Exhibit 10.1


 


IN THE COURT OF CHANCERY OF THE
STATE OF DELAWARE


 




	
  IN
  RE UNITED THERAPEUTICS 

  	
  )

  	
   

  
	
  CORPORATION
  DERIVATIVE 

  	
  )

  	
  Cons.
  C.A. No: 4946-CC

  
	
  LITIGATION

  	
  )

  	
   

  






 


STIPULATION OF SETTLEMENT


 


Plaintiffs
Retirement Board of Allegheny County (“RBAC”), Police & Fire
Retirement System of the City of Detroit (“PFRS”) and Jeffrey Benison IRA (“Benison”)
(collectively, the “Plaintiffs”); nominal defendant United Therapeutics
Corporation (“UT” or the “Company”); and defendants Martine Rothblatt (“Rothblatt”),
Roger Jeffs,  Christopher
Causey,  R. Paul Gray,  Christopher Patusky,
Louis Sullivan,  Raymond Dwek,  Ray Kurzweil,  John M. Ferrari and  Paul
A. Mahon (collectively, the “Individual Defendants,” and together with UT, the “Defendants”),
who are the parties to the above-captioned derivative action (the “Parties”),
by and through their respective attorneys, have entered into this Stipulation
of Settlement (the “Stipulation”), subject to the approval of the Court of
Chancery of the State of Delaware (the “Court”).  The settlement contemplated by this
Stipulation is referred to herein as the “Settlement.”


 


WHEREAS:


 


A.            On
December 10, 2008, Benison made a books and records demand pursuant to 8
Del. C. § 220 (“Section 220”) and received a response to its demand on January 12,
2009.  UT began producing documents in
late January 2009.  Benison
requested additional records in February 2009, which the Company produced
later that month.


 


B.            On
May 7, 2009, Benison filed its derivative complaint in C.A. No. 4569-CC
on behalf of nominal defendant UT alleging that directors and officers of the
Company breached their fiduciary duties in connection with the repricing of
awards (the “Award Repricings”) granted under the United Therapeutics
Corporation Share Tracking Awards Plan (“STAP”) and 


 

















 


CONFIDENTIAL SETTLEMENT
COMMUNICATION


 


an exchange offer for certain outstanding stock
options (the “Option Exchange”), and in connection with adopting the STAP.  On August 7, 2009, the defendants moved
to dismiss Benison’s derivative complaint. 
Subsequently, on September 1, 2009, Benison filed a Verified
Amended Complaint, and on October 6, 2009, the defendants moved to dismiss
the Verified Amended Complaint.


 


C.            On
June 9, 2009, RBAC sent to UT a demand pursuant to Section 220 to
inspect certain books and records of UT related to the STAP, the Awards
Repricings and the Option Exchange, among other things.  By letter dated June 16, 2009, UT’s
outside counsel, on behalf of UT, responded to RBAC’s books and records demand
and subsequently produced certain documents.


 


D.            On
July 28, 2009, RBAC filed a Verified Complaint Pursuant to Section 220
of the Delaware General Corporation Law captioned Retirement
Board of Allegheny County v. United Therapeutics Corporation, Case No. 4764-CC
(the “220 Action”), seeking books and records from UT.


 


E.             On
October 2, 2009, RBAC filed its derivative complaint in C.A. No. 4946-CC
on behalf of UT, which challenged, inter alia, the
Award Repricings and Option Exchange.  On
the same date, RBAC filed motions for expedited proceedings and preliminary
injunction.  On October 13, 2009,
the Court denied the motion for expedited proceedings.  See Ret. Bd. Allegheny Cnty. v.
Rothblatt, C.A. No. 4946-CC, 2009 WL 3349262 (Del. Ch. Oct. 13,
2009).


 


F.             On
November 9, 2009, the Court entered an order consolidating C.A. Nos.
4569-CC and 4764-CC (the “Action”).  The
order also designated the law firms of Barroway Topaz Kessler Meltzer &
Check, LLP, Bernstein Litowitz Berger & Grossmann LLP, and Harwood 


 


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Feffer LLP as Plaintiffs’ Co-Lead Counsel and the
law firms of Prickett, Jones & Elliott, P.A. and Rosenthal, Monhait &
Goddess, P.A. as Plaintiffs’ Delaware Liaison Counsel.


 


G.            On
April 30, 2010, the Court entered an order permitting PFRS to join as a
plaintiff in the Action.


 


H.            Following
negotiations and the production of additional books and records, RBAC and UT
entered into a settlement agreement resolving the 220 Action, with each party
bearing its own costs.  Pursuant to the
settlement, the 220 Action was dismissed on May 3, 2010.


 


I.              On
May 4, 2010, Plaintiffs filed the Verified Consolidated Amended Derivative
Complaint (the “Complaint”) against the Individual Defendants alleging: (a) violations
of the Delaware General Corporation Law, the Company’s equity compensation plan
and the employment contract between the Company and its Chief Executive Officer
(“CEO”); (b) breaches of fiduciary duties; (c) waste of corporate
assets; and (d) unjust enrichment.


 


J.             On
May 19, 2010, Plaintiffs filed a Motion for Partial Summary Judgment, and
Defendants filed a Motion to Dismiss.


 


K.            On
May 21, 2010, Plaintiffs served their First Consolidated Request for
Production of Documents Directed to Defendants, and on June 21, 2010,
Defendants responded with Responses and Objections thereto.


 


L.             On
June 10, 2010, the Court entered an order setting a briefing schedule for
Plaintiffs’ Motion for Partial Summary Judgment and Defendants’ Motion to
Dismiss.


 


M.           On
June 14, 2010, Defendants filed their Opening Brief in support of their
Motion to Dismiss.


 


N.            RBAC and Defendants
initially engaged in arm’s-length settlement negotiations in August 2009.   In June 2010
the Parties engaged in further extensive arm’s-length negotiations 


 


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in an effort to resolve the Action.  As a result of those negotiations, the
parties requested and, on July 7, 2010, the Court entered an amended
scheduling order extending the briefing schedule on the pending motions.


 


O.            As
a result of their negotiations, Defendants and Plaintiffs reached an agreement
in principle to settle the Action on terms and conditions set forth in this
Stipulation.


 


P.             On
July 27, 2010, the Parties advised the Court of their agreement in
principle to settle the Action, requested a stay of the briefing schedule on
the pending motions to dismiss and for partial summary judgment and that the September 24,
2010 oral argument be removed from the Court’s calendar.  The Court granted that request on July 27,
2010.


 


Q.            Plaintiffs
have conducted a thorough investigation and reviewed extensive publicly filed
documents and materials produced in connection with the books and records
demands and the 220 Action with respect to the claims and underlying events and
transactions alleged in the Action. 
While Plaintiffs and their counsel believe the claims asserted in the
Action have merit, Plaintiffs and their counsel, based on legal and factual
analyses and the review of non-public and public documents, have concluded that
settling the Action on the terms and conditions of this Stipulation confers
substantial benefits upon and is in the best interests of UT and its
shareholders.  In making this
determination, Plaintiffs and their counsel have considered the benefits
conferred on the Company by the Settlement and have taken into account the
uncertain outcome and risks of any litigation, especially in complex derivative
stockholder litigation such as the Action, as well as the difficulties and
delays inherent in such litigation. Plaintiffs and their counsel also are
mindful of the inherent problems of proof associated with, and possible
defenses to, the claims asserted in the Action. 
In addition, Plaintiffs and their 


 


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counsel recognize and acknowledge the expense and
length of continued proceedings necessary to prosecute the Action against the
Individual Defendants through trial and appeals.


 


R.            The
Individual Defendants in the Action have denied, and continue to deny, that any
claims asserted by Plaintiffs have merit and that any of the Individual
Defendants have committed, have attempted to commit or have threatened to
commit any violations of law or breaches of duties to UT, any of the Plaintiffs
in the Action, or any other UT stockholder, or otherwise have been unjustly
enriched or acted in any improper manner. 
Nonetheless, Defendants have taken into account the costs, uncertainty
and risks inherent in any litigation, especially in complex cases like the
Action.  Defendants have, therefore,
determined that it is desirable and beneficial that the Action, and all of the
Parties’ disputes related thereto, be fully and finally settled in the manner
and upon the terms and conditions set forth in this Stipulation.


 


S.             This
Stipulation shall not be construed or deemed to be evidence of or an admission
or concession on the part of any Party with respect to (i) the validity or
infirmity of any claim, (ii) any fault, liability, wrongdoing or damage
whatsoever, or (iii) the validity or infirmity of any and all defenses
asserted in the Action.


 


T.            The
Parties acknowledge that the Action is being voluntarily settled with each
Party having been advised by its own counsel, and believe that the terms of
this Stipulation are fair, adequate, reasonable and in the best interests of UT
and its shareholders.


 


NOW,
THEREFORE, IT IS HEREBY STIPULATED AND AGREED, BY AND AMONG THE PARTIES TO
THIS STIPULATION, subject to the approval of the Court pursuant to Court of
Chancery Rule 23.1, that all Released Claims (as defined in
Paragraph 1.11 infra) as to
all Released Persons (as defined in Paragraph 1.13 infra)
and all Released Defendants’ Claims (as defined in Paragraph 1.12 infra) shall be and hereby are compromised, 


 


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settled,
discontinued and dismissed with prejudice and without costs (except as stated
herein) upon the following terms and conditions:


 


I.                                         DEFINITIONS


 


In
addition to the terms defined above, the following additional terms shall have
the meanings specified below:


 


1.1           “1997 Plan” means the United
Therapeutics Corporation Amended and Restated Equity Incentive Plan, as adopted
in 1997 and amended from time to time thereafter.


 


1.2           “Board” means UT’s board of
directors.


 


1.3           “Compensation Committee”
means the Compensation Committee of the Board.


 


1.4           “Defendants’ Affiliates”
means UT’s and the Individual Defendants’ respective present or former spouses,
family members, officers, directors, employees, agents, attorneys, advisors,
accountants, auditors, insurers, trustees, financial advisors, investment
bankers, representatives, affiliates, parents, subsidiaries (including the
directors and officers of such affiliates, parents, and subsidiaries), general
partners, limited partners, partnerships, heirs, executors, personal
representatives, estates, administrators, successors or assigns.


 


1.5           “Effective Date” means the
date the Final Order and Judgment, which approves in all material respects this
Stipulation and the Settlement embodied herein, including the Releases provided
for herein, and dismisses the Action with prejudice, becomes Final.


 


1.6           “Final” means no longer
subject to review upon appeal, whether due to expiration of time to appeal, or
due to final affirmation on appeal and expiration of time for any petition for
reargument, appeal or review, by certiorari or otherwise.


 


1.7           “Judgment” means the Final
Order and Judgment entered by the Court dismissing the Action, with prejudice,
substantially in the form attached hereto as Exhibit C.


 


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1.8           “Notice” means the Notice of
Pendency and Proposed Settlement of Derivative Action, substantially in the
form attached hereto as Exhibit B.


 


1.9           “Person” means a natural
person, individual, corporation, partnership, limited partnership, limited
liability partnership, limited liability company, association, joint venture,
joint stock company, estate, legal representative, trust, unincorporated
association, government or any political subdivision or agency thereof, or any
business or legal entity.


 


1.10         “Plaintiffs’
Counsel” means the undersigned attorneys for Plaintiffs.


 


1.11         “Released Claims” means any
and all claims, rights, demands, suits, matters, issues, causes of action,
liabilities, obligations, expenses, damages, losses, judgments, suits, or any
other matters of any kind, including Unknown Claims (as defined in
Paragraph 1. 20 infra), whether
foreseen or unforeseen, foreseeable or unforeseeable, or certain or contingent,
that have been, or could have been, or in the future could be asserted by
Plaintiffs (on their own behalf directly or derivatively on behalf of UT), by
UT, and by each and every UT stockholder (derivatively or on behalf of UT,)
against the Released Persons, whether under state, federal, or foreign law,
which arise out of or relate in any manner to the allegations, facts, events,
transactions, acts, occurrences, conduct, statements, representations, alleged
misrepresentations, alleged omissions or any other matters that: (i) have
been asserted in the Action; (ii) were recited, described or referenced in
the Action; or (iii)  arise out of or relate to any matters
(A) alleged in the Complaint in the Action or the complaints filed in the
Benison lawsuit or the RBAC lawsuit, (B) concerning, without limitation,
UT’s adoption of the STAP, expansion or amendment of the STAP, stock options,
Share Tracking Awards, the Awards
Repricings, the Option Exchange, grant of stock options or payment of
any compensation to its Chief Executive Officer, and any contracts, agreements
and disclosures relating thereto, or (C) concerning the 


 


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fiduciary
and disclosure obligations or alleged unjust enrichment or waste with respect
to the matters described in parts (i), (ii), and (iii).


 


1.12         “Released Defendants’ Claims”
means all claims, demands, suits, matters, issues, causes of action,
liabilities, obligations, expenses, damages, losses, judgments, or any other
matters of any kind, including Unknown Claims (as defined in Paragraph 1.20 infra), whether foreseen or unforeseen, foreseeable or
unforeseeable, or certain or contingent, whether under state, federal or
foreign law that have been, could have been, or in the future could be asserted
in any forum by the Defendants or any of them or the successors and assigns of
any of them against any of the Plaintiffs, any other UT shareholder or their
attorneys, that arise out of or relate in any way to the institution,
prosecution, or settlement of the Action (except for claims to enforce the
terms of the Settlement).


 


1.13         “Released Persons” means UT,
any and all of the Individual Defendants, and any and all of the Defendants’
Affiliates.


 


1.14         “Releases” means the
releases set forth in Paragraphs 3.1-3.2 below.


 


1.15         “Scheduling Order” means an
order scheduling a hearing on this Stipulation and the Settlement embodied
herein and approving the form of Notice and method of giving notice,
substantially in the form attached hereto as Exhibit A.


 


1.16         “Settlement Hearing” means
the hearing or hearings at which the Court will review the adequacy, fairness,
and reasonableness of the Settlement and rule on Plaintiffs’ request for
attorneys’ fees and expenses.


 


1.17         “Shareholder
Approval” means shareholder approval as defined and computed in accordance with
the rules of NASDAQ or other applicable stock exchange rules.


 


1.18         “Share
Tracking Award” means an award issued pursuant to the STAP.


 


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1.19         “STAP”
means the United Therapeutics Share Tracking Awards Plan.


 


1.20         “Unknown
Claims” means any and all Released Claims which any Plaintiff or other UT
shareholder does not know or suspect to exist in his, her or its favor at the
time of the release of the Released Persons, and any Released Defendants’
Claims which any Defendant does not know or suspect to exist in his, her or its
favor at the time of the release of Plaintiffs, the other UT shareholders and
their counsel, which if known by him, her or it might have affected his, her or
its decision(s) with respect to the Settlement.  With respect to any and all Released Claims
and Released Defendants’ Claims, the Parties stipulate and agree that upon the
Effective Date, Plaintiffs and the Defendants shall expressly waive, and each
other UT shareholder 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, territory of the United States, or
any foreign nation, 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.


 


Plaintiffs
and the Defendants acknowledge, and each other UT shareholder by operation of
law shall be deemed to have acknowledged, that the inclusion of “Unknown Claims”
in the definition of Released Claims and Released Defendants’ Claims was
separately bargained for and was a key element of the Settlement.


 


II.            TERMS
OF SETTLEMENT


 


The
Defendants agree and acknowledge that Plaintiffs’ filing and prosecution of the
Action, and the negotiations with Plaintiffs’ Counsel, were material factors in
UT’s ability to obtain the below benefits and recoveries and in UT’s decision
to implement the below corporate 


 


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governance
improvements.  UT believes that these
terms confer substantial benefits upon UT and its shareholders.


 


2.1           Benefits and Recoveries. No later than
ten (10) days after the Effective Date, Rothblatt shall surrender and UT
shall cancel 165,214 stock options issued to Rothblatt with a current exercise
price of $30.75 per option and scheduled to expire in December 2017.


 


2.2           Corporate Governance Improvements. In addition
to the benefits and recoveries set forth above, in direct response to, and as a
result of, the Action and Plaintiffs’ efforts, UT has adopted and/or will adopt
no later than ten (10) days after the Effective Date, unless otherwise
provided, the following corporate governance improvements:


 


A)           Stock Option
and Share Tracking Award Plans


 


1.             The adoption of any future
stock option plan shall require Shareholder Approval.


 


2.             Except for any amendments
proposed herein, the 1997 Plan may not be materially amended without
Shareholder Approval.


 


3.             No existing or future awards
under the 1997 Plan or STAP may be amended, exchanged, or re-priced to lower
prices without Shareholder Approval.


 


4.             All Company stock option
plans and share tracking awards plans shall provide that the exercise price for
stock option grants and share tracking awards shall be no less than one hundred
percent (100%) of fair market value of UT common stock on the grant date.  The fair market value of UT stock on a grant
date shall be the closing price for a share of UT common stock on such day as
reported on the NASDAQ or other relevant stock exchange.


 


5.             The Board or Compensation
Committee shall within sixty (60) days after the Effective Date designate a
Company Officer who shall who shall oversee 


 


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mechanisms
for monitoring compliance with laws and regulations relating to the disclosure
of compensation or trading by any applicable option or share tracking award
grantees (e.g., timely and accurate filing of SEC
Forms 3, 4 and 5), as well as compliance with the Company’s stock option plans
and share tracking awards plans.


 


B)            Granting of
Stock Option Awards and Share Tracking Awards


 


1.             Authority to approve the
grant of stock option awards and share tracking awards, or the authority to
approve the formulae or methodology by which such grants are determined, shall
be limited to the full Board or a properly constituted Compensation Committee,
consisting of three or more independent directors, or their duly authorized
delegates.  The majority of the full
Board shall be comprised of independent directors, and the Compensation
Committee shall be comprised solely of independent directors.  For purposes of this Stipulation, “independent
director” shall have the meaning ascribed to such term under Rule 5605(a)(2) of
the NASDAQ listing standards (or any applicable successor rule applicable
to NASDAQ-listed companies’ boards of directors or compensation committees, as
the case may be).


 


2.             Beginning no later than
sixty (60) days after the Effective Date discretionary grants and awards to
directors and any employee subject to § 16 of the Securities Exchange Act
of 1934 or Covered Employees within the meaning of §162(m) of the Internal
Revenue Code shall be approved in advance by either the full Board or Compensation
Committee.  The sole exception to this rule is
that a single independent director, following proper delegation of authority by
the Compensation Committee or full Board, may approve or ratify
non-discretionary stock option grants which are determined solely under a
mechanical formula.


 


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3.             No later than sixty (60)
days after the Effective Date the body authorized to approve the grant of stock
options and share tracking awards shall be specified in the Compensation
Committee Charter, the 1997 Plan, any subsequent equity incentive plans, and
any share tracking awards plans, whether subject to stockholder approval or
not.


 


4.             On a prospective basis
beginning on the Effective Date, Section 5.4 of the 1997 Plan, as adjusted
or amended with Shareholder Approval or as adjusted automatically in accordance
with its terms as a result of stock splits or other events specified in Section 12.1
of the 1997 Plan (Changes in Capital Structure), shall be construed to limit
the number of options that may be granted to the CEO in a single calendar year
notwithstanding any provisions of the 1997 Plan or the CEO’s employment
agreement to the contrary.  The limit
currently imposed by Section 5.4 of the 1997 Plan is 1,000,000 stock
option grants.


 


5.             Dr. Rothblatt’s
employment agreement will not be amended to allow her to receive Share Tracking
Awards in lieu of or in addition to stock options, as long as the 1997 Plan
remains in force and has not exhausted the number of shares available to permit
the grant of stock options sufficient to satisfy the requirements of
Dr. Rothblatt’s employment agreement, as limited by Section 5.4 of
the 1997 Plan.


 


C)            Timing of Stock
Option and Share Tracking Award Grants


 


1.             Beginning no later than
sixty (60) days after the Effective Date, stock options and share tracking
awards granted to all officers, directors, and employees shall be granted only
on pre-set dates, which shall be set by the Compensation Committee prior to the
beginning of the fiscal year in which the stock options are to be granted,
except that stock options and share tracking awards may be granted on other
dates in connection with significant personnel events, such as a new hire,
promotion, new directorship, achievement of a significant 


 


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corporate
objective, or appointment to a board committee. 
The method used to determine the pre-set grant dates, and any future
changes thereto, shall be publicly reported at least ninety (90) days prior to
becoming effective.


 


2.             Beginning no later than
sixty (60) days after the Effective Date, executive officers shall be
prohibited from determining the date of any stock option award or share
tracking award granted to them, except in accordance with the method previously
disclosed pursuant to Paragraph 2.2(C)(1) above.


 


3.             Beginning no later than
sixty (60) days after the Effective Date, all grants of stock options or share
tracking awards—or, in case of stock options or share tracking awards that are
determined in accordance with a formula, all decisions regarding the formulae
or methodology by which such grants are determined—shall be made only at a
meeting of the Board or a properly constituted Compensation Committee and not
by unanimous written consent, except that:


 


i.              a single independent
director may approve or ratify non-discretionary stock option grants which are
determined solely under a mechanical formula, as described in Paragraph  2.2(B)(2) above;
and


 


ii.             the Company’s duly authorized
directors, officers, or managers may approve the grant of such awards in
connection with significant personnel events, as described in Paragraph  2.2(C)(1) above.


 


2.3           The foregoing corporate
governance improvements will not be diminished or removed unless either:


 


A)           the Board determines, in
good faith and upon advice of counsel, that a particular governance improvement
conflicts or will conflict with any applicable law, regulation, 


 


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or
rule (including the NASDAQ rules or other applicable stock exchange
rules), agreement with any governmental entity, or corporate policy approved by
the Company’s shareholders; or


 


B)            such alteration or removal
is approved by a vote of the Company’s shareholders.


 


III.           SCOPE
OF SETTLEMENT AND RELEASES


 


3.1           Upon the Effective Date,
Plaintiffs (on their own behalf or derivatively on behalf of UT), UT, and each
and every other UT stockholder claiming by, through, in the right of,
derivatively, or on behalf of UT, on behalf of themselves and their respective
heirs, executors, personal representatives, estates, administrators, successors
or assigns, shall and hereby do fully, finally and forever release, relinquish,
discharge and dismiss, with prejudice, the Released Persons from any and all
Released Claims.


 


3.2           Upon the Effective Date,
each of the Defendants, on behalf of themselves and their respective Defendants’
Affiliates, shall and hereby do fully, finally, and forever release,
relinquish, and discharge Plaintiffs, all other UT shareholders, and their
counsel from any and all Released Defendants’ Claims.


 


3.3           Permanent Injunction. By operation
of the Judgment, and upon the Effective Date, Plaintiffs and UT agree not to
institute, maintain or prosecute any and all Released Claims against any and
all of the Released Persons, and shall be permanently and finally enjoined from
commencing or prosecuting any actions or other proceedings asserting any or all
of the Released Claims against any or all of the Released Persons.  By operation of the Judgment, and upon the
Effective Date, Defendants agree not to institute, maintain or prosecute any
and all Released Defendants’ Claims against any and all of Plaintiffs, the
other UT shareholders, or their counsel, and shall be permanently and finally
enjoined from commencing or prosecuting any actions or 


 


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other
proceedings asserting any or all of the Released Defendants’ Claims against any
or all of Plaintiffs, the other UT shareholders, or their counsel.


 


3.4           Denial of Wrongdoing. The
Individual Defendants in the Action have denied, and continue to deny, that any
of the Individual Defendants have committed, have attempted to commit or have
threatened to commit any violations of law or breaches of duties to UT, any of
the Plaintiffs in the Action, or UT’s other stockholders, or otherwise have
acted in any improper manner.  Individual
Defendants state that they are entering into this Stipulation solely because
the Settlement would eliminate the burden, expense, and distraction of further
protracted litigation, which the Individual Defendants believe is in the best
interests of UT and its shareholders.


 


IV.           ATTORNEYS’
FEES AND EXPENSES


 


4.1           Plaintiffs
and Plaintiffs’ Counsel shall petition the Court for an award of attorney’s
fees in an amount to be determined (the “Fee Request”).  Defendants are negotiating with Plaintiffs
over whether Defendants will oppose the Fee Request.  The parties may reach an agreement prior to
the Settlement Hearing.  If such an
agreement is reached, the parties will present that agreement to the Court at
the Settlement Hearing, without distributing additional notice.  Any fee amount approved and awarded by the
Court upon the Fee Request described in this paragraph (the “Fee Award”) shall
be paid by the Company, or any successor in interest, in accordance with the
terms of the Stipulation.  The Fee Award shall be paid
jointly to Co-Lead Counsel as receiving agents on behalf of Plaintiffs’ Counsel
within ten (10) days after entry of the Court’s order approving the Fee
Award, notwithstanding the existence of any timely filed objections thereto, or
potential for appeal therefrom, or collateral attack on the Settlement or any
part thereof, subject to the obligation of Plaintiffs’ Counsel to make
appropriate refunds or 


 


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repayments
plus accrued interest promptly if and when, as a result of any appeal and/or
further proceedings on remand, the Fee Award is reversed or reduced.  Co-Lead Counsel shall jointly be responsible
for the internal allocation and distribution of the Fee Award and in the
absence of agreement among Co-Lead Counsel the allocation shall be decided by
the Court on appropriate notice. 
Defendants shall have no responsibility for, and no liability whatsoever
with respect to, any fee allocation among Plaintiffs’ Counsel.


 


4.2           Final resolution of the Fee
Request shall not be a precondition to the dismissal, with prejudice, of the
Action, and any application or litigation concerning the Fee Request may be
considered and resolved separately from the Settlement.  Except as expressly provided herein, the
Parties shall bear their own fees, costs and expenses, and no Party shall assert
any claim for expenses, costs and fees against any other Party.


 


V.            SCHEDULING
ORDER AND SETTLEMENT HEARING


 


5.1           Upon the execution of this
Stipulation, the Parties shall promptly submit this Stipulation together with
its related documents to the Court, and shall apply to the Court to enter the
Scheduling Order, substantially in the form attached hereto as Exhibit A.


 


5.2           UT shall be responsible (a) for
the reproduction and distribution of the Notice, substantially in the form
attached hereto as Exhibit B, in accordance with the Scheduling Order; and
(b) for paying all costs associated therewith, in accordance with the
Scheduling Order, whether or not the Settlement becomes effective, and in no
event shall Plaintiffs or their counsel be responsible for any such notice
costs.  Counsel for UT, at least seven (7) days
before the Settlement Hearing, shall file with the Court an appropriate proof
of mailing of the Notice and compliance with the other Notice procedures set
forth in the Scheduling Order.


 


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VI.          STANDSTILL
AGREEMENT AND STAY OF PROCEEDINGS


 


Except
as provided herein, pending the final determination of whether the Settlement
should be approved by the Court, all Parties to the Action (including
Plaintiffs, Individual Defendants, and UT) agree not to institute,
commence, prosecute, continue, or in any way participate in, whether directly,
representatively, individually, derivatively on behalf of UT, or in any other
capacity, any action or other proceeding asserting any Released Claims or
Released Defendants’ Claims.


 


VII.         EFFECTIVE
DATE OF SETTLEMENT, TERMINATION AND VOIDABILITY


 


7.1          The Settlement shall become
effective on the Effective Date.


 


7.2          In the event that the
Settlement is not approved by the Court, or vacated or modified on appeal, or if
the Judgment is not entered by the Court or does not become Final, or if any
other condition necessary for the Settlement to become effective fails to
occur, then any of the Parties may terminate this Stipulation and withdraw from
the Settlement by providing written notice of such action to undersigned
counsel for all of the other Parties within thirty (30) calendar days after the
failure of such condition, in which case, this Stipulation, including the
Releases, shall be voided.


 


7.3          In the event that the
Settlement is terminated pursuant to Paragraph 7.2 herein, the Settlement and
any actions taken in connection therewith shall become null and void for all
purposes, and all negotiations, transactions, and proceedings connected with
it: (i) shall be without prejudice to the rights and position of any Party
hereto with respect to the Action or any other litigation or judicial
proceeding; (ii) shall not entitle any Party to recover any costs or
expenses incurred in connection with the implementation of this Stipulation; (iii) shall
not be deemed to be or construed as evidence of, or an admission by any Party
of, any fact, matter or 


 


17

















 


thing;
and (iv) shall be subject to Rule 408 of the Delaware Rules of Evidence
such that the contents of this Stipulation shall not be admissible in evidence
or be referred to or otherwise used for any purpose in any subsequent
proceedings in the Action or any other litigation or judicial proceeding.  In the event that the Settlement is
terminated pursuant to Paragraph 7.2 herein, the Parties shall be deemed to
have reverted to their respective statuses in the Action as of the date and
time immediately prior to the execution of this Stipulation, and, except as
otherwise expressly provided, the Parties shall proceed in all respects as if
this Stipulation and any related orders had not been executed and/or entered.


 


7.4          In the event this
Stipulation is terminated under Paragraphs 7.2, Paragraph 7.3 shall survive.


 


VIII.       MISCELLANEOUS
PROVISIONS


 


8.1          Cooperation of the Parties. The Parties
acknowledge that it is their intent to consummate the Settlement, and agree to
cooperate to the extent reasonably necessary to effectuate and implement all
terms and conditions of this Stipulation and to exercise their reasonable
efforts to accomplish the foregoing terms and conditions of this Stipulation.


 


8.2          Acknowledgment of Adequate
Consideration. The Parties acknowledge, represent, and warrant to
each other that the terms of the Settlement are such that each of the Parties
is to receive adequate consideration in exchange for consideration given.


 


8.3          No Admissions. Neither this
Stipulation nor the Settlement, nor any provision contained herein, nor any act
performed or document executed pursuant to or in furtherance of this
Stipulation or the Settlement: (a) is or may be deemed to be or may be
used as an admission of, or evidence of the validity or lack of validity of any
Released Claims, or any reserved claims, or any wrongdoing or liability of the
Parties, their counsel, or any Released Persons; (b) is or 


 


18

















 


may
be deemed to be or may be used as an admission of, or evidence of, any fault or
omission of any of the Parties or any of the Defendants’ Affiliates in any
civil, criminal, or administrative proceeding in any court, administrative
agency, or other tribunal; or (c) is or may be alleged or mentioned so as
to contravene clause (a) above in any litigation or other action unrelated
to the enforcement of this Stipulation. 
Notwithstanding the foregoing, on or after the Effective Date, any of
the Individual Defendants may file this Stipulation or any judgment or order of
the Court related thereto in any action that may be brought against them, in
order to support a defense or a counterclaim based on res judicata,
collateral estoppel, release, good-faith settlement, judgment bar or reduction,
or any other theory of claim preclusion or issue preclusion, or similar defense
or counterclaim.


 


8.4          Costs. Except as
otherwise expressly provided herein, the Parties shall bear their own costs.


 


8.5          Modification. This
Stipulation may be modified or amended only by a writing signed by all of the
signatories hereto.


 


8.6          Governing Law. This
Stipulation, the Settlement and dismissal contemplated thereunder shall be
governed by, and construed in accordance with, the laws of the State of
Delaware, without regard to Delaware’s conflict of laws rules.


 


8.7          Binding Effect. This
Stipulation shall be binding upon, and inure to the benefit of, all Parties,
their successors and assigns.  This
Stipulation is not intended, and shall not be construed, to create rights in or
confer benefits on any other Persons, and there shall not be any third-party
beneficiaries hereto, except as expressly provided hereby with respect to such
aforementioned Persons who are not Parties hereto.


 


19

















 


8.8          Entire Agreement. This
Stipulation and all documents executed pursuant hereto constitute the entire
agreement between the Parties with respect to the Settlement of the Action and
supersede any and all prior negotiations, discussions, agreements, or
undertakings, whether oral or written, with respect to the Settlement of the
Action.


 


8.9          Judicial Enforcement. The Court
shall retain jurisdiction with respect to the implementation and enforcement of
the terms of this Stipulation and the Settlement, and the Parties submit to the
jurisdiction of the Court for the purposes of implementing and enforcing the
terms of this Stipulation and the Settlement.


 


8.10        Warranty of Authority. Each counsel
or person executing this Stipulation or any of the related documents on behalf
of any Party hereto hereby warrants that such Person has the full authority to
do so.  The Parties have caused this
Stipulation to be duly executed and delivered by their counsel of record.


 


8.11        Waiver of Breach. The Parties
may not waive or vary any right hereunder except by an express written waiver
or variation signed by them in hand.  Any
failure to exercise or any delay in exercising any of such rights, or any
partial or defective exercise of any such rights, shall not operate as a waiver
or variation of that or any other such right. 
The waiver by one Party of any breach of this Stipulation by another
Party shall not be deemed a waiver of any other prior or subsequent breach of
this Stipulation.


 


8.12        Fair Construction. 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.  This
Stipulation 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.


 


20

















 


8.13        No Assignment of Claims. Plaintiffs
hereby represent and warrant that they have not assigned any rights, claims, or
causes of action that were asserted or could have been asserted in connection
with, under or arising out of any of the claims being settled or released
herein.


 


8.14        No Sanctions. No Party or
its counsel shall make any application for sanctions, pursuant to Rule 11
of the Court of Chancery Rules or other court rule or statute, with
respect to any claims or defenses in the Action.  Defendants will not assert that the Action
was filed in violation of Court of Chancery Rule 11, and they agree that
the Action is being settled voluntarily after consultation with competent legal
counsel and after discovery into the underlying facts of the claims.


 


8.15        Counterparts. This
Stipulation may be executed in counterparts by any of the signatories hereto,
and may be delivered in facsimile or PDF form, and as so executed and delivered
shall constitute one agreement.


 


8.16        Facsimile and Scanned
Signatures. Any signature to this Stipulation, to the extent
signed and delivered by means of a facsimile machine or electronically scanned
and sent via email (e.g., PDF), shall be treated in all manner and respects as
an original signature and shall be considered to have the same binding legal
effect as if it were the original signed version thereof delivered in
person.  At the request of a Party to
this Stipulation, any other Party to this Stipulation so executing and
delivering this document by means of a facsimile machine or via email shall
re-execute original forms thereof and deliver them to the requesting
Party.  No Party to this Stipulation
shall raise the use of a facsimile machine or email to deliver a signature or
the fact that any signature or agreement was transmitted or communicated
through the use of a facsimile machine or email as a defense to the formation
or the enforceability of this Stipulation and each such Party forever waives
any such defense.


 


21

















 


8.17        Extensions of Time. Without
further order of the Court, the Parties hereto may agree, in writing, to
reasonable extensions of time to carry out any of the provisions of this
Stipulation, and will cooperate with one another, for good cause, in seeking
any reasonable extension of a Court-imposed deadline when necessary.


 


8.18        Exhibits. The following
exhibits are attached hereto and incorporated herein by reference:


 


(a)           Exhibit A: Scheduling
Order;


 


(b)           Exhibit B: Notice; and


 


(c)           Exhibit C: Final Order
and Judgment.


 


IT
IS HEREBY AGREED by the undersigned as dated below.


 


	
  DATED:
  October 25, 2010

  	
  PRICKETT,
  JONES & ELLIOTT, P.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Paul A. Fioravanti, Jr.

  
	
   

  	
  Michael
  Hanrahan (DE Bar No. 941)

  
	
   

  	
  Paul
  A. Fioravanti, Jr. (DE Bar No. 3808)

  
	
   

  	
  Laina
  M. Herbert (DE Bar No. 4717)

  
	
   

  	
  1310
  N. King Street

  
	
   

  	
  P.O. Box
  1328

  
	
   

  	
  Wilmington,
  Delaware 19801

  
	
   

  	
  (302)
  888-6500

  
	
   

  	
   

  
	
   

  	
  Co-Liaison Counsel for Plaintiffs

  
	
   

  	
   

  
	
  DATED: October 25, 2010

  	
  ROSENTHAL, MONHAIT & GODDESS, P.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Joseph A. Rosenthal

  
	
   

  	
  Joseph
  A. Rosenthal (DE Bar No. 234)

  
	
   

  	
  P.
  Bradford deLeeuw (DE Bar No. 3569)

  
	
   

  	
  919
  N. Market Street, Suite 1401

  
	
   

  	
  P.O. Box
  1070

  
	
   

  	
  Wilmington,
  DE 19899-1070

  
	
   

  	
  (302)
  656-4433

  
	
   

  	
   

  
	
   

  	
  Co-Liaison Counsel for Plaintiffs

  



 


22

















 


	
  DATED: October 25, 2010

  	
  BARROWAY TOPAZ KESSLER

  
	
   

  	
  MELTZER & CHECK, LLP

  
	
   

  	
   

  
	
   

  	
  /s/
  Michael J. Hynes

  
	
   

  	
  Eric
  L. Zagar

  
	
   

  	
  Michael
  J. Hynes

  
	
   

  	
  Tara
  P. Kao

  
	
   

  	
  280
  King of Prussia Road

  
	
   

  	
  Radnor,
  PA 19087

  
	
   

  	
  (610)
  667-7706

  
	
   

  	
   

  
	
   

  	
  Co-Lead Counsel for Plaintiffs

  
	
   

  	
   

  
	
  DATED: October 25, 2010

  	
  HARWOOD FEFFER LLP

  
	
   

  	
   

  
	
   

  	
  /s/ Daniella Quitt

  
	
   

  	
  Joel C. Feffer

  
	
   

  	
  Daniella
  Quitt

  
	
   

  	
  488
  Madison Avenue, 8th Floor

  
	
   

  	
  New York, New York 10022

  
	
   

  	
  (212)
  935 7400

  
	
   

  	
   

  
	
   

  	
  Co-Lead Counsel for Plaintiffs

  
	
   

  	
   

  
	
  DATED: October 25, 2010

  	
  BERNSTEIN LITOWITZ

  
	
   

  	
  BERGER & GROSSMANN LLP

  
	
   

  	
   

  
	
   

  	
  /s/ Mark Lebovitch

  
	
   

  	
  Mark
  Lebovitch

  
	
   

  	
  Amy
  Miller

  
	
   

  	
  Jeremy
  Friedman

  
	
   

  	
  1285
  Avenue of the Americas

  
	
   

  	
  New
  York, NY 10019

  
	
   

  	
  (212)
  554-1400

  
	
   

  	
   

  
	
   

  	
  Co-Lead Counsel for Plaintiffs

  
	
   

  	
   

  
	
  DATED: October 22, 2010

  	
  MORRIS, NICHOLS, ARSHT & TUNNELL LLP

  
	
   

  	
   

  
	
   

  	
  /s/
  William M. Lafferty

  
	
   

  	
  William
  M. Lafferty (#2755)

  
	
   

  	
  Bradley
  D. Sorrels (#5233)

  
	
   

  	
  1201
  N. Market Street

  
	
   

  	
  Wilmington,
  Delaware 19801

  
	
   

  	
  (302)
  658-9200

  
	
   

  	
   

  
	
   

  	
  Attorneys for Defendants

  



 


23

















 


	
  DATED: October 22, 2010

  	
  GIBSON, DUNN & CRUTCHER LLP

  
	
   

  	
   

  
	
   

  	
  /s/
  Andrew S. Tulumello

  
	
   

  	
  Andrew
  S. Tulumello

  
	
   

  	
  Jason
  J. Mendro

  
	
   

  	
  1050
  Connecticut Avenue, N.W.

  
	
   

  	
  Washington,
  DC 20036

  
	
   

  	
  (202)
  955-8500

  
	
   

  	
   

  
	
   

  	
  Attorneys
  for Defendants

  
	
   

  	
   

  
	
  DATED:
  October 22, 2010

  	
  SQUIRESLAW,
  PLLC

  
	
   

  	
   

  
	
   

  	
  /s/
  Jeffrey L. Squires

  
	
   

  	
  Jeffrey
  L. Squires

  
	
   

  	
  1850
  M St. NW, Ste. 280

  
	
   

  	
  Washington,
  D.C. 20036

  
	
   

  	
  (202)
  223-4500

  
	
   

  	
   

  
	
   

  	
  Attorney
  for Nominal Defendant

  
	
   

  	
  United
  Therapeutics Corporation

  



 


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