAIMS.

 

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ADMINISTRATION OF THE SETTLEMENT

 

13.           ANY MEMBER OF THE CLASS WHO DOES NOT SUBMIT A VALID PROOF OF CLAIM
WILL NOT BE ENTITLED TO RECEIVE ANY OF THE PROCEEDS FROM THE NET SETTLEMENT FUND
BUT WILL OTHERWISE BE BOUND BY ALL OF THE TERMS OF THIS STIPULATION AND THE
SETTLEMENT, INCLUDING THE TERMS OF THE JUDGMENT TO BE ENTERED IN THE ACTION AND
THE RELEASES PROVIDED FOR HEREIN, AND WILL BE BARRED FROM BRINGING ANY ACTION
AGAINST THE RELEASED PARTIES CONCERNING THE SETTLED CLAIMS.

 

14.           THE CLAIMS ADMINISTRATOR SHALL PROCESS THE PROOFS OF CLAIM AND,
AFTER ENTRY OF THE CLASS DISTRIBUTION ORDER, DISTRIBUTE THE NET SETTLEMENT FUND
TO THE AUTHORIZED CLAIMANTS.  EXCEPT FOR THEIR OBLIGATION TO PAY THE SETTLEMENT
AMOUNT AS SET FORTH IN ¶ 4(A), AND TO COOPERATE IN THE PRODUCTION OF INFORMATION
WITH RESPECT TO THE IDENTIFICATION OF CLASS MEMBERS FROM BIOVAIL’S SHAREHOLDER
TRANSFER RECORDS, AS PROVIDED HEREIN, DEFENDANTS AND THEIR INSURERS SHALL HAVE
NO LIABILITY, OBLIGATION OR RESPONSIBILITY FOR THE ADMINISTRATION OR
DISBURSEMENT OF THE GROSS OR NET SETTLEMENT FUNDS PURSUANT TO THE STIPULATION. 
PLAINTIFFS’ CO-LEAD COUNSEL SHALL HAVE THE RIGHT, BUT NOT THE OBLIGATION, TO
ADVISE THE CLAIMS ADMINISTRATOR TO WAIVE WHAT PLAINTIFFS’ CO-LEAD COUNSEL DEEM
TO BE FORMAL OR TECHNICAL DEFECTS IN ANY PROOFS OF CLAIM SUBMITTED IN THE
INTERESTS OF ACHIEVING SUBSTANTIAL JUSTICE.

 

15.           FOR PURPOSES OF DETERMINING THE EXTENT, IF ANY, TO WHICH A
CLASS MEMBER SHALL BE ENTITLED TO BE TREATED AS AN “AUTHORIZED CLAIMANT”, THE
FOLLOWING CONDITIONS SHALL APPLY:

 

(A)           EACH CLASS MEMBER SHALL BE REQUIRED TO SUBMIT A PROOF OF CLAIM
(SEE ATTACHED EXHIBIT 2 TO EXHIBIT A), SUPPORTED BY SUCH DOCUMENTS AS ARE
DESIGNATED THEREIN, INCLUDING PROOF OF THE TRANSACTIONS CLAIMED AND THE LOSSES
INCURRED THEREON, OR SUCH OTHER DOCUMENTS OR PROOF AS PLAINTIFFS’ CO-LEAD
COUNSEL, IN THEIR DISCRETION MAY DEEM ACCEPTABLE;

 

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(B)           ALL PROOFS OF CLAIM MUST BE SUBMITTED BY THE DATE SPECIFIED IN THE
NOTICE, UNLESS SUCH PERIOD IS EXTENDED BY ORDER OF THE COURT.  ANY CLASS MEMBER
WHO FAILS TO SUBMIT A PROOF OF CLAIM BY SUCH DATE SHALL BE FOREVER BARRED FROM
RECEIVING ANY PAYMENT PURSUANT TO THIS STIPULATION (UNLESS, BY ORDER OF THE
COURT, A LATER SUBMITTED PROOF OF CLAIM BY SUCH CLASS MEMBER IS APPROVED), BUT
SHALL IN ALL OTHER RESPECTS BE BOUND BY ALL OF THE TERMS OF THIS STIPULATION AND
THE SETTLEMENT, INCLUDING THE TERMS OF THE JUDGMENT TO BE ENTERED IN THE ACTION
AND THE RELEASES PROVIDED FOR HEREIN, AND WILL BE BARRED FROM BRINGING ANY
ACTION AGAINST THE RELEASED PARTIES CONCERNING THE SETTLED CLAIMS.  PROVIDED
THAT IT IS RECEIVED BEFORE THE MOTION FOR THE CLASS DISTRIBUTION ORDER IS FILED,
A PROOF OF CLAIM SHALL BE DEEMED TO HAVE BEEN SUBMITTED WHEN POSTED, IF RECEIVED
WITH A POSTMARK INDICATED ON THE ENVELOPE AND IF MAILED BY FIRST-CLASS MAIL AND
ADDRESSED IN ACCORDANCE WITH THE INSTRUCTIONS THEREON.  IN ALL OTHER CASES, THE
PROOF OF CLAIM SHALL BE DEEMED TO HAVE BEEN SUBMITTED WHEN ACTUALLY RECEIVED BY
THE CLAIMS ADMINISTRATOR;

 

(C)           EACH PROOF OF CLAIM SHALL BE SUBMITTED TO AND REVIEWED BY THE
CLAIMS ADMINISTRATOR, WHO SHALL DETERMINE IN ACCORDANCE WITH THIS STIPULATION
AND THE APPROVED PLAN OF ALLOCATION THE EXTENT, IF ANY, TO WHICH EACH CLAIM
SHALL BE ALLOWED, SUBJECT TO REVIEW BY THE COURT PURSUANT TO SUBPARAGRAPH
(E) BELOW;

 

(D)           PROOFS OF CLAIM THAT DO NOT MEET THE SUBMISSION REQUIREMENTS MAY
BE REJECTED.  PRIOR TO REJECTION OF A PROOF OF CLAIM, THE CLAIMS ADMINISTRATOR
SHALL COMMUNICATE WITH THE CLAIMANT IN ORDER TO ATTEMPT TO REMEDY THE CURABLE
DEFICIENCIES IN THE PROOF OF CLAIM SUBMITTED.  THE CLAIMS ADMINISTRATOR SHALL
NOTIFY, IN A TIMELY FASHION AND IN WRITING, EACH CLAIMANT WHOSE PROOF OF CLAIM
IT PROPOSES TO REJECT IN WHOLE OR IN PART, SETTING FORTH THE REASONS THEREFOR,
AND SHALL INDICATE IN SUCH NOTICE THAT THE CLAIMANT WHOSE CLAIM IS TO BE
REJECTED HAS THE

 

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RIGHT TO A REVIEW BY THE COURT IF THE CLAIMANT SO DESIRES AND COMPLIES WITH THE
REQUIREMENTS OF SUBPARAGRAPH (E) BELOW;

 

(E)           IF ANY CLAIMANT WHOSE CLAIM HAS BEEN REJECTED IN WHOLE OR IN PART
DESIRES TO CONTEST SUCH REJECTION, THE CLAIMANT MUST, WITHIN TWENTY (20) DAYS
AFTER THE DATE OF MAILING OF THE NOTICE REQUIRED IN SUBPARAGRAPH (D) ABOVE,
SERVE UPON THE CLAIMS ADMINISTRATOR A NOTICE AND STATEMENT OF REASONS INDICATING
THE CLAIMANT’S GROUNDS FOR CONTESTING THE REJECTION ALONG WITH ANY SUPPORTING
DOCUMENTATION, AND REQUESTING A REVIEW THEREOF BY THE COURT.  IF A DISPUTE
CONCERNING A CLAIM CANNOT BE OTHERWISE RESOLVED, PLAINTIFFS’ CO-LEAD COUNSEL
SHALL THEREAFTER PRESENT THE REQUEST FOR REVIEW TO THE COURT; AND

 

(F)            THE ADMINISTRATIVE DETERMINATIONS OF THE CLAIMS ADMINISTRATOR
ACCEPTING AND REJECTING CLAIMS SHALL BE PRESENTED TO THE COURT, ON NOTICE TO
DEFENDANTS’ COUNSEL, FOR APPROVAL BY THE COURT IN THE CLASS DISTRIBUTION ORDER.

 

16.           EACH CLAIMANT SHALL BE DEEMED TO HAVE SUBMITTED TO THE
JURISDICTION OF THE COURT WITH RESPECT TO THE CLAIMANT’S CLAIM, AND THE CLAIM
WILL BE SUBJECT TO INVESTIGATION AND DISCOVERY UNDER THE FEDERAL RULES OF CIVIL
PROCEDURE, PROVIDED THAT SUCH INVESTIGATION AND DISCOVERY SHALL BE LIMITED TO
THAT CLAIMANT’S STATUS AS A CLASS MEMBER AND THE VALIDITY AND AMOUNT OF THE
CLAIMANT’S CLAIM.  NO DISCOVERY SHALL BE ALLOWED ON THE MERITS OF THE ACTION OR
SETTLEMENT IN CONNECTION WITH PROCESSING OF THE PROOFS OF CLAIM.

 

17.           PAYMENT PURSUANT TO THIS SETTLEMENT SHALL BE DEEMED FINAL AND
CONCLUSIVE AGAINST ALL CLASS MEMBERS.  ALL CLASS MEMBERS WHOSE CLAIMS ARE NOT
APPROVED BY THE COURT SHALL BE BARRED FROM PARTICIPATING IN DISTRIBUTIONS FROM
THE NET SETTLEMENT FUND, BUT OTHERWISE SHALL BE BOUND BY ALL OF THE TERMS OF
THIS STIPULATION AND THE SETTLEMENT, INCLUDING THE TERMS OF THE

 

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JUDGMENT TO BE ENTERED IN THE ACTION AND THE RELEASES PROVIDED FOR HEREIN, AND
WILL BE BARRED FROM BRINGING ANY ACTION AGAINST THE RELEASED PARTIES CONCERNING
THE SETTLED CLAIMS.

 

18.           ALL PROCEEDINGS WITH RESPECT TO THE ADMINISTRATION, PROCESSING AND
DETERMINATION OF CLAIMS DESCRIBED BY ¶ 15 OF THIS STIPULATION AND THE
DETERMINATION OF ALL CONTROVERSIES RELATING THERETO, INCLUDING DISPUTED
QUESTIONS OF LAW AND FACT WITH RESPECT TO THE VALIDITY OF CLAIMS, SHALL BE
SUBJECT TO THE JURISDICTION OF THE COURT.

 

19.           THE NET SETTLEMENT FUND SHALL BE DISTRIBUTED TO AUTHORIZED
CLAIMANTS BY THE CLAIMS ADMINISTRATOR AFTER THE EFFECTIVE DATE ON NOTICE TO
DEFENDANTS’ COUNSEL PURSUANT TO ORDER OF THE COURT.

 

TERMS OF ORDER FOR NOTICE AND HEARING

 

20.           CONCURRENTLY WITH THEIR APPLICATION FOR PRELIMINARY COURT APPROVAL
OF THE SETTLEMENT CONTEMPLATED BY THIS STIPULATION, PLAINTIFFS’ CO-LEAD COUNSEL
AND DEFENDANTS’ COUNSEL JOINTLY SHALL APPLY TO THE COURT FOR ENTRY OF AN ORDER
FOR NOTICE AND HEARING, SUBSTANTIALLY IN THE FORM ANNEXED HERETO AS EXHIBIT A.

 

TERMS OF FINAL JUDGMENT

 

21.           IF THE SETTLEMENT CONTEMPLATED BY THIS STIPULATION IS APPROVED BY
THE COURT, COUNSEL FOR THE PARTIES SHALL REQUEST THAT THE COURT ENTER A JUDGMENT
SUBSTANTIALLY IN THE FORM ANNEXED HERETO AS EXHIBIT B.

 

OPT-OUT TERMINATION RIGHT

 

22.           THE DEFENDANTS MAY TERMINATE THIS SETTLEMENT IF CLASS MEMBERS WHO
IN TOTAL PURCHASED IN EXCESS OF TEN PERCENT (10%) OF THE SHARES OF BIOVAIL
COMMON STOCK PURCHASED DURING THE CLASS PERIOD EXCLUDE THEMSELVES FROM THE
CLASS.  IN THE EVENT OF A TERMINATION BY THE DEFENDANTS, THIS STIPULATION SHALL
BECOME NULL AND VOID AND OF NO FURTHER FORCE AND EFFECT AND THE PROVISIONS OF
¶ 25 SHALL APPLY.  IF THE DEFENDANTS ELECT TO TERMINATE THIS SETTLEMENT PURSUANT
TO

 

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THIS PARAGRAPH WRITTEN NOTICE OF SUCH TERMINATION MUST BE PROVIDED TO
PLAINTIFFS’ CO-LEAD COUNSEL ON OR BEFORE SEVEN (7) CALENDAR DAYS PRIOR TO THE
SETTLEMENT FAIRNESS HEARING.  PLAINTIFFS’ CO-LEAD COUNSEL SHALL HAVE THE RIGHT
TO COMMUNICATE WITH CLASS MEMBERS REGARDING THEIR DECISIONS TO OPT-OUT.  IF A
SUFFICIENT NUMBER OF CLASS MEMBERS WITHDRAW THEIR REQUESTS FOR EXCLUSION SUCH
THAT THE TOTAL NUMBER OF REMAINING SHARES REQUESTING EXCLUSION FALLS BELOW THE
TEN PERCENT (10%) THRESHOLD NOTED ABOVE, PLAINTIFFS’ CO-LEAD COUNSEL SHALL SO
ADVISE DEFENDANTS’ COUNSEL AND ANY NOTICE BY DEFENDANTS OF TERMINATION OF THE
SETTLEMENT SHALL AUTOMATICALLY AND IMMEDIATELY BECOME NULL AND VOID.

 

EFFECTIVE DATE OF SETTLEMENT, WAIVER OR TERMINATION

 

23.           THE “EFFECTIVE DATE” OF SETTLEMENT SHALL BE THE DATE WHEN ALL THE
FOLLOWING SHALL HAVE OCCURRED:

 

(A)           APPROVAL BY THE COURT OF THE SETTLEMENT, FOLLOWING NOTICE TO THE
CLASS AND A HEARING, AS PRESCRIBED BY RULE 23 OF THE FEDERAL RULES OF CIVIL
PROCEDURE; AND

 

(B)           ENTRY BY THE COURT OF A JUDGMENT, SUBSTANTIALLY IN THE FORM SET
FORTH IN EXHIBIT B ANNEXED HERETO, AND THE EXPIRATION OF ANY TIME FOR APPEAL OR
REVIEW OF SUCH JUDGMENT, OR, IF ANY APPEAL IS FILED AND NOT DISMISSED, AFTER
SUCH JUDGMENT IS UPHELD ON APPEAL IN ALL MATERIAL RESPECTS AND IS NO LONGER
SUBJECT TO REVIEW UPON APPEAL OR REVIEW BY WRIT OF CERTIORARI, OR, IN THE EVENT
THAT THE COURT ENTERS A JUDGMENT IN A FORM OTHER THAN THAT PROVIDED ABOVE
(“ALTERNATIVE JUDGMENT”) AND NONE OF THE PARTIES HERETO ELECT TO TERMINATE THIS
SETTLEMENT, THE DATE THAT SUCH ALTERNATIVE JUDGMENT BECOMES FINAL AND NO LONGER
SUBJECT TO APPEAL OR REVIEW.

 

24.           DEFENDANTS OR LEAD PLAINTIFFS SHALL HAVE THE RIGHT TO TERMINATE
THE SETTLEMENT AND THEREBY THIS STIPULATION BY PROVIDING WRITTEN NOTICE OF THEIR
ELECTION TO DO SO (“TERMINATION NOTICE”) TO ALL OTHER PARTIES HERETO WITHIN
THIRTY (30) DAYS OF:  (A) THE COURT’S DECLINING TO ENTER

 

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THE ORDER FOR NOTICE AND HEARING IN ANY MATERIAL RESPECT; (B) THE COURT’S
REFUSAL TO APPROVE THIS SETTLEMENT AS SET FORTH IN THIS STIPULATION OR ANY
MATERIAL PART OF IT; (C) THE COURT’S DECLINING TO ENTER THE JUDGMENT IN ANY
MATERIAL RESPECT; (D) THE DATE UPON WHICH THE JUDGMENT IS MODIFIED OR REVERSED
IN ANY MATERIAL RESPECT BY THE COURT OF APPEALS OR THE SUPREME COURT; OR (E) THE
DATE UPON WHICH AN ALTERNATIVE JUDGMENT IS MODIFIED OR REVERSED IN ANY MATERIAL
RESPECT BY THE COURT OF APPEALS OR THE SUPREME COURT.

 

25.           EXCEPT AS OTHERWISE PROVIDED HEREIN, IN THE EVENT THE SETTLEMENT
IS TERMINATED, THEN THE PARTIES TO THIS STIPULATION SHALL BE RESTORED TO THEIR
RESPECTIVE STATUS IN THE ACTION AS OF DECEMBER 7, 2007 AND, EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED, THE PARTIES SHALL PROCEED IN ALL RESPECTS AS IF THIS
STIPULATION AND ANY RELATED ORDERS HAD NOT BEEN ENTERED.  FURTHERMORE, THE
ESCROW AGENT SHALL PAY FROM THE ESCROW ACCOUNT THE SUM OF (A) AN AMOUNT EQUAL TO
THAT PORTION OF THE SETTLEMENT AMOUNT PREVIOUSLY PAID BY BIOVAIL AND THE
INSURERS TO THE ESCROW AGENT AS AGENT FOR THE CLASS; AND (B) AN AMOUNT EQUAL TO
ANY INTEREST OR OTHER INCOME EARNED THEREON; LESS THE SUM OF (C) AN AMOUNT EQUAL
TO ANY TAXES PAID OR DUE WITH RESPECT TO SUCH INCOME; AND (D) AN AMOUNT EQUAL TO
COSTS OF ADMINISTRATION AND NOTICE ACTUALLY INCURRED AND PAID OR PAYABLE FROM
THE SETTLEMENT AMOUNT, TO BIOVAIL OR THE INSURERS (AS THE CASE MAY BE).  FOR
GREATER CERTAINTY, THE AMOUNT TO BE PAID TO BIOVAIL AND EACH OF THE INSURERS
WILL BE AN AMOUNT EQUAL TO THE SUM OF EACH PAYOR’S PRO-RATA SHARE OF (A) AND
(B) IN THE PRECEDING SENTENCE, LESS EACH PAYOR’S PRO-RATA SHARE OF (C) IN THE
PRECEDING SENTENCE.  THE AMOUNT IN (D) SHALL BE TREATED AS A DEFENSE COST TO BE
DEDUCTED FROM THE PAYMENT DUE TO THE INSURER THEN RESPONSIBLE FOR PAYING OR
ADVANCING DEFENSE COSTS.  SUCH PAYMENTS WILL BE MADE WITHIN THIRTY (30) DAYS OF
TERMINATION.  IT SHALL BE DEFENDANTS’ RESPONSIBILITY TO TIMELY NOTIFY THE ESCROW
AGENT WHAT THE PRO-RATA SHARE OF EACH PAYOR WAS AND WHICH INSURER’S PAYMENT IS
TO BE REDUCED BY THE AMOUNT IN (D).

 

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NO ADMISSION OF WRONGDOING

 

26.           THIS STIPULATION, WHETHER OR NOT CONSUMMATED OR TERMINATED, AND
ANY PROCEEDINGS TAKEN PURSUANT TO IT:

 

(A)           SHALL NOT BE OFFERED OR RECEIVED AGAINST ANY OF THE DEFENDANTS AS
EVIDENCE OF OR CONSTRUED AS OR DEEMED TO BE EVIDENCE OF ANY PRESUMPTION,
CONCESSION, OR ADMISSION BY ANY OF THE DEFENDANTS WITH RESPECT TO THE TRUTH OF
ANY FACT ALLEGED BY ANY OF THE PLAINTIFFS OR THE VALIDITY OF ANY CLAIM THAT HAS
BEEN OR COULD HAVE BEEN ASSERTED IN THE ACTION OR IN ANY LITIGATION, OR THE
DEFICIENCY OF ANY DEFENSE THAT HAS BEEN OR COULD HAVE BEEN ASSERTED IN THE
ACTION OR IN ANY LITIGATION, OR OF ANY LIABILITY, NEGLIGENCE, FAULT, OR
WRONGDOING OF ANY OF THE DEFENDANTS;

 

(B)           SHALL NOT BE OFFERED OR RECEIVED AGAINST ANY OF THE DEFENDANTS AS
EVIDENCE OF A PRESUMPTION, CONCESSION OR ADMISSION OF ANY FAULT,
MISREPRESENTATION OR OMISSION WITH RESPECT TO ANY STATEMENT OR WRITTEN DOCUMENT
APPROVED OR MADE BY ANY OF THE DEFENDANTS;

 

(C)           SHALL NOT BE OFFERED OR RECEIVED AGAINST ANY OF THE DEFENDANTS AS
EVIDENCE OF A PRESUMPTION, CONCESSION OR ADMISSION WITH RESPECT TO ANY
LIABILITY, NEGLIGENCE, FAULT OR WRONGDOING, OR IN ANY WAY REFERRED TO FOR ANY
OTHER REASON AS AGAINST ANY OF THE DEFENDANTS, IN ANY OTHER CIVIL, CRIMINAL OR
ADMINISTRATIVE ACTION OR PROCEEDING, OTHER THAN SUCH PROCEEDINGS AS MAY BE
NECESSARY TO EFFECTUATE THE PROVISIONS OF THIS STIPULATION; PROVIDED, HOWEVER,
THAT IF THIS STIPULATION IS APPROVED BY THE COURT, THE DEFENDANTS MAY REFER TO
IT TO EFFECTUATE THE LIABILITY PROTECTION GRANTED THEM HEREUNDER;

 

(D)           SHALL NOT BE CONSTRUED AGAINST ANY OF THE DEFENDANTS AS AN
ADMISSION OR CONCESSION THAT THE CONSIDERATION TO BE GIVEN HEREUNDER REPRESENTS
THE AMOUNT WHICH COULD BE OR WOULD HAVE BEEN RECOVERED AFTER TRIAL; AND

 

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(E)           SHALL NOT BE CONSTRUED AS OR RECEIVED IN EVIDENCE AS AN ADMISSION,
CONCESSION OR PRESUMPTION AGAINST LEAD PLAINTIFFS OR ANY OF THE OTHER
CLASS MEMBERS THAT ANY OF THEIR CLAIMS ARE WITHOUT MERIT, OR THAT ANY DEFENSES
ASSERTED BY THE DEFENDANTS HAVE ANY MERIT, OR THAT DAMAGES RECOVERABLE UNDER THE
COMPLAINT WOULD NOT HAVE EXCEEDED THE GROSS SETTLEMENT FUND.

 

MISCELLANEOUS PROVISIONS

 

27.           ALL OF THE EXHIBITS ATTACHED HERETO ARE HEREBY INCORPORATED BY
REFERENCE AS THOUGH FULLY SET FORTH HEREIN.

 

28.           EACH DEFENDANT CONTRIBUTING TO THE SETTLEMENT AMOUNT WARRANTS AS
TO HIMSELF OR ITSELF THAT, AS TO THE PAYMENTS MADE BY OR ON BEHALF OF HIM OR IT
TO THE SETTLEMENT AMOUNT, AT THE TIME OF SUCH PAYMENT THAT THE DEFENDANT MADE OR
CAUSED TO BE MADE PURSUANT TO ¶ 4 ABOVE, HE OR IT WAS NOT INSOLVENT, NOR WILL
THE PAYMENT REQUIRED TO BE MADE BY OR ON BEHALF OF HIM OR IT RENDER SUCH
DEFENDANT INSOLVENT, WITHIN THE MEANING OF AND/OR FOR THE PURPOSES OF THE UNITED
STATES BANKRUPTCY CODE, INCLUDING §§ 101 AND 547 THEREOF.  THIS WARRANTY IS MADE
BY EACH SUCH DEFENDANT AND NOT BY SUCH DEFENDANT’S COUNSEL.

 

29.           IF A CASE IS COMMENCED IN RESPECT OF ANY DEFENDANT CONTRIBUTING
THE SETTLEMENT AMOUNT (OR ANY INSURER CONTRIBUTING FUNDS TO THE SETTLEMENT
AMOUNT ON BEHALF OF ANY DEFENDANT) UNDER TITLE 11 OF THE UNITED STATES CODE
(BANKRUPTCY), OR A TRUSTEE, RECEIVER, CONSERVATOR, OR OTHER FIDUCIARY IS
APPOINTED UNDER ANY SIMILAR LAW, AND IN THE EVENT OF THE ENTRY OF A FINAL ORDER
OF A COURT OF COMPETENT JURISDICTION DETERMINING THE TRANSFER OF MONEY TO THE
GROSS SETTLEMENT FUND OR ANY PORTION THEREOF BY OR ON BEHALF OF SUCH DEFENDANT
TO BE A PREFERENCE, VOIDABLE TRANSFER, FRAUDULENT TRANSFER OR SIMILAR
TRANSACTION AND ANY PORTION THEREOF IS REQUIRED TO BE RETURNED AND IS IN FACT
RETURNED TO SUCH BANKRUPT DEFENDANT OR TO THE INSURER WHO

 

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CONTRIBUTED THE FUNDS TO THE SETTLEMENT AMOUNT ON BEHALF OF THE BANKRUPT
DEFENDANT, AND SUCH AMOUNT IS NOT PROMPTLY DEPOSITED TO THE GROSS SETTLEMENT
FUND BY OTHERS, THEN, AT THE ELECTION OF PLAINTIFFS’ CO-LEAD COUNSEL, THE
PARTIES SHALL JOINTLY MOVE THE COURT TO VACATE AND SET ASIDE THE RELEASES GIVEN
AND JUDGMENT ENTERED IN FAVOR OF THE DEFENDANTS PURSUANT TO THIS STIPULATION,
WHICH RELEASES AND JUDGMENT SHALL BE NULL AND VOID, AND THE PARTIES SHALL BE
RESTORED TO THEIR RESPECTIVE POSITIONS IN THE LITIGATION AS OF DECEMBER 7, 2007
AND AN AMOUNT EQUAL TO THE AMOUNT COMPUTED IN ¶ 25 ABOVE, LESS ANY AMOUNT
ALREADY IN FACT RETURNED TO THE BANKRUPT DEFENDANT OR TO THE INSURER WHO
CONTRIBUTED THE FUNDS TO THE SETTLEMENT AMOUNT ON BEHALF OF THE BANKRUPT
DEFENDANT, SHALL BE PAID TO BIOVAIL OR THE INSURERS (AS THE CASE MAY BE).

 

30.           THE PARTIES TO THIS STIPULATION INTEND THE SETTLEMENT TO BE A
FINAL AND COMPLETE RESOLUTION OF ALL DISPUTES ASSERTED OR WHICH COULD BE
ASSERTED BY THE CLASS MEMBERS AGAINST THE RELEASED PARTIES WITH RESPECT TO THE
SETTLED CLAIMS.  ACCORDINGLY, LEAD PLAINTIFFS AND DEFENDANTS AGREE NOT TO MAKE
ANY DISPARAGING REMARKS ABOUT EACH OTHER IN ANY PUBLIC STATEMENTS CONCERNING
THIS LITIGATION OR THE SETTLEMENT OF THIS LITIGATION AND LEAD PLAINTIFFS AND
DEFENDANTS AGREE THEY WILL NOT ASSERT IN ANY FORUM THAT THE LITIGATION WAS
BROUGHT BY PLAINTIFFS OR DEFENDED BY DEFENDANTS IN BAD FAITH OR WITHOUT A
REASONABLE BASIS.  THE PARTIES HERETO SHALL ASSERT NO CLAIMS OF ANY VIOLATION OF
RULE 11 OF THE FEDERAL RULES OF CIVIL PROCEDURE RELATING TO THE PROSECUTION,
DEFENSE, OR SETTLEMENT OF THE ACTION.  THE PARTIES AGREE THAT THE AMOUNT PAID
AND THE OTHER TERMS OF THE SETTLEMENT WERE NEGOTIATED AT ARM’S-LENGTH IN GOOD
FAITH BY THE PARTIES, AND REFLECT A SETTLEMENT THAT WAS REACHED VOLUNTARILY
AFTER CONSULTATION WITH EXPERIENCED LEGAL COUNSEL.

 

31.           THIS STIPULATION MAY NOT BE MODIFIED OR AMENDED, NOR MAY ANY OF
ITS PROVISIONS BE WAIVED EXCEPT BY A WRITING SIGNED BY ALL PARTIES HERETO OR
THEIR SUCCESSORS-IN-INTEREST.

 

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32.           THE HEADINGS HEREIN ARE USED FOR THE PURPOSE OF CONVENIENCE ONLY
AND ARE NOT MEANT TO HAVE LEGAL EFFECT.

 

33.           THE ADMINISTRATION AND CONSUMMATION OF THE SETTLEMENT AS EMBODIED
IN THIS STIPULATION SHALL BE UNDER THE AUTHORITY OF THE COURT, AND THE COURT
SHALL RETAIN JURISDICTION FOR THE PURPOSE OF ENTERING ORDERS PROVIDING FOR
AWARDS OF ATTORNEYS’ FEES AND EXPENSES TO PLAINTIFFS’ CO-LEAD COUNSEL AND
ENFORCING THE TERMS OF THIS STIPULATION.

 

34.           THE WAIVER BY ONE PARTY OF ANY BREACH OF THIS STIPULATION BY ANY
OTHER PARTY SHALL NOT BE DEEMED A WAIVER OF ANY OTHER PRIOR OR SUBSEQUENT BREACH
OF THIS STIPULATION.

 

35.           THIS STIPULATION AND ITS EXHIBITS CONSTITUTE THE ENTIRE AGREEMENT
AMONG THE PARTIES HERETO CONCERNING THE SETTLEMENT OF THE ACTION, AND NO
REPRESENTATIONS, WARRANTIES, OR INDUCEMENTS HAVE BEEN MADE BY ANY PARTY HERETO
CONCERNING THIS STIPULATION AND ITS EXHIBITS OTHER THAN THOSE CONTAINED AND
MEMORIALIZED IN SUCH DOCUMENTS.

 

36.           THIS STIPULATION MAY BE EXECUTED IN ONE OR MORE COUNTERPARTS.  ALL
EXECUTED COUNTERPARTS AND EACH OF THEM SHALL BE DEEMED TO BE ONE AND THE SAME
INSTRUMENT.

 

37.           THIS STIPULATION SHALL BE BINDING UPON, AND INURE TO THE BENEFIT
OF, THE SUCCESSORS AND ASSIGNS OF THE PARTIES HERETO.

 

38.           THE CONSTRUCTION, INTERPRETATION, OPERATION, EFFECT AND VALIDITY
OF THIS STIPULATION, AND ALL DOCUMENTS NECESSARY TO EFFECTUATE IT, SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS OF LAWS, EXCEPT TO THE EXTENT THAT FEDERAL LAW REQUIRES THAT FEDERAL
LAW GOVERNS.

 

39.           NO OPINION OR ADVICE CONCERNING THE TAX CONSEQUENCES OF THE
PROPOSED SETTLEMENT TO INDIVIDUAL CLASS MEMBERS IS BEING GIVEN OR WILL BE GIVEN
BY PLAINTIFFS’ CO-LEAD COUNSEL OR COUNSEL FOR THE DEFENDANTS; NOR IS ANY
REPRESENTATION OR WARRANTY IN THIS REGARD MADE BY VIRTUE OF

 

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THIS STIPULATION.  EACH CLASS MEMBER’S TAX OBLIGATIONS, AND THE DETERMINATION
THEREOF, ARE THE SOLE RESPONSIBILITY OF THE CLASS MEMBER, AND IT IS UNDERSTOOD
THAT THE TAX CONSEQUENCES MAY VARY DEPENDING ON THE PARTICULAR CIRCUMSTANCES OF
EACH INDIVIDUAL CLASS MEMBER.

 

40.           THIS STIPULATION SHALL NOT BE CONSTRUED MORE STRICTLY AGAINST ONE
PARTY THAN ANOTHER MERELY BY VIRTUE OF THE FACT THAT IT, OR ANY PART OF IT, MAY
HAVE BEEN PREPARED BY COUNSEL FOR ONE OF THE PARTIES, IT BEING RECOGNIZED THAT
IT IS THE RESULT OF ARM’S-LENGTH NEGOTIATIONS BETWEEN THE PARTIES AND ALL
PARTIES HAVE CONTRIBUTED SUBSTANTIALLY AND MATERIALLY TO THE PREPARATION OF THIS
STIPULATION.

 

41.           ALL COUNSEL AND ANY OTHER PERSON EXECUTING THIS STIPULATION AND
ANY OF THE EXHIBITS HERETO, OR ANY RELATED SETTLEMENT DOCUMENTS, WARRANT AND
REPRESENT THAT THEY HAVE THE FULL AUTHORITY TO DO SO AND THAT THEY HAVE THE
AUTHORITY TO TAKE APPROPRIATE ACTION REQUIRED OR PERMITTED TO BE TAKEN PURSUANT
TO THE STIPULATION TO EFFECTUATE ITS TERMS.

 

42.           PLAINTIFFS’ CO-LEAD COUNSEL AND DEFENDANTS’ COUNSEL AGREE TO
COOPERATE FULLY WITH ONE ANOTHER IN SEEKING COURT APPROVAL OF THE ORDER FOR
NOTICE AND HEARING, THE STIPULATION

 

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AND THE SETTLEMENT, AND TO PROMPTLY AGREE UPON AND EXECUTE ALL SUCH OTHER
DOCUMENTATION AS MAY BE REASONABLY REQUIRED TO OBTAIN FINAL APPROVAL BY THE
COURT OF THE SETTLEMENT.

 

Dated:    April 4, 2008

 

 

BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP

 

MILBERG LLP

 

 

 

 

 

 

 

 

By:

Sanford P. Dumain (SD-8712)

By:

Max W. Berger (MB-5010)

 

 

Kent A. Bronson (KB-4906)

 

Steven B. Singer (SS-5212)

 

 

Joshua E. Keller (JK-4882)

 

Rochelle Feder Hansen (RH-7061)

 

One Penn Plaza

1285 Avenue of the Americas

 

New York, New York 10119

New York, New York 10019

 

Tel: 212-594-5300

Tel: 212-554-1400

 

Fax: 212-868-1229

Fax: 212-554-1444

 

 

 

 

 

Co-Lead Counsel and Counsel for Co-Lead Plaintiff Ontario Teachers’ Pension Plan
Board

 

Co-Lead Counsel and Counsel for Co-Lead Plaintiff Local 282 Welfare Trust Fund

 

 

 

HOWREY LLP

 

CURTIS, MALLET-PREVOST, COLT & MOSLE LLP

 

 

 

 

 

 

By:

Mark D. Wegener, Esq. (pro hac vice)

 

By:

Peter Fleming, Jr., Esq. (PEF-1354)

 

Martin F. Cunniff, Esq. (pro hac vice)

 

 

T. Barry Kingham, Esq. (TBK-1219)

 

Andrew D. Lazerow, Esq. (pro hac vice)

 

101 Park Avenue

1299 Pennsylvania Ave., N.W.

 

New York, New York 10178

Washington, D.C. 20004

 

Tel.: 212-696-6000

Tel: 202-783-0800

 

Fax: 212-697-1559

Fax: 202-383-6610

 

 

 

 

 

Co-Counsel for Defendants

 

Co-Counsel for Defendants

 

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