Court Opinion

ID: 9943424
Source: CourtListenerOpinion
Date Created: 2024-02-23 16:04:08.244836+00
Date Added: 2024-06-11T13:47:00.027344
License: Public Domain

COURT OF CHANCERY
                                   OF THE
                             STATE OF DELAWARE
MORGAN T. ZURN                                                LEONARD L. WILLIAMS JUSTICE CENTER
VICE CHANCELLOR                                                  500 N. KING STREET, SUITE 11400
                                                                WILMINGTON, DELAWARE 19801-3734

                                 February 23, 2024

    A. Thompson Bayliss, Esquire               Thomas A. Uebler, Esquire
    Abrams & Bayliss, LLP                      McCollom D’Emilio Smith Uebler, LLC
    20 Montchanin Road, Suite 200              2751 Centerville Road, Suite 401
    Wilmington, DE 19807                       Wilmington, DE 19808

        RE:   OrbiMed Advisors LLC, et al. v. Symbiomix Therapeutics, LLC, et al.,
              Civil Action No. 2023-0769-MTZ

Dear Counsel:

        This letter decision answers one question in a noisy advancement dispute. It

explains that defendant Lupin, Inc. is obligated to provide advancement under

indemnification agreements between the plaintiffs and a company that Lupin first

acquired, then cancelled. Answering this question cuts down on some of the noise,

but not all of it. This letter therefore also charts a course forward to resolve

remaining disputes.

        I.     BACKGROUND1

        Symbiomix Therapeutics, LLC was a pharmaceutical company founded by

John Gregg. In 2012, Gregg sought financing for Symbiomix, with legal assistance

1
  Citations in the form of “Am. Compl.” refer to the plaintiffs’ verified amended and
supplemental complaint for advancement, available at docket item (“D.I.”) 17. Citations
in the form of “Am. Countercl.” refer to defendant Lupin’s answer and amended
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from Cooley LLP. Plaintiff OrbiMed Advisors, LLC invested in Symbiomix, and

obtained the rights to designate members of Symbiomix’s board of managers (the

“Board”) and to terminate Gregg without cause.2 OrbiMed appointed plaintiffs Rishi

Gupta and Klaus Veitinger (together, the “Manager Plaintiffs”) to the Board;

Veitinger was also Symbiomix’s CEO.3

         The Manager Plaintiffs entered into substantively identical indemnification

agreements with Symbiomix dated May 3, 2013 (the Indemnification Agreements or

“IAs”).4 The IAs offered the Manager Plaintiffs and OrbiMed, as an express

third-party beneficiary, broad advancement rights.5             “To induce [the Manager

Plaintiffs] to provide services to [Symbiomix], and OrbiMed to commit resources as

counterclaims, available at D.I. 27. Citations in the form of “POB” refer to the plaintiffs’
pretrial opening brief, available at D.I. 61. Citations in the form of “DAB” refer to Lupin’s
pretrial answering brief, available at D.I. 66. Citations in the form of “PRB” refer to the
plaintiffs’ pretrial reply brief, available at D.I. 72. Citations in the form of “Joint Stip.”
refer to the parties’ joint pretrial stipulation, available at D.I. 76. Citations in the form of
“IA” refer to the Indemnification Agreement, which is joint trial exhibits (“JX”) 1 and 2.
Citations in the form of “OAA” refer to the Omnibus Acquisition Agreement, which is JX
3.
2
    JX 7 ¶ 65.j.
3
    Joint Stip. ¶ 3; D.I. 85 at 91 [hereinafter “Tr.”].
4
    Joint Stip. ¶¶ 3–4; see also IA.
5
    IA § 4.
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an actual or potential stockholder in or lender to the Company,”6 the IAs “provide

for the indemnification of, and the advancement of expenses to, [the Manager

Plaintiffs] and [OrbiMed] to the maximum extent permitted by applicable law, as set

forth [in the IAs].”7 Each IA is “binding upon the parties . . . and their respective

successors.”8

          In November 2013, the Board terminated Gregg’s Symbiomix employment,9

causing him to lose his Board seat.10

                     A.    Lupin Purchases Symbiomix’s Equity.

          On May 1, 2017, Lupin, Symbiomix, and other parties entered into an

Omnibus Acquisition Agreement (the “OAA”).11 Gregg contends that in his absence

from Symbiomix, the OAA was negotiated to favor Symbiomix’s investors at

Gregg’s expense: Gregg might not receive any payment from the sale of the

6
    Id. at 2.
7
    Id.
8
    Id.; id. § 14.
9
    JX 46 ¶ 4; see JX 7 ¶ 65.v.
10
     JX 7 ¶ 65.p.
11
     Joint Stip. ¶¶ 5–6.
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company he founded.12 Gregg began investigating and sent Symbiomix a books and

records demand on September 21, 2017.13

          On October 11, the OAA closed: Lupin acquired all of Symbiomix’s equity,

and the Manager Plaintiffs ceased serving as managers of Symbiomix. 14 In the

OAA, Lupin promised to indemnify and advance expenses for current and former

Symbiomix managers and officers (the “M&O Indemnified Persons”) “against any

and all Damages incurred or suffered by any of the M&O Indemnified Persons in

connection with any action taken in such individual’s capacity as an officer or

manager of the Company” until six years after the OAA’s closing date.15

          On October 17, Lupin asked the Food and Drug Administration (the “FDA”)

to transfer ownership of Symbiomix’s new drug application to Lupin, and on

12
  JX 7 ¶ 72 (“Mr. Gregg has been notified that he will not be paid anything as a result of
the Symbiomix Sale immediately, and that he will not receive any payment from the
Symbiomix Sale, if any, for from six to up to ten years.”); see JX 18 at LUP_00003542
(“As you are aware, although Mr. Gregg was the inventor of Solosec and was the largest
individual unit-holder in Symbiomix, he has yet to receive any value for his interests in
Symbiomix and his intellectual property despite the fact that Lupin purchased the company
for more than $150 million.”).
13
     Joint Stip. ¶ 7; JX 5.
14
     Joint Stip. ¶ 9.
15
     OAA § 5.4(a).
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November 16 the FDA notified Lupin it had “revised [its] records to indicate Lupin

Inc. as the applicant of record.”16

                 B.     Gregg Files A Claim Against Cooley And Seeks Discovery
                        Regarding Plaintiffs.

         On October 26, Gregg filed an action in New Jersey (the “New Jersey Action”)

against Cooley based on its role in Symbiomix’s 2012 financing and alleged

continued representation of Symbiomix after Gregg’s termination.17 Gregg alleged

that OrbiMed and other investors hijacked Cooley’s representation of Gregg, that

Cooley breached its duties to Gregg, and that the investors’ scheme with Cooley

robbed Gregg of his rightful proceeds from the sale of Symbiomix.

         On March 12, 2018, Gregg served a subpoena on Lupin seeking “all

documents which refer or relate to OrbiMed” and

         all documents which refer or relate to any communication between any
         employee, officer, member, board member . . . of Symbiomix and any
         employee, officer, member, board member, shareholder of OrbiMed
         Advisors, including without limitation: a. Klaus Veitinger, MD;
         b. Rishi Gupta, JD; c. Evan Sotiriou; d. Donald Bennett;
         e. Daniel Gordon. 18

16
     JX 8 at LUP_00016287.
17
     See Joint Stip. ¶ 10; JX 7 ¶¶ 54, 65.
18
     JX 9 ¶¶ 20, 35; see Joint Stip. ¶ 13.
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In October 2019, the Manager Plaintiffs’ counsel began discussions with Lupin’s

counsel regarding their indemnification and advancement rights.19

                 C.      Lupin Dissolves And Cancels Symbiomix.

          On “August 22, 2019, Symbiomix’s bank account was closed,” and its entire

$122,000 balance was “deposited into an account controlled by Lupin.”20 On

December 18, Lupin’s CEO, serving as Symbiomix’s sole director, “declared that

Symbiomix be liquidated and dissolved; appointed Sean Moriarty as the liquidator

of Symbiomix . . . ; and directed any officer of Symbiomix to file a Certificate of

Cancellation with the Delaware Secretary of State.”21

          On December 29, Symbiomix’s rights, titles, and interests in its patents and

trademarks were assigned to Lupin.22         On December 30, Symbiomix filed a

certificate of cancellation.23

19
     JX 17 at LUP_00001943.
20
     Joint Stip. ¶ 14.
21
     Id. ¶ 16.
22
     Id. ¶¶ 17–18.
23
     Id. ¶ 19.
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                 D.     Plaintiffs Seek Advancement From Lupin And Symbiomix.

         By letter dated July 10, 2020, the Manager Plaintiffs formally demanded

advancement from Lupin and Symbiomix (the “Defendants”) under the IAs and

OAA “in connection with their potential role as third-party witnesses in the New

Jersey Action.”24 By letter dated July 27, Lupin’s counsel asserted the request under

the IAs was unripe because the Manager Plaintiffs had not yet been subpoenaed.25

The parties exchanged several letters on that point through which Lupin repeatedly

acknowledged OrbiMed, Gupta, and Veitinger’s (the “Plaintiffs”) rights under

Indemnification Agreements and Omnibus Acquisition Agreement.26                 Although

Symbiomix had already been cancelled, Lupin’s counsel also purported to speak for

Symbiomix, and stated Symbiomix also acknowledged the IAs and its obligations

and rights thereunder.27

24
     Id. ¶ 20; see JX 29.
25
     Joint Stip. ¶ 21; see JX 31.
26
  E.g., JX 70; JX 93 at LUP_00002893, 96; JX 94; JX 98; JX 41 at LUP_00004688; see
Joint Stip. ¶ 31.
27
     Joint Stip. ¶¶ 32, 34; JX 31; JX 78; JX 94 at LUP_00002889–91.
       Symbiomix purported to retain and respond through counsel until the pretrial
conference in this matter. At that point, counsel understood it could not be retained by a
cancelled entity, and withdrew its appearance for Symbiomix. Tr. 8 (citing In re Reinz Wis.
Gasket, LLC, 2023 WL 3300042 (Del. Ch. May 8, 2023)); In re Reinz Wis. Gasket, LLC,
2023 WL 3300042, at *2 (Del. Ch. May 8, 2023) (“Cancellation precludes a defunct entity
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          In June 2022, Gregg served subpoenas on the Manager Plaintiffs.28 On

July 27, he notified OrbiMed it could also expect a subpoena, which it received on

October 31.29 Plaintiffs told Lupin about the subpoenas and that they had retained

counsel and sought indemnification and advancement for their expenses. 30 Lupin’s

counsel continued to purport to speak for Symbiomix, and referenced the two

companies interchangeably. Lupin’s counsel acknowledged Lupin’s obligations

under the IAs.31

          On February 13, 2023, Lupin agreed to “advance [the Manager] Plaintiffs’

reasonable attorneys’ fees and expenses incurred in responding to the subpoenas

served on them in the New Jersey Action.”32 By letter dated March 22, counsel

from retaining counsel and litigating before a receiver is appointed, even in a proceeding
in which it must be named as a respondent.”). Lupin presented the entire defense of this
matter at trial.
       I note Symbiomix was purportedly served via its registered agent on July 31, 2023.
D.I. 3. A cancelled entity cannot be served in that manner. Tratado de Libre Commercio,
LLC v. Splitcast Tech., LLC, 2019 WL 1057976, at *1 (Del. Ch. Mar. 16, 2019) (“The entity
no longer has a registered agent . . . upon whom personal service could be perfected.”).
28
     Joint Stip. ¶ 25.
29
     Id.; see JX 60–61.
30
     Joint Stip. ¶ 26.
31
   E.g., JX 41 at LUP_00004688–89; JX 90; JX 93 at LUP_00002893; JX 98; Joint Stip.
¶ 31.
32
     Joint Stip. ¶ 27.
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wrote that, “pursuant to the [IAs],”33 Symbiomix would “advance OrbiMed’s

reasonable attorneys’ fees and expenses incurred” in connection with the New Jersey

Action.34 Lupin requested undertakings pursuant to Section 8 of the IAs, which

Plaintiffs submitted to Lupin and Lupin accepted.35          On June 2, Lupin again

confirmed that “Symbiomix and/or Lupin are . . . obligated to . . . indemnify Mr.

Gupta, Mr. Veitinger and/or OrbiMed for their reasonable attorneys’ fees and

expenses.”36 “During the period of July 27, 2020, through and including August 14,

2023, Defendants” never raised “Symbiomix’s certification of cancellation” as a

defense against advancement.37

          On April 19, 2023, Plaintiffs sent Lupin their undertakings and invoices.38

Plaintiffs retained Sidley Austin LLP as lead counsel and McElroy, Deutsch,

Mulvaney & Carpenter, LLP as local counsel in connection with the New Jersey

subpoenas, and demanded Lupin advance them $273,737.21.39 While Section 8 of

33
     JX 78 at LUP_00003099; see Joint Stip. ¶ 28.
34
     Joint Stip. ¶ 28.
35
     Id. at ¶ 29; JXs 89–91. See generally JX 88; JX 92 at LUP_00002984–88.
36
     JX 94 at LUP_00002889; see Joint Stip. ¶ 31.
37
     Joint Stip. ¶ 32.
38
     JX 92 at LUP_00002984–85; JX 93 at LUP_00002893.
39
     See JX 98 at 1; see, e.g., JX 104 at 3.
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the IA requires advancement within thirty days after the receipt of invoices, Lupin

took months to respond.40 On June 23, the parties met; Lupin compared Plaintiffs’

fees to “amounts incurred by other nonparties” for the same action and questioned

the reasonableness of their expenses.41 Lupin refused to advance Plaintiffs more

than $75,000.42

                  E.        This Action Ensues.

          On July 27, Plaintiffs filed their Verified Complaint for Advancement against

Symbiomix and Lupin.43 On August 15, Lupin’s counsel filed an answer and

counterclaims, asserting for the first time Symbiomix lacked the capacity to be sued

due to its cancellation.44 On August 21, Plaintiffs moved for leave to file an amended

and supplemental complaint, seeking to address Symbiomix’s cancellation;45

Plaintiffs filed their amended complaint on August 23.46 The amended complaint

includes four counts: Count I for breach of the IAs; Count II for breach of the OAA;

40
     See generally JX 93.
41
     JX 98 at 1–2; JX 97 ¶ 9.
42
     JX 97 ¶ 9.
43
     Joint Stip. ¶ 33.
44
     D.I. 8 at 1 n.1, 15.
45
     D.I. 12 at Mot.
46
     Am. Compl.
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Count III for fees on fees; and Count IV for the nullification of Symbiomix’s

certificate of cancellation.47

         On August 23, Plaintiffs adjusted the expenses sought from $273,737.21 to

$215,628.73.48          On August 28, Lupin advanced $215,628.73 to Plaintiffs for

attorneys’ fees and expenses Plaintiffs incurred in connection with the New Jersey

Action.49

         On September 6, Lupin’s counsel filed an answer and amended counterclaims.

The counterclaims comprise Count I for breach of the IAs and OAA, seeking

repayment of advanced expenses, and Count II for declaratory judgment that

indemnification and advancement rights under the IAs expired on October 11, 2017,

that any other advancement rights were provided by the OAA, and that those rights

terminated on October 11, 2023.50

         In their pretrial briefs, Plaintiffs identified Counts II and IV as claims in the

alternative, should the Court not order Lupin to perform under the IAs.51 Lupin

47
     Id. at ¶¶ 49–65.
48
     See JX 98; Am. Compl. ¶ 14.
49
     JX 98; see Joint Stip. ¶ 36.
50
     Am. Countercl. ¶¶ 14–48.
51
     POB 45–46.
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limited its relief sought to declaratory judgment, fees on fees, and an order “for

further proceedings with respect to Lupin’s counterclaim for breach of contract.”52

Trial was held on November 16.53

         Judgment is entered in favor of Plaintiffs on their Counts I and III and on

Lupin’s counterclaim Count II: the IAs have not terminated, and Lupin assumed

Symbiomix’s obligations under the IAs. I do not reach Plaintiffs’ alternative Counts

II and IV.

         Even though this matter went to trial, the parties still have work to do. Lupin

disputes whether some, or perhaps even all, of Plaintiffs’ invoiced expenses should

be covered under the IAs.54 The parties did not equip the Court to resolve this issue,

and in fact Lupin sought further proceedings to address it, which Plaintiffs did not

oppose at trial. This letter answers what it can, and leaves the rest for another day.55

52
     DAB 32–33.
53
     See Tr.
54
  DAB 11–12 (arguing “there is growing evidence that some or all of the conduct in the
New Jersey Action is not a ‘Covered Event’”); id. at 13 (“Lupin has never disputed that the
non-par[t]y subpoenas issued in the New Jersey Action trigger Plaintiffs’ right to
advancement.”); PRB 4 (reading Lupin to concede “that the New Jersey Action at least in
part presents a Covered Event”).
55
  Litigants reading this letter in the future should not adopt Lupin’s unilateral bifurcation
as a model for how to proceed. The Court held a trial in this action; that trial should have
addressed any dispute over whether Plaintiffs’ invoices to date should be covered. The
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       II.    ANALYSIS

       A gating issue in this action asks whether the IAs’ advancement rights and

obligations terminated when the Manager Plaintiffs ceased serving as managers of

Symbiomix, and the extent to which Lupin assumed any Symbiomix indemnification

obligations to Plaintiffs.    In so many words, the parties dispute whether any

advancement right exists today, given the Manager Plaintiffs’ intervening departure

from the Board and the intervening OAA.

       Plaintiffs bear the burden of demonstrating the existence of a contractual

advancement right.56         While “Delaware policy favors indemnification and

advancement,”57 “[t]he public policy in favor of advancement rights . . . does not

parties in this action are encouraged to resolve that issue without drawing on additional
judicial resources.
56
  VonFeldt v. Stifel Fin. Corp., 714 A.2d 79, 82, 86–87 (Del. 1998) (affirming the Court of
Chancery’s holding that the plaintiff “failed to prove the existence of an indemnification
agreement” and so failed to establish a contractual right to advancement of his litigation
expenses in the two pending actions); Lagrone v. Am. Mortell Corp., 2008 WL 4152677, at
*1, 6 (Del. Super. Sept. 4, 2008) (holding the plaintiffs had the burden of establishing a
valid indemnification agreement existed, then concluding they failed to meet that burden
because the party seeking indemnification relied upon a contract to which it was not a party
and sought to impose indemnification obligations against defendants with whom it
“maintained no contractual relationship”).
 Blankenship v. Alpha Appalachia Hldgs. Inc., 2015 WL 3408255, at *18 n.147 (Del. Ch.
57

May 28, 2015) (quoting Miller v. Palladium Indus., Inc., 2012 WL 6740254, at *3 (Del.
Ch. Dec. 31, 2012)).
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trump basic principles of contract interpretation.”58 When determining whether an

advancement right or obligation exists, “I give priority to the intention of the

parties,” and “start by looking to the four corners of the contract to conclude whether

the intent of the parties can be determined from its express language.”59 “When the

contract      is   clear   and    unambiguous,      [I]   will   give     effect   to   the

plain-meaning of the contract’s terms and provisions”60 with the aid of interpretive

canons.61      I must “lean in favor of a construction which will render every word

operative, rather than one which may make some idle and nugatory.”62 And, any

ambiguities will be resolved in favor of indemnification and advancement.63

58
     Majkowski v. Am. Imaging Mgmt. Servs., LLC, 913 A.2d 572, 592–93 (Del. Ch. 2006).
59
     Paul v. Deloitte & Touche, LLP, 974 A.2d 140, 145 (Del. 2009).
60
     Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159–60 (Del. 2010).
61
   Bouchard v. Braidy Indus., 2020 WL 2036601, at *9 (Del. Ch. Apr. 28, 2020) (“[T]he
court evaluates the relevant provision’s semantics, syntax, and context, aided by
interpretive canons.”).
62
  Osborn, 991 A.2d at 1159 (“We will read a contract as a whole, and we will give each
provision and term effect, so as not to render any part of the contract mere surplusage. We
will not read a contract to render a provision or term ‘meaningless or illusory.’”); see
Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts
[hereinafter “Reading Law”] 174 (2012) (quoting Thomas M. Cooley, A Treatise on the
Constitutional Limitations Which Rest upon the Legislative Power of the States of the
American Union 58 (1868)).
63
  Blankenship, 2015 WL 3408255, at *17, *18 n.147 (quoting Miller v. Palladium Indus.,
Inc., 2012 WL 6740254, at *3 (Del. Ch. Dec. 31, 2012)).
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                A.     The IAs Did Not Terminate When The Manager Plaintiffs
                       Left The Board.

          Whether the IAs’ obligations continued after the Manager Plaintiffs left the

Board on October 11, 2017, is sourced in and resolved by the IAs’ plain text. The

IAs are full of indicia that they offer advancement to the Manager Plaintiffs and

OrbiMed even if they had not yet become, or were no longer, managers or a

stockholder, respectively. The IAs recite that they were drafted with the intention of

providing advancement and indemnification “regardless . . . of . . . any change in . . .

the composition of its Board of Managers.”64 They cover events related to not just

OrbiMed’s status as an actual stockholder, but also as a potential stockholder.65

They cover proceedings that were pending before the IAs were executed.66 And they

define “Covered Event” to mean “any event related to . . . the fact that Indemnitee is

or was a manager.”67

64
     IA at 1.
65
  Id. § 1(a)(ii) (defining “Covered Event” to include any event related to “Indemnitee’s
position as a[] . . . potential stockholder in or lender to the Company”); id. § 4 (“[T]he
Appointing Stockholder will be entitled to indemnification hereunder for Expenses to the
same extent as Indemnitee.”).
66
  Id. § 1(g) (defining “Proceeding” to mean any threatened, pending or completed claim,
action, suit, arbitration, alternate dispute resolution process, investigation, administrative
hearing, appeal, or any other proceeding . . . whether formal or informal, including . . . a
Proceeding pending on or before the date of th[e] Agreement”).
67
     Id. § 1(a) (emphasis added).
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         The parties’ dispute is sourced in Section 14. It reads in relevant part:

         All agreements and obligations of the Company contained herein shall
         continue during the period Indemnitee is a manager of the Company . . .
         and shall continue thereafter so long as Indemnitee shall be subject to
         any current or future Proceeding or any proceeding commenced under
         § 10 . . . . This Agreement shall continue in effect regardless of whether
         Indemnitee continues to serve as an officer or manager of the Company
         . . . .68

The parties dispute whether the Manager Plaintiffs were subject to a Proceeding on

October 11, 2017, when they left the Board, and whether the Company’s obligations

under the IAs continued after that date.

         Section 14 continues the IAs’ advancement obligations so long as Gupta or

Veitinger (individually, the “Indemnitee”) is “subject to any . . . future

Proceeding.”69 The IA defines “Proceeding” to mean “any threatened, pending or

completed claim, action, suit, arbitration, alternate dispute resolution process,

investigation, administrative hearing, appeal, or any other proceeding, whether . . .

formal or informal.”70 Thus, the Company’s IA obligations continue so long as the

Indemnitee is subject to any future threatened legal action. A “threat” is “an

68
     Id. § 14 (emphasis added).
69
     Id. (emphasis added).
70
     Id. § 1(g) (emphasis added).
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indication of an approaching menace; or the suggestion of an impending

detriment.”71

          Gregg’s books and records demand threatened a future Proceeding. Just

weeks before the OAA’s October 11 closing, on September 21, Gregg demanded to

inspect Symbiomix books and records.72 His demand sought agreements “for the

contemplated Lupin . . . change of control transaction,” “the most recent and accurate

version of the Omnibus Acquisition Agreement,” and “severance agreements with

employees, and promised cash bonuses to Members” for the “reasonable purpose”

of investigating “potential mismanagement.”73 Two weeks after the OAA closed,

Gregg filed his complaint in the New Jersey Action.74 In the context of a laches

defense against a stockholder claim, this Court has recognized that seeking books

and records demand is tantamount to vigilantly pursuing that claim.75 A books and

71
     Threat, Black’s Law Dictionary (11th ed. 2019).
72
     JX 5.
73
     Id. at LUP_00011141.
74
     Joint Stip. ¶ 7.
75
  Lebanon Cnty. Empls.’ Ret. Fund v. Collis, 287 A.3d 1160, 1179 (Del. Ch. 2022) (“When
applying the separate accrual approach within a laches framework, the court looks to when
the plaintiff began vigilantly pursuing its claims. For purposes of a derivative action, that
can be when a plaintiff begins seeking books and records.”).
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records demand stating an intention to investigate mismanagement is an indication

of an approaching suit.76

         As Lupin puts it, “Lupin has never disputed that the non-par[t]y subpoenas

issued in the New Jersey Action trigger Plaintiffs’ right to advancement.”77 Gregg’s

books and records demand was an indication or suggestion of that approaching

action.78 It threatened a future Proceeding that would take the form of the New

Jersey Action. Because the Manager Plaintiffs were subject to a Proceeding in the

form of a future threatened legal action when they left the Board, the IAs’ obligations

did not terminate at that time. From there, the IAs are clear that they “continue in

effect regardless of whether Indemnitee continues to serve as an officer or manager

of the Company.”79

76
   See Amalgamated Bank v. Yahoo! Inc., 132 A.3d 752, 799 (Del. Ch. 2016) (describing a
Section 220 request as a “pre-suit investigation”), abrogated on other grounds, 214 A.3d
933 (Del. 2019); White v. Panic, 783 A.2d 543, 549–50, 557 (Del. 2001) (discussing the
Court of Chancery’s criticism of plaintiff’s books and records “pre-suit investigation”); Wei
v. Zoox, Inc., 268 A.3d 1207, 1216 (Del. Ch. 2022) (referring to the Section 220 “purpose
. . . to investigate potential claims for breach of fiduciary duty” as “the ‘pre-suit
investigation’”).
77
     DAB 13.
78
  Ont. Provincial Council of Carpenters’ Pension Tr. Fund v. Walton, 294 A.3d 65, 70 (Del.
Ch. 2023) (identifying that plaintiff began pursuing its claims not when the plaintiff filed
suit but “when a plaintiff has engaged in diligent efforts to obtain books and records” and
tying the lookback date for the case to the books and records demand); see IA § 14.
79
     IA § 14.
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                  B.   OrbiMed’s IA Rights Continued.

          The parties also dispute whether OrbiMed’s rights under the IAs terminated

when the Manager Plaintiffs left the Board. OrbiMed, referred to in the IAs as the

“Appointing Stockholder,” is entitled to indemnification and advancement until a

Manager Plaintiff “ceases to serve, or otherwise be involved in, any formal capacity,

position or circumstance which may give rise, in whole or in part, to a Covered

Event.”80 The parties dispute the construction of this phrase. Lupin reads “formal”

to modify not only “position” and “circumstance,” but also “capacity,” and

concludes that because the Manager Plaintiffs no longer served on Symbiomix’s

Board after October 11, they lacked any formal role with Symbiomix as necessary

to maintain OrbiMed’s rights.        Plaintiffs argue that “formal” modifies only

“capacity,” and that the Manager Plaintiffs still were in a “position or circumstance,”

which need not be “formal,” that maintained OrbiMed’s advancement rights.81

          If there were any ambiguity as to whether “formal” modifies “position or

circumstance,” the phrase would need to be interpreted in favor of advancement.82

80
     Id. § 5.
81
     Tr. 12–13.
82
   Miller v. Palladium Indus., Inc., 2012 WL 6740254, at *3 (Del. Ch. Dec. 31, 2012)
(explaining Delaware’s policy favoring advancement “supports the approach resolving
ambiguity in favor of indemnification and advancement”).
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But there is no ambiguity: “formal” only modifies “capacity.” The IA does not

define the disputed terms, but the presumption of consistent usage “provides that

‘absent anything indicating a contrary intent, the same [word] should be given the

same meaning when it is used in different places in the same contract.’”83

           The IAs’ other uses of the words “capacity,” “position,” and “circumstance”

indicate “formal” could only modify “capacity.”84 Each time “capacity” is used, it

refers to the indemnitee’s service as “a manager, officer, employee, agent and/or

fiduciary of the Company.”85 “Position” is used in relation to “Indemnitee’s position

as an actual or potential stockholder” of Symbiomix.86 And “circumstance” is used

to refer to “facts and circumstances” at the heart of a Covered Event.87 A “formal

capacity” makes sense. A formal “position as an actual or potential stockholder”

83
  Tex. Pac. Land Corp. v. Horizon Kinetics LLC, 306 A.3d 530, 564 n.34 (quoting JJS,
Ltd. v. Steelpoint CP Hldgs., LLC, 2019 WL 5092896, at *6 (Del. Ch. Oct. 11, 2019));
accord 11 Richard A. Lord, Williston on Contracts § 32:6 (4th ed. 2023) (“Generally, a
word used by the parties in one sense will be given the same meaning throughout the
contract in the absence of countervailing reasons.”); Reading Law 170–73.
84
  “Capacity” appears three times in the IA: in Section 1(a), in Section 4, and in Section
14; “position” appears twice in the IA: in Section 1(a) and in Section 4; and “circumstance”
appears three times in the IA: twice in Section 1(a), and in Section 4.
85
     IA §§ 1(a), 14.
86
     Id. § 1(a).
87
     Id.
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does not make sense. Neither does “facts or [formal] circumstances.”88 And the

additional terms “position” and “facts and circumstances” must mean something

other than “capacity,” and offer a differentiated meaning if they are not themselves

“formal.”89 The only reasonable interpretation of Section 4 reads “formal” to modify

“capacity,” but not “position” or “facts or circumstances.”

         Thus, the Appointing Stockholder’s IA rights survived the Manager Plaintiffs’

separation from their formal roles, so long as they were still involved in facts or

circumstances that form the basis of claims that have been, could have been, or could

be brought against them in a Proceeding.90 Gregg’s September 21, 2017 books and

records demand stating an intention to investigate mismanagement, or to sue, 91 and

88
   Id. §§ 1(a), 4; see Weinberg v. Waystar, Inc., 294 A.3d 1039, 1044 (Del. 2023) (“Delaware
adheres to the ‘objective’ theory of contracts, i.e. a contract’s construction should be that
which would be understood by an objective, reasonable third party . . . . [I]n giving sensible
life to a real-world contract, courts must read the specific provisions of the contract in light
of the entire contract . . . . [And] [a]n interpretation is unreasonable if it ‘produces an
absurd result.’”).
89
   W. Willow-Bay Ct., LLC v. Robino-Bay Ct. Plaza, LLC, 2007 WL 3317551, at *11 (Del.
Ch. Nov. 2, 2007) (“Delaware courts . . . prefer to interpret contracts to give effect to each
term rather than to construe them in a way that renders some terms repetitive or mere
surplusage.”); 16 Richard A. Lord, Williston on Contracts § 49:14 (4th ed. 2023) (“Where
an insurance policy contains both the words ‘sudden’ and ‘unexpected,’ the word ‘sudden’
may not be interpreted to mean ‘unexpected.’”).
90
     IA §§ 1(a), 4.
91
     See JX 5 ¶¶ 13–17 (indicating Gregg’s discontent with the Symbiomix sale to Lupin).
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his October 24 filing of the New Jersey Action questioning various Board decisions

leading up to and including the OAA,92 present circumstances that could give rise,

in whole or in part, to a Covered Event. OrbiMed’s IA rights continued after the

Manager Plaintiffs left the Board.

                 C.   Lupin Assumed Symbiomix’s IA Obligations.

         Having concluded that the IAs still provide Plaintiffs with advancement

rights, I turn to whether Lupin is obligated to fulfill those rights. The IAs were

contracts with Symbiomix, but Symbiomix was cancelled in 2019. Plaintiffs seek

advancement under the IAs from Lupin as Symbiomix’s successor.93

         “It is a general principle of contract law that only a party to a contract may be

sued for breach of that contract.”94 Even so, a party does not have to be a signatory

to a contract to become bound by it.95 For example, “third parties to an agreement

may become parties to it, and thus be bound by it, by either expressly or implicitly

92
     See JX 7.
93
  Tr. 3 (“[U]nder the general survival term, Section 14 of the [IAs], the [IAs] travel with
the assets of the business of Symbiomix. It is undisputed that Lupin took the assets and
business of Symbiomix, and thereby, as a result, inherited indemnification agreements
which bind it directly.”).
94
  Wallace ex rel. Cencom Cable Income P’rs II, Inc., L.P. v. Wood, 752 A.2d 1175, 1180
(Del. Ch. 1999).
95
     Am. Legacy Found. v. Lorillard Tobacco Co., 831 A.2 335, 343–44, 348 (Del. Ch. 2003).
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adopting the agreement.”96 In order for a nonsignatory to adopt a contract, the

contract must provide that “the original parties intended to create or permit future

contractual obligations through adoption by nonsignatories.”97 “The contract itself

. . . must contemplate that non-signatories may adopt it.”98 If the contract permits

adoption, “[t]here are no magic words to explicitly adopt a contract.”99 Express

adoption includes “when a successor adopts a contract of a predecessor as its own,”

and where a nonsignatory makes statements confirming it is bound by a contract.100

Public statements by a nonsignatory’s agent that the nonsignatory is bound by or

must comply with an agreement “reflect [the nonsignatory’s] explicit intent and

consent to be bound by the [agreement],” as does a nonsignatory’s letter

acknowledging a contractual obligation.101 And, “in addition to express adoption,

96
  Id. at 343–44 (citing Wiggins Ferry Co. v. Ohio & Miss. Ry. Co., 142 U.S. 396, 408
(1892)); Wiggins Ferry Co. v. Ohio & Miss. Ry. Co., 142 U.S. 396, 408 (1892) (holding
nonsignatory adopted contract “and made it its own”).
97
     Id. at 344.
98
     Id.
99
  In re Federal-Mogul Glob., Inc., 526 B.R. 567, 576 (D. Del. 2015) (citing Am. Legacy,
831 A.2d at 349).
100
      Am. Legacy, 831 A.2d at 348–49.
101
   Id. at 349; id. at 348–49 n.58 (citing Bronx Store Equip. Co., Inc. v. Westbury Brooklyn
Assocs., L.P., 280 A.2d 352 (N.Y. App. Div. 2001)).
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non-signatories may implicitly adopt a contract through their conduct, rather than

through words.”102

          The IAs contemplate that a nonsignatory may adopt them. They recite that

they were drafted with the intention of providing advancement and indemnification

“regardless . . . of any amendment to or revocation of the Company’s LLC Charter

and Operating Agreement or Bylaws . . . , [or] any change in the ownership of the

Company.”103 Section 14 provides the IAs’ obligations endure if another entity

succeeds Symbiomix and acquires “all or substantially all of [Symbiomix’s] business

or assets” by “purchase, merger, consolidation, or otherwise”: the “Agreement shall

be binding upon . . . the parties [to it] and their respective successors (including any

direct or indirect successor by purchase, merger, consolidation or otherwise to all or

substantially all of the business or assets of the Company).”104 This clause “defines

who is bound by the Indemnification Agreement”105 and evinces the intent that

102
      Id. at 349.
103
      IA at 1.
104
      Id. § 14.
105
   See Charney v. Am. Apparel, Inc., 2015 WL 5313769, at *9–10 (Del. Ch. Sept. 11, 2015)
(interpreting the provision “[t]his Agreement shall be binding upon and inure to the benefit
of and be enforceable by the parties hereto and their respective successors (including any
direct or indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company” to define “the universe of
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Symbiomix’s successor by purchase, merger, or otherwise would be bound by the

IAs.106

         Lupin became a successor to all or substantially all of Symbiomix’s business

or assets. When the OAA closed, Lupin bought all of Symbiomix’s equity, and

Symbiomix continued as the surviving entity with Lupin as its sole member.107

Before closing Symbiomix’s bank account, all of its funds “were deposited into an

account controlled by Lupin”; then, Lupin acquired “Symbiomix’s right, title and

interest in its patents” and trademarks.108 It is a direct successor to all or substantially

all of Symbiomix’s business or assets.

parties to be bound under the Indemnification Agreement”); Am. Legacy, 831 A.2 at 344
(referencing a contractual provision that binds “‘successors’ of the original tobacco
company signatories” and acknowledging the contract contemplated adoption by a
successor); Miramar Police Officers’ Ret. Plan v. Murdoch, 2015 WL 1593745, at *8 (Del.
Ch. Apr. 7, 2015) (interpreting the provision “[t]his Settlement shall be binding upon and
shall inure to the benefit of the parties . . . successors and assigns of all of such foregoing
persons and upon any corporation, partnership, or other entity into or with which any party
or person may merge or consolidate” to define the universe of persons to be bound by the
terms of the settlement agreement and concluding that because the provision “does not
specifically reference other obvious forms of significant corporate transactions that may
involve [the company], namely, asset transfers or spin-offs,” the plain terms suggested the
parties “did not intend for that contract to be binding on the recipient of assets in an asset
transfer”).
106
      IA § 14.
107
      OAA Recitals; id. § 1.3; Joint Stip. ¶ 16.
108
      Joint Stip. ¶¶ 14–18.
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      Lupin implicitly and explicitly adopted the IAs. Symbiomix provided the IAs

to Lupin before the OAA was signed.109               In OAA Section 5.4(a), Lupin

acknowledged indemnification agreements with Symbiomix’s present and former

managers.110 Through June 2023, after the OAA closed and after Lupin caused

Symbiomix to “be liquidated and dissolved,” Lupin continued to acknowledge that

Plaintiffs held rights under the IAs, and even agreed to indemnify Plaintiffs

thereunder.111    Lupin     specifically    acknowledged       OrbiMed’s       continued

indemnification and advancement rights, which could only be under the IAs and not

109
    See OAA § 2.24 (Symbiomix representing to Lupin as Parent “there are no . . . material
obligations of the Company to officers, managers, Company Members (including any
affiliates) or employees of the Company . . . other than . . . (e) the Indemnification
Agreements”); id. § 5.4(a) (acknowledging indemnification and advancement rights “under
the Company’s bylaws (as in effect as of the date of this Agreement) and/or as provided in
indemnification agreements between the Company and such M&O Indemnified Persons
(as in effect as of the date of this Agreement) made available by the Company to Parent
prior to the date of this Agreement (the ‘Indemnification Agreements’)”).
110
   Id. § 5.4(a); Tr. 74 (“[I]t acknowledges the existence of indemnification agreements,
which it goes on to define as the ‘Indemnification Agreements,’ which we acknowledge
are Joint Exhibits 1 and 2 for Gupta and Veitinger.”).
  Joint Stip. ¶¶ 15–18, 31; JX 41 at LUP_00004688–89; JX 90; JX 93 at LUP_00002893;
111

JX 94; JX 98.
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the OAA.112 Lupin also implicitly adopted the IAs by requiring Plaintiffs to submit

undertakings pursuant to those agreements.113

      Thus, the IAs’ contemplated adoption of Symbiomix’s obligations by a

nonsignatory successor, and Lupin explicitly and implicitly assumed those

obligations.

               D.   The OAA Does Not Replace The IAs.

      Lupin argues it did not assume Symbiomix’s full advancement obligations in

the IAs, but rather extended them only for six years, relying on Sections 5.4(a) and

5.4(c) of the OAA. Those provisions read:

      (a) From and after the Effective Time until the sixth anniversary of
      the date on which the Effective Time occurs, Parent shall and shall
      cause Surviving Entity to (i) indemnify and hold harmless each present
      and former manager or officer of the Company (collectively, the “M&O
      Indemnified Persons”) against any and all Damages incurred or
      suffered by any of the M&O Indemnified Persons in connection with
      any action taken in such individual’s capacity as an officer or manager
      of the Company, whether civil, criminal, administrative or
      investigative, arising out of or pertaining to matters existing or
      occurring at or prior to the Effective Time, whether asserted or claimed

112
   See JX 78; JX 92 at LUP_00002984–88; JX 93 at LUP_00002896; JX 94; JX 98; Joint
Stip. ¶ 31.
113
   See Am. Legacy, 831 A.2d at 349 (“[I]f the corporation accepts the contract’s benefits,
the corporation will be required to perform its obligations.” (quoting 1A Carol A. Jones
and Britta M. Larsen, Fletcher Cyclopedia of the Law of Private Corporations § 207 (perm.
ed., rev. vol. 2002)); JX 43A at LUP_0001119–20; JX 90; JX 89; JX 91; JX 93 at
LUP_00002893, 96.
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          prior to, at or after the Effective Time, to the fullest extent permitted
          under applicable Law and under the Company’s bylaws (as in effect as
          of the date of this Agreement) and/or as provided in indemnification
          agreements between the Company and such M&O Indemnified Persons
          ( as in effect as of the date of this Agreement) made available by the
          Company to Parent prior to the date of this Agreement (the
          “Indemnification Agreements”), and (ii) advance expenses (including
          attorneys’ fees) as incurred by any M&O Indemnified Persons in
          connection with any matters for which such M&O Indemnified Persons
          is entitled to indemnification from the Surviving Entity pursuant to this
          Section 5.4(a) to the fullest extent permitted under applicable Law;
          provided, however, that the M&O Indemnified Persons to whom
          expenses are advanced provides an undertaking to repay such advances
          if it is ultimately and finally determined by a court of competent
          jurisdiction (and all rights of appeal have lapsed) that such M&O
          Indemnified Persons is not entitled to indemnification under applicable
          Law, the Company LLC Agreement, any Indemnification Agreement,
          or pursuant to this Section 5.4(a).114

          (c) In the event that Parent, the Company or the Surviving Entity or
          any of their respective successors or assigns (i) consolidates with or
          merges into any other Person and shall not be the continuing or
          Surviving Entity or Entity of such consolidation or merger or (ii)
          transfers all or substantially all of its properties and assets to any
          Person, then, and in each such case, Parent shall ensure that the
          successors and assigns of Parent, the Company or the Surviving Entity,
          as the case may be, shall assume the obligations set forth in this Section
          5.4.115

Lupin contends that these sections extended Symbiomix’s indemnification

obligations for six years after the OAA’s Effective Time—until October 11, 2023.

114
      OAA § 5.4(a).
115
      Id. § 5.4(c).
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          But Lupin’s indemnification and advancement obligations in OAA Section 5.4

are in addition to, not a replacement for, the obligations it assumed in the IAs. Lupin

promised to provide “additional indemnity” for Symbiomix’s managers “from and

after [October 11, 2017] until the sixth anniversary of [October 11, 2017].”116

Section 5.4 makes plain it is “in addition to, and not in substitution for, any other

rights to indemnification or contribution that any such M&O Indemnified Person

may have by contract or otherwise.”117 It offers indemnification “to the fullest extent

permitted under applicable Law and under [Lupin’s] bylaws and/or as provided in

indemnification agreements” with the Manager Plaintiffs.118

          Further, Section 19 of the IAs requires “supplements, modifications,

terminations, or amendment” of the IAs to be “executed in writing by both

parties,”119 i.e., the Manager Plaintiffs and Symbiomix.120 The Manager Plaintiffs

116
   OAA § 5.4(a); Tr. 96 (Lupin’s deal counsel testifying Section 5.4(a)’s six-year term
“means that . . . the sixth anniversary of the closing date, which I think would be October
11, 2023, is the end date. And after that, there’s no additional indemnity required for
damages” (emphasis added)).
117
   Id. § 5.4(d). Lupin’s argument that this provision does not explicitly name the IAs, and
therefore cannot encompass them, ignores the expansive categorical language that plainly
encompasses the IAs.
118
      Id. § 5.4(a) (emphasis added).
119
      IA § 19.
120
      Id. at signature page.
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are not signatories to the OAA.121 The parties to the OAA could not restrict the

Manager Plaintiffs’ vested advancement rights under the IAs.122 And nothing in

Section 5.4 speaks to OrbiMed’s indemnification or advancement rights; OrbiMed

was never a Symbiomix “manager or officer.”123

         And so, Section 5.4(a) must be read as providing a new source of six years of

indemnification for Symbiomix’s present and former managers.124 The OAA is in

addition to, not a replacement for, the IAs’ indemnification and advancement rights.

Section 5.4(c) compels Lupin to ensure its own successors and assigns assume that

new obligation.

         Reading the IAs and the OAA together reveals the OAA fills a potential gap

in the Manager Plaintiffs’ rights under the IAs. As this letter has explained, the IAs

only offered indemnification so long as the Manager Plaintiffs served as managers

121
      OAA at signature page.
122
    See Javice v. JPMorgan Chase Bank, N.A., 2023 WL 4561017, at *2 (Del. Ch.
July 13, 2023) (“[C]ontracting parties may not unilaterally eliminate vested rights of third
parties.”).
123
   OAA § 5.4(a); Field Intell. Inc. v. Xylem Dewatering Sol. Inc., 49 F.4th 351, 358 (3d
Cir. 2022) (“A later contract does not supersede an earlier one unless both concern the same
subject matter’ and the later agreement is so ‘inconsistent’ with the former ‘that the two
cannot stand together.”) (internal quotation marks removed).
124
      OAA § 5.4(a).
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of Symbiomix or were “subject to any current or future Proceeding.”125 If the

Manager Plaintiffs ceased serving and were not subject to a current or future

Proceeding at that time, their IA rights would terminate. If the Manager Plaintiffs

later became subject to a Covered Event under the IA, they would not have any

advancement or indemnification and advancement rights. On the occasion of the

Manager Plaintiffs leaving the Symbiomix Board, the OAA provided them with six

years of coverage without that risk of termination.

         By its own terms, the OAA’s indemnification and advancement rights are in

addition to, not in substitution of, the IAs’ rights.

                 E.   Plaintiffs Are Entitled To Fees On Fees.

         Because Plaintiffs established they have advancement rights under the IAs,

they are entitled to fees on fees. “[W]ithout an award of attorneys’ fees for the

indemnification suit itself, indemnification would be incomplete.”126 This is so for

advancement cases as well.127 Although parties may contract around the “fees for

125
      IA § 14.
126
    Stifel Fin. Corp. v. Cochran, 809 A.2d 555, 561 (Del. 2002) (holding “indemnification
for expenses incurred in successfully prosecuting an indemnification suit are . . . authorized
by law”).
  Reddy v. Elec. Data Sys. Corp., 2002 WL 1358761, at *9 (Del. Ch. June 18, 2002), aff’d,
127

820 A.2d 371 (Del. 2003) (ORDER).
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fees” requirement, the IAs reinforce it: it provides that if an indemnitee “seeks a

judicial adjudication of [his] rights under” the IA, the Company shall advance fees

on fees for that adjudication.128 Lupin argues that because it paid Plaintiffs’ expenses

subject to the OAA’s six-year restriction, Plaintiffs did not need to continue this

enforcement action. But Lupin paid only after Plaintiffs filed suit, resisted its

obligation to pay the costs of enforcement before it paid under the OAA, and resisted

its obligations under the IAs, which are still and separately enforceable. And the

New Jersey Action is still ongoing, and Plaintiffs face additional expenses. Plaintiffs

are entitled to fees on fees.

                F.       The Path Forward

         The parties appear to dispute the extent to which the New Jersey Action is a

Covered Event. They also have not engaged on calculating interest, or on how to

parse fees on fees for alternative counts. The parties shall stipulate to a procedure

for presenting any disputes to the Court regarding payments already made and

regarding interest, as well as to a Fitracks order for implementing Plaintiffs’ right to

advancement going forward.

128
      IA §§ 10(d), 12.
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      III.   CONCLUSION

      Judgment shall be entered for Plaintiffs on their Counts I and III, and on

Lupin’s counterclaim Count II. The parties shall submit the requested proposed

orders for the remainder of the case.

                                                     Sincerely,

                                                     /s/ Morgan T. Zurn

                                                     Vice Chancellor

MTZ/ms

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