SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): November 19, 1999
AMERICAN HOME PRODUCTS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-1225 13-2526821
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
Five Giralda Farms, Madison, New Jersey 07940
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 973-660-5000
<PAGE>
Item 5. Other Events
On November 19, 1999, pursuant to the provisions of the Memorandum
of Understanding Concerning Settlement of Diet Drug Litigation, dated
October 7, 1999, a copy of which was filed as Exhibit 99.2 to American Home
Products Corporation's ("AHP") Form 8-K filed with the Securities and
Exchange Commission on October 8, 1999, a nationwide class action
settlement agreement (the "Settlement Agreement") was entered into to
resolve litigation against AHP brought by people who used REDUX
(dexfenfluramine) or PONDIMIN (fenfluramine). Settlement class members
have certain rights to opt-out of the Settlement Agreement pursuant to
its terms. Attached as Exhibit 99.1 is the press release announcing the
Settlement Agreement and the commencement of a 120-day public notice period
to reach settlement class members. Attached as Exhibit 99.2 is the
Settlement Agreement, dated November 19, 1999, which definitively sets
forth the terms of settlement including settlement class members'
opt-out rights and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(c) Exhibits
(99.1) Press Release announcing Settlement Agreement and
public notice period, dated November 23, 1999
(99.2) Settlement Agreement, dated November 19, 1999
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<PAGE>
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
AMERICAN HOME PRODUCTS CORPORATION
By: /s/ Gerald A. Jibilian
------------------------------
Name: Gerald A. Jibilian
Title: Vice President
Dated: November 24, 1999
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EXHIBIT INDEX
(99.1) Press Release announcing Settlement Agreement and
public notice period, dated November 23, 1999
(99.2) Settlement Agreement, dated November 18, 1999
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American Home Products Corporation
Diet Drug Settlement Receives Preliminary Approval
Madison, N.J., November 23, 1999 -- American Home Products Corporation (NYSE:
AHP) said today that Judge Louis Bechtle of the U.S. District Court in
Philadelphia has given preliminary approval to a national legal settlement
between the Company and individuals who took the diet drugs Redux
(dexfenfluramine) and Pondimin (fenfluramine). The class-action settlement is
open to all individuals in the U.S. who used the drugs regardless of whether
they have lawsuits pending against the Company.
AHP said a 120-day public notice period will begin December 1, 1999, and end
March 30, 2000. A variety of media will be used to reach the settlement class
members. Following the notice period, Judge Bechtle will hold a hearing on
the fairness of the settlement during the week of May 1, 2000.
After the commencement of the notice period on Dec. 1, individuals interested
in further information should call 1-800-386-2070 or go online to
www.settlementdietdrugs.com.
American Home Products is one of the world's largest research-based
pharmaceutical and health care products companies. It is a leader in the
discovery, development, manufacturing and marketing of prescription drugs and
over-the-counter medications. It is also a global leader in vaccines,
biotechnology, agricultural products and animal health care.
CONTACT: Media: Lowell B. Weiner (973) 660-5013. Investor: Thomas G. Cavanagh
(973) 660-5706
# # # # #
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
___________________________________
IN RE DIET DRUGS )
(PHENTERMINE/FENFLURAMINE/ ) MDL NO. 1203
DEXFENFLURAMINE) PRODUCTS )
LIABILITY LITIGATION )
___________________________________ )
)
THIS DOCUMENT RELATES TO: )
ALL ACTIONS )
___________________________________ )
)
SHEILA BROWN, et al. v. AMERICAN )
HOME PRODUCTS CORPORATION ) CIVIL ACTION NO. 99-20593
___________________________________ )
NATIONWIDE CLASS ACTION
SETTLEMENT AGREEMENT WITH
AMERICAN HOME PRODUCTS CORPORATION
Dated: November 18, 1999
<PAGE>
TABLE OF CONTENTS
Page No.
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . -7-
II. SCOPE OF THE SETTLEMENT CLASS . . . . . . . . . . . . . . . . -21-
III. AHP'S PAYMENT OBLIGATIONS . . . . . . . . . . . . . . . . . . -24-
A. Establishment of Settlement Trust . . . . . . . . . . . . -24-
B. Fund A . . . . . . . . . . . . . . . . . . . . . . . . . -25-
C. Fund B . . . . . . . . . . . . . . . . . . . . . . . . . -26-
D. Other Provisions . . . . . . . . . . . . . . . . . . . . -32-
E. Security Arrangements . . . . . . . . . . . . . . . . . . -32-
IV. CLASS MEMBER RIGHTS AND BENEFITS . . . . . . . . . . . . . . . -38-
A. Screening/Refund/Medical Services/Cash/Research Benefits
Payable from Fund A . . . . . . . . . . . . . . . . . . -38-
1. Benefits for Class Members who ingested Pondimin (Registered
Trademark) and/or Redux (Trademark) for 61 or more days. . -38-
2. Benefits for Class Members who ingested Pondimin (Registered
Trademark) and/or Redux (Trademark) for 60 days or less: . -39-
3. Benefits for All Class Members . . . . . . . . . . . . . -41-
4. Terms of medical screening program and provision of additional
medical services. . . . . . . . . . . . . . . . . . . . -42-
B. Compensation Benefits Payable from Fund B . . . . . . . . -43-
1. Eligible Class Members . . . . . . . . . . . . . . . . . -43-
2. Benefits Available . . . . . . . . . . . . . . . . . . . -44-
C. Payment Provisions . . . . . . . . . . . . . . . . . . . -60-
D. Opt-Out Rights . . . . . . . . . . . . . . . . . . . . . -62-
1. Derivative Claimants . . . . . . . . . . . . . . . . . . -62-
2. Initial Opt-Out . . . . . . . . . . . . . . . . . . . . . -62-
3. Intermediate Opt-Out . . . . . . . . . . . . . . . . . . -63-
4. Back-End Opt-Out . . . . . . . . . . . . . . . . . . . . -66-
V. ACCELERATED IMPLEMENTATION OPTION . . . . . . . . . . . . . . -69-
VI. CLAIMS ADMINISTRATION . . . . . . . . . . . . . . . . . . . . -75-
<PAGE>
A. The Interim Escrow Agent, Interim Claims Administrator(s),
Claims Administrator(s) and Trustees . . . . . . . . -75-
B. Notice . . . . . . . . . . . . . . . . . . . . . . . . -87-
C. Claims Administration and Criteria for Benefits
Determinations . . . . . . . . . . . . . . . . . . . . -91-
1. Echocardiogram Criteria . . . . . . . . . . . . . . . . -91-
2. Claims Information . . . . . . . . . . . . . . . . . . -92-
3. General Claims Processing Procedures and the Registry . -97-
4. Administration of Matrix Compensation Benefit Claims . -105-
D. Procedure for Recognition of Credits . . . . . . . . . -113-
E. Audits of Claims by Trustees and/or Claims
Administrator(s) . . . . . . . . . . . . . . . . . . . -117-
AHP-Initiated Audits of Claims . . . . . . . . . . . . -120-
VII. AHP RIGHTS AND BENEFITS . . . . . . . . . . . . . . . . . . -123-
A. Credits . . . . . . . . . . . . . . . . . . . . . . . . -123-
B. Effect on Claims . . . . . . . . . . . . . . . . . . . -126-
C. Protection of AHP From Claims by Non-Settling
Defendants . . . . . . . . . . . . . . . . . . . . . . -128-
D. Protection of AHP From Possible Subrogation Claims . . -135-
E. Walkaway Rights . . . . . . . . . . . . . . . . . . . . -136-
F. Limitation On Financial Obligations . . . . . . . . . . -137-
VIII. SETTLEMENT IMPLEMENTATION . . . . . . . . . . . . . . . . . -137-
A. General . . . . . . . . . . . . . . . . . . . . . . . . -137-
B. Jurisdiction . . . . . . . . . . . . . . . . . . . . . -137-
C. Approval Process and Notice Provisions . . . . . . . . -138-
D. Conditions . . . . . . . . . . . . . . . . . . . . . . -140-
E. Attorneys' Fees . . . . . . . . . . . . . . . . . . . . -142-
F. Other Provisions . . . . . . . . . . . . . . . . . . . -145-
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<PAGE>
TABLE OF EXHIBITS
1. Trust Agreement
2. Fund A Legal Fee Escrow Account Agreement
3. Security Fund and Escrow Agreement
4. Articles of Incorporation and Bylaws of Medical Research and
Education Fund
5. Summary Notice to Pharmacists
6. ORANGE FORM (Initial Opt-Out Notice Form)
7. ORANGE FORM #2 (Intermediate Opt-Out Notice Form)
8. ORANGE FORM #3 (Back-End Opt-Out Notice Form)
9. PINK FORM (for Election of the Accelerated Implementation Option)
10. Interim Escrow Agreement
11. Proposed Preliminary Approval Order
12. A Class Member's Guide to Settlement Benefits
13. Official Court Notice
14. Matrix Compensation Benefits Guide for Physicians, Attorneys and
Class Members
15. Publication Notice
16. Plan of Media Notice
17. Script of Television Notice
18. Summary Notice to Physicians
19. WHITE FORM (for reimbursement of Echocardiogram expenses incurred
independent of the Screening Program)
20. GRAY FORM (for qualifications of Board-Certified Cardiologist and
Echocardiogram results)
21. BLUE FORM (for registration of Settlement Benefits)
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22. GREEN FORM (for Matrix Compensation Benefits)
23. BROWN FORM (for compassionate and humanitarian and true financial
hardship Echocardiograms)
24. Notice of Appeal of Determination of Trustees and/or Claims
Administrator(s)
25. RED FORM #1 (Credits for Initial and Back-End Opt-Out)
26. RED FORM #2 (Credits for Intermediate Opt-Out)
27. Class Representative's release and covenant not to sue
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<PAGE>
NATIONWIDE CLASS ACTION SETTLEMENT
AGREEMENT WITH AMERICAN HOME PRODUCTS
CORPORATION
PREAMBLE
American Home Products Corporation ("AHP") and the undersigned
representatives of the purported class and subclasses defined herein (the
"Class Representatives") (together, the "Parties") hereby agree to propose
a nationwide Class Action Settlement which would resolve, on the terms set
forth in this Settlement Agreement, "Settled Claims" against AHP and other
"Released Parties" arising from the marketing, sale, distribution and use
of the diet drugs Pondimin (Registered Trademark) and Redux (Trademark),
pending in various courts, including but not limited to claims which have
been made in the actions that have been transferred for coordinated or
consolidated pretrial proceedings to the United States District Court for
the Eastern District of Pennsylvania under Docket No. MDL 1203 (the
"Federal District Court"), in Vadino et al. v. AHP (Docket No. MID-L-425-
98), and in the numerous other State Courts around the United States. The
Parties to this Agreement are aware of the following certified or
conditionally certified nationwide or statewide classes involving Pondimin
(Registered Trademark) and Redux (Trademark) as of October 7, 1999:
United States District Court for the Eastern District of Pennsylvania,
Jeffers v. American Home Products Corp., C.A. No. 98-CV-20626 (E.D. Pa.)
(In re Diet Drug Products Liability Litigation, MDL 1203) (nationwide
medical monitoring class); West Virginia (Burch et al. v. AHP, Civil
Action No. 97-C-204(1-11)) (statewide personal injury and medical
monitoring class); Illinois (Rhyne v. AHP, 98 CH 4099) (statewide refund
and monitoring reimbursement class); New Jersey (Vadino et al. v. AHP,
Docket No. MID-L-425-98) (statewide Unfair and Deceptive Acts and
Practices and medical monitoring class); New York (New York Diet Drug
Litigation, Index No. 700000/98) (statewide medical monitoring class);
Pennsylvania (Pennsylvania Diet Drug Litigation, Master Docket No. 9709-
3162 C.C.P. Phila.) (statewide medical monitoring class); Texas (Earthman
v. AHP, No. 97-10-03970 CV, Dist. Ct. Montgomery Co. Texas) (statewide
medical monitoring class); and Washington (St. John v. AHP, 97-2-06368-4)
(statewide medical monitoring class).
This Settlement Agreement shall not be construed as evidence of
or as an admission by AHP of any liability or wrongdoing whatsoever or as
an admission by the Class Representatives or members of the Settlement
Class as defined herein ("Class Members") of any lack of merit in their
claims.
Accordingly, AHP and the Class Representatives hereby agree,
subject to Final Judicial Approval (except as to the Accelerated
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<PAGE>
Implementation Option ("AIO") described in Section V below), compliance
with applicable legal requirements, and other conditions, all as set forth
below, that Fund A and Fund B shall be established, from which the
benefits described herein will be paid to the Class Members of the
proposed Settlement Class and Subclasses, and that the Settled Claims
against AHP and other Released Parties, as defined herein, will be
settled, compromised and released, in accordance with the following terms.
I. DEFINITIONS
For purposes of this Settlement Agreement the following terms
(designated by initial capitalization throughout this Agreement) shall
have the meanings set forth in this Section. Terms used in the singular
shall be deemed to include the plural and vice versa.
1. "Adjusted Maximum Annual Payment Amount," or "Adjusted
MAPA," shall mean the maximum amount that AHP shall be
obligated to deposit in Fund B during any Fiscal Year
beginning with the second Fiscal Year after the Final
Judicial Approval Date through the sixteenth Fiscal Year
after the Final Judicial Approval Date. The Pre-Adjusted
MAPA for each such year is set forth in Section III.C.2
below. The Adjusted MAPA with regard to any Fiscal Year
refers to the amount of the Pre-Adjusted MAPA for that
year, as adjusted by increases due to Unused Adjusted
MAPAs, as defined in Section III.C.3 from prior years and
accretions thereon as set forth therein, and as adjusted
by decreases due to accumulated accreted Credits applied
thereto as provided herein.
2. "Administrative Reserve" has the meaning provided in
Section III.C.1.d.
3. "Aggregate Intermediate Opt-Out Credit Cap" has the
meaning provided in Section VII.A.7.
4. "AHP" means American Home Products Corporation, its
successors and assigns.
5. "AHP Released Parties" shall mean the Released Parties
described in Sections I.48.a and I.48.b herein.
6. "AIO Fiscal Year" shall mean any 12-month period
beginning on the first day of the month following the
month in which Final Judicial Approval is not obtained or
the Settlement Agreement is otherwise terminated. In
counting AIO Fiscal Years, the first AIO Fiscal Year
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<PAGE>
shall be the year which begins on the first day of the
month following the month in which Final Judicial
Approval is not obtained or the Settlement Agreement is
otherwise terminated. The second AIO Fiscal Year shall be
the twelve-month period beginning on the first day of the
month following the first anniversary of the date on
which Final Judicial Approval is not obtained or the
Settlement Agreement is otherwise terminated, and so
forth.
7. "AIO Start Date" shall mean the date on which the Trial
Court determines by oral or written decision whether or
not to approve the Settlement or the date on which AHP
terminates the Settlement Agreement, whichever is
earlier.
8. "Business Day" shall mean any day other than Saturday,
Sunday or New Year's Day, Birthday of Martin Luther King,
Jr., Washington's Birthday, Memorial Day, Independence
Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving
Day, Christmas Day, and any other day appointed as a
holiday by the President or the Congress of the United
States.
9. "Claim for Benefits" or "Claim for Settlement Benefits"
or "Claim" refers to the submission of a form in which a
Class Member elects the Accelerated Implementation Option
(or "AIO"), or the submission of a form in which a Class
Member seeks to register for any of the benefits
available to Class Members pursuant to this Settlement
Agreement, or the submission of a form through which a
Class Member seeks Matrix Compensation Benefits pursuant
to the matrices, along with all other materials including
correspondence, documents and video tapes or disks of
Echocardiograms submitted with such forms or in support
of such a Claim.
10. "Class Counsel" shall mean those attorneys executing this
Settlement Agreement on behalf of the Class
Representatives, or such other attorneys as shall be
approved by the Court as counsel to the Settlement Class.
11. "Claims Administrator" shall mean any person or persons
to be appointed by the Trustees, subject to approval of
the Court, to administer Claims for Benefits pursuant to
the Settlement Agreement.
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<PAGE>
12. "Class Counsel Representative(s)" shall mean one or more
individual members of the Class Counsel who are selected
by the Class Counsel to represent the Class Counsel with
respect to those matters specified in this Settlement
Agreement.
13. "Class Representatives" shall mean Sheila Brown, Sharon
Gaddie, Jose Gaddie, Vivian Naugle, Quentin Layer, Joan
S. Layer, Joby Jackson-Reid and Harvey E. Reid, or such
other or different persons as shall be designated by the
Court as the representatives of the Settlement Class, in
the action captioned Sheila Brown, et al. v. American
Home Products Corporation, Civil Action No. 99-20593,
pending in the United States District Court for the
Eastern District of Pennsylvania.
14. "Common Benefit Attorneys" shall mean those attorneys who
contributed to the creation of the Settlement Trust
through work devoted to the "common benefit" of Class
Members, including any attorney who reasonably believes
that he or she actually conferred benefits upon the Class
Members as a whole through state court litigation,
subject to determination by the Court.
15. "Court" and/or "Trial Court" and/or "Federal District
Court" means the United States District Court for the
Eastern District of Pennsylvania presiding over MDL
Docket No. 1203.
16. "Credit" has the meaning provided in Section VII.A.
17. "Cross-Claim Credit" has the meaning provided in Section
VII.C.1.g.
18. "Date 1" is the date which is 210 days after Final
Judicial Approval, by which (1) Class Members in
Subclasses 1(a) and 1(b) must register to receive refund
and/or Screening Program benefits from Fund A, and (2)
Class Members in Subclasses 2(a) and 2(b) must register
to receive refund benefits from Fund A.
19. "Date 2" is the date which is 120 days after the end of
the Screening Period.
20. "Diet Drug(s)" shall mean Fenfluramine marketed under the
brand name Pondimin (Registered Trademark) and/or
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<PAGE>
Dexfenfluramine marketed under the brand name Redux
(Trademark).
21. "Endocardial Fibrosis" is defined as a condition (a)
diagnosed by (1) endomyocardial biopsy that demonstrates
fibrosis and cardiac catheterization that demonstrates
restrictive cardiomyopathy or (2) autopsy that
demonstrates endocardial fibrosis and (b) other causes,
including dilated cardiomyopathy, myocardial infarction,
amyloid, Loeffler's endocarditis, endomyocardial fibrosis
as defined in Braunwald<F1> (involving one or both
ventricles, located in the inflow tracts of the
ventricles, commonly involving the chordae tendinae, with
partial obliteration of either ventricle commonly
present), focal fibrosis secondary to valvular
regurgitation (e.g., "jet lesions"), focal fibrosis
secondary to catheter instrumentation, and hypertrophic
cardiomyopathy with septal fibrosis, have been excluded.
22. "FDA Positive" is defined as follows:
a. With respect to a diagnosis based on an
Echocardiogram conducted between the commencement
of Diet Drug use and September 30, 1999, FDA
Positive is a condition in which the Cardiologist
interpreting the Echocardiogram, in the ordinary
course of medical treatment, has issued a written
report which clearly states that the individual has
mild or greater regurgitation of the aortic valve
and/or moderate or greater regurgitation of the
mitral valve; provided however, that this
definition shall be applicable only to
qualification of a Diet Drug Recipient for Fund A
benefits. In order to qualify for Matrix
Compensation Benefits, a Diet Drug Recipient must
present evidence that he or she had an
Echocardiogram prior to the end of the Screening
Period that meets the requirements of Section
I.22.b below.
b. With respect to a diagnosis based on an
Echocardiogram conducted after September 30, 1999,
FDA Positive is defined as mild or greater
regurgitation of the aortic valve of the heart
and/or moderate or greater regurgitation of the
mitral valve of the heart as these levels are
defined in Singh<F2> (1999) and measured by an
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<PAGE>
echocardiographic examination performed and
evaluated by qualified medical personnel following
the protocol as outlined in Feigenbaum<F3>
(1994) or Weyman<F4> (1994).
The degrees of regurgitation are determined as
follows:
-- Aortic Valve -- Mild or greater regurgitation,
defined as regurgitant jet diameter in the
parasternal long-axis view (or in the apical long-
axis view, if the parasternal long-axis view is
unavailable), equal to or greater than 10% of the
outflow tract diameter (JH/LVOTH).
-- Mitral Valve -- Moderate or greater regurgitation,
defined as regurgitant jet area in any apical view
equal to or greater than 20% of the left atrial
area (RJA/LAA).
23. "Final Judicial Approval" refers to the approval of the
Settlement Agreement as a whole by the Federal District
Court and such approval becoming final by the exhaustion
of all appeals, if any, without substantial modification
of the order or orders granting such approval. Final
Judicial Approval shall be deemed not to have been
obtained in the event that Trial Court Approval is
denied, and the period for appealing such denial has
expired without any such appeal having been taken.
24. "Final Judicial Approval Date" shall mean the date on
which Final Judicial Approval occurs.
25. "Fiscal Year" shall mean any twelve-month period
beginning on the first day of the month following the
month in which the Final Judicial Approval Date occurs.
In counting Fiscal Years, the first Fiscal Year shall be
the year which begins on the first day of the month
following the Final Judicial Approval Date, the second
Fiscal Year shall be the twelve-month period beginning on
the first day of the month following the first
anniversary of the Final Judicial Approval Date, and so
forth. This definition applies only to the payment terms
set forth herein and will have no effect on the tax or
accounting year of the Settlement Trust.
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<PAGE>
26. "Full Credit" has the meaning provided in Section
VII.A.5.
27. "Fund A Amounts" has the meaning provided in Section
III.B.1.
28. "Fund A Escrow Account" has the meaning provided in
Section III.B.3.
29. "Fund B Amounts" has the meaning provided in Section
III.C.1.
30. "Fund B Deposit Amount" has the meaning provided in
Section III.C.1.d.
31. "Fund B Quarterly Notice" has the meaning provided in
Section III.C.1.d.
32. "Initial Opt-Out Period" shall mean the period to be
established by the Court during which Class Members may
exercise the Initial Opt-Out right described in Section
IV.D.2.
33. "Interim Claims Administrator(s)" shall mean the two
persons mutually agreed upon by AHP and Class Counsel
subject to approval by the Court pursuant to Section
VI.A.2 to exercise all of the functions which are to be
exercised by the Claims Administrator and/or the Trustees
prior to approval of the Trustees.
34. "Interim Escrow Agent" shall mean the person or entity
mutually agreed upon by AHP and Class Counsel subject to
approval by the Court pursuant to Section VI.A.1 to
receive, hold and disburse Fund A Amounts and Fund B
Amounts until Court approval of the Trustees pursuant to
Section VI.A.6 herein.
35. "Intermediate Opt-Out Credit" has the meaning provided in
Section VII.A.6.
36. "Judgment" has the meaning provided in Section VII.A.5.
37. "Matrix-Level Condition" shall mean a physiological
condition with a level of severity meeting any of the
criteria specified in Section IV.B.2.c.
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38. "Mild Mitral Regurgitation" refers to mild mitral valve
regurgitation as that level is defined in Singh<F5>
(1999) and measured by an echocardiographic examination
performed and evaluated by qualified medical personnel
following the protocol as outlined in Feigenbaum<F6>
(1994) or Weyman<F7> (1994). That degree of
regurgitation is determined as follows: (1) either the
RJA/LAA ratio is more than 5% or the mitral regurgitant
jet height is greater than 1 cm from the valve orifice,
and (2) the RJA/LAA ratio is less than 20%.
39. "Mitral Valve Prolapse" refers to a condition where (a)
the echocardiogram video tape or disk includes the
parasternal long axis view and (b) that echocardiographic
view shows displacement of one or both mitral leaflets
>2mm above the atrial-ventricular border during systole,
and >5mm leaflet thickening during diastole, as
determined by a Board-Certified Cardiologist.<F8>
40. "Non-AHP Released Parties" shall mean those Released
Parties other than the AHP Released Parties.
41. "Nonpayment Hearing" has the meaning provided in Section
III.E.6.a.
42. "Plaintiffs' Counsel" shall mean the Class Counsel and
the Common Benefits Attorneys.
43. "Pre-Adjusted MAPA" has the meaning provided in Section
III.C.2.
44. "Preliminary Approval" shall mean the Federal District
Court's conditional certification of the Settlement Class
and preliminary approval of this Settlement Agreement
pursuant to Fed. R. Civ. P. 23(a), 23(b)(2), 23(b)(3),
23(c)(1) and 23(e) and entry of an order or orders
providing for issuance of notice to the Settlement Class.
45. "Preliminary Approval Date" shall mean the date on which
Preliminary Approval occurs.
46. "Primary Pulmonary Hypertension" ("PPH") is defined as
either or both of the following:
a. For a diagnosis based on examinations and clinical
findings prior to death:
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(1) (a) Mean pulmonary artery pressure by
cardiac catheterization of greater than
or equal to 25 mm Hg at rest or greater
than or equal to 30 mm Hg with exercise
with a normal pulmonary artery wedge
pressure less than or equal to 15
mm Hg<F9>; or
(b) A peak systolic pulmonary artery
pressure of greater than or equal to 60
mm Hg at rest measured by Doppler
echocardiogram utilizing standard
procedures; or
(c) Administration of Flolan to the patient
based on a diagnosis of PPH with cardiac
catheterization not done due to
increased risk in the face of severe
right heart dysfunction; and
(2) Medical records which demonstrate that the
following conditions have been excluded by
the following results<F10>:
(a) Echocardiogram demonstrating no primary
cardiac disease including, but not
limited to, shunts, valvular disease
(other than tricuspid or pulmonary
valvular insufficiency as a result of
PPH or trivial, clinically insignificant
left-sided valvular regurgitation), and
congenital heart disease (other than
patent foramen ovale); and
(b) Left ventricular dysfunction defined as
LVEF < 40% defined by MUGA,
Echocardiogram or cardiac
catheterization; and
(c) Pulmonary function tests demonstrating
the absence of obstructive lung disease
(FEV1/FVC > 50% of predicted) and the
absence of greater than mild restrictive
lung disease (total lung capacity
> 60% of predicted at rest);
and
(d) Perfusion lung scan ruling out pulmonary
embolism; and
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(e) If, but only if, the lung scan is
indeterminate or high probability, a
pulmonary angiogram or a high resolution
angio computed tomography scan
demonstrating absence of thromboembolic
disease; and
(3) Conditions known to cause pulmonary
hypertension<F11>,<F12>,<F13>
including connective tissue disease known to
be causally related to pulmonary
hypertension, toxin induced lung disease
known to be causally related to pulmonary
hypertension, portal hypertension,
significant obstructive sleep apnea,
interstitial fibrosis (such as silicosis,
asbestosis, and granulomatous disease)
defined as greater than mild patchy
interstitial lung disease, and familial
causes, have been ruled out by a Board-
Certified Cardiologist or Board-Certified
Pulmonologist as the cause of the person's
pulmonary hypertension.
-OR-
b. For a diagnosis made after the individual's death:
(1) Autopsy demonstrating histopathologic changes
in the lung consistent with primary pulmonary
hypertension and no evidence of congenital
heart disease (other than a patent foramen
ovale) with left-to-right shunt, such as
ventricular septal defect as documented by a
Board-Certified Pathologist; and
(2) Medical records which show no evidence of
alternative causes as described above for
living persons.
This definition of PPH ("the PPH Definition") is intended
solely for the purpose of describing claims excluded from
the definition of Settled Claims and for purposes of
Section VII.B.4 and 5, below. The Parties agree that the
PPH Definition includes but is broader than the rare and
serious medical condition suffered by the individuals
described in L. Abenhaim, et al., Appetite-Suppressant
-10-
<PAGE>
Drugs and the Risk of Primary Pulmonary Hypertension,
International Primary Pulmonary Hypertension Study Group,
335(9), New England Journal of Medicine, 609-16 (1996)
(the "IPPHS study"). The subjects in that study exhibited
significantly elevated pulmonary artery pressures with an
average systolic pulmonary artery pressure of 88 mm Hg
and average mean pulmonary artery pressure of 57 mm Hg.
Two-thirds of the IPPHS patients demonstrated NYHA Class
III or IV symptoms. While the IPPHS subjects would fall
within the PPH Definition, the definition also includes
persons with a milder, less serious medical condition.
47. "Qualified Physician" shall mean a Board-Certified or
Board-Eligible Cardiologist.
48. "Released Parties" shall mean:
a. AHP and each of its subsidiaries, affiliates, and
divisions, including, but not limited to, Wyeth-
Ayerst Laboratories Division, Wyeth-Ayerst
Laboratories Co., Wyeth-Ayerst Pharmaceuticals
Inc., and American Cyanamid Corporation, along with
each of their respective current and former
officers, directors, employees, attorneys, agents,
and insurers;
b. Any and all predecessors, successors, and/or
shareholders of AHP and each of its subsidiaries,
affiliates, and divisions; provided, however, that
any such person or entity shall be considered a
Released Party only to the extent that such person
or entity is sued in its capacity as a predecessor,
successor, and/or shareholder of AHP or its
subsidiaries, affiliates, and divisions;
c. Any and all suppliers of materials, components, and
services used in the manufacture of Pondimin
(Registered Trademark) and/or Redux (Trademark),
including the labeling and packaging thereof, along
with each such person's or entity's predecessors,
successors, parents, subsidiaries, affiliates, and
divisions, and each of their respective current and
former shareholders, officers, directors,
employees, attorneys, agents, and insurers;
provided, however, that no person or entity
described in this subsection shall be a Released
Party with respect to any claims based upon his,
-11-
<PAGE>
her or its own independent negligence or culpable
conduct;
d. All distributors of Pondimin (Registered Trademark)
and/or Redux (Trademark), including wholesale
distributors, private label distributors, retail
distributors, hospitals and clinics, and their
respective predecessors, successors, parents,
subsidiaries, affiliates, and divisions, and their
respective current and former shareholders,
officers, directors, employees, attorneys, agents,
and insurers; provided that (1) such persons and
entities described in this section shall be a
Released Party only as to claims as to which such
persons would have a statutory or common-law right
of indemnity against AHP and (2) no person or
entity described in this section shall be a
Released Party to the extent that any claim is
based upon his, her or its own independent
negligence or culpable conduct, including, without
limitation, negligence or professional malpractice
asserted against hospitals, clinics, and diet
centers;
e. All physicians who prescribed, and all pharmacists
and pharmacies who dispensed, Pondimin (Registered
Trademark) and/or Redux (Trademark) to the extent
that liability against such physicians, pharmacists
or pharmacies is based on:
(1) the prescription or dispensing of Pondimin
(Registered Trademark) and/or Redux
(Trademark) in a manner consistent with the
product labeling; and/or
(2) the prescription or dispensing of Pondimin
(Registered Trademark) for any period longer
than a "few weeks"; and/or
(3) the prescription or dispensing of Pondimin
(Registered Trademark) and/or Redux
(Trademark) for concomitant use with
Phentermine hydrochloride or Phentermine
resin; and/or
(4) a claim that the physician's or pharmacist's
liability stems solely from having prescribed
-12-
<PAGE>
or dispensed Pondimin (Registered Trademark)
and/or Redux (Trademark); and/or
(5) a claim that the physician's or pharmacist's
liability stems solely from the prescription
or dispensing of a defective or unreasonably
dangerous product.
Physicians, pharmacists and pharmacies are not
Released Parties with respect to any claims based
on their independent negligence or culpable
conduct, not consisting of the conduct described in
paragraphs (1)-(5) of this Subsection I.48.e.
Notwithstanding the foregoing, Les Laboratoires
Servier S.A. and all of its affiliates and
subsidiaries, including, without limitation,
Servier S.A.S., Oril, Orsem, Servier Amerique,
Science Union et Cie, Institut de Recherches
Internationales Servier, Servier Research
(collectively hereinafter "Servier"); Interneuron
Pharmaceuticals, Inc. (hereinafter "Interneuron");
and any manufacturer, seller, wholesaler, or
distributor of any Phentermine hydrochloride or
Phentermine resin pharmaceutical product are not
Released Parties.
49. "Screening Period" refers to the 12-month period (or such
longer period that shall be permitted by the Court for
good cause shown, but in any case not to exceed 18
months) during which benefits shall be available under
the Screening Program.
50. "Screening Program" refers to the program for providing
Transthoracic Echocardiograms and associated interpretative
physician visit benefits, as set forth in Sections
IV.A.1.a and IV.A.2.b.
51. "Security Fund" has the meaning provided for in Section
III.E.2.
52. "Security Fund Escrow Account" has the meaning provided
in Section III.E.8.
53. "Settled Claims" shall mean any and all claims, including
assigned claims, whether known or unknown, asserted or
unasserted, regardless of the legal theory, existing now
-13-
<PAGE>
or arising in the future by any or all members of the
Settlement Class arising out of or relating to the
purchase, use, manufacture, sale, dispensing,
distribution, promotion, marketing, clinical
investigation, administration, regulatory approval,
prescription, ingestion, and labeling of Pondimin
(Registered Trademark) and/or Redux (Trademark), alone or
in combination with any other substance, including,
without limitation, any other drug, dietary supplement,
herb, or botanical. These "Settled Claims" include,
without limitation and by way of example, all claims for
damages or remedies of whatever kind or character, known
or unknown, that are now recognized by law or that may be
created or recognized in the future by statute,
regulation, judicial decision, or in any other manner,
for:
a. personal injury and/or bodily injury, damage,
death, fear of disease or injury, mental or
physical pain or suffering, emotional or mental
harm, or loss of enjoyment of life;
b. compensatory damages, punitive, exemplary,
statutory and other multiple damages or penalties
of any kind;
c. loss of wages, income, earnings, and earning
capacity, medical expenses, doctor, hospital,
nursing, and drug bills;
d. loss of support, services, consortium,
companionship, society or affection, or damage to
familial relations, by spouses, parents, children,
other relatives or "significant others" of
Settlement Class Members;
e. consumer fraud, refunds, unfair business practices,
deceptive trade practices, Unfair and Deceptive
Acts and Practices ("UDAP"), and other similar
claims whether arising under statute, regulation,
or judicial decision;
f. wrongful death and survival actions;
g. medical screening and monitoring, injunctive and
declaratory relief;
-14-
<PAGE>
h. economic or business losses or disgorgement of
profits arising out of personal injury; and
i. prejudgment or post-judgment interest.
Notwithstanding the foregoing, Settled Claims do not
include claims based on PPH, including claims for
compensatory, punitive, exemplary or multiple damages
based on PPH; provided, however, that if a Class Member
receives settlement benefits from Fund B, he/she may not
bring a lawsuit based upon a claim for PPH, unless the
Class Member was diagnosed with PPH before the Class
Member had left-sided heart valve abnormalities (other
than those which produce trivial, clinically
insignificant left-sided regurgitation) or Endocardial
Fibrosis.
54. "Transthoracic Echocardiogram" means a non-invasive,
standard Echocardiogram which includes an M-Mode and 2D
Echocardiogram, and Doppler and color Doppler evaluations
of all four chambers of the heart and all four heart
valves.
55. "Trial Court Approval" shall mean the granting, by order,
of the approval of the Settlement Agreement by the
Federal District Court.
56. "Trial Court Approval Date" shall mean the date upon
which Trial Court Approval occurs.
57. "Trust" or "Settlement Trust" shall mean a trust
established to receive funds to be paid by AHP as
provided in this Settlement Agreement pursuant to a Trust
Agreement substantially in the form appended hereto as
Exhibit "1."
58. "Trustees" shall mean those individuals approved by the
Court as Trustees of the Settlement Trust in accordance
with Section VI.A.3 herein.
-15-
<PAGE>
II. SCOPE OF THE SETTLEMENT CLASS
A. The Parties shall seek certification by the Federal
District Court of a nationwide class solely for
Settlement purposes (the "Settlement Class") in the case
entitled Sheila Brown, et al. v. American Home Products
Corporation, Civil Action No. 99-20593, pending in the
United States District Court for the Eastern District of
Pennsylvania.
B. The Settlement Class will consist of:
All persons in the United States, its possessions
and territories who ingested Pondimin (Registered
Trademark) and/or Redux (Trademark) ("Diet Drug
Recipients"), or their estates, administrators or
other legal representatives, heirs or beneficiaries
("Representative Claimants"), and any other persons
asserting the right to sue AHP or any Released
Party independently or derivatively by reason of
their personal relationship with a Diet Drug
Recipient, including without limitation, spouses,
parents, children, dependents, other relatives or
"significant others" ("Derivative Claimants"). The
Settlement Class does not include any individuals
whose claims against AHP and/or the AHP Released
Parties, arising from the use of Diet Drugs, have
been resolved by judgment on the merits or by
release (other than releases provided pursuant to
this Settlement).
C. There will be five subclasses as follows:
1.(a) "Subclass 1(a)" shall consist of all Diet
Drug Recipients in the Settlement Class (1)
who ingested Pondimin (Registered Trademark)
and/or Redux (Trademark) for 60 days or less,
and (2) who have not been diagnosed by a
Qualified Physician as FDA Positive by an
Echocardiogram performed between the
commencement of Diet Drug use and September
30, 1999, and all Representative and
Derivative Claimants in the Settlement Class
whose claims are based on their personal or
legal relationship with a Diet Drug Recipient
(1) who ingested Pondimin (Registered
Trademark) and/or Redux (Trademark) for 60
-16-
<PAGE>
days or less, and (2) who has not been
diagnosed by a Qualified Physician as FDA
Positive by an Echocardiogram performed
between the commencement of Diet Drug use and
September 30, 1999.
1.(b) "Subclass 1(b)" shall consist of all Diet
Drug Recipients in the Settlement Class (1)
who ingested Pondimin (Registered Trademark)
and/or Redux (Trademark) for 61 or more days,
and (2) who have not been diagnosed by a
Qualified Physician as FDA Positive by an
Echocardiogram performed between the
commencement of Diet Drug use and September
30, 1999, and all Representative and
Derivative Claimants in the Settlement Class
whose claims are based on a personal or legal
relationship with a Diet Drug Recipient (1)
who ingested Pondimin (Registered Trademark)
and/or Redux (Trademark) for 61 or more days,
and (2) who has not been diagnosed by a
Qualified Physician as FDA Positive by an
Echocardiogram performed between the
commencement of Diet Drug use and September
30, 1999.
2.(a) "Subclass 2(a)" shall consist of all Diet
Drug Recipients in the Settlement Class (1)
who ingested Pondimin (Registered Trademark)
and/or Redux (Trademark) for 60 days or less,
and (2) who have been diagnosed by a
Qualified Physician as FDA Positive by an
Echocardiogram which was performed between
the commencement of Diet Drug use and
September 30, 1999, and all Representative
and Derivative Claimants in the Settlement
Class whose claims are based on a personal or
legal relationship with a Diet Drug Recipient
(1) who ingested Pondimin (Registered
Trademark) and/or Redux (Trademark) for 60
days or less, and (2) who has been diagnosed
by a Qualified Physician as FDA Positive by
an Echocardiogram which was performed between
the commencement of Diet Drug use and
September 30, 1999.
-17-
<PAGE>
2.(b) "Subclass 2(b)" shall consist of all Diet
Drug Recipients in the Settlement Class (1)
who ingested Pondimin (Registered Trademark)
and/or Redux (Trademark) for 61 or more days,
and (2) who have been diagnosed by a
Qualified Physician as FDA Positive by an
Echocardiogram which was performed between
the commencement of Diet Drug use and
September 30, 1999, and all Representative
and Derivative Claimants in the Settlement
Class whose claims are based on a personal or
legal relationship with a Diet Drug Recipient
(1) who ingested Pondimin (Registered
Trademark) and/or Redux (Trademark) for 61 or
more days, and (2) who has been diagnosed by
a Qualified Physician as FDA Positive by an
Echocardiogram which was performed between
the commencement of Diet Drug use and
September 30, 1999.
3. "Subclass 3" (which may include persons also
included in Subclasses 1(a) and 1(b)) shall consist
of all Diet Drug Recipients in the Settlement Class
who have been diagnosed by a Qualified Physician as
having Mild Mitral Regurgitation by an
Echocardiogram performed between the commencement
of Diet Drug use and the end of the Screening
Period, but who have not been diagnosed by a
Qualified Physician as FDA Positive by an
Echocardiogram performed between the commencement
of Diet Drug use and the end of the Screening
Period, and all Representative and Derivative
Claimants in the Settlement Class whose claims are
based on a personal or legal relationship with a
Diet Drug Recipient who has been diagnosed by a
Qualified Physician as having Mild Mitral
Regurgitation by an Echocardiogram performed
between the commencement of Diet Drug use and the
end of the Screening Period, but who has not been
diagnosed by a Qualified Physician as FDA Positive
by an Echocardiogram performed between the
commencement of Diet Drug use and the end of the
Screening Period.
-18-
<PAGE>
III. AHP'S PAYMENT OBLIGATIONS
A. Establishment of Settlement Trust
1. A Settlement Trust shall be established to receive
the Fund A Amounts and Fund B Amounts to be paid by
AHP under the terms of this Settlement Agreement
pursuant to the terms of a Trust Agreement
substantially in the form appended to the
Settlement Agreement as Exhibit "1."
2. The Parties agree that, as provided in the Trust
Agreement, the Trustees of the Settlement Trust
will be nominated by the Parties and that each
nomination will be subject to agreement of the
Parties and subject to approval by the Court
consistent with the provisions stated in Section
VI.A.3 herein and the Trust Agreement substantially
in the form appended to the Settlement Agreement as
Exhibit "1".
3. The Settlement Trust will begin as a reversionary
trust and will become non-reversionary upon Final
Judicial Approval. If Final Judicial Approval is
not obtained, or if the Settlement Agreement is
terminated in accordance with its terms for any
other reason, all amounts remaining in the
Settlement Trust after payment of any charges and
expenses which the Settlement Agreement expressly
authorized or required to be incurred and expended
prior to the reversion date, including any amounts
expended to assist in seeking Final Judicial
Approval, shall be returned to AHP, except as
provided in Section V hereof relating to the
administration of claims of Class Members who have
accepted the Accelerated Implementation Option.
4. AHP shall have no right to any of the funds
previously deposited, nor to any of the funds
subsequently deposited into the Settlement Trust,
as of the date the Trust becomes non-reversionary.
AHP shall have no further claim to such funds for
any purpose.
5. Subject to the conditions set forth in this
Settlement Agreement, AHP shall be obligated to
make payments as set forth in Sections III.B ("Fund
-19-
<PAGE>
A") and III.C ("Fund B") below to the Settlement
Trust. Such payments shall be made by wire
transfer. If any date of payment provided herein
is not a Business Day, such payment shall be due
and payable on the first Business Day following
such date.
B. Fund A
1. AHP shall make payments into Fund A as follows
(such amounts collectively referred to herein as
the "Fund A Amounts"):
a. $50 million five Business Days after the
Preliminary Approval Date.
b. $383 million five Business Days after the
Trial Court Approval Date.
c. $383 million 180 days after the preceding
payment of $383 million.
d. $184 million five Business Days after the
Final Judicial Approval Date.
2. The monies held by Fund A shall be available and
shall be used to pay all benefits payable from Fund
A, out-of-pocket and pre-settlement litigation
expenses of Plaintiffs' Counsel approved by the
Court for reimbursement in relation to Fund A, and
all proper administrative expenses associated with
the administration of the Settlement and the
Settlement Trust insofar as they relate to Fund A.
3. In addition to the foregoing, within five Business
Days after the Final Judicial Approval Date, AHP
shall pay $200 million into an escrow account under
the supervision of the Court (the "Fund A Escrow
Account"). The funds in the Fund A Escrow Account
shall be used to pay compensation to Plaintiffs'
Counsel. In addition, the funds in the Fund A
Escrow Account may be used to make incentive awards
to the Class Representatives in the following State
and Federal Court class actions involving Pondimin
(Registered Trademark) and Redux (Trademark):
United States District Court for the Eastern
District of Pennsylvania, Brown v. American Home
-20-
<PAGE>
Products Corp., C.A. No. 99-20593; Jeffers v.
American Home Products Corp., C.A. No. 98-CV-20626
(E.D. Pa.) (In re Diet Drug Products Liability
Litigation, MDL 1203); New Jersey (Vadino et al. v.
AHP, Docket No. MID-L-425-98); New York (New York
Diet Drug Litigation, Index No. 700000/98);
Pennsylvania (Pennsylvania Diet Drug Litigation,
Master Docket No. 9709-3162 C.C.P. Phila.); and
Washington (St. John v. AHP, 97-2-06368-4). The
payment of said compensation, relating to Fund A,
to Plaintiffs' Counsel and the certified State and
Federal Court Class Representatives shall be in
such manner and in such amounts as the Court, with
advice and counsel of the State Court Judicial
Advisory Committee, may determine is appropriate,
as contemplated by Sections VIII.B.3 and VIII.E.1.a
hereof and pursuant to a Fund A Escrow Account
Agreement substantially in the form attached hereto
as Exhibit "2." AHP shall take no position on the
amount of such fees to be awarded as attorneys'
fees or incentive awards or the allocation thereof.
All Class Members shall have standing to object to
or support the award of attorneys' fees and
incentive awards for Class Representatives from the
Fund A Escrow Account. Any amount in the Fund A
Escrow Account not awarded in attorneys' fees shall
be returned to AHP by order of the Court.
4. When the Trustees decide that Fund A's purposes
have been met, the remaining balance, if any, in
Fund A shall be transferred to Fund B.
5. Any transfer from Fund A to Fund B will not reduce
the Adjusted MAPA for the year in which any unused
portion of Fund A is transferred, and said transfer
will not reduce the maximum obligation of AHP to
make payments to Fund B.
C. Fund B
1. AHP shall make payments into Fund B as follows
(such amounts collectively referred to herein as
the "Fund B Amounts"):
a. $25 million five Business Days after the
Preliminary Approval Date.
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<PAGE>
b. $625 million five Business Days after the
Final Judicial Approval Date.
c. The $25 million which is paid to Fund B after
the Preliminary Approval Date and the $625
million which is paid to Fund B at the Final
Judicial Approval Date shall be available and
shall be used to pay Class Members who
qualify to receive benefits from Fund B, all
common benefit fees and costs awarded by the
Court in relation to Fund B, and all
administrative expenses authorized under the
Settlement Agreement associated with the
administration of the Settlement and the
Settlement Trust insofar as they relate to
Fund B.
d. Beginning in the second Fiscal Year after the
Final Judicial Approval Date, the Trustees
may request in writing on a quarterly basis
(each a "Fund B Quarterly Notice") an
additional amount (said amount being referred
to as a "Fund B Deposit Amount") (i) to pay
claims received which qualify for payment
from Fund B pursuant to Section IV.B
(including claims for counsel fees and
authorized administrative expenses) but which
have not been paid due to an insufficient
cash balance in Fund B, and/or (ii) to
maintain a $50 million reserve in Fund B for
administrative expenses (the "Administrative
Reserve"). AHP shall pay the Fund B Deposit
Amount so requested no later than 15 days
after the date on which the Trustees provide
AHP with a Fund B Quarterly Notice requesting
such Fund B Deposit Amount; provided,
however, that AHP's obligation to pay Fund B
Deposit Amounts during any Fiscal Year shall
at all times be limited to the Adjusted MAPA.
-22-
<PAGE>
2. The Pre-Adjusted MAPA for each Fiscal Year shall be
as set forth below:
Fund B
Pre-Adjusted
Maximum
Annual
Payment
Fiscal Year Amount
2nd Fiscal Year after the Final Judicial Approval Date $182,863,500
3rd Fiscal Year after the Final Judicial Approval Date $182,863,500
4th Fiscal Year after the Final Judicial Approval Date $182,863,500
5th Fiscal Year after the Final Judicial Approval Date $182,863,500
6th Fiscal Year after the Final Judicial Approval Date $182,863,500
7th Fiscal Year after the Final Judicial Approval Date $182,863,500
8th Fiscal Year after the Final Judicial Approval Date $182,863,500
9th Fiscal Year after the Final Judicial Approval Date $182,863,500
10th Fiscal Year after the Final Judicial Approval Date $182,863,500
11th Fiscal Year after the Final Judicial Approval Date $182,863,500
12th Fiscal Year after the Final Judicial Approval Date $182,863,500
13th Fiscal Year after the Final Judicial Approval Date $182,863,500
14th Fiscal Year after the Final Judicial Approval Date $182,863,500
15th Fiscal Year after the Final Judicial Approval Date $182,863,500
16th Fiscal Year after the Final Judicial Approval Date $480,000,000
3. In the event that the Adjusted MAPA in any Fiscal Year is
not required to be paid in its entirety, the difference
between the Adjusted MAPA for that Fiscal Year and the
payment amounts actually made by AHP to Fund B in that
Fiscal Year (the "Unused Adjusted MAPA") shall accrete as
follows: an average shall be taken of the Unused Adjusted
MAPA that exists at the end of each Fiscal quarter for
the Fiscal Year in question; that average Unused Adjusted
MAPA shall accrete at 6% for that year; and the Unused
Adjusted MAPA that exists at the end of the fourth
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<PAGE>
quarter of that Fiscal Year, plus the accretion as
calculated in accordance with the provisions set forth
above, shall be added to the Adjusted MAPA available to
the Settlement Trust in the following year. For example
and by way of explanation, assume that an Unused Adjusted
MAPA of $50 million was generated by the end of the first
quarter of the third Fiscal Year and remains unchanged
for the next two Fiscal quarters, but is reduced to $40
million by the end of the fourth quarter of the third
Fiscal Year. The average quarterly Unused Adjusted MAPA
for the third Fiscal Year would be $47.5 million.
Accreting at 6%, a total accretion of $2,850,000 would
then be added to the Unused Adjusted MAPA of $40,000,000
at the end of the fourth quarter of the third Fiscal
Year, resulting in a total of $42,850,000 of Unused
Adjusted MAPA to be added to the Adjusted MAPA available
to the Settlement Trust in the following Fiscal Year (the
fourth Fiscal Year). Because the Pre-Adjusted MAPA for
the fourth Fiscal Year is $182,863,500, the Adjusted MAPA
for that year, assuming no other adjustments, would be
$225,713,500. If the Trustees did not require any Fund B
Deposit in the fourth Fiscal Year, the quarterly average
of the Unused Adjusted MAPA for the fourth Fiscal Year
would be $225,713,500, which would accrete at 6%, and the
accreted amount, $239,256,310, would be added to the Pre-
Adjusted MAPA for the fifth Fiscal Year, so that the
Adjusted MAPA at the beginning of the fifth Fiscal Year
will be $422,119,810, provided there are no further
adjustments.
4. The Credits referred to in Section VII.A shall accrete at
6% per year, compounded annually, commencing at the end
of the Fiscal quarter during which each Credit is
generated and ending on the date of the Adjusted MAPA
which is reduced by the application of the Credit,
irrespective of the actual passage of time. The
determination of the amount of such Credits generated in
any Fiscal Year shall be made at the end of each Fiscal
Year after the Final Judicial Approval Date unless an
earlier determination is necessary to carry out the
intention of the Parties. Such accreted Credits shall
accumulate and shall be applied to reduce the Adjusted
MAPAs in reverse order starting with the first day of the
sixteenth Fiscal Year after the Final Judicial Approval
Date. For example and by way of explanation, assuming a
$1 million Credit were generated during the last quarter
of the first Fiscal Year after the Final Judicial
-24-
<PAGE>
Approval Date, and assuming no other adjustments to the
Adjusted MAPA, this Credit would accrete until the first
day of the sixteenth Fiscal Year after the Final Judicial
Approval Date, would have an accreted value of $2,260,904
and would be applied at that date to reduce the Adjusted
MAPA for that year. As a further example by way of
explanation, assuming that $300 million of Credits were
generated during the last quarter of the third Fiscal
Year after the Final Judicial Approval Date, and assuming
no other adjustments to the Adjusted MAPA, $238,545,295
of those credits would accrete until the first day of the
sixteenth Fiscal Year after the Final Judicial Approval
Date, at which time those credits would have an accreted
value of $480 million and would be applied at that date
to eliminate the full amount of the Pre-Adjusted MAPA for
that year; the remaining $61,454,705 of those third-year
credits would accrete until the first day of the
fifteenth Fiscal Year after the Final Judicial Approval
Date, at which time those credits would have an accreted
value of $116,659,378 and would be applied at that date
to reduce the Pre-Adjusted MAPA for the fifteenth Fiscal
Year by that amount; the Pre-Adjusted MAPA for the
fifteenth Fiscal Year would therefore be $66,204,122
(namely, $182,863,500 minus $116,659,378).
5. Prior to the end of the first quarter of the sixteenth
Fiscal Year after the Final Judicial Approval Date, the
Trustees shall make a calculation as to a final payment
to be made by AHP to Fund B (the "Final Payment"). The
Final Payment, if any, by AHP into Fund B, shall be the
lesser of two amounts, "X" or "Y," where:
a. Amount "X" refers to the projected amount of
additional funds necessary to meet the obligations
of Fund B. To make this projection, the Trustees
shall cause an actuarial determination to be made,
based on the experience of the Settlement Trust, as
to the amount of additional funds, if any, which
will be required to fund obligations to Class
Members who have qualified or are likely in the
future to qualify for benefits from Fund B and
associated administrative expenses. In determining
Amount "X," the Trustees shall also take into
consideration the then cash balance in Fund B
(including the Administrative Reserve), its
projected future investment and other income, and an
estimate of required future administrative expenses.
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<PAGE>
b. Amount "Y" refers to the difference between (i) the
Adjusted MAPA computed as of the first day of the
sixteenth Fiscal Year following the Final Judicial
Approval Date, giving due credit for all Unused
Adjusted MAPAs with 6% accretions thereon, and all
Credits and Cross-Claim Credits to which AHP is
entitled under the Settlement Agreement with 6%
accretions thereon, and (ii) any amounts paid by AHP
to Fund B during the first quarter of the sixteenth
Fiscal Year.
6. After making the foregoing calculation, but prior to
payment thereof, the Trustees shall provide a report to
Class Counsel and to AHP setting forth the Trustees'
projection of the amount of additional funds, if any,
which will be necessary to meet the obligations of Fund
B, as described above. The report shall contain all
supporting information necessary to allow Class Counsel
and AHP to evaluate the accuracy and reasonableness of
the projection. Such supporting information shall
include, without limitation, the Trustees' methodology
for making the projection and any assumptions used in
making the projection. Either AHP or Class Counsel shall
have the right to seek any additional information
reasonably requested by them, and to contest the
Trustees' projections to the Court, which shall modify
such projection if it is determined to be unreasonable or
lacking in substantial support. AHP shall make the Final
Payment within 15 days after a final determination of the
amount thereof. In the event AHP seeks a stay of such
determination pending appeal and posts adequate bond,
Class Counsel shall not oppose such a stay.
7. At such time as the accumulated accreted Credits and
Cross-Claim Credits are equal to or exceed the remaining
maximum payment obligations of AHP, as calculated
hereunder, the Final Payment shall be deemed to have been
made at that time if that date is prior to the date on
which the Final Payment is required to be made under
Section III.C.6 above, and no Final Payment shall be
required to be made pursuant to Section III.C.6.
8. If no Final Payment is required pursuant to the preceding
provision, or if a Final Payment is made pursuant to
Section III.C.6, AHP shall have no further obligation to
make any payments to Fund B under the Settlement
Agreement.
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<PAGE>
9. The monies held by Fund B shall be available and shall be
used to pay all benefits payable from Fund B, all common
benefit fees and costs awarded by the Court in relation
to Fund B, and all proper administrative expenses
associated with the administration of the Settlement and
the Settlement Trust insofar as they relate to Fund B.
D. Other Provisions
1. The Settlement Trust shall be structured and managed to
qualify as a Qualified Settlement Fund under Section 468B
of the Internal Revenue Code and related regulations and
will contain customary provisions for such trusts
including obligations of the Settlement Trust to make tax
filings and to provide to AHP information to permit AHP
to report deductions properly for tax purposes.
2. The Parties agree that all of the amounts being paid
pursuant to the terms of this Settlement are being paid
as damages (other than punitive damages) on account of
alleged physical personal injuries or alleged physical
sickness of the members of the Settlement Class as
described in Section 104(a)(2) of the Internal Revenue
Code of 1986, as amended (the "Code"). The Parties
further agree that the claims set forth in the definition
of Settled Claims in Section I.53 have their origin in
such alleged physical personal injuries or physical
sickness.
3. Except as provided in Section V herein relating to the
Accelerated Implementation Option, AHP shall have no
financial obligations under this Settlement Agreement
other than as explicitly set forth in this Section III
(AHP's Payment Obligations). AHP shall have no
responsibility for the management of the Settlement Trust
or any liability to any Class Member arising from the
handling of claims by the Trustees.
E. Security Arrangements
1. During the period beginning on the first Business Day
following the Trial Court Approval Date and ending on the
fifth Business Day following the Final Judicial Approval
Date, AHP shall maintain credit facilities in an
aggregate principal amount of One Billion Dollars
($1,000,000,000) exclusively as security for its
obligations under this Settlement Agreement over the sum
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<PAGE>
of (1) the greater of (a) the aggregate minimum principal
amount of credit facilities that would be required by
Moody's Investors Service to satisfy back-up liquidity on
AHP's commercial paper obligations or (b) the aggregate
minimum principal amount of credit facilities that would
be required by Standard & Poor's Rating Services as
sufficient to satisfy back-up liquidity on AHP's
commercial paper obligations, plus (2) the amount of any
uses (other than the payments under this Settlement
Agreement) for which such credit facilities have been
committed, plus (3) outstanding drawings under such
credit facilities.
2. Fifteen days after the Final Judicial Approval Date, or
the first Business Day thereafter if such fifteenth day
is not a Business Day, AHP shall establish and thereafter
maintain a fund (the "Security Fund") consisting of cash
and high-grade marketable commercial securities (which
shall consist of the "Permitted Investments," defined
herein) selected by AHP having a principal value equal to
$370 million. If the credit rating for AHP as reported
by both Moody's Investors Service and Standard & Poor's
Rating Services is below investment grade at any time
during which the Security Fund must be maintained
hereunder, AHP shall deposit additional cash and
Permitted Investments selected by AHP having an aggregate
principal value of an additional $180 million. For
purposes of this Section III.E, the term "Permitted
Investments" shall mean any of the following: (a)
readily marketable direct obligations of the United
States or any agency or instrumentality thereof or
obligations unconditionally guaranteed by the full faith
and credit of the United States, maturing within 365 days
of purchase (in the case of all such obligations other
than direct obligations of the United States Treasury);
(b) certificates of deposit or time deposits maturing
within 365 days of purchase with any commercial bank that
(1) has deposits insured by the Federal Deposit Insurance
Corporation, (2) is organized under the laws of the
United States or any state thereof, (3) has a minimum
long-term rating of "A-3" (or the then equivalent) by
Moody's Investors Service and a long-term rating of "A-"
(or the then equivalent) by Standard & Poor's Rating
Services, and (4) has combined capital and surplus of at
least $10 billion; (c) commercial paper issued by any
corporation organized under the laws of any state of the
United States and rated at least "Prime-1" short-term (or
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<PAGE>
the then equivalent grade) and "A-1" long-term (or the
then equivalent grade) by Standard & Poor's Rating
Services, in each case with a maturity of not more than
180 days from the date of acquisition thereof; or (d)
investments, classified as current assets of AHP or any
of its subsidiaries under generally accepted accounting
principles, in money market investment programs
registered under the Investment Company Act of 1940, as
amended, which are administered by financial institutions
that have the highest rating obtainable from either
Moody's Investors Service or Standard & Poor's Rating
Services, and the portfolios of which are limited solely
to investments of the character, quality and maturity
described in clauses (a), (b) or (c) of this definition.
3. The Security Fund shall be terminated upon AHP's making,
or being deemed to have made, the Final Payment provided
for in Sections III.C.5, III.C.6 and III.C.7,
respectively.
4. AHP shall be entitled to withdraw from the Security Fund
all income earned thereby. However, in the event that,
and so long as, the credit rating of AHP reported by both
Moody's Investors Service and Standard & Poor's Rating
Services is below investment grade at any time during
which the Security Fund must be maintained, AHP shall no
longer be entitled to withdraw from the Security Fund the
income earned thereby, except that AHP shall thereafter
be entitled to withdraw, at each tax payment date, such
amount thereof as shall equal all federal, state and
local taxes payable by AHP with respect to or on account
of the whole amount of the Security Fund. AHP shall be
responsible for the payment of all federal, state and
local taxes payable with respect to or on account of the
Security Fund.
5. AHP shall grant to the Trustees a perfected security
interest in the Security Fund as collateral for AHP's
obligations under the Settlement Agreement pursuant to
the terms of a Security Fund and Escrow Agreement in the
form appended hereto as Exhibit "3" hereto. The assets
in the Security Fund shall at all times be owned by AHP,
subject to the rights of the Trust as a secured creditor.
6. For purposes of this Settlement Agreement, an "Uncured
Failure to Make Payment" is an event in which:
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a. AHP fails to make a payment to Fund B which was due
and not timely paid, and such failure to make
payment was due to either a financial inability to
pay or a deliberate unwillingness to pay, such
determinations having been made by order of the
Court after an evidentiary hearing (a "Nonpayment
Hearing"); and
b. AHP fails to make that payment within thirty days
after such order becomes final after exhaustion of
all appeals, if any, or AHP fails to make that
payment thirty days after a Trial Court order
declaring an Uncured Failure to Make Payment and is
unable to obtain a stay of that order pending an
appeal from such order.
7. At least thirty days prior to any Nonpayment Hearing, AHP
and Class Counsel shall have the right to receive from
the Trustees such information as they reasonably request
relating to the Trustees' claim that such payment was due
and owing, as to which issue the Trustees shall have the
burden of proof.
8. In the event of an Uncured Failure to Make Payment,
securities and/or cash in the Security Fund having a
principal value equal to the entire amount of the
Security Fund shall be transferred to the escrow agent of
an escrow account to be maintained under the supervision
of the Court (the "Security Fund Escrow Account"),
without impairing the security interest of the Trust.
The portion of the Security Fund Escrow Account, if any,
needed to satisfy the obligations of AHP under the
Settlement Agreement shall be paid to the Trust pursuant
to order of the Court or on agreement of the Parties.
Any unused amount of the Security Fund Escrow Account
shall be returned to AHP at the time the Final Payment is
made or deemed to have been made. Any income earned on
the account shall remain the property of the account, and
all federal, state and local taxes payable with respect
to the Security Fund Escrow Account shall be paid out of
the account. Additional conditions and procedures for
the establishment, operation and distribution of the
Security Fund Escrow Account are set forth in Exhibit
"3," which is to be executed substantially in that form
by the escrow agent.
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<PAGE>
9. In the event of the following occurrences:
a. The occurrence of more than one Uncured Failure to
Make Payment within a two-year period; and
b. The depletion of the amount of the assets which AHP
is required to have on deposit in the Security Fund
or in the Security Fund Escrow Account described
above by more than fifty percent of the then-
required amount of assets; and
c. A determination by the Court after notice and an
opportunity to be heard by all interested parties
that the remaining assets in the Security Fund or in
the Security Fund Escrow Account are not likely to
be sufficient to pay the remaining Fund B
obligations to Class Members as of that point in
time;
all Diet Drug Recipients who (i) are diagnosed by a
Qualified Physician as FDA Positive or as having Mild
Mitral Regurgitation by an Echocardiogram performed
between the commencement of Diet Drug use and the end of
the Screening Period and who have registered for
settlement benefits by Date 2, or (ii) are diagnosed as
having Endocardial Fibrosis by September 30, 2005, and
have registered for Fund B benefits by January 31, 2006,
together with their associated Representative and/or
Derivative Claimants, will have a right to opt out of the
Settlement and pursue all of their Settled Claims (except
for those claims set forth in subparagraphs (e) and (g)
of Section I.53 of this Agreement), against AHP and the
other Released Parties, including claims for punitive and
multiple damages (hereinafter the "Financial Insecurity
Opt-Out Right"), provided such Class Members have not
received Matrix-Level V benefits set forth in Section
IV.B.2.
10. Within thirty (30) days of the date of the entry of any
Order determining that the remaining assets in the
Security Fund or in the Security Fund Escrow Account are
not likely to be sufficient to pay the remaining Fund B
obligations, as referred to in Sections III.E.6.a and
III.E.9.c, above, the Trustees and/or Claims
Administrator(s) shall provide written notice to all
affected Class Members of the circumstances giving rise
to the Financial Insecurity Opt-Out Right by first class
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<PAGE>
mail, postage prepaid. Within one-hundred and twenty
(120) days of the transmission of that notice, each Class
Member who is eligible to exercise a Financial Insecurity
Opt-Out Right may send a written notice advising the
Trustees and/or Claims Administrator(s) of the Class
Member's election to exercise the Financial Insecurity
Opt-Out Right on a form prescribed by the Trustees and/or
Claims Administrator(s). In the event of such an opt-
out, the Class Member may pursue any and all claims
(except for those claims set forth in subparagraphs (e)
and (g) of Section I.53 of this Agreement) against AHP in
the legal system, and none of the Released Parties may
assert any defense to such claims based on any statute of
limitations or repose, the doctrine of laches, any other
defense predicated on the failure to timely pursue the
claim, any defense based on "splitting" a cause of
action, any defense based on any release signed pursuant
to the Settlement Agreement, and/or any other defense
based on the existence of the Settlement Agreement,
except to the extent provided in Section III.E.9 of this
Agreement. In any legal action commenced by a Class
Member exercising a right of opt-out under these
circumstances, the Class Member shall reduce the amount
of his or her recovery by the amount of any cash that the
Class Member has received from AHP and/or the Trust under
any terms of the Settlement. There shall be no
deduction, offset, or reduction for any Medical Screening
or Medical Services received by a Class Member.
11. Nothing contained in this Section of the Agreement shall
be construed to be a waiver of or a limitation on rights
which the Class Members, Class Representatives or
Trustees would otherwise have under the law in the event
of a breach of the Settlement Agreement.
12. Immediately following AHP's remittance (or deemed
remittance) of the Final Payment pursuant to Section
III.C.6 (or Section III.C.7), any remaining balance of
the Security Fund, including any income earned thereon,
shall be released to AHP.
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<PAGE>
IV. CLASS MEMBER RIGHTS AND BENEFITS
A. Screening/Refund/Medical Services/Cash/Research Benefits
Payable from Fund A
1. Benefits for Class Members who ingested Pondimin
(Registered Trademark) and/or Redux (Trademark) for 61 or
more days
a. Screening Program: Diet Drug Recipients in Subclass
1(b) will be eligible for one Transthoracic
Echocardiogram and an associated interpretative
physician visit. Eligible Class Members must
register for this benefit by Date 1. This Screening
Program shall be conducted for a 12-month period
after Final Judicial Approval. This period may be
extended for up to an additional 6 months by the
Court for good cause shown.
b. Cost of Transthoracic Echocardiogram: Diet Drug
Recipients in Subclass 1(b) who do not elect the
Accelerated Implementation Option described in
Section V below and who, independent of the
Screening Program, obtain an Echocardiogram after
the end of the Initial Opt-Out Period but before the
Final Judicial Approval Date, may recover from Fund
A the lesser of (i) the Trust's direct cost of
providing for a Transthoracic Echocardiogram and
associated interpretative physician visit under the
Screening Program and (ii) the actual amount paid by
the Class Member for the Echocardiogram and
associated interpretative physician visit, net of
amounts paid or reimbursed by an insurance carrier
or other third-party payor, but only in the event
that the Settlement receives Final Judicial
Approval. Eligible Class Members must submit a
claim for this benefit by Date 2. Class Members
receiving such a payment may not also participate in
the Screening Program benefits described in Section
IV.A.1.a.
c. Additional Medical Services Or Cash: All Diet Drug
Recipients in Subclass 2(b) and those Diet Drug
Recipients in Subclass 1(b) who have been diagnosed
by a Qualified Physician as FDA Positive by an
Echocardiogram performed between the commencement of
Diet Drug use and the end of the Screening Period,
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<PAGE>
will be entitled to receive, at the Class Member's
election, either (i) valve-related medical services
up to $10,000 in value to be provided by the Trust;
or (ii) $6,000 in cash. Such cash payments and
funds for such medical services will come from Fund
A. Eligible Class Members must register for this
benefit and make the affirmative election as to
whether they wish to receive cash or services by
Date 2.
d. Refund: Diet Drug Recipients in Subclasses 1(b) and
2(b), or their associated Representative Claimants,
will be eligible for a refund in the fixed amount of
$30 per month of use for Pondimin (Registered
Trademark) and $60 per month of use for Redux
(Trademark), subject to a maximum of $500 per Class
Member; provided, however, that such benefits will
be made available to members of Subclasses 1(b) and
2(b) only if, and to the extent that, Fund A
possesses sufficient assets to pay such benefits
after paying or creating a reserve for payment of
all other authorized expenses and benefits to be
provided by Fund A. Eligible Class Members must
register for this benefit by Date 1.
2. Benefits for Class Members who ingested Pondimin
(Registered Trademark) and/or Redux (Trademark) for 60
days or less:
a. Refund: Diet Drug Recipients in Subclasses 1(a) and
2(a) or their associated Representative Claimants
will be eligible for a refund in the fixed amount of
$30 per month of use for Pondimin (Registered
Trademark) and $60 per month of use for Redux
(Trademark). Eligible Class Members must register
for this refund benefit by Date 1.
b. Screening Program:
(1) In general, members of Subclass 1(a) are not
entitled to screening benefits.
(2) Limited Reimbursement for Screening
Examinations. If, however, during the
Screening Period, a Diet Drug Recipient in
Subclass 1(a), independent of the Screening
Program, obtains an Echocardiogram and is
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<PAGE>
diagnosed by a Qualified Physician as FDA
Positive based on that Echocardiogram, he/she
may recover from Fund A the lesser of (i) the
direct cost to the Trust of providing a
Transthoracic Echocardiogram and an associated
interpretative physician visit under the
Screening Program, and (ii) the actual amount
paid by the Class Member for the
Echocardiogram and associated interpretative
physician, net of amounts paid or reimbursed
by an insurance carrier or other third-party
payor, but only in the event that the
Settlement receives Final Judicial Approval.
Eligible Subclass 1(a) members must register
for this benefit by Date 2.
(3) Compassionate and Humanitarian Program. In
addition, the Trustees may, in their
discretion in appropriate cases for
compassionate and humanitarian reasons,
provide a Transthoracic Echocardiogram and
associated interpretative physician visit during
the Screening Period for members of Subclass
1(a) who are Diet Drug Recipients, where the
Trustees determine that (a) such persons are
in need of such services and are otherwise
unable to obtain them; or (b) where there are
other compelling reasons to provide such
services to such persons. Total disbursements
for such services shall not exceed $20
million. Eligible Subclass 1(a) members must
apply for such benefits by Date 1.
c. Additional medical services or cash. All members of
Subclass 2(a) who are Diet Drug Recipients as well
as those members of Subclass 1(a) who are Diet Drug
Recipients and who have been diagnosed by a
Qualified Physician as FDA Positive by an
Echocardiogram performed between the commencement of
Diet Drug use and the end of the Screening Period,
will be entitled to receive, at the Class Member's
election, either (i) valve-related medical services
up to $5,000 in value to be provided by the Trust or
(ii) $3,000 in cash. Such cash payments and funds
for such medical services will come from Fund A.
Eligible Class Members must register for this
benefit and make the affirmative election as to
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whether they wish to receive cash or services by
Date 2.
3. Benefits for All Class Members
a. Medical Research and Education Fund. An amount in
Fund A not to exceed $25 million may be used to
finance medical research and education related to
heart disease. The Medical Research and Education
Fund will be funded by the transfer of up to $25
million from Fund A to an organization formed for
that purpose and described in Subsection (c)(3) of
Section 501 of the Internal Revenue Code pursuant to
Articles of Incorporation and Bylaws substantially
in the form appended hereto as Exhibit "4." The
management of the Medical Research and Education
Fund will be by an independent Board of Directors.
The Parties agree that the Directors of the Medical
Research and Education Fund will be nominated by the
Parties and that each nominee will be subject to
agreement of the Parties and subject to Court
approval.
b. Medical/Legal Registry. The Trustees shall apply a
portion of Fund A to establish, operate and maintain
a "Registry" to track the medical condition of Class
Members, both for purposes of processing claims for
benefits under the terms of the Settlement and for
purposes of medical research and education. The
funds expended to create, maintain and operate this
Registry shall be considered administrative expenses
of Fund A and shall not reduce the $25 million which
is available for medical education and research.
c. Echocardiogram in the case of financial hardship. In
addition, the Trustees may, in their discretion, for
members of Subclasses 1(a) and 1(b), in cases of
true financial hardship provide a Transthoracic
Echocardiogram and associated interpretative
physician visit to such persons after Trial Court
Approval of this Settlement. The Trustees may also,
in their discretion, reimburse members of Subclasses
1(a) and 1(b), in cases of true financial hardship,
for Echocardiograms and associated interpretative
physician visits that were previously performed
where (i) such procedures were performed prior to
September 30, 1999 in response to a statewide class
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action notice, or (ii) the Trustees, in their
discretion, determine that there are compelling
reasons for such reimbursement. Such reimbursement
shall be limited to the lesser of (i) the direct
cost to the Trust of providing a Transthoracic
Echocardiogram and associated interpretative
physician visit under the Screening Program
and (ii) the actual amount paid by the Class
Member for the Echocardiogram and associated
interpretative physician visit, net of amounts
paid or reimbursed by an insurance carrier or
other third-party payor.
4. Terms of medical screening program and provision of
additional medical services.
a. In order to supply Transthoracic Echocardiograms and
associated interpretative physician visits pursuant to
Sections IV.A.1.a, IV.A.1.b, IV.A.2.b.2, IV.A.2.b.3
and IV.A.3.c of this Settlement Agreement, and the
additional medical services which Class Members are
entitled to receive in accordance with Sections
IV.A.1.c and IV.A.2.c of this Settlement Agreement,
the Trustees and/or Claims Administrator(s) may
enter into a contract with a network of providers of
health services.
b. The "additional medical services" which eligible
Class Members are entitled to receive under Sections
IV.A.1.c and IV.A.2.c of this Settlement Agreement
shall be determined by the Trustees and may include
the following services, when performed, supervised,
or prescribed by a physician specializing in
internal medicine, cardiology, or cardiothoracic
surgery:
(1) Comprehensive physical examinations;
(2) Chest x-rays;
(3) Electrocardiograms;
(4) Standard laboratory testing;
(5) Medically-appropriate Echocardiograms;
(6) Medically-supervised nutritional counseling;
and/or
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(7) Any new, accepted technology or modalities for
the management of valvular heart disease.
B. Compensation Benefits Payable from Fund B
1. Eligible Class Members. The following Class Members, and
only such Class Members, shall be entitled to the
compensation benefits from Fund B ("Matrix Compensation
Benefits"):
a. Diet Drug Recipients who have been diagnosed by a
Qualified Physician as FDA Positive or as having
Mild Mitral Regurgitation by an Echocardiogram
performed between the commencement of Diet Drug use
and the end of the Screening Period and who have
registered for further settlement benefits by Date
2;
b. The Representative Claimants of Diet Drug Recipients
who have been diagnosed by a Qualified Physician as
FDA Positive or as having Mild Mitral Regurgitation
by an Echocardiogram performed between the
commencement of Diet Drug use and the end of the
Screening Period, where either the Diet Drug
Recipient or the Representative Claimant(s) for the
Diet Drug Recipient has registered for further
settlement benefits by Date 2;
c. The Derivative Claimants of Diet Drug Recipients who
have been diagnosed by a Qualified Physician as FDA
Positive or as having Mild Mitral Regurgitation by
an Echocardiogram performed between the commencement
of Diet Drug use and the end of the Screening
Period, where the Derivative Claimants have
registered for further settlement benefits by Date
2, to the extent that such persons have a legally
recognized claim for loss of services, consortium,
support, or the like, arising from injury to the
associated Diet Drug Recipient;
d. Diet Drug Recipients who have been diagnosed by a
Qualified Physician as having Endocardial Fibrosis
by September 30, 2005 and have registered for Fund B
benefits by January 31, 2006;
e. The Representative Claimants of Diet Drug Recipients
who have been diagnosed by a Qualified Physician as
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having Endocardial Fibrosis by September 30, 2005,
where either the Diet Drug Recipient or the
Representative Claimant(s) of the Diet Drug
Recipient has registered for Fund B benefits by
January 31, 2006;
f. The Derivative Claimants of Diet Drug Recipients who
have been diagnosed by a Qualified Physician as
having Endocardial Fibrosis by September 30, 2005,
where the Derivative Claimants have registered for
Fund B benefits by January 31, 2006, to the extent
that such persons have a legally recognized claim
for loss of services, consortium, support, or the
like, arising from injury to the associated Diet
Drug Recipient.
2. Benefits Available
a. For purposes of providing Matrix Compensation
Benefits to those Class Members eligible to receive
such payments, the following four payment matrices
(hereinafter the "Matrices" or "Matrix") are
established:
Matrix A-1 Age at diagnosis/event
<TABLE>
Severity <24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70 - 79
-
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
I $123,750 $117,563 $111,685 $106,100 $100,795 $95,755 $90,967 $86,419 $82,098 $73,888 $36,944
II $643,500 $611,325 $580,759 $551,721 $524,135 $497,928 $473,032 $449,381 $426,912 $384,221 $192,111
III $940,500 $893,475 $848,801 $806,361 $766,043 $727,741 $691,354 $656,786 $623,947 $561,552 $280,776
IV $1,336,500 $1,269,675 $1,206,191 $1,145,881 $1,088,587 $1,034,158 $982,450 $933,327 $886,661 $797,995 $398,998
V $1,485,000 $1,410,750 $1,340,213 $1,273,202 $1,209,542 $1,149,065 $1,091,612 $1,037,031 $985,180 $886,662 $443,331
</TABLE>
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<PAGE>
Matrix A-2 Age at diagnosis/event
<TABLE>
Severity < 24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-79
-
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
I $1,250 $1,187 $1,128 $1,072 $1,018 $967 $919 $873 $829 $739 $500
II $6,500 $6,175 $5,866 $5,573 $5,294 $5,030 $4,778 $4,539 $4,312 $3,842 $1,921
III $9,500 $9,025 $8,574 $8,145 $7,738 $7,351 $6,983 $6,634 $6,302 $5,616 $2,808
IV $13,500 $12,825 $12,184 $11,575 $10,996 $10,446 $9,924 $9,428 $8,956 $7,980 $3,990
V $15,000 $14,250 $13,537 $12,861 $12,218 $11,607 $11,026 $10,475 $9,951 $8,867 $4,433
</TABLE>
Matrix B-1 Age at diagnosis/event
<TABLE>
Severity < 24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70 - 79
-
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
I $24,750 $23,513 $22,337 $21,221 $20,159 $19,152 $18,194 $17,284 $16,420 $14,778 $7,389
II $128,700 $122,265 $116,152 $110,344 $104,827 $99,586 $94,606 $89,876 $85,383 $76,844 $38,422
III $188,100 $178,695 $169,760 $161,272 $153,208 $145,548 $138,270 $131,357 $124,790 $112,310 $56,155
IV $267,300 $253,935 $241,238 $229,176 $217,717 $206,831 $196,489 $186,665 $177,332 $159,599 $79,800
V $297,000 $282,150 $268,043 $254,641 $241,908 $229,813 $218,322 $207,406 $197,036 $177,332 $88,666
</TABLE>
Matrix B-2 Age at diagnosis/event
<TABLE>
Severity < 24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70 - 79
-
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
I $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
II $1,300 $1,235 $1,173 $1,115 $1,059 $1,006 $956 $908 $862 $768 $500
III $1,900 $1,805 $1,715 $1,629 $1,548 $1,470 $1,397 $1,327 $1,260 $1,123 $562
IV $2,700 $2,565 $2,437 $2,315 $2,199 $2,089 $1,985 $1,885 $1,791 $1,596 $798
V $3,000 $2,850 $2,707 $2,572 $2,444 $2,321 $2,205 $2,095 $1,990 $1,773 $886
</TABLE>
-40-
<PAGE>
b. Each Matrix describes the amount which an eligible
Class Member is entitled to recover based on (1) the
level of severity of a Diet Drug Recipient's disease
pursuant to Section IV.B.2.c below, and (2) the age
at which the Diet Drug Recipient is first diagnosed
as suffering from that level of disease severity.
c. The levels of disease severity in a Diet Drug
Recipient which qualify eligible Class Members for
payment on the Matrices are as follows:
(1) Matrix Level I is severe left sided valvular
heart disease without complicating factors, and
is defined as one of the following:
(a) Severe aortic regurgitation (AR) > 50%
jet height/left ventricular outflow
tract height (JH/LVOTH)<F14> and/or
severe mitral regurgitation (MR) > 40%
regurgitant jet area/left atrial area
(RJA/LAA)<F15>,<F16> and no
complicating factors as defined below;
(b) FDA Positive valvular
regurgitation<F17> with bacterial
endocarditis contracted after
commencement of Pondimin (Registered
Trademark) and/or Redux (Trademark) use.
(2) Matrix Level II is left sided valvular heart
disease with complicating factors, and is
defined as:
(a) Moderate AR (25% - 49%
JH/LVOTH)<F18> or Severe AR (> 50%
JH/LVOTH)<F19> with one or more of
the following:
i) Pulmonary hypertension secondary to
severe aortic regurgitation with a
peak systolic pulmonary artery
pressure > 40 mm Hg measured by
cardiac catheterization or with a
peak systolic pulmonary artery
pressure > 45 mm Hg<F20>
measured by Doppler
Echocardiography, at rest,
-41-
<PAGE>
utilizing standard
procedures<F21>,<F22>
assuming a right atrial pressure of
10 mm Hg;
ii) Abnormal left ventricular end-
systolic dimension > 50
mm<F23> by M-mode or 2-D
Echocardiography or abnormal left
ventricular end-diastolic dimension
> 70 mm<F24> as measured by M-
mode or 2-D Echocardiography;
iii) Ejection fraction of <
50%<F25>; and/or
(b) Moderate MR (20% - 40%
RJA/LAA)<F26> or Severe MR (> 40%
RJA/LAA)<F27> with one or more of
the following:
i) Pulmonary hypertension secondary to
valvular heart disease with peak
systolic pulmonary artery pressure
> 40 mm Hg measured by cardiac
catheterization or with a peak
systolic pulmonary artery pressure
> 45 mm Hg<F28> measured by
Doppler Echocardiography, at rest,
utilizing the procedures described
in Section IV.B.2.c.(2)(a)(i)
above;
ii) Abnormal left atrial supero-
inferior systolic dimension > 5.3
cm<F29> (apical four chamber
view) or abnormal left atrial
antero-posterior systolic dimension
> 4.0 cm (parasternal long axis
view) measured by 2-D directed M-
mode or 2-D echocardiography with
normal sinus rhythm using sites of
measurement recommended by the
American Society of
Echocardiography;<F30>
-42-
<PAGE>
iii) Abnormal left ventricular end-
systolic dimension > 45
mm<F31> by M-mode or 2-D
Echocardiogram;
iv) Ejection fraction of less than
Or equal to 60%<F32>;
v) Arrhythmias, defined as chronic
atrial fibrillation/flutter that
cannot be converted to normal sinus
rhythm, or atrial
fibrillation/flutter requiring
ongoing medical therapy, any of
which are associated with left
atrial enlargement; as defined
above in Section
IV.B.2.c.(2)(b)(ii).
(3) Matrix Level III is left sided valvular heart
disease requiring surgery or conditions of
equal severity, and is defined as:
(a) Surgery to repair or replace the aortic
and/or mitral valve(s) following the use
of Pondimin (Registered Trademark)
and/or Redux (Trademark); or
(b) Severe regurgitation and the presence of
ACC/AHA Class I indications for surgery
to repair or replace the
aortic<F33> and/or mitral<F34>
valve(s) and a statement from the
attending Board-Certified Cardiothoracic
Surgeon or Board-Certified Cardiologist
supported by medical records regarding
the recommendations made to the patient
concerning valvular surgery, with the
reason why the surgery is not being
performed; or
(c) Qualification for payment at Matrix
Level I(b) (as described in Section
IV.B.2.c.(1)(b) above) or Matrix Level
II and, in addition, a stroke due to
bacterial endocarditis contracted after
use of Pondimin (Registered Trademark)
-43-
<PAGE>
and/or Redux (Trademark) or as a
consequence of chronic atrial
fibrillation with left atrial
enlargement as defined in Section
IV.B.2.c.(2)(b)(ii) which results in a
permanent condition which meets the
criteria of AHA Stroke Outcome
Classification<F35> Functional
Level II, determined six months after
the event.
(4) Matrix Level IV is defined as follows:
(a) Qualification for payment at Matrix
Level I(b) (as described in Section
IV.B.2.c.(1)(b) above), II or III and,
in addition, a stroke due to Bacterial
Endocarditis contracted after use of
Pondimin (Registered Trademark) and/or
Redux (Trademark) or as a consequence of
chronic atrial fibrillation with left
atrial enlargement as defined in Section
IV.B.2.c.(2)(b)(ii) which results in a
permanent condition which meets the
criteria of AHA Stroke Outcome
Classification<F36> Functional
Level III, determined six months after
the event; or
(b) Qualification for payment at Matrix
Level I.b, II, or III and, in addition,
a peripheral embolus due to Bacterial
Endocarditis contracted after use of
Pondimin (Registered Trademark) and/or
Redux (Trademark) or as a consequence of
atrial fibrillation with left atrial
enlargement as defined in Section
IV.B.2.c.(2)(b)(ii) which results in
severe permanent impairment to the
kidneys, abdominal organs, or
extremities, where severe permanent
impairment means:
i) for the kidneys, chronic severe
renal failure requiring
hemodialysis or continuous
-44-
<PAGE>
abdominal peritoneal dialysis for
more than six months;
ii) for the abdominal organs,
impairment requiring intra-
abdominal surgery;
iii) for the extremities, impairment
requiring amputation of a major
limb; or
(c) The individual has the following:
i) Qualification for payment at Matrix
Level III; and
ii) New York Heart Association
Functional Class I or Class II
symptoms as documented by the
attending Board-Certified
Cardiothoracic Surgeon or Board-
Certified Cardiologist; and
iii) Valvular repair and replacement
surgery or ineligibility for
surgery due to medical reasons as
documented by the attending Board-
Certified Cardiothoracic Surgeon or
Board-Certified Cardiologist; and
iv) Significant damage to the heart
muscle, defined as: (a) a left
ventricular ejection fraction < 30%
with aortic regurgitation or a left
ventricular ejection fraction < 35%
with mitral regurgitation in
patients who have not had surgery
and meet the criteria of Section
IV.B.2.c.(3)(b) above or (b) a left
ventricular ejection fraction < 40%
six months after valvular repair or
replacement surgery in patients who
have had such surgery; or
(d) The individual has had valvular repair
or replacement surgery and has one or
more of the following complications
-45-
<PAGE>
which occur either during surgery,
within 30 days after surgery, or during
the same hospital stay as the surgery:
i) Renal failure, defined as chronic,
severe renal failure requiring
regular hemodialysis or continuous
abdominal peritoneal dialysis for
greater than six months following
aortic and/or mitral valve
replacement surgery;
ii) Peripheral embolus following
surgery resulting in severe
permanent impairment to the
kidneys, abdominal organs, or
extremities;
iii) Quadriplegia or paraplegia
resulting from cervical spine
injury during valvular heart
surgery; or
(e) A stroke caused by aortic and/or mitral
valve surgery and the stroke has
produced a permanent condition which
meets the criteria of the AHA Stroke
Outcome Classification<F37>
Functional Levels II or III determined
six months after the event;
(f) The individual has had valvular repair
or replacement surgery and suffers from
post operative endocarditis,
mediastinitis or sternal osteomyelitis,
any of which requires reopening the
median sternotomy for treatment, or a
post-operative serious infection defined
as HIV or Hepatitis C within six months
of surgery as a result of blood
transfusion associated with the heart
valve surgery.
(g) The individual has had valvular repair
or replacement surgery and requires a
second surgery through the sternum
within 18 months of the initial surgery
-46-
<PAGE>
due to prosthetic valve malfunction,
poor fit, or complications reasonably
related to the initial surgery.
(5) Matrix Level V is defined as:
(a) Endocardial Fibrosis (1) diagnosed by
(a) endomyocardial biopsy that
demonstrates fibrosis and cardiac
catheterization that demonstrates
restrictive cardiomyopathy or (b)
autopsy that demonstrates endocardial
fibrosis and (2) other causes, including
dilated cardiomyopathy, myocardial
infarction, amyloid, Loeffler's
endocarditis, endomyocardial fibrosis as
defined in Braunwald (involving one or
both ventricles, located in the inflow
tracts of the ventricles, commonly
involving the chordae tendinea, with
partial obliteration of either ventricle
commonly present)<F38>, focal
fibrosis secondary to valvular
regurgitation (e.g., "jet lesions"),
focal fibrosis secondary to catheter
instrumentation, and hypertrophic
cardiomyopathy with septal fibrosis,
have been excluded; or
(b) Left sided valvular heart disease with
severe complications, defined as Matrix
Levels I(b) (as described in Section
IV.B.2.c.(1)(b) above), III or IV above
with one or more of the following:
i) A severe stroke caused by aortic
and/or mitral valve surgery or due
to bacterial endocarditis
contracted after use of Pondimin
(Registered Trademark) and/or Redux
(Trademark) or as a consequence of
chronic atrial fibrillation with
left atrial enlargement as defined
in Section IV.B.2.c.(2)(b)(ii) and
the severe stroke has resulted in a
permanent condition which meets the
criteria of AHA Stroke Outcome
-47-
<PAGE>
Classification<F39> Functional
Levels IV or V, determined six
months after the event;
ii) The individual has the following:
a) Qualification for payment at
Matrix Levels III or IV; and
b) New York Heart Association
Functional Class III or Class
IV symptoms as documented by
the attending Board-Certified
Cardiothoracic Surgeon or
Board-Certified Cardiologist;
and
c) Valvular repair or
replacement surgery or
ineligibility for surgery due
to medical reasons as
documented by the attending
Board-Certified
Cardiothoracic Surgeon or
Board-Certified Cardiologist;
and
d) Significant damage to the
heart muscle, defined as:
(i) a left ventricular
ejection fraction < 30% with
aortic regurgitation or a
left ventricular ejection
fraction < 35% with mitral
regurgitation, in patients
who have not had surgery and
meet the criteria of Section
IV.B.2.c.(3)(b) above or (ii)
a left ventricular ejection
fraction < 40% six months
after valvular repair or
replacement surgery in
patients who have had such
surgery; or
iii) Heart transplant;
-48-
<PAGE>
iv) Irreversible pulmonary hypertension
(PH) secondary to valvular heart
disease defined as peak-systolic
pulmonary artery pressure > 50 mm
Hg<F40> (by cardiac
catheterization) at rest following
repair or replacement surgery of
the aortic and/or mitral valve(s);
v) Persistent non-cognitive
state<F41> caused by a
complication of valvular heart
disease (e.g., cardiac arrest) or
valvular repair/replacement surgery
supported by a statement from the
attending Board-Certified
Cardiothoracic Surgeon or Board-
Certified Cardiologist, supported
by medical records; or
(c) Death resulting from a condition caused
by valvular heart disease or valvular
repair/replacement surgery which
occurred post-Pondimin (Registered
Trademark) and/or Redux (Trademark) use
supported by a statement from the
attending Board-Certified Cardiothoracic
Surgeon or Board-Certified Cardiologist,
supported by medical records; or
(d) The individual otherwise qualifies for
payment at Matrix Level II, III, or IV
and suffers from ventricular
fibrillation or sustained ventricular
tachycardia which results in hemodynamic
compromise.
d. The circumstances which determine whether Matrix A-1
or Matrix B-1 is applicable to a claim for Matrix
compensation benefits are as follows:
(1) For Matrix A-1: Diet Drug Recipients who
ingested Pondimin (Registered Trademark)
and/or Redux (Trademark) for 61 or more days,
who were diagnosed by a Qualified Physician as
FDA Positive by an Echocardiogram performed
between the commencement of Diet Drug use and
-49-
<PAGE>
the end of the Screening Period, whose
conditions are eligible for Matrix payments
but who do not have any condition or
circumstance which makes Matrix B-1
applicable, or their Representative Claimants,
shall be entitled to receive Matrix
Compensation Benefits determined by
application of Matrix A-1, provided that such
Diet Drug Recipients or Representative
Claimants have registered (or are deemed to
have registered) for settlement benefits by
Date 2.
(2) For Matrix B-1: Diet Drug Recipients who are
eligible for Matrix Compensation Benefits and
to whom one or more of the following
conditions apply, or their Representative
Claimants, will receive Matrix Compensation
Benefits determined by application of Matrix
B-1, provided that such Diet Drug Recipients
or Representative Claimants have registered
(or are deemed to have registered) for
settlement benefits by Date 2:
(a) For claims as to the mitral valve, Diet
Drug Recipients who were diagnosed by a
Qualified Physician as having Mild
Mitral Regurgitation by an
Echocardiogram performed between the
commencement of Diet Drug use and the
end of the Screening Period (regardless
of the duration of ingestion of Pondimin
(Registered Trademark) and/or Redux
(Trademark)); or
(b) Diet Drug Recipients who ingested
Pondimin (Registered Trademark) and/or
Redux (Trademark) for 60 days or less,
who were diagnosed by a Qualified
Physician as FDA Positive by an
Echocardiogram performed between the
commencement of Diet Drug use and the
end of the Screening Period; or
(c) Diet Drug Recipients who ingested
Pondimin (Registered Trademark) and/or
Redux (Trademark) for 61 or more days,
-50-
<PAGE>
who were diagnosed by a Qualified
Physician as FDA Positive by an
Echocardiogram performed between the
commencement of Diet Drug use and the
end of the Screening Period, with any of
the following conditions:
i) With respect to an aortic valve
claim:
a) The following congenital
aortic valve abnormalities:
unicuspid, bicuspid or
quadricuspid aortic valve,
ventricular septal defect
associated with aortic
regurgitation;
b) Aortic dissection involving
the aortic root and/or aortic
valve;
c) Aortic sclerosis in people
who are greater than or equal
to 60 years old as of
the time they are first
diagnosed as FDA Positive;
d) Aortic root dilatation greater
than or equal to 5.0 cm;
e) Aortic stenosis with an
aortic valve area < 1.0
square centimeter by the
Continuity Equation.
ii) With respect to a mitral valve
claim:
a) The following congenital
mitral valve abnormalities:
parachute valve, cleft of the
mitral valve associated with
atrial septal defect;
b) Mitral Valve Prolapse;
c) Chordae tendineae rupture or
papillary muscle rupture; or
-51-
<PAGE>
acute myocardial infarction
associated with acute mitral
regurgitation;
d) Mitral annular calcification;
e) M-Mode and 2-D
echocardiographic evidence of
rheumatic mitral valves
(doming of the anterior
leaflet and/or anterior
motion of the posterior
leaflet and/or commissural
fusion), except where a
Board-Certified Pathologist
has examined mitral valve
tissue and determined that
there was no evidence of
rheumatic valve disease.
iii) With respect to claims for the
aortic and/or mitral valve(s):
a) Heart valve surgery prior to
Pondimin (Registered
Trademark) and/or Redux
(Trademark) use on the valve
that is the basis of claim;
b) Bacterial endocarditis prior
to Pondimin (Registered
Trademark) and/or Redux
(Trademark) use;
c) FDA Positive regurgitation
(confirmed by Echocardiogram)
prior to Pondimin (Registered
Trademark) and/or Redux
(Trademark) use for the valve
that is the basis of claim;
d) A diagnosis of Systemic Lupus
Erythematosus or a diagnosis
of Rheumatoid
Arthritis<F42> and
valvular abnormalities of a
-52-
<PAGE>
type associated with those
conditions;<F43>
e) Carcinoid tumor of a type
associated with aortic and/or
mitral valve lesions;
f) History of daily use of
methysergide or ergotamines
for a continuous period of
longer than 120 days.
e. Matrix A-2 and Matrix B-2 describe the amount of
compensation to which Derivative Claimants are
entitled if the Diet Drug Recipient with whom they
are associated has a Matrix-Level Condition, to the
extent that applicable state law recognizes that
they have a claim for loss of consortium, services
or support. Derivative Claimants will be paid based
on the Matrix-Level Condition and age of diagnosis
of the Diet Drug Recipient whose alleged injury
forms the basis of their claim for loss of
consortium, services, or support under applicable
state law. Matrix A-2 will apply if the Diet Drug
Recipient, whose alleged injury forms the basis of
the claim for loss of consortium, services, or
support under applicable state law, meets the
criteria for payment under Matrix A-1. Matrix B-2
will apply if the Diet Drug Recipient, whose alleged
injury forms the basis of the claim for loss of
consortium, services, or support under applicable
state law, meets the criteria for payment on Matrix
B-1.
f. If a Diet Drug Recipient qualifies for Matrix
payments due to more than one condition, the Diet
Drug Recipient and/or his or her associated
Representative and Derivative Claimants who have
registered (or who are deemed to have registered)
for settlement benefits by Date 2 shall be entitled
to receive only the higher of such payments, but not
both such payments.
g. Matrices A-1 and B-1 set forth the maximum aggregate
amount to which the Diet Drug Recipient or his or
her Representative Claimants are collectively
entitled to receive from Fund B. Where there is
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<PAGE>
more than one Representative Claimant associated
with any particular Diet Drug Recipient eligible for
such Matrix Compensation Benefits, the Trustees
and/or Claims Administrator(s) shall allocate this
amount among all of the Representative Claimants who
have made a claim for such benefits according to
applicable law. Matrices A-2 and B-2 set forth the
maximum aggregate amount to which all Derivative
Claimants associated with any particular Diet Drug
Recipient are collectively entitled to receive from
Fund B. Where there is more than one Derivative
Claimant associated with any particular Diet Drug
Recipient eligible for such Matrix Compensation
Benefits, the Trustees and/or Claims
Administrator(s) shall allocate the Matrix amount,
pro rata among all of the Derivative Claimants who
have made a claim for such benefits, to the extent
that applicable state law recognizes that they have
a claim for loss of consortium, services or support.
h. Diet Drug Recipients who have been diagnosed by a
Qualified Physician as FDA Positive (but not also as
having Mild Mitral Regurgitation) by an
Echocardiogram performed between the commencement of
Diet Drug use and the end of the Screening Period
and have registered for settlement benefits by Date
2, and their associated Representative and
Derivative Claimants who have registered (or who are
deemed to have registered) for settlement benefits
by Date 2, shall be eligible for Matrix payments for
Matrix-Level Conditions resulting from the valve or
valves for which there was an FDA Positive diagnosis
by a Qualified Physician by the end of the Screening
Period, subject to the above provision that if
he/she qualifies for more than one benefit, he/she
shall be entitled to the higher benefit, but not
both.
i. Diet Drug Recipients who have been diagnosed by a
Qualified Physician as having Mild Mitral
Regurgitation (but not also as FDA Positive) by an
Echocardiogram performed between the commencement of
Diet Drug use and the end of the Screening Period
and have registered for settlement benefits by Date
2, and their associated Representative and
Derivative Claimants who have registered (or who are
deemed to have registered) for settlement benefits
-54-
<PAGE>
by Date 2, shall be eligible for Matrix payments
only for claims based upon the mitral valve, subject
to the above provision that if he/she qualifies for
more than one benefit, he/she shall be entitled to
the higher benefit, but not both.
j. Diet Drug Recipients who have been diagnosed by a
Qualified Physician both as FDA Positive (due to
mild or greater aortic regurgitation) and as having
Mild Mitral Regurgitation by an Echocardiogram
performed between the commencement of Diet Drug use
and the end of the Screening Period and who have
registered for settlement benefits by Date 2, and
their associated Representative and Derivative
Claimants who have registered (or who are deemed to
have registered) for settlement benefits by Date 2,
shall be eligible for Matrix payments based upon
either the aortic or the mitral valve.
k. Diet Drug Recipients who have been diagnosed by a
Qualified Physician as having Endocardial Fibrosis
by September 30, 2005, and have registered for
Matrix Compensation Benefits for Endocardial
Fibrosis by January 31, 2006, and their associated
Representative and Derivative Claimants who have
registered (or who are deemed to have registered)
for these settlement benefits by January 31, 2006,
shall be entitled to the Endocardial Fibrosis
benefits as set forth in Sections IV.B.2.a and
IV.B.2.c.(5)(a), regardless of whether or not the
Diet Drug Recipient had valvular regurgitation.
l. A Representative Claimant is deemed to have
registered for settlement benefits either when the
Representative Claimant registers for benefits or,
if applicable, as of the date when the Diet Drug
Recipient to which the claim relates has registered
for settlement benefits.
C. Payment Provisions
1. The Matrix payment amounts set forth in Section IV.B.2.a
above will be increased by two percent (2%) per year,
compounded annually, beginning one year after the Final
Judicial Approval Date. In the event that the Settlement
does not receive Final Judicial Approval or is terminated
by AHP in accordance with its terms for any other reason,
-55-
<PAGE>
then for purposes of providing benefits to each Class
Member who has entered into an Individual Agreement
pursuant to the Accelerated Implementation Option
(described in Section V below), the Matrix payment
amounts shall be increased by 2% per year, compounded
annually, beginning in the second "AIO Fiscal Year" (as
defined in Section I.6 and as discussed in Section V.H.3
hereof).
2. A "Matrix Payment Cut-Off Date" is established for
purposes of this Settlement. The Matrix Payment Cut-Off
Date shall be a date which is 14 years from the Final
Judicial Approval Date or December 31, 2015, whichever is
earlier. Those Class Members who fail to qualify for
payment on the Matrices by the Matrix Payment Cut-Off
Date shall have no further right to claim benefits under
Fund B or to exercise a Back-End Opt-Out (as described in
Section IV.D.4 below). However, where a Diet Drug
Recipient does qualify for payment on the Matrices by the
Matrix Payment Cut-Off Date, the Diet Drug Recipient
and/or the associated Representative and Derivative
Claimants may continue to receive higher amounts of
Matrix Compensation Benefits, if any, if the condition of
the Diet Drug Recipient which qualified such person for
such payment progresses to a more severe condition after
the Matrix Payment Cut-Off Date.
3. Once a Diet Drug Recipient has reached a Matrix-Level
Condition before the Matrix Payment Cut-Off Date, the
Diet Drug Recipient and any associated Representative
and/or Derivative Claimants can step up to higher Matrix-
Level Conditions and will be paid the incremental dollar
amount, if any, by which the Matrix payment for the
higher Matrix-Level Condition exceeds the Matrix payment
previously received. Notwithstanding the foregoing, Class
Members who seek benefits for Endocardial Fibrosis must
qualify for payment on the Matrices for that condition by
September 30, 2005 and register (or be deemed to have
registered) for Matrix Compensation Benefits for
Endocardial Fibrosis by January 31, 2006.
4. Prior to the payment of Fund B benefits to any Class
Member, the Trustees and/or Claims Administrator(s) shall
deduct the amount provided for in Section VIII.E.1.b for
the payment of attorneys' fees.
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<PAGE>
D. Opt-Out Rights
1. Derivative Claimants. As to all opt-outs, where there is
both a Diet Drug Recipient or a Representative Claimant
and one or more Derivative Claimants, the Diet Drug
Recipient's or the Representative Claimant's exercise or
failure to exercise an opt-out right shall be binding on
the associated Derivative Claimant(s).
2. Initial Opt-Out
a. Eligibility: All Class Members are eligible to
exercise an Initial Opt-Out right.
b. Method of Exercise: Each Class Member wishing to opt
out from this Settlement must sign and submit timely
written notice to the Claims Administrator(s), with
a copy to AHP, clearly manifesting the Class
Member's intent to opt out of the Settlement. The
Claims Administrator(s) shall then submit all Opt-
Out forms to the Court. The Court shall be the
official registry of Opt-Outs. This written notice
shall be in the form appended hereto as Exhibit "6"
or in a substantially identical written
manifestation of intent. To be effective, this
written notice must be signed and submitted by the
expiration of the Initial Opt-Out Period. The
Parties will recommend that the Court approve an
Initial Opt-Out Period of 90 days from the date on
which class notice commences.
c. Effect of Exercise: Any Class Member who timely and
properly exercises an Initial Opt-Out right may
initiate, continue with, or otherwise prosecute any
legal claim against AHP and the Released Parties
without any limitation, impediment or defense
arising from the terms of the Settlement Agreement
and subject to all defenses and rights which AHP and
the Released Parties would otherwise have in the
absence of the Settlement Agreement. AHP agrees
that it will not use the Settlement Agreement or any
proceedings connected therewith to cause delay to
any Class Member who timely and properly exercises
his/her Initial Opt-Out right and initiates,
continues with, or otherwise prosecutes a claim
against AHP. Lawsuits initiated by Class Members
who timely and properly exercise an Initial Opt-Out
shall be subject to the provisions of Section
VIII.F.3.
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d. Revocation of Exercise: Any Class Member may revoke
an election to exercise a right of Initial Opt-Out
and thereby receive the benefits of the Settlement,
provided that the revocation takes place with the
written consent of AHP, which shall not be
unreasonably withheld.
3. Intermediate Opt-Out
a. Eligibility: All Diet Drug Recipients (other than
those who have entered into AIO Individual
Agreements pursuant to the Accelerated
Implementation Option) who are not members of
Subclasses 2(a), 2(b) or 3, and who have been
diagnosed by a Qualified Physician as FDA Positive
by an Echocardiogram performed between the
commencement of Diet Drug use and the end of the
Screening Period, and their associated
Representative and/or Derivative Claimants, are
eligible to exercise a right to Intermediate Opt-Out.
b. Method of Exercise: Each Class Member who wants to
exercise a right of Intermediate Opt-Out must do so
by completing, signing, and timely submitting a
written notice of the Class Member's intent to do so
in the form appended hereto as Exhibit "7." This
written notice must be submitted to the Court, the
Trustees and/or Claims Administrator(s), and to AHP,
no later than Date 2. In that form, the Class
Member must clearly express his/her desire to
exercise a right of Intermediate Opt-Out, certify
that he/she is eligible to do so, and expressly
acknowledge an understanding of the Settlement
rights and benefits that will be relinquished by the
exercise of the Intermediate Opt-Out right. A Class
Member may not exercise an Intermediate Opt-Out
right after receiving either $6,000 in cash or any
portion of $10,000 in medical services in the case
of members of Subclass 1(b) (pursuant to Section
IV.A.1.c above), or $3,000 in cash or any portion of
$5,000 in medical services in the case of members of
Subclass 1(a) (pursuant to Section IV.A.2.c above).
If a member of Subclass 1(a) or 1(b) is diagnosed
with a Matrix-Level Condition and exercises an opt-
out right after the end of the Initial Opt-Out
Period, the opt-out shall be deemed a Back-End Opt-
Out.
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c. Effect of Exercise: The Intermediate Opt-Out is
subject to the following provisions. A Class Member
who timely and properly exercises an Intermediate
Opt-Out right may pursue all of his or her Settled
Claims (except for those claims set forth in
subparagraphs (e) and (g) of Section I.53), against
the AHP Released Parties and/or the Non-AHP Released
Parties, but may only assert a claim against AHP
Released Parties and/or the Non-AHP Released Parties
based on the heart valve of the relevant Diet Drug
Recipient which was diagnosed by a Qualified
Physician as FDA Positive by an Echocardiogram
performed between the commencement of Diet Drug use
and the end of the Screening Program. If, at any
time after a Class Member exercises an Intermediate
Opt-Out right, the Class Member initiates a lawsuit
seeking to pursue a Settled Claim against AHP or any
other Released Party, the Released Party shall have
the right to challenge, in such lawsuit only,
whether the opt-out was timely and proper, including
whether the Class Member was eligible to exercise
such an opt-out right. With respect to each Class
Member who timely and properly exercises the
Intermediate Opt-Out right and who initiates a
lawsuit against any of the Released Parties within
one year from the date on which the Intermediate
Opt-Out right is exercised, the AHP Released Parties
shall not assert any defense based on any statute of
limitations or repose, the doctrine of laches, any
other defense predicated on the failure to timely
pursue the claim, any defense based on "splitting" a
cause of action, any defense based on any release
signed pursuant to the Settlement Agreement, and/or
any other defense based on the existence of the
Settlement Agreement, except to the extent provided
herein. A Class Member timely and properly
exercising an Intermediate Opt-Out right may not
seek punitive, exemplary, or any multiple damages
against the AHP Released Parties or the Non-AHP
Released Parties; provided, however, as
consideration for being a Non-AHP Released Party and
for receiving the benefit of this waiver of
punitive, exemplary, and multiple damages, the Non-
AHP Released Party must agree in writing not to
assert any defense based on any statute of
limitations or repose, the doctrine of laches, or
any other defense predicated on the failure to
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timely pursue the claim, any defense based on
"splitting" a cause of action, any defense based on
any release signed pursuant to the Settlement
Agreement, and/or any other defense based on the
existence of the Settlement Agreement, except to the
extent provided herein; and provided further that if
the Non-AHP Released Party so agrees, then the Class
Member may not recover more than the total amount of
compensatory damages he or she is entitled to from
all persons or entities in connection with any
claimed injury arising from his/her use of Diet
Drugs, except where such limitation is inconsistent
with applicable law. A Class Member timely and
properly exercising an Intermediate Opt-Out right
may not use any previous verdicts or judgments
against the AHP Released Parties, or factual
findings necessary to such verdicts or judgments,
for purposes of establishing claims or facts in
order to obtain a verdict or judgment against the
AHP Released Parties under the doctrines of res
judicata, collateral estoppel or other doctrines of
claim or issue preclusion. Nor may a Class Member
timely and properly exercising an Intermediate Opt-
Out right seek to introduce into evidence against
the AHP Released Parties, for any purpose, such a
verdict, judgment, or factual finding. Lawsuits
initiated by Class Members who timely and properly
exercise an Intermediate Opt-Out shall be subject to
the provisions of Section VIII.F.3.
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4. Back-End Opt-Out
a. Eligibility:
(1) As to Matrix-Level claims based upon valvular
regurgitation, all Diet Drug Recipients (other
than those who have entered into AIO
Individual Agreements pursuant to the
Accelerated Implementation Option) who have
been diagnosed by a Qualified Physician as FDA
Positive or as having Mild Mitral
Regurgitation by an Echocardiogram performed
between the commencement of Diet Drug use and
the end of the Screening Period, and who reach
a Matrix-Level Condition after September 30,
1999, but before the Matrix Payment Cut-Off
Date, and their associated Representative
and/or Derivative Claimants, may exercise a
Back-End Opt-Out right, provided that the
Class Member has registered or is deemed to
have registered for settlement benefits by
Date 2. Class Members who knew prior to
September 30, 1999, that they had injury to
one or more of their left side heart valves
and a condition which would entitle them to
payments on the Matrices may not exercise a
Back-End Opt-Out.
(2) As to Matrix-Level claims based upon
Endocardial Fibrosis, all Diet Drug Recipients
who have not received the diagnosis of
Endocardial Fibrosis from a Qualified
Physician by September 30, 1999, and who have
subsequently been diagnosed by a Qualified
Physician as having Endocardial Fibrosis by
September 30, 2005, and their associated
Representative and/or Derivative Claimants,
may exercise a Back-End Opt-Out.
(3) Class Members who are not eligible for Matrix
Compensation Benefits may not exercise the
Back-End Opt-Out right provided by this
Settlement.
b. Method of Exercise: Each Class Member who wishes to
exercise a right of Back-End Opt-Out must complete,
sign, and timely submit written notice of the Class
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Member's intention to do so in the form appended
hereto as Exhibit "8." This written notice must be
submitted to the Court, the Trustees and/or Claims
Administrator(s), and to AHP, within 120 days after
the date on which the Class Member first knows or
should have known in the exercise of reasonable
diligence that the relevant Diet Drug Recipient
developed a Matrix-Level Condition or by Date 2,
whichever is later. In that notice, the Class
Member must clearly express his or her decision to
exercise a Back-End Opt-Out right, certify that he
or she is eligible to do so, and acknowledge an
understanding of the Settlement rights and benefits
that will be relinquished by the exercise of the
Back-End Opt-Out. A Class Member may not exercise a
Back-End Opt-Out right after claiming any Matrix
Compensation Benefits.
c. Effect of Exercise: The Back-End Opt-Out is subject
to the following provisions. A Class Member who
timely and properly exercises a Back-End Opt-Out may
pursue all of his or her Settled Claims (except for
those claims set forth in subparagraphs (e) and (g)
of Section I.53), against the AHP Released Parties
and/or the Non-AHP Released Parties, but may only
assert a claim against the AHP Released Parties
and/or the Non-AHP Released Parties as follows: (i)
if such person has opted out by reason of a Matrix-
Level Condition of one or more heart valves
diagnosed by a Qualified Physician as FDA Positive
or Mild Mitral Regurgitation by an Echocardiogram
performed between the commencement of Diet Drug use
and the end of the Screening Period, such lawsuit
may only assert a claim based on that heart valve or
valves and condition; and (ii) if such person has
opted out by reason of Endocardial Fibrosis, such
lawsuit may only assert a claim based on Endocardial
Fibrosis. If, at any time after a Class Member
exercises a Back-End Opt-Out right, the Class Member
initiates a lawsuit seeking to pursue a Settled
Claim against AHP or any other Released Party, the
Released Party shall have the right to challenge, in
such lawsuit only, whether the opt-out was timely
and proper, including whether the Class Member was
eligible to exercise such an opt-out right. With
respect to each Class Member who timely and properly
exercises the Back-End Opt-Out right and who
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initiates a lawsuit against any of the Released
Parties within one year from the date on which the
Back-End Opt-Out right is exercised, the AHP
Released Parties shall not assert any defense based
on any statute of limitations or repose, the
doctrine of laches, any other defense predicated on
the failure to timely pursue the claim, any defense
based on "splitting" a cause of action, any defense
based on any release signed pursuant to the
Settlement Agreement, and/or any other defense based
on the existence of the Settlement Agreement, except
to the extent provided herein. A Class Member
timely and properly exercising a Back-End Opt-Out
may not seek punitive, exemplary, or any multiple
damages against the AHP Released Parties or the Non-
AHP Released Parties; provided, however, as
consideration for being a Non-AHP Released Party and
for receiving the benefit of this waiver of
punitive, exemplary, and multiple damages, the Non-
AHP Released Party must agree not to assert any
defense based on any statute of limitations or
repose, the doctrine of laches, or any other defense
predicated on the failure to timely pursue the
claim, any defense based on "splitting" a cause of
action, any defense based on any release signed
pursuant to the Settlement Agreement, and/or any
other defense based on the existence of the
Settlement Agreement, except to the extent provided
herein; and provided further that if the Non-AHP
Released Party so agrees, then the Class Member may
not recover more than the total amount of
compensatory damages he or she is entitled to from
all persons or entities in connection with any
claimed injury arising from his/her use of Diet
Drugs, except where such limitation is inconsistent
with applicable law. A Class Member timely and
properly exercising a Back-End Opt-Out may not use
any previous verdicts or judgments against the AHP
Released Parties, or factual findings necessary to
such verdicts or judgments, for purposes of
establishing claims or facts in order to obtain a
verdict or judgment against the AHP Released Parties
under the doctrines of res judicata, collateral
estoppel or other doctrines of claim or issue
preclusion. Nor may a Class Member timely and
properly exercising a Back-End Opt-Out right seek to
introduce into evidence against the AHP Released
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Parties, for any purpose, such a verdict, judgment,
or factual finding. Lawsuits initiated by Class
Members who timely and properly exercise a Back-End
Opt-Out shall be subject to the provisions of
Section VIII.F.3.
V. ACCELERATED IMPLEMENTATION OPTION
A. All Class Members shall be offered the option of obtaining
settlement benefits prior to the Final Judicial Approval Date
(the "Accelerated Implementation Option" or "AIO") subject to
the conditions defined below.
B. Any Class Member may elect the AIO at any time from the
Preliminary Approval Date until the Final Judicial Approval
Date or, unless AHP elects to extend the offer date
thereafter, the date on which it is determined that the
Settlement Agreement will not receive Final Judicial
Approval. Persons electing the AIO will begin receiving
benefits thereunder at such time as the Trial Court makes an
oral or written ruling on the approval or non-approval of the
Settlement or at such time as AHP exercises its "walkaway
rights" pursuant to Section VII.E hereof. A Derivative
Claimant may not elect the AIO if the Diet Drug Recipient
with whom he or she is associated (or the Representative
Claimant of the Diet Drug Recipient) has not elected the AIO.
C. In order to elect the AIO, a Class Member must complete and
sign the "PINK FORM" appended to this Settlement Agreement as
Exhibit "9" and submit it to the Trustees and/or Claims
Administrator(s). Any person properly executing the "PINK
FORM" and delivering it to the Trustees and/or Claims
Administrator(s) during the period in which AHP is offering
the AIO, including any extension of the AIO offer, will have
entered into an individual agreement with AHP, separate from
this Settlement Agreement, under which the parties thereto
shall have all the same rights, benefits and obligations to
one another as the rights, benefits and obligations accorded
to Class Members and to AHP under the Settlement Agreement,
except as provided below. Class Members will have all the
rights, benefits and obligations provided in Section IV.A,
IV.B, and IV.C, except for Section IV.A.1.b herein. AHP will
have all the rights, benefits and obligations provided in
Section VII., except subsection E. thereof. Such executed
and delivered PINK FORMS shall be referred to as "Individual
Agreements."
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D. Such Individual Agreements shall be effective prior to the
Final Judicial Approval Date and, even if AHP exercises its
"walkaway right" under Section VII.E, the Individual
Agreements entered into prior to the date of such exercise
shall nevertheless be binding and effective. If AHP does not
exercise its "walkaway right," and the Settlement Agreement
with the Settlement Class does not receive Final Judicial
Approval or is terminated for any other reason, such
Individual Agreements shall nevertheless continue to be
effective and binding.
E. No person exercising an Initial Opt-Out right will be
eligible to enter into an Individual Agreement, unless such
Initial Opt-Out has been revoked with AHP's consent pursuant
to Section IV.D.2.d hereof. Persons signing Individual
Agreements will, by entering into such Individual Agreements,
knowingly and affirmatively waive all Intermediate and Back-
End Opt-Out rights otherwise provided for by the Settlement
Agreement regardless of whether or not the Settlement
Agreement receives Final Judicial Approval. Notwithstanding
the preceding sentence, Class Members who enter into
Individual Agreements pursuant to the Accelerated
Implementation Option will be eligible to exercise the
Financial Insecurity Opt-Out Right described in Section
III.E.9 above. In addition, such persons will agree not to
object to approval of the Settlement by the Court and will
agree not to appeal from Trial Court Approval. The Individual
Agreements shall also provide for a Screening Period to
commence on or about the AIO Start Date and to conclude 12
months after the date on which the Settlement Agreement
obtains Final Judicial Approval or the date on which it is
determined that the Settlement Agreement will not receive
Final Judicial Approval or is otherwise terminated. Persons
signing Individual Agreements pursuant to the AIO shall also
agree to be bound by the provisions contained in Sections
VII.C.1 through VII.C.4 herein with respect to the protection
of AHP from claims by Non-Settling Defendants,
notwithstanding the absence of any order enjoining and
barring all Non-Settling Defendants from commencing or
prosecuting any claim against AHP or any other Released Party
for contribution and/or non-contractual indemnity as set
forth in Section VII.C.1.a and Section VII.C.2 herein.
F. After Trial Court Approval or in the event Trial Court
Approval is denied and an appeal from that denial is taken in
a timely manner, but prior to the Final Judicial Approval
Date, the following provisions shall apply: (i) Fund A
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benefits for individuals accepting the AIO will be payable
only out of Fund A of the Settlement Trust and AHP's
obligation to make payments to Fund A for this and any other
purpose shall be unchanged from that set forth in Section
III.B hereof; (ii) Fund B benefits for eligible individuals
accepting the AIO will be payable only out of Fund B of the
Settlement Trust. AHP shall deposit in Fund B any additional
amounts needed to pay Fund B benefits for individuals
accepting the AIO and the reasonable costs of administration
associated with providing such benefits, as needed by the
Trust. The payment of attorneys' fees by AHP in the
circumstances described by this paragraph shall be in
accordance with Section VIII.E.2, 3 and 4.
G. In the event of Final Judicial Approval, all benefits due
under the AIO shall be paid from Fund A or Fund B, as
applicable, and AHP shall continue to have obligations as set
forth in Sections III.B and III.C hereof to make payments to
Fund A and Fund B, but AHP shall have no further obligation
to make any "additional deposits" in Fund B pursuant to
Section V.F above for the payment of such AIO benefits. In
that event, AHP will receive a credit for any "additional
deposits" to Fund B made pursuant to Section V.F above, which
will accrete at 6% per year from the end of the calendar
quarter in which the additional deposit is made until the
date it is applied. That credit will be applied against the
earliest payment(s) to Fund B required to be made by AHP
after Final Judicial Approval. All Individual Agreements
shall be administered after Final Judicial Approval in all
respects as if they were part of the Settlement, other than
as set forth in Section V.E hereof; provided, however, that
all persons who have entered into Individual Agreements shall
be deemed to have registered for all benefits under the
Settlement Agreement. Such persons will be subject to the
requirements for submission of documentation and other
evidence to establish their entitlement to settlement
benefits, including but not limited to submission of the
"GREEN FORM" in order to claim Matrix Compensation Benefits.
H. If Final Judicial Approval is not obtained or if the
Settlement Agreement is terminated by AHP for any reason, the
following provisions shall apply with respect to the
Individual Agreements which have been entered into pursuant
to the AIO:
1. The Settlement Trust shall not automatically terminate,
but shall remain in effect to administer the Individual
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Agreements, subject to Sections V.H.2, V.H.3, V.H.4 and
V.H.5 hereof.
2. Notwithstanding the provisions of Section V.H.1 hereof,
within five Business Days after the date on which Final
Judicial Approval is not obtained or the date on which
Settlement Agreement is terminated for any other reason,
the Trustees shall transfer to AHP all amounts in the
Settlement Trust after payment of any charges and
expenses which the Settlement Agreement expressly
authorized or required to be incurred and expended prior
thereto, including any amounts expended to assist in
seeking Final Judicial Approval, except that the Trust
shall retain the sum of $50 million and any additional
amount which the Trustees reasonably determine to be
required to provide Fund A and Fund B benefits to
individuals who have qualified for benefits pursuant to
Individual Agreements but have not yet received them.
Thereafter, and subject to any changes negotiated or
determined by arbitration pursuant to Sections V.H.4 and
V.H.5 hereof, AHP shall make payments to the Trust on a
quarterly basis of amounts required by the Trust to
provide Fund A and Fund B benefits to individuals who
have qualified for such benefits pursuant to Individual
Agreements but have not yet received them and to maintain
a $50 million Administrative Reserve. Such quarterly
payments shall be based upon an AIO Fiscal Year. For this
purpose, AHP agrees to pay into the Settlement Trust such
amount as the Trustees may request in writing on such a
quarterly basis, no later than 15 days after the date on
which the Trustees provide AHP with such a quarterly
request, subject to Section V.H.3 below.
3. AHP's obligations to make payments pursuant to Individual
Agreements, including but not limited to payments to the
Trust pursuant to Section V.F and pursuant to Section
V.H.2 above, shall be subject in the aggregate to the
same maximum limitations on its obligations as would have
been applicable to its Fund A and Fund B obligations to
the Settlement Trust had the Settlement received Final
Judicial Approval, subject to the following
modifications: (i) The payment amounts specified in
Section III.B.1. hereof shall be deemed to be AHP's
maximum aggregate obligation pursuant to all Individual
Agreements to pay for or otherwise provide benefits or
other amounts which would have been payable from Fund A
had Final Judicial Approval been obtained and for the
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cost of administration thereof; (ii) The payment amounts
specified in Section III.C.1.a and b hereof shall be
deemed to be AHP's maximum aggregate obligation pursuant
to all Individual Agreements, applicable until the
beginning of the second AIO Fiscal Year, to make payments
which would have been payable from Fund B had Final
Judicial Approval been obtained, to pay the cost of
administration of such Fund B payments and to pay legal
fees relating to such Fund B payments. AHP's maximum
aggregate payment obligation pursuant to all Individual
Agreements applicable to each of the second through the
sixteenth AIO Fiscal Years to make such Fund B payments,
to pay the cost of administration of such Fund B payments
and to pay legal fees relating to such Fund B payments,
shall be the Adjusted MAPA for such AIO Fiscal Year,
calculated as provided in Section III.C hereof for each
AIO Fiscal Year; provided that, in calculating Adjusted
MAPA amounts for such AIO Fiscal Years (i) the AIO Fiscal
Year shall be used in lieu of the Fiscal Year; and (ii)
no deduction shall be made for any Credits pursuant to
Section VII.A or any Cross-claim Credits pursuant to
Section VII.C. hereof.
4. During the 60-day period following the termination of the
Settlement Agreement, AHP and the Class Counsel shall
engage in good faith negotiations with respect to a
mechanism to administer the Individual Agreements in a
manner designed to assure that individuals electing the
AIO have the same rights and benefits as the rights and
benefits accorded to Class Members under this Agreement
(except as provided in Section V.E hereof); to reduce the
cost of administering the Individual Agreements to an
amount which is reasonable in relation to the number of
such agreements which have been entered into; and to
assure that AHP obtains the most favorable tax treatment
available under those circumstances, and to assure that
AHP receives all information requested by it to permit it
to take appropriate tax deductions and otherwise
calculate its taxes. Such negotiations shall address,
without limitation, the following matters:
a. whether a different mechanism other than the
Settlement Trust should be established for
administering the Individual Agreements; whether
such an alternative mechanism is necessary to reduce
the cost of administering the Individual Agreements
to an amount which is reasonable in relation to the
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number of such agreements which have been entered
into; or whether the Settlement Trust shall be
retained as the mechanism for administering the
Individual Agreements, but with changes in its
structure or level of expenditures; provided however
that the Settlement Trust shall remain in effect, as
modified in accordance with Sections V.H.2 and V.H.3
above, unless and until such changes or alternative
mechanisms are agreed upon pursuant to this Section
V.H.4 or are determined pursuant to Section H.5;
b. whether and to what extent an alternative means for
resolving disputes in the administration of the
Individual Agreements, including but not limited to
disputes as to whether or not AHP has failed to make
any required payment, should be used in lieu of the
resolution of such disputes by the Court;
c. whether and to what extent changes should be made to
the Security Fund structure and terms (including a
reduction in the amount of collateral and the
treatment of the Financial Insecurity Opt-Out Right)
in light of the number of such agreements which
shall have been entered into and to reflect the
different circumstances then in effect;
d. in the event that the Settlement Trust is retained
for the purpose of administering the Individual
Agreements, the amount by which the Administrative
Reserve is to be reduced to reflect the reasonable
administrative needs of the Trust for the purpose of
administering the Individual Agreements, which shall
be reasonable in relation to the number of such
agreements which have been entered into.
5. In the event that Class Counsel and AHP are not able to
reach agreement as to any or all of the matters described
in Section V.H.4, such matters shall be resolved by
binding arbitration by a panel of three arbitrators, one
of whom shall be selected by AHP, one of whom shall be
selected by Class Counsel and the third of whom shall be
selected by the first two such arbitrators. The cost of
such arbitration shall be paid by the Settlement Trust as
an administrative expense. Such arbitration shall be
conducted under the rules of the American Arbitration
Association and shall be concluded in no more than 60
days after the end of the 60-day period referred to in
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Section V.H.4 above, including the rendering of a
decision by the arbitrators.
I. If AHP exercises its "walkaway right" under Section VII.E
hereof, the Individual Agreements previously entered into
shall nevertheless be binding and effective on AHP and the
other parties thereto. The exercise of the "walkaway right"
by AHP will not affect its obligations to those Class Members
who have accepted the AIO prior to AHP's exercise of its
"walkaway right" or during any subsequent period in which AHP
continues to offer the AIO, nor those Class Members'
obligations to AHP thereunder.
J. The Parties shall ask the Court to supervise the award of
attorneys' fees relating to the Individual Agreements, as set
forth in Section VIII.E hereof, whether or not the Settlement
receives Final Judicial Approval.
VI. CLAIMS ADMINISTRATION
A. The Interim Escrow Agent, Interim Claims Administrator(s),
Claims Administrator(s) and Trustees.
1. In connection with their request for Preliminary Approval
of the Settlement, AHP and the Class Counsel
Representative(s) shall mutually select an Interim Escrow
Agent, such selection being subject to approval by the
Court. Until such time as the Court approves the
appointment of Trustees, the Interim Escrow Agent shall
have all of the rights and responsibilities of the
Trustees under the Settlement Agreement with regard to
the receipt and investment of Settlement Funds and any
payments which AHP is required to make to the Trustees
shall be paid to the Interim Escrow Agent.
2. In connection with their request for Preliminary Approval
of the Settlement, AHP and the Class Counsel
Representative(s) shall request that the Court approve
the appointment of two (2) Interim Claims Administrators.
The Interim Claims Administrators will be nominated by
the Parties, and each nomination will be subject to
agreement of the Parties and subject to approval by the
Federal District Court.
The Trustees shall consist of seven (7) independent
individuals, all of whom shall be jointly nominated by
the Parties and subject to agreement of AHP and the Class
Counsel Representative(s). Four (4) of the nominees
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shall be subject to the approval by the Judges who will
participate in the State Court Judicial Advisory
Committee referred to in Sections VIII.B.3-6 of this
Agreement. These four Trustees shall serve for a period
ending December 31, 2004. The initial Trustees shall be
those persons named on the signature pages of the Trust
Agreement, and the Trustees who shall serve until
December 31, 2004, shall be designated as such on the
signature pages of the Trust Agreement. Beginning on
January 1, 2005, the Trust will be comprised of three (3)
Trustees until the termination of the Trust. All nominee
Trustees shall be subject to the approval of and
appointment by the Federal District Court. AHP and the
Class Counsel Representative(s) shall use their best
efforts to assure that such Trustees will be appointed
within 60 days of this Settlement Agreement. If any
nominee is not approved, the Parties shall jointly
nominate another nominee, who will be subject to
agreement of AHP and the Class Counsel Representative(s).
If any vacancy occurs among the Trustees, the successor
Trustee, if any, shall be selected in accordance with
Article 3.06 of the Trust Agreement, subject to approval
of the Court.
3. The Interim Escrow Agent, Interim Claims
Administrator(s), Trustees and Claims Administrator(s),
shall have the following qualifications:
a. The Interim Claims Administrator(s), Trustees and
Claims Administrator(s) shall have relevant medical,
financial, legal, or administrative experience.
b. The following individuals and/or entities, may not
be nominated, approved, or serve as the Interim
Escrow Agent or any other escrow agent appointed
hereunder, Interim Claims Administrator(s), Claims
Administrator(s), or Trustees:
i. Past or present officers, directors, agents,
or employees of AHP, Interneuron or Servier,
or any successor or any affiliates thereof.
ii. Past or present officers, directors, agents,
or employees of any manufacturer, seller,
wholesaler, or distributor of any Phentermine
hydrochloride or Phentermine resin
pharmaceutical product.
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iii. Attorneys or other persons who represent or
have represented or been retained to represent
Interneuron, Servier, or any of the Parties to
this Agreement, including but not limited to,
AHP, any Diet Drug Recipients, Representative
Claimants or Derivative Claimants.
iv. Diet Drug Recipients, Class Members,
Representative Claimants, or Derivative
Claimants.
v. Persons or entities related to or affiliated
with any attorneys or representatives of Diet
Drug Recipients, Representative Claimants, or
Derivative Claimants.
vi. Persons who own any securities of AHP,
Interneuron, Servier, or any successor
corporations or any affiliates thereof, or who
have any other financial interest in AHP,
Interneuron, Servier or, any successor
corporations or any affiliates thereof.
vii. Persons who own any securities of any
manufacturer, seller, wholesaler or
distributor of any Phentermine hydrochloride
or Phentermine resin pharmaceutical product.
Notwithstanding the foregoing, upon written
request and full disclosure of any and all
disqualifications under this subsection, said
disclosed disqualifications may be waived in
writing by the Parties to this Agreement,
subject to Court approval.
4. The rights and duties of the Interim Escrow Agent shall
be set forth in an escrow agreement substantially in the
form appended hereto as Exhibit "10."
5. Until the effective date of the Trust, the Interim Claims
Administrators shall jointly exercise all of the
functions which are to be exercised by the Claims
Administrator(s) and/or Trustees under the terms of this
Settlement Agreement, except those functions which will
be exercised by the Interim Escrow Agent.
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6. In addition to the duties, obligations and procedures
described in this Settlement Agreement, the Interim
Claim(s) Administrator(s) (if required), Claims
Administrator(s) and Trustees shall hire personnel,
including personnel qualified to provide expert medical
advice.
7. Until the effective date of the Trust:
a. Disbursements for purposes of paying claims or
providing benefits under the Settlement Agreement
shall be made by the Interim Escrow Agent subject to
the direction of the Interim Claims Administrators;
and
b. Disbursements for purposes of claims administration,
including the cost of providing notice to the
Settlement Class, shall be made by the Interim
Escrow Agent subject to the joint direction of AHP
and Class Counsel. All disbursements will be
subject to review and approval by the Court.
8. As promptly as possible, after the effective date of the
Trust, for purposes of administering the Settlement
Trust:
a. Control over Fund A and Fund B shall be transferred
by the Interim Escrow Agent to the Trustees and upon
such transfer, the Interim Escrow Agent shall cease
to have any responsibility for the future receipt,
preservation, maintenance, investment, and
disbursement of the Settlement funds;
b. The Trustees shall have responsibility for each
matter entrusted to the "Trustees and/or Claims
Administrator(s)" under the terms of the Settlement
Agreement. Until such time as Claims
Administrator(s) are appointed and approved by the
Court according to Section VI.A.9.c below, the
Trustees may delegate any portion of their
responsibility for claims administration to the
Interim Claims Administrator(s);
c. The Trustees shall have responsibility for
appointing Claims Administrator(s) within 120 days
of the date on which the Trustees are appointed by
the Court, and the appointment of the Claims
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Administrator(s) shall be subject to approval of the
Court. At the time of such approval, the Interim
Claims Administrator(s) shall have no further duties
or responsibilities under the Settlement.
9. The Trustees (and the Interim Claims Administrator(s))
and Interim Escrow Agent prior to the effective date of
the Trust shall make reports to the Court, AHP, and Class
Counsel as follows:
a. Annual Reporting Obligations
(1) On an annual (calendar year) basis, the Trustees
shall cause an audit to be performed by a Certified
Public Accountant upon the calendar year financial
statements of each of the following (each financial
statement being prepared in accordance with
generally accepted accounting principles) and shall
issue a report stating the result of each such
audit:
(a) the Settlement Trust and each Fund established
thereunder;
(b) the Security Fund; and
(c) each escrow account then in effect hereunder
(including, as to the Security Fund Escrow
Account, the amounts transferred from the
Security Fund upon an Uncured Failure to Make
Payment).
(2) On an annual basis based on the calendar year, the
Trustees shall provide AHP with information
sufficient to allow AHP to calculate in a timely
fashion its estimated taxes and taxes in connection
with payments made by AHP to the Trust, including
without limitation the actual payments made by the
Trust.
(3) The Trustees shall provide annual reports for each
Fiscal Year to be sent to AHP and to Class Counsel,
reporting, among other appropriate items, the
following: the total amount paid out of each of
Fund A and Fund B for each category of benefit
payable by each such Fund; the amounts incurred by
the Settlement Trust in administrative expenses and
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for any other purpose; the amount of cash and other
liquid assets held by the Settlement Trust at the
end of each such fiscal period; the Trustees'
calculations of the Fund B amounts paid by AHP
during such fiscal period; the Trustees'
calculations of Unused Adjusted MAPA and appropriate
accretions thereof for such fiscal period; the
Trustees' calculation of the accumulated Credits and
Cross-Claim Credits to which AHP is entitled during
such fiscal period and the Trustees' calculations of
accretions thereon through the end of such fiscal
period; the amount of any Credits and Cross-Claim
Credits that the Trustees believe to be applicable
to the Adjusted MAPA during such fiscal period.
(4) On an annual (calendar year) basis for each year
beginning one (1) year after Final Judicial
Approval, the Trustees shall issue a report stating
the value of Fund B Payment Matrices payments, which
are to be increased 2% per year compounded annually.
(5) On an annual (calendar year) basis, the Trustees
shall cause an audit to be performed by a health
care consulting firm nominated and agreed to by the
Parties and approved by the Court(s) to conduct an
audit regarding the processing of claims and a
report based on that audit shall be prepared by the
health care consulting firm conducting the audit
stating the results of the audit. The purpose of
this audit shall be to ensure that the claims
administration process is being administered in a
manner which reasonably ensures that Class Members
who claim benefits are actually entitled to receive
them and that payments are not made to Class Members
who are not entitled to receive them.
b. Quarterly Reporting Obligations
(1) The Trustees shall cause to be prepared at the end
of each of the first three quarters of each calendar
year, a quarterly accounting containing unaudited
financial statements of the Trust as of the end of
such quarter, including without limitation, a
balance sheet of the Trust, a statement of receipts
and disbursements, a statement of profit and loss
prepared on an accrual basis, and a supplementary
schedule of investments and assets, listing both
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principal and income reported on, subject to normal
year-end adjustments, as to fairness of presentation
in accordance with generally accepted trust
accounting principles consistently applied, by the
Trustees or by an accountant or financial officer or
agent regularly employed by the Trust.
(2) On a calendar quarter basis, the Trustees shall
provide AHP with information sufficient to allow AHP
to calculate in a timely fashion its estimated taxes
and taxes in connection with payments made by AHP to
the Trust, including without limitation the actual
payments made by the Trust.
(3) On a Fiscal Year quarterly basis, the Trustees shall
provide AHP and the Class Counsel with a report with
respect to each of the items required to be reported
annually under Section VI.A.10.a(3) hereof.
(4) The Trustees shall report, on a quarterly (calendar)
basis, the following:
(a) Opt-Outs.
i) The number and identities of Class
Members revoking an Initial Opt-Out;
ii) The number and identities of Class
Members exercising an Intermediate Opt-
Out; and
iii) The number and identities of Class
Members exercising a Back-End Opt-Out.
(b) Accelerated Implementation Option.
i) The number and identities of Class
Members electing the Accelerated
Implementation Option;
ii) The number and identities of Initial
Opt-Outs who have revoked such opt-out
and have elected the Accelerated
Implementation Option;
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iii) All amounts paid to provide Fund A
benefits to Class Members electing the
Accelerated Implementation Option; and
iv) All payments from Fund B to Class
Members electing the Accelerated
Implemented Option.
(c) General Registration.
i) The total number of Class Members who
have registered for settlement benefits;
ii) The number of Subclass 1(a) members who
have registered for benefits of any
kind, and have not exercised an opt-out
right;
iii) The number of Subclass 1(b) members who
have registered for benefits of any
kind, and have not exercised an opt-out
right;
iv) The number of Subclass 2(a) members who
have registered for benefits of any
kind, and have not exercised an opt-out
right;
v) The number of Subclass 2(b) members who
have registered for benefits of any
kind, and have not exercised an opt-out
right; and
vi) The number of Subclass 3 members, who
have registered for benefits of any
kind, and have not exercised an opt-out
right.
(d) Refund Benefits.
i) The number of Class Members who have
registered for refund benefits for use
of Pondimin (Registered Trademark)
and/or Redux (Trademark);
ii) The number of Subclass 1(a) members who
have timely registered for a refund for
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use of Pondimin (Registered Trademark)
and/or Redux (Trademark); the number of
these Subclass 1(a) members who qualify
for refund; and the number of these
Subclass 1(a) members who do not qualify
for refund;
iii) The number of Subclass 2(a) members who
have registered for a refund for use of
Pondimin (Registered Trademark) and/or
Redux (Trademark); the number of these
Subclass 2(a) members who qualify for
refund; and the number of these Subclass
2(a) members who do not qualify for
refund; and
iv) Amounts paid from Fund A for refund
benefits.
(e) Screening Program Benefits.
i) The number of Class Members who register
for Screening Program benefits;
ii) The number of Subclass 1(a) members who
qualify for a Transthoracic
Echocardiogram and association
interpretative physician visit for
compassionate and/or humanitarian
reasons;
iii) The amounts paid from Fund A for
Transthoracic Echocardiograms and
associated interpretative physician
visits for compassionate and/or
humanitarian reasons;
iv) The number of Subclass 1(b) members who
have registered for Screening Program
benefits; the number of these Subclass
1(b) members who qualify for Screening
Program benefits; and the number of
these Subclass 1(b) members who do not
qualify for Screening Program benefits;
and
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v) The number of Subclass 1(b) members who
actually participate in the Screening
Program.
(f) Independent Echocardiogram And Associated
Interpretative Physician Visit.
The number of Subclass 1(a) and 1(b) members
who have obtained an independent FDA Positive
Echocardiogram, and have registered to obtain
the lesser of (i) the cost of the Trust of
providing such an Echocardiogram and an
associated interpretative physician visit under
the Screening Program, and (ii) the actual
amount paid for such by the Class Member, less
amounts paid or reimbursed by an insurance
carrier or other third-party payor; and the
amounts paid from Fund A therefore.
(g) Valve-Related Medical Services or $6,000 In
Cash From Fund A.
The number of Subclass 1(b) and 2(b) members
who have registered and have obtained an FDA
Positive diagnosis by the end of the Screening
Period and have elected to receive either (i)
valve-related medical services up to $10,000
in value to be provided by the Trust; or (ii)
$6,000 in cash from Fund A; the number
electing each; and the amount paid in cash
from Fund A for such.
(h) Valve-Related Medical Services or $3,000 In
Cash From Fund A.
The number of Subclass 1(a) and 2(a) members
who have registered and have obtained an FDA
Positive diagnosis by the end of the Screening
Period and have elected to receive either (i)
valve-related medical service up to $5,000 in
value to be provided by the Trust; or (ii)
$3,000 in cash from Fund A; the number
electing each; and the amounts paid in cash
from Fund A for such.
(i) Credits To AHP Pursuant To Judgment Or
Settlement Of Claims.
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All credits to AHP against its Fund B
obligations stemming from payments by AHP,
pursuant to judgment or settlement, of the
claims of Initial, Intermediate and/or Back-
End Opt-Outs.
(j) Subrogation Claims.
i) All subrogation claims asserted against
the Trust; identification of subrogation
claims approved for payment;
identification of subrogation claims not
approved for payment; and amounts to be
paid from Fund B in resolution of such.
ii) All subrogation claims asserted against
AHP and/or Released Parties.
(k) Accelerated Implementation Option (AIO);
Attorneys' Fees And Costs.
All amounts deposited for individual
attorneys' fees and costs pursuant to the
authorized deduction from Fund B benefits paid
to claimants accepting the AIO; the
applications for payment of individual
attorneys' fees and costs from such; and the
payments for attorneys' fees and costs being
made from such monies.
(l) Matrix Level Claims.
i) The number of Matrix Level I claims; the
number of Matrix Level I claims
approved; the number of Matrix I claims
rejected; and the total amount of Matrix
I claims paid;
ii) The number of Matrix Level II claims;
the number of Matrix Level II claims
approved; the number of Matrix II claims
rejected; and the total amount of Matrix
II claims paid;
iii) The number of Matrix Level III claims;
the number of Matrix Level III claims
approved; the number of Matrix III
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<PAGE>
claims rejected; and the total amount of
Matrix III claims paid;
iv) The number of Matrix Level IV claims;
the number of Matrix Level IV claims
approved; the number of Matrix IV claims
rejected; and the total amount of Matrix
IV claims paid; and
v) the number of Matrix Level V claims; the
number of Matrix Level V claims
approved; the number of Matrix V claims
rejected; and the total amount of Matrix
V claims paid.
(m) Assignment Of Indemnity Rights.
The indemnity rights of AHP against Class
Members assigned by AHP to the Trustees for
which AHP receives a credit against its Fund B
obligations, including the amount thereof.
c. Periodic Reporting Obligations.
(1) The Trustees and/or Claims Administrator(s) shall
report within five (5) Business Days all AHP
payments into the Settlement Trust, including but
not limited to:
(a) All AHP payments deposited into Fund A;
(b) All AHP payments deposited into Fund B; and
(c) All requests for additional cash deposits into
Fund B and payments deposited in accordance
with each request.
(2) The Trustees and/or Claims Administrator(s) shall
report within five (5) Business Days an Uncured
Failure To Make Payment by AHP.
(3) At the conclusion of the Initial Opt-Out Period, the
Trustees and/or Claims Administrator(s) shall report
within fifteen (15) Business Days the number and
identities of Class Members exercising an Initial
Opt-Out.
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B. Notice.
1. Within ten (10) days of the execution of this Settlement
Agreement, the parties shall apply to the Court for an
Order in the form appended hereto as Exhibit "11":
a. Granting Preliminary Approval of the Settlement;
b. Approving the appointment of Interim Claims
Administrator(s) and an Interim Escrow Agent
pursuant to Section VI.A.2 and Section VI.A.1;
c. Approving a written notification to the Settlement
Class which shall contain A Class Member's Guide to
Settlement Benefits (Exhibit "12"), an Official
Court Notice Package (Exhibit "13"), and a Matrix
Compensation Benefits Guide for Physicians,
Attorneys and Class Member (Exhibit "14");
d. Approving a summary publication notice to the
Settlement Class in the form appended hereto as
Exhibit "15";
e. Approving the establishment of and maintenance of a
"1-800" telephone number and website to receive
requests from Class Members for written notice;
f. Directing written notice to all those Class Members
whose names and addresses are known or presently
knowable to the Parties as a result of:
(1) The filing of legal claims by Class Members
against AHP;
(2) The creation and maintenance of a database of
Class Members who registered to receive
benefits pursuant to a proposed limited fund
Class Action Settlement with Interneuron
Pharmaceuticals, Inc. in Sharyn Wish v.
Interneuron Pharmaceuticals, Inc., Civil
Action No. 98-cv-20594 (E.D. Pa.);
(3) The establishment and operation of the
"1-800-386-2070" telephone number and _
www.settlementdietdrugs.com website
incident to the publication of the Memorandum
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of Understanding which was executed among the
Parties on October 7, 1999;
(4) Any database within the possession, custody,
or control of AHP which reflects the names and
addresses of Class Members;
(5) Any database which is readily obtainable from
any pharmacy chain which reflects the names
and addresses of Class Members;
g. Directing that the person or entity who will mail
the individual notices shall have access to the
names and addresses of individuals who requested the
mailing of individual notices to them by contacting
"1-800-386-2070" and www.settlementdietdrugs.com;
h. Directing that all names and addresses of Class
Members collected for the purpose of providing
notice shall be kept strictly confidential and shall
not be disclosed to any person or used for any
purpose other than for issuance of notice to Class
Members upon prior order of the Court;
i. Authorizing Publication Notice in the form appended
hereto as Exhibit "15" in accordance with the Plan
of Media Notice appended hereto as Exhibit "16";
j. Authorizing television notice in accordance with the
Script of Television Notice appended hereto as
Exhibit "17," and in accordance with the Plan of
Media Notice appended hereto as Exhibit "16";
k. Authorizing the distribution of Summary Notice to
Physicians in the form appended hereto as Exhibit
"18," to physicians for display to their patients;
and
l. Authorizing the distribution of Summary Notice to
Pharmacists in the form appended hereto as Exhibit
"5," to pharmacists for display to their customers.
2. The Claims Administrator(s) and/or the Interim Claims
Administrator(s) shall maintain a list of the names and
addresses of each person to whom written notice was
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transmitted in accordance with any order entered by the
Court pursuant to the preceding paragraph of this
Settlement Agreement (hereinafter "the Notice List").
These names and addresses shall be kept strictly
confidential and shall be used only by appropriate
persons for administrative purposes of the Trust, except
on prior order of the Court.
3. Within forty-five (45) days after Final Judicial
Approval, the Trustees and/or Claims Administrator(s)
shall transmit a written notice to all individuals whose
names and addresses are contained in the Notice List
advising all recipients of the notice that the Settlement
has received Final Judicial Approval, advising all Class
Members of the day on which Date 1 falls, advising the
recipients of the notice that Class Members in Subclasses
1(a) and 1(b) must Register to receive Refund and/or
Screening Program benefits from Fund A by Date 1 and that
Class Members in Subclasses 2(a) and 2(b) must register
to receive Refund Benefits from Fund A by Date 1,
advising all recipients of the notice of the period of
time in which Date 2 may fall, and advising all
recipients of the notice that if they wish to receive
Matrix Compensation Benefits in the future they must be
registered as having Mild Mitral Regurgitation or an FDA
Positive level of valvular regurgitation by Date 2. This
notice shall also contain information concerning the
rights of certain Class Members to exercise Intermediate
and Back-End Opt-Outs. It shall contain the BLUE FORM,
GREEN FORM and Intermediate and Back-End Opt-Out forms as
described below, which will allow Class Members the
opportunity to register for settlement benefits or
exercise Intermediate or Back-End Opt-Out rights. In
addition, it will advise members of Subclass 1(a) of
their right to obtain payment of the net cost of any FDA
Positive Echocardiogram which they may have had during
the Screening Period but independent of the Screening
Program pursuant to the terms and conditions of Sections
IV.A.2.b(2) and shall provide Class Members with the
WHITE FORM appended hereto as Exhibit "19" in order to
make a claim for such benefits. It will also advise
members of Subclass 1(b) of their right to obtain payment
of the net cost of a Transthoracic Echocardiogram
obtained independent of the Screening Program performed
after the end of the Initial Opt-Out Period but before
the Final Judicial Approval Date, pursuant to the terms
and conditions of Section IV.A.1.b and shall provide
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Class Members with the WHITE FORM appended hereto as
Exhibit "19" in order to make a claim for such benefits.
The Parties shall prepare this class notice for Court
approval. The notice shall reflect the fact that the
Settlement Agreement has been approved, that there are no
further rights to object to the Settlement, and that
there is no longer any Initial Opt-Out right in effect.
4. Three (3) months prior to Date 2, the Trustees and/or
Claims Administrator(s) shall transmit a written notice
to all individuals whose names and addresses are
contained in the Notice List advising all recipients of
the notice of the day on which Date 2 falls and advising
all recipients of the notice, that if they wish to
receive Matrix Compensation Benefits in the future they
must be registered as having Mild Mitral Regurgitation or
an FDA Positive level of valvular regurgitation by Date
2. This notice shall also contain information concerning
the rights of certain Class Members to exercise
Intermediate and Back-End Opt-Outs. It shall contain the
BLUE FORM, the GREEN FORM and Intermediate and Back-End
Opt-Out forms, as described below, which will allow Class
Members the opportunity to register for settlement
benefits or exercise Intermediate or Back-End Opt-Out
rights. In addition, it will advise members of Subclass
1(a) of their right to obtain payment of the net cost of
any FDA Positive Echocardiogram which they may have had
during the Screening Period but independent of the
Screening Program pursuant to the terms and conditions of
Section IV.A.2.b(2) and shall provide Class Members with
the WHITE FORM appended hereto as Exhibit "19" in order
to make a claim for such benefits. It will also advise
members of Subclass 1(b) of their right to obtain a
limited refund of the net cost of any Transthoracic
Echocardiogram obtained independent of the Screening
Program after the end of the Initial Opt-Out Period but
before the Final Judicial Approval Date, pursuant to the
terms and conditions of Section IV.A.1.b and shall
provide Class Members with the WHITE FORM appended hereto
as Exhibit "19" in order to make a claim for such
benefits. The Parties shall prepare this class notice
for court approval. The notice shall reflect the fact
that the Settlement has been approved, that there are no
further rights to object to the Settlement, and that
there is no longer any Initial Opt-Out right in effect,
and that the time to register for the Screening Program
has been completed.
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C. Claims Administration and Criteria for Benefits
Determinations.
1. Echocardiogram Criteria.
a. Where a Diet Drug Recipient has had an
Echocardiogram between the commencement of Diet Drug
use and September 30, 1999, the results of that
Echocardiogram as contained in the written report
issued by a Qualified Physician shall be used by the
Trustees/Claims Administrator(s) to determine the
level of mitral and/or aortic valvular regurgitation
for that Diet Drug Recipient as of the date of the
Echocardiogram for purposes of Fund A benefits
determinations under the Settlement Agreement,
except (i) where the report of the Echocardiogram
does not clearly state the level of valvular
regurgitation for the mitral and/or aortic valves or
(ii) where in an audit conducted pursuant to Section
VI.E, it is determined that the conclusions of the
written report are not supported by the videotape or
disk of the Echocardiogram.
Such an Echocardiogram shall not be used to qualify
a Diet Drug Recipient for Matrix Compensation
Benefits unless, upon re-reading, it is determined
(i) that prior to the end of the Screening Period,
the Diet Drug Recipient met the definition for "FDA
Positive" set forth in Section I.22.b and (ii) the
Echocardiogram met the criteria set forth in Section
VI.C.1.b below. Such a determination may be made by
the Trustees and/or Claims Administrator(s) upon
submission of a GRAY FORM (appended hereto as
Exhibit "20") which has been completed by a Board-
Certified Cardiologist.
b. Each Echocardiogram performed after September 30,
1999, which is used to determine whether the
condition of a Diet Drug Recipient qualifies a Class
Member for Fund A or Fund B (Matrix) settlement
benefits, shall be one which was:
(1) conducted in accordance with the standards and
criteria as outlined in Feigenbaum
(1994)<F44> or Weyman (1994);<F45>
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(2) evaluated following the grading system of
valvular regurgitation defined in Singh
(1999);<F46>
(3) conducted by a Diagnostic Cardiac Sonographer
who is able to produce and evaluate ultrasound
images and related data used by physicians to
render a medical diagnosis; and
(4) conducted under the supervision of, and read
and interpreted by, a Board-Certified
Cardiologist with level 2 training in
echocardiography as specified in the
Recommendations of the American Society of
Echocardiography Committee on Physician
Training in Echocardiography.<F47>
c. A Diet Drug Recipient who demonstrates to the
Trustees and/or Claims Administrator(s) that he or
she had an Echocardiogram conducted between
September 30, 1999 and the date of commencement of
Class Notice which a Qualified Physician reported as
showing that he or she had FDA Positive
regurgitation shall not be disqualified from
receiving settlement benefits if the Echocardiogram
does not meet all of the requirements of Section
VI.C.1.b above.
d. A claimant who qualifies for a particular Matrix
payment, by virtue of a properly interpreted
Echocardiogram showing the required levels of
regurgitation and/or complicating factors, after
exposure to fenfluramine and/or dexfenfluramine,
shall not be disqualified from receiving that Matrix
payment in the event that a subsequent
Echocardiogram shows that the required levels of
regurgitation and/or complicating factors are no
longer present.
2. Claims Information.
a. Each Claim for Benefits under the Settlement
Agreement shall be made on one of two forms signed
and submitted to the Trustees and/or Claims
Administrator(s), as follows:
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(1) The "PINK FORM" appended to the Settlement
Agreement as Exhibit "9" shall be used by
Class Members who want to elect the AIO; and
(2) The "BLUE FORM" appended to the Settlement
Agreement as Exhibit "21" shall be used by all
other Class Members who wish to make a claim
for the benefits available under the
Settlement Agreement.
b. Submission of a PINK FORM or BLUE FORM that has not
been fully completed shall be sufficient to
"register" the Class Member for benefits, provided,
however, that the missing information must be
submitted in order for the Class Member to receive
any benefits under this Settlement Agreement.
c. In addition, each person who wants to make a claim
for Matrix Compensation Benefits under Section IV.B
of the Settlement Agreement or pursuant to the AIO
must complete and submit to the Trustees and/or
Claims Administrator(s) the "GREEN FORM" which is
appended to this Settlement Agreement as Exhibit
"22."
d. In order to complete the submission of a Claim and
to qualify for any benefits under the Settlement
Agreement, each Class Member must submit documentary
proof to the Trustees and/or Claims Administrator(s)
of the period of time for which the Diet Drugs
Pondimin (Registered Trademark) and/or Redux
(Trademark) were prescribed and dispensed to the
Diet Drug Recipient who is the subject of the
Claim. This proof must include one of the
following:
(1) If the diet drug was dispensed by a pharmacy,
the identity of each pharmacy that dispensed
Diet Drugs to the Diet Drug Recipient,
including its name, address, and telephone
number, and a copy of the prescription
dispensing record(s) from each pharmacy, which
should include the medication name, quantity,
frequency, dosage and number of refills
prescribed, prescribing physician's name,
assigned prescription number, original fill
date and each subsequent refill date; or,
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(2) If the diet drug was dispensed directly by a
physician or weight loss clinic, or the
pharmacy record(s) is unobtainable, the
identity of each prescribing physician,
including the prescribing physician's name,
address, and telephone number and a copy of
the medical record(s) prescribing or
dispensing the diet drug(s). The medical
record(s) must include records which identify
the Diet Drug Recipient, the Diet Drug name,
the date(s) prescribed, the dosage, and
duration the drug was prescribed or dispensed;
(3) If the pharmacy records and medical records
are unobtainable, an affidavit under penalty
of perjury from the prescribing physician or
dispensing pharmacy identifying the Diet Drug
Recipient, the drug(s) prescribed or
dispensed, the date(s), quantity, frequency,
dosage and number of prescriptions or refills
of the Diet Drug(s).
e. In order to complete the submission of a Claim and
qualify for Fund A benefits under the Settlement
Agreement, where a Class Member relies on a result
of an Echocardiogram to establish that a Diet Drug
Recipient had FDA Positive levels of regurgitation
by the end of the Screening Period and where that
Echocardiogram took place between the commencement
of Diet Drug use and September 30, 1999, the Class
Member must provide the Trustees and/or Claims
Administrator(s) with a copy of the report of the
results of the Echocardiogram and the videotape or
disk of the Echocardiogram. In order to complete
the submission of a Claim and qualify for Matrix
Compensation Benefits under the Settlement
Agreement, where a Class Member relies on a result
of an Echocardiogram to establish that a Diet Drug
Recipient had FDA Positive levels of regurgitation
or Mild Mitral Regurgitation by the end of the
Screening Period and where that Echocardiogram took
place between the commencement of Diet Drug use and
September 30, 1999, the Class Member must provide
the Trustees and/or Claims Administrator(s) with a
copy of the report of the results of the
Echocardiogram and the videotape or disk of the
Echocardiogram and a certification from a Qualified
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Physician on the GRAY FORM which is appended to the
Settlement Agreement as Exhibit "20". If the Class
Member does not have custody of such videotape or
disk, the Class Member must submit an executed
authorization which will allow the Trustees and/or
Claims Administrator(s) to obtain a videotape or
disk of the Echocardiogram from the physician or
health care provider who has custody of such
videotape or disk as a condition to considering the
Class Member's Claims for Benefits. If the videotape
or disk is no longer in existence, the Class Member
must supply an affidavit under penalty of perjury
from the person who last had custody of the
videotape or disk stating that the videotape or disk
is no longer in existence and describing the
circumstances under which it came to be misplaced or
destroyed.
f. In order to complete the submission of a Claim and
qualify for benefits under the Settlement Agreement,
where a Class Member relies on the results of an
Echocardiogram to establish that a Diet Drug
Recipient had FDA Positive regurgitation levels of
regurgitation or Mild Mitral Regurgitation by the
end of the Screening Period and where that
Echocardiogram took place after September 30, 1999,
and where that Echocardiogram took place outside of
the Screening Program, the Class Member must report
the results of the Echocardiogram to the Trustees
and/or Claims Administrator(s) in the form of a
certification from a Board-Certified Cardiologist on
the GRAY FORM which is appended to the Settlement
Agreement as Exhibit "20," and provide the Trustees
and/or Claims Administrator(s) with a copy of the
videotape or disk which reflects the results of the
Echocardiogram. If the Class Member does not have
custody of such videotape or disk, the Class Member
must submit an executed authorization which will
allow the Trustees and/or Claims Administrator(s) to
obtain a videotape or disk of the Echocardiogram
from the physician or health care provider who has
custody of such videotape or disk as a condition to
considering the Class Member's Claim for Benefits.
If the videotape or disk is no longer in existence,
the Class Member must supply an affidavit under
penalty of perjury from the person who last had
custody of the videotape or disk stating that the
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videotape or disk is no longer in existence and
describing the circumstances under which it came to
be misplaced or destroyed.
g. Each Cardiologist who is responsible for performing
Echocardiograms pursuant to the Screening Program
provisions of the Settlement Agreement shall report
the results of those Echocardiograms to the Trustees
and/or Claims Administrator(s) on the "GRAY FORM"
which is appended to the Settlement Agreement as
Exhibit "20" and shall supply a copy of the
videotape or disk of the results of the
Echocardiogram to the Claims Administrator(s) and/or
Trustees.
h. In order to complete the submission of a claim and
qualify for benefits under the Settlement Agreement,
each Class Member who submits a claim as a
Representative Claimant must supply the Trustees
and/or Claims Administrator(s) with written proof
that such person has legal authority to act in a
representative capacity.
i. In order to complete submission of a Claim for
reimbursement of the actual amount paid for an
Echocardiogram by a Class Member pursuant to
Sections IV.A.1.b or IV.A.2.b(2) above, a Class
Member must submit the following documents:
(1) A copy of the report of the Echocardiogram;
(2) A copy of the bill or invoice reflecting the
charges for the Echocardiogram; and
(3) A copy of the cancelled check or other
documentary evidence of the amount actually
paid by the Class Member for the
Echocardiogram.
j. In order to complete the submission of a Claim by a
Class Member who has ingested Pondimin (Registered
Trademark) and/or Redux (Trademark) for 60 days or
less to receive an Echocardiogram and interpretative
physician visit for compassionate and humanitarian
reasons pursuant to the provisions of Section
IV.A.2.b(3), the Class Member must submit
documentary proof supporting the Claim that there
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are compassionate and humanitarian reasons which
would justify the Trustees and/or Claims
Administrator(s) to exercise their discretion to
provide the Diet Drug Recipient with the benefit of
a Transthoracic Echocardiogram and associated
interpretative physician visit.
k. In order to complete the submission of a claim and
qualify to receive an Echocardiogram after Trial
Court Approval but prior to Final Judicial Approval
by reason of "true financial hardship" pursuant to
Section IV.A.3.c of the Settlement Agreement, a Diet
Drug Recipient must provide the Trustees and/or
Claims Administrator(s) with documentary proof of
the Diet Drug Recipient's financial situation
including a copy of the Diet Drug Recipient's most
recent federal income tax return.
3. General Claims Processing Procedures and the Registry.
a. Within thirty (30) days of the date on which the
Trustees and/or Claims Administrator(s) receive a
Claim for Benefits from a Class Member, the Claims
Administrator(s) shall:
(1) assign a unique identifying number to the
Claim;
(2) review the Claim which has been submitted,
together with supporting documentation, and
determine whether the Claim is complete or
requires a submission of additional
information to make it complete;
(3) confirm that any required physician
certification submitted in support of a claim
for Matrix Compensation Benefits was submitted
by a physician who actually is a Board-
Certified Cardiologist, Cardiothoracic
Surgeon, Pathologist, Neurologist or
Neurosurgeon; and
(4) inform the Class Member, in writing, of the
unique identifying number assigned to the
Class Member's Claim and the information which
the Class Member must submit to the Trustees
and/or Claims Administrator(s), if any, in
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order for the claim to be completed and ready
for processing.
b. With respect to each Claim submitted by a Class
Member as part of the claims administration process,
the Trustees and/or Claims Administrator(s) shall
afford each Class Member at least three (3) separate
opportunities to supply any missing or omitted
information and documentation which are necessary to
support a Claim for Benefits under the Settlement
Agreement.
c. All information submitted by Class Members to the
Trustees and/or Claims Administrator(s) shall be
recorded in a computerized database suitable for use
with standard medical research software such as SAS
and for all purposes of claims administration.
d. The database created pursuant to the preceding
paragraph shall be maintained as a "Registry" for
purposes of administering the Settlement and for
purposes of medical education and research. After
taking appropriate steps to maintain the
confidentiality of Class Members, the Trustees
and/or Claims Administrator(s) shall make the
database, or any portion thereof, available to
qualified scientists, physicians, and other
researchers subject to the following conditions:
(1) First, the Trustees and/or Claims
Administrator(s) shall make the
deidentified<F48> database available only
to such persons who:
(a) provide the Trustees and/or Claims
Administrator(s) with written proof of
their training, qualifications, and
experience to conduct medical or
scientific research;
(b) provide a research protocol setting
forth the purposes for which they seek
access to the Registry/database, their
research methodology, source of funding,
a description of how the proposed
research will benefit the Settlement
Class and any other information that may
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be requested by the Trustees and/or
Claims Administrator(s);
(c) undertake, in writing, to use the
information which they receive from the
Registry/database solely for medical,
scientific, and educational purposes and
not to disclose confidential information
concerning any Class Member in the event
that they should inadvertently come into
possession of such confidential
information through their access to the
database;
(d) undertake, in writing, to provide, upon
completion of the research, the Trustees
and/or Claims Administrator(s), the
Court, AHP, and Class Counsel with a
copy of any published or unpublished
abstract, article, or report which is
based, in whole or in part, on the
information contained in the Registry/
database; and
(e) undertake, in writing, not to testify at
any time on behalf of any party in any
lawsuit relating to the use of Pondimin
(Registered Trademark) and/or Redux
(Trademark).
(2) Second, the Trustees and/or Claims
Administrator(s) shall make the deidentified
database, or any portion thereof, available to
qualified scientists, physicians, and other
researchers only when, considering the
training, qualifications and experience of
such persons and the purposes for which they
seek access to the Registry/database, the
Trustees and/or Claims Administrator(s) form a
reasoned opinion that disclosure of database
information to any given scientist, physician,
or other researcher will be beneficial to the
Settlement Class.
e. Copies of all videotapes and disks of
Echocardiograms submitted by or on behalf of Diet
Drug Recipients to the Trustees and/or Claims
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Administrator(s) shall be preserved and maintained.
Copies of these videotapes and disks shall be
available to qualified scientists, physicians, and
other researchers subject to the conditions stated
in Section VI.C.3.d above, and subject to the
following additional conditions:
(1) In making copies of videotapes and disks to be
provided to qualified scientists, physicians
and other researchers for purposes of medical
and scientific research, the Trustees and/or
Claims Administrator(s) shall redact all
information identifying the Diet Drug
Recipient who was the subject of the
Echocardiogram; and
(2) The Trustees and/or Claims Administrator(s)
shall require that the scientists, physicians,
and/or other researchers requesting a copy of
the videotapes pay all costs reasonably
incurred by the Trustees and/or Claims
Administrator(s) in making copies of the
videotapes and in redacting patient
identifying information from the videotapes as
a condition to receiving copies thereof.
f. In making arrangements for the disclosure of
information contained in the Medical
Registry/database, the Trustees and/or Claims
Administrator(s) shall assure that an alpha-numeric
designation is used for each claimant and that the
name, address, telephone number, social security
number, e-mail address, and other personal
identifying information pertaining to the Diet Drug
Recipient and/or Class Member is not disclosed.
g. Processing Claims for Screening Program Benefits for
Subclass 1(b) Members:
(1) Within forty-five (45) days of the date on
which the Trustees and/or Claims
Administrator(s) receive a completed Claim
which adequately documents that a Diet Drug
Recipient is a member of Subclass 1(b), the
Trustees and/or Claims Administrator(s) shall
certify that the Diet Drug Recipient is
eligible for a Transthoracic Echocardiogram
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and associated interpretative physician visit in
the Screening Program pursuant to Section
IV.A.1.a. or Section IV.A.3.c of this
Settlement Agreement and shall furnish to the
Diet Drug Recipient the appropriate
documentation and information to receive such
benefits and will provide those benefits in
accordance with the timetable set forth in
Section VI.C.3.m, below.
(2) Within forty-five (45) days of the date on
which the Trustees and/or Claims
Administrator(s) receive a completed Claim
which adequately documents that a Diet Drug
Recipient is a member of Subclass 1(b) and
which requests payment of the net cost of an
Echocardiogram pursuant to Section IV.A.1.b.
or Section IV.A.3.c, the Trustees and/or
Claims Administrator(s) shall determine
whether the Diet Drug Recipient is entitled to
such payment, and if so, the amount of such
payment. The Trustees and/or Claims
Administrator(s) shall provide such payments
in accordance with the timetable set forth in
Section VI.C.3.m. If the Trustees and/or
Claims Administrator(s) deny such a claim,
they shall send the Diet Drug Recipient
written notification of that decision and the
reasons therefor within this forty-five (45)
day period.
h. Processing Claims for Screening Program Benefits for
Subclass 1(a) Members:
(1) Within forty-five (45) days of the date on
which the Trustees and/or Claims
Administrator(s) receive a completed Claim
which adequately documents that a Diet Drug
Recipient is a member of Subclass 1(a) and
requests a Transthoracic Echocardiogram and
associated interpretative physician visit
pursuant to Section IV.A.2.b or Section
IV.A.3.c of the Settlement Agreement, the
Trustees and/or Claims Administrator(s) shall
promptly transmit to each such person the
BROWN FORM, appended to the Settlement
Agreement as Exhibit "23." The BROWN FORM
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explains the circumstances under which such
Diet Drug Recipients may receive a
Transthoracic Echocardiogram and associated
interpretative physician visit and allows them
to make a request for that benefit by
completing, signing and submitting the form,
together with supporting documentation, to the
Trustees and/or Claims Administrator(s).
Within forty-five (45) days after receiving a
completed BROWN FORM, the Trustees and/or
Claims Administrator(s) shall make a
determination concerning whether the Diet Drug
Recipient will receive a Transthoracic
Echocardiogram and associated interpretative
physician visit and will either reject the
request for such benefits or shall furnish to
the Diet Drug Recipient the appropriate
documentation and information to receive such
benefits and will provide those benefits in
accordance with the timetable set forth in
Section VI.C.3.m, below.
(2) Within forty-five (45) days of the date on
which the Trustees and/or Claims
Administrator(s) receive a completed Claim
which adequately documents that a Diet Drug
Recipient is a member of Subclass 1(a) and
which requests payment of the net cost of an
Echocardiogram pursuant to Section IV.2.b.2 or
FDA Positive Section IV.A.3.c., the Trustees
and/or Claims Administrator(s) shall determine
whether the Diet Drug Recipient is entitled to
such payment, and if so, the amount of such
payment. If the Trustee(s) and/or Claims
Administrator(s) deny such a claim, they shall
send the Diet Drug Recipient written
notification of that decision and the reasons
therefor within this forty-five (45) day
period. The Trustees and/or claims
Administrator(s) will provide such payments in
accordance with the timetable set forth in
Section VI.C.3.m, below.
i. Processing Claims for Additional Medical Services or
Cash for Subclass 1(b) and 2(b) Members:
Within forty-five (45) days of the date on which the
Trustees and/or Claims Administrator(s) receive a
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completed Claim which adequately documents that a
Diet Drug Recipient is a member of Subclass 2(b), or
is a member of Subclass 1(b) and obtained an FDA
Positive diagnosis by a Qualified Physician after
Pondimin (Registered Trademark) and/or Redux
(Trademark) use but by the end of the Screening
Period, the Trustees and/or Claims Administrator(s)
shall, in accordance with the Diet Drug Recipient's
election, certify that the Diet Drug Recipient is
entitled to either $6,000 in cash or $10,000 in
valve-related medical services and shall either make
payment to the Diet Drug Recipient or furnish to the
Diet Drug Recipient the appropriate documentation
and information to receive such valve-related
services and will provide those benefits in
accordance with the timetable set forth in Section
VI.C.3.m, below.
j. Processing Claims for Additional Medical Services or
Cash for Subclass 1(a) and 2(a) Members:
Within forty-five (45) days of the date on which the
Trustees and/or Claims Administrator(s) receive a
completed Claim which adequately documents that a
Diet Drug Recipient is a member of Subclass 2(a), or
is a member of Subclass 1(a) and obtained an FDA
Positive diagnosis by a Qualified Physician after
Pondimin (Registered Trademark) and/or Redux
(Trademark) use but by the end of the Screening
Period, the Trustees and/or Claims Administrator(s)
shall in accordance with the Diet Drug Recipient's
election certify that the Diet Drug Recipient is
entitled to $3,000 in cash or $5,000 in valve-
related medical services and shall either make
payment to the Diet Drug Recipient or furnish to the
Diet Drug Recipient the appropriate documentation
and information to receive such valve-related
services and will provide those benefits in
accordance with the timetable set forth in Section
VI.C.3.m, below.
k. Processing Claims for Refunds for Subclass 1(a) and
2(a) Members:
Within forty-five (45) days of the date on which the
Trustees and/or Claims Administrator receive a
completed Claim which adequately documents that the
Diet Drug Recipient is a member of Subclass 1(a) or
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2(a) and which adequately documents the duration of
his or her Diet Drug use for which a refund is
sought, the Trustees and/or Claims Administrator(s)
shall certify the amount of the refund to which that
Diet Drug Recipient or the Representative Claimant
for that Diet Drug Recipient is entitled and shall
make payment to the Diet Recipient or Representative
Claimant in accordance with the timetable set forth
in Section VI.C.3.m, below.
l. Processing Claims for Refunds for Subclass 1(b) and
2(b) Members:
Within ninety (90) days after Date 2, the Trustees
and/or Claims Administrator(s) shall determine,
pursuant to Section IV.A.1.d, the amount, if any, of
the refunds to which Diet Drug Recipients who are
members of Subclasses 1(b) or 2(b) or the
Representative Claimants for those Diet Drug
Recipients are entitled. Within 45 days of such
time, the Trustees and/or Claims Administrator shall
pay all Diet Drug Recipients or Representative
Claimants who have adequately documented membership
in Subclasses 1(b) or 2(b), the refund amounts to
which they are entitled, if any. In the event that
it is determined that the Settlement Agreement will
not receive Final Judicial Approval or in the event
that the Settlement Agreement is terminated for any
reason, the Trustees and/or Claims Administrator(s)
shall determine within 90 days after the conclusion
of the period for providing Echocardiograms and
associated physician visits to Diet Drug Recipients
who have elected the AIO whether there are
sufficient assets to make refund payments to
Subclass 1(b) or 2(b) members who have entered into
Individual Agreements pursuant to the AIO. Within
45 days of making such determination, the Trustees
and/or Claims Administrator(s) shall pay to all Diet
Drug Recipients or Representative Claimants who have
adequately documented membership in Subclass 1(b) or
2(b) and have entered into Individual Agreements
pursuant to the AIO, the amounts to which they are
entitled, if any.
m. The timetable for the benefits described in Sections
VI.C.3.g-k above shall be as follows:
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(1) For Class Members who have elected the AIO,
such benefits cannot be provided until after
the AIO Start Date;
(2) For Class Members who qualify for benefits
under Section IV.A.3.c, such benefits cannot
be provided until after the Trial Court
Approval Date;
(3) For all other Class Members, such benefits
cannot be provided until after the Final
Judicial Approval Date.
4. Administration of Matrix Compensation Benefit Claims.
a. To receive Matrix benefits, the Class Member must
provide the Trustees and/or Claims Administrator(s)
with appropriate documentation of the condition of
the Diet Drug Recipient that forms the basis for the
claim. As set forth in the "GREEN FORM," attached
as Exhibit "22", such documentation shall include:
(1) all hospital reports of the admitting history
and physical examination of the Diet Drug
Recipient, operative reports, pathology
reports, Echocardiogram reports, cardiac
catheterization reports, and discharge
summaries which relate to the condition of the
Diet Drug Recipient that forms the basis of
the Claim;
(2) a copy of the videotape or disk of the
Echocardiogram results which, in whole or in
part, forms the basis for the Claim for Matrix
Compensation Benefits;
(3) a declaration under penalty of perjury from
the Diet Drug Recipient that, to the best of
his/her knowledge, such condition was not
present prior to usage of Pondimin (Registered
Trademark) and/or Redux (Trademark);
(4) a declaration under penalty of perjury from a
Board-Certified Cardiologist or Cardiothoracic
Surgeon setting forth an opinion to a
reasonable degree of medical certainty that
(a) the Diet Drug Recipient has the condition
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which qualifies the Class Member for a
particular Matrix payment, including, where
applicable, that the causation requirements
applicable to conditions (b)(v) and (c) of
Matrix-Level V, as defined in Section
IV.B.2.c.(5) either are or are not present;
(b) to the best of such physician's knowledge
after reasonable inquiry, such condition which
qualifies the Class Member for a particular
Matrix payment was not present prior to usage
of Pondimin (Registered Trademark) and/or
Redux (Trademark); and (c) all the conditions
set forth in Section IV.B.2.d. which determine
whether Matrix A-1 or B-1 is applicable,
either are present or are not present;
(5) a declaration under penalty of perjury from a
Board-Certified Cardiologist, Cardiothoracic
Surgeon, Neurologist or Neurosurgeon with
regard to the functional outcome which the
patient has had six months after a stroke, if
applicable;
(6) a declaration under penalty of perjury from a
Board-Certified Cardiologist, Cardiothoracic
Surgeon or Pathologist regarding the existence
of the pathological criteria for Endocardial
Fibrosis defined in Section I.21, if
applicable;
(7) any other documentation which the Trustees
and/or Claims Administrator(s) are otherwise
authorized to request under this Settlement
Agreement; and
(8) if not previously submitted, a certification
from a Qualified Physician on the GRAY FORM
which is appended to the Settlement Agreement
as Exhibit "20" that the Diet Drug Recipient
met the criteria for having FDA Positive
regurgitation as defined in Section I.22 or
Mild Mitral Regurgitation as defined in
Section I.38 prior to the end of the Screening
Period.
b. If the Class Member seeking a Matrix payment is
unable to obtain the documentation described above
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through the exercise of reasonable efforts, the
Trustees and/or Claims Administrator shall have the
right to consider other supporting documentation
including but not limited to declarations of other
Qualified Physician(s) under penalty of perjury
setting forth opinion(s) to a reasonable degree of
medical certainty to support the claim that the
Class Member's condition entitles him or her to a
Matrix payment, subject to review by the Court as
set forth in Section VIII.D. If this evidence
establishes the Class Member's condition to the
satisfaction of the Trustees and/or Claims
Administrator(s), the Class Member shall be entitled
to receive the appropriate Matrix Compensation
Benefits.
c. Upon receiving a claim for Matrix Compensation
Benefits, the Trustees and/or Claims
Administrator(s) shall obtain the following
information from the Class Member:
(1) A copy of any fee agreement between the Class
Member and the attorney representing that
Class Member which shall be submitted and
maintained in confidence;
(2) A verified statement of the out-of-pocket
costs incurred by the Class Member's
individual attorney, which shall be submitted
and maintained in confidence;
(3) A written representation by the Class Member
or the Class Member's attorney, made subject
to penalties of perjury, as to whether or not
a subrogation lien or claim has been asserted
with respect to the Class Member's right to
receive benefits under the Settlement and, if
so, the name of the subrogee; and
(4) If the Class Member is a Representative
Claimant, such court approvals or
authorizations as may be necessary to
authorize that person to consummate a
Settlement in a representative capacity.
Until the submission of all of the information
referred to in Section VI.C.2, a Claim for
Matrix Compensation Benefits shall not be
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considered "completed" and ready for
determination.
d. Subject to the audit provisions of this Settlement
Agreement, Section VI.E and Section VI.F, the
Trustees and/or Claims Administrator(s) shall make
Matrix Benefits Determinations based upon the
Medical Information provided to them by an
appropriate Board-Certified physician on or with a
properly and fully completed GREEN FORM.
e. Within forty-five (45) days of receiving a completed
Claim for Matrix Compensation Benefits, the Trustees
and/or Claims Administrator(s) shall make a
tentative determination:
(1) As to whether the Class Member(s) is entitled
to compensation under the Matrices, and if so,
the amount of compensation to which the
individual is entitled, including an
apportionment among Derivative and
Representative Claimants to the extent
necessary;
(2) The amount of counsel fees to which the
attorney representing the Class Member is
entitled, making the appropriate deduction of
9% to account for the fees paid to Class
Counsel as required by Section VIII.E.1.b or
Section VIII.E.3 of this Agreement, whichever
is applicable;
(3) The amount of reasonable out-of-pocket
expenditures which should be reimbursed to the
individual attorney representing the Class
Member;
(4) The amount to which any subrogee is entitled
in accordance with the provisions of Section
VII.D.2 hereof; and
(5) The net amount to which the Class Member is
entitled after making appropriate deductions
for counsel fees, reimbursement of litigation
expenses, and payment of all appropriate
subrogation liens.
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f. Immediately upon making the determination required
by the preceding paragraph, the Trustees and/or
Claims Administrator(s) shall notify the Class
Members; the attorneys for the Class Members, if
any; and the subrogrees if any, of the determination
and provide them with a period of thirty (30) days
in which to contest the tentative determination by
the Trustees and/or Claims Administrator(s), and to
provide additional information concerning the level
of Matrix Compensation Benefits which should be paid
as well as the distribution and apportionment of
those benefits.
g. Within sixty (60) days of receiving any explanatory
or supporting information pursuant to the preceding
paragraph or within ninety (90) days of receiving a
completed Claim for Matrix Compensation Benefits,
whichever is later, the Trustees and/or Claims
Administrator(s) shall make a final determination:
(1) As to whether the Class Member is entitled to
compensation under the Matrices, and, if so,
the amount of compensation to which the Class
Member is entitled, including an apportionment
among Derivative and Representative Claimants
to the extent necessary;
(2) The amount of counsel fees to which the
attorney representing the Class Member is
entitled, making the appropriate deduction of
9% to account for the fees paid to Class
Counsel as required by Section VIII.E.3 or
Section VIII.E.1.b of this Agreement,
whichever is applicable;
(3) The amount of reasonable out-of-pocket
expenditures which should be reimbursed to the
individual attorney representing the Class
Member;
(4) The amount to which any subrogee is entitled
in accordance with the provisions in Section
VII.D hereof; and
(5) The net amount to which the Class Member is
entitled after making appropriate deductions
for counsel fees, reimbursement of litigation
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expenses, and payment of all appropriate
subrogation liens.
h. Within fifteen (15) days of receiving notice of the
Trustees/Claims Administrators' final determination,
the affected Class Member(s), attorney(s), and/or
subrogee(s) may appeal the determination by filing a
Notice of Appeal in the form appended hereto as
Exhibit "24" with the Trial Court and serving a copy
on the Trustees and/or Claims Administrator(s).
i. In the event of such an appeal, the Court shall
refer the matter to Arbitration by a single
Arbitrator appointed by the Court from a panel of
arbitrators appointed by the Court for that purpose.
With respect to an appeal by a Class Member relating
to the determination of the gross amount of Matrix
Compensation Benefits to which the Class Member is
entitled, the Arbitrator shall determine whether the
Trustees and/or Claims Administrator(s) have
properly applied the criteria set forth in the
Settlement Agreement to the information submitted by
the Class Member in support of the claim and shall
enter a report and award which either affirms the
decision of the Trustees and/or Claims
Administrator(s) or directs a different payment than
that which was determined by the Trustees and/or
Claims Administrator(s). With respect to an appeal
relating to the distribution of counsel fees and
costs, the Arbitrator shall determine the amount of
the attorneys fees to which the attorney is entitled
under the provisions of the applicable state law
after deducting 9% as required by Section VIII.E.1.b
of this Agreement and the extent to which the
attorney should receive reimbursement for out-of-
pocket costs from the Class Member's recovery under
applicable state law. In the case of an appeal
relating to a subrogation issue, the Arbitrator
shall determine the amount to which the subrogee is
entitled to under applicable law to consistent with
the provisions of Section VII.D.2 of this Agreement.
The costs of such Arbitration, including the fees of
the Arbitrator, shall be taxed by the Arbitrator in
favor of the party who substantially prevails in the
Arbitration if the Arbitrator finds that the appeal
was taken or maintained in violation of the
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standards set forth in Fed.R.Civ.P.11(b).
Otherwise, the costs of such Arbitration shall be
paid by the Trust. Any party may appeal from the
report and award of the Arbitrator to the Court.
5. If there is no appeal initiating an Arbitration
process, then the decision of the Trustees and/or
Claims Administrator(s) with respect to the gross
amount to be paid on account of a Claim for Matrix
Compensation Benefits shall be final, unless there
is a documented change in the physical condition of
the Diet Drug Recipient after submission of the
claim which justifies consideration for a greater
level of Matrix Compensation Benefits than
previously applied for or justifies consideration
for payment at the same level as previously applied
for by reason of a different physical condition than
that which was the subject of the prior Claim for
Benefits by the Class Member.
6. If there is no appeal initiating an Arbitration
process, then the decision of the Trustees and/or
Claims Administrator(s) with respect to the
distribution of any portion of any amount paid on
account of a Claim for Matrix Compensation Benefits
to any attorney or subrogee shall be final.
7. If an appeal initiating arbitration is taken, the
decision of the Arbitrator or, if an appeal from the
report and award of the Arbitrator is taken, the
decision of the Court shall be final and binding
with respect to: (a) The gross amount to be paid on
account of a Claim for Matrix Compensation Benefits
unless there is a documented change in the physical
condition of the Diet Drug Recipient after the
submission of the claim which justifies
consideration for a greater level of Matrix
Compensation Benefits than that previously applied
for or for payment at the same level as previously
applied for by reason of a different physical
condition than that which was the subject of the
prior Claim for Benefits by the Class Member; and
(b) the distribution of any portion of the gross
amount to be paid for Matrix Compensation Benefits
to any attorney or subrogee for attorneys' fees,
reimbursement of litigation expenses, or subrogation
claims.
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8. Within forty-five (45) days after the end of each
calendar quarter or AIO Fiscal Quarter, whichever is
applicable, after the AIO Start Date and prior to
Final Judicial Approval, the Trustees and/or Claims
Administrator(s) shall pay the Matrix Compensation
Benefit claims of all Class Members who:
a. have completed Claims for Matrix Compensation
Benefits during the period prior to the
commencement of the above-referenced calendar
quarter or AIO Fiscal Quarter, whichever is
applicable, which have not been previously
paid; and
b. have executed Individual Agreements pursuant
to the AIO; and
c. whose rights to Matrix Compensation Benefits
have become final during the above-referenced
calendar quarter or AIO Fiscal Quarter,
whichever is applicable under this Section and
are not then the subject of an audit under the
terms of the Settlement Agreement.
In distributing the amount due with respect to a claim
for Matrix Compensation Benefits, the Trustees and/or
Settlement Administrator(s) shall pay all sums due to the
individual attorney for the Class Member for payment of
counsel fees and reimbursement of litigation expenses,
and all sums due to any subrogee as determined by the
above procedures. The net amount remaining after
deducting such payments from the gross amount of the
Matrix Compensation Benefits to which a Class Member is
determined to be entitled, shall be distributed to the
Class Member.
9. Upon Final Judicial Approval, the preceding paragraph
will cease to be effective and the following schedule
will apply to the payment of all claims for Matrix
Compensation Benefits. Within 45 days after the close of
each Fiscal Quarter, the Trustees and/or Claims
Administrator(s) shall pay all Claims for the Matrix
Compensation Benefits of all Class Members who:
a. have completed Claims for Matrix Compensation
Benefits during the period prior to the commencement
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of the above-referenced 45-day time period which
have not been previously paid; and
b. whose rights to Matrix Compensation Benefits have
become final during the above-referenced Fiscal
Quarter under Section VI.C.5, and are not then the
subject of an audit under the terms of the
Settlement Agreement.
In distributing the amount due with respect to a claim
for Matrix Compensation Benefits, the Trustees and/or
Settlement Administrator(s) shall pay all sums due to the
individual attorney for the Class Member for payment of
counsel fees and reimbursement of litigation expenses,
and all sums due to any subrogee as determined by the
above procedures. The net amount remaining after
deducting such payments from the gross amount of the
Matrix Compensation Benefits to which a Class Member is
determined to be entitled, shall be distributed to the
Class Member.
10. The payment obligations in paragraphs (8) and (9) above
are subject to the provisions of Section III.C.2-3 (MAPA
limitations).
D. Procedure for Recognition of Credits.
1. AHP shall receive Credits in accordance with Section
VII.A of this Settlement Agreement pursuant to the
following procedure:
a. With respect to each Class Member who has opted out
of the Settlement and who has received a payment
from AHP for which AHP seeks a Credit under Section
VII.A (a "Request for Credit"), AHP shall supply the
Trustees and/or Claims Administrator(s) with the
following documents and information:
(1) A copy of the form through which the Class
Member(s) exercised an Opt-Out right;
(2) A copy of the report of the Echocardiogram, if
any, showing the degree of mitral and/or
aortic valvular regurgitation in the Diet Drug
Recipient whose condition is at issue prior to
September 30, 1999 and/or as of the close of
the Screening Period;
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(3) A copy of the check(s) evidencing payment or
other evidence of payment to the Class
Member(s) for which AHP seeks credit;
(4) A copy of the release(s) executed by the Class
Member(s) in favor of AHP;
(5) A "RED FORM # 1" for an Initial or Back-End
Opt-Out which is appended to this Settlement
Agreement as Exhibit "25" or a "RED FORM # 2"
for an Intermediate Opt-Out which is appended
to this Settlement Agreement as Exhibit "26"
completed and signed subject to penalties of
perjury by a knowledgeable representative of
AHP and a Board-Certified Cardiologist or
Cardiothoracic Surgeon;
(6) all hospital reports of the admitting history
and physical examination of the Diet Drug
Recipient, medical histories, operative
reports, pathology reports, Echocardiogram
reports, cardiac catheterization reports and
discharge summaries which relate to the
condition of the Diet Drug Recipient that
forms the basis of the Request for Credit;
(7) a copy of the videotape or disk of the
Echocardiogram results which, in whole or in
part, form the basis for the Request for
Credit;
(8) a declaration under penalty of perjury from a
Board-Certified Cardiologist or Cardiothoracic
Surgeon, regardless of whether that
Cardiologist was originally retained by AHP,
the plaintiff or neither, setting forth an
opinion to a reasonable degree of medical
certainty that (1) the Diet Drug Recipient has
the condition which would otherwise qualify a
Class Member for a particular Matrix payment,
including, where applicable, that the
causation requirements applicable to
conditions (b)(v) and (c) of Matrix-Level V,
either are or are not present; (2) to the best
of such physician's knowledge after reasonable
inquiry, such condition which would otherwise
qualify the Class Member for a particular
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Matrix payment was not present prior to usage
of Pondimin (Registered Trademark) and/or
Redux (Trademark); and (3) all the conditions
which determine whether Matrix A-1 or B-1 are
applicable, either are present or are not
present;
(9) a declaration under penalty of perjury from a
Board-Certified Cardiologist, Cardiothoracic
Surgeon, Neurologist or Neurosurgeon with
regard to the functional outcome which the
patient has had six months after a stroke, if
applicable;
(10) a declaration under penalty of perjury from a
Board-Certified Cardiologist, Cardiothoracic
Surgeon, or Pathologist regarding the
existence of the pathological criteria for
Endocardial Fibrosis defined in Section I.21
if applicable; and,
(11) any other documentation which the Trustees
and/or Claims Administrators(s) are otherwise
authorized to request under this Settlement
Agreement.
b. If AHP is unable to obtain the documentation
described above through the exercise of reasonable
efforts, the Trustees and/or Claims Administrator(s)
shall have the right to consider other supporting
documentation including but not limited to
declaration(s) of other Qualified Physician(s) under
penalty of perjury setting forth opinion(s) to a
reasonable degree of medical certainty to support
the claim that the Class Members' condition would
have otherwise entitled him or her to a Matrix
payment for which AHP would be entitled to a Credit,
subject to review by the Court as set forth in
Section VI.D.1.g. If this evidence establishes the
Class Member's condition to the satisfaction of the
Trustees and/or Claims Administrator(s), AHP shall
be entitled to receive the appropriate credit.
c. Within forty-five (45) days of receiving a completed
Request for Credit from AHP, the Trustees and/or
Claims Administrator(s) shall make a preliminary
determination as to whether AHP is entitled to a
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Credit, and, if so, the amount of the Credit to
which AHP is entitled, and shall advise AHP and
Class Counsel, in writing, of this determination.
d. AHP and Class Counsel shall have forty-five (45)
days from the date of receiving such a preliminary
determination to submit additional information
concerning the question of whether and to what
extent a Credit should be given to AHP.
e. Within sixty (60) days of receiving any additional
information which is submitted pursuant to the
preceding paragraph or within ninety (90) days of
receiving a completed Request for Credit from AHP,
whichever is later, the Trustees shall make a final
determination as to whether AHP is entitled to a
Credit and, if so, the amount of Credit to which AHP
is entitled, and shall advise AHP and Class Counsel
in writing of this determination.
f. Within fifteen (15) days of receiving notice of the
Trustees' determination, AHP may appeal the
determination by filing a notice of the appeal in
the form appended hereto as Exhibit "24" with the
Trial Court and serving a copy on Class Counsel, and
the Trustees and/or Claims Administrator(s).
g. In the event of such an appeal, the Court shall
refer the matter to Arbitration by a single
Arbitrator appointed by the Court for that purpose.
The Arbitrator shall determine whether the Trustees
have properly applied the criteria set forth in the
Settlement Agreement to the information supplied by
AHP in support of the Request for Credit and shall
enter a report and award, which either affirms the
decision of the Trustees, directs a different Credit
than that which was determined by the Trustees, or
directs that no Credit shall be given to AHP. If
the Arbitrator affirms the decision of the Trustees
or awards a lower Credit than had been awarded by
the Trustees and finds that the appeal was taken or
maintained by AHP in violation of the standards set
forth in Fed.R.Civ.P. 11(b), the cost of this
Arbitration shall be borne by AHP. Otherwise, the
costs of such Arbitration shall be paid by the
Trust. Any party may appeal from the report and
award of the Arbitrator to the Court.
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h. If there is no appeal initiating an Arbitration
process, then the decision of the Trustees with
respect to a claim for a Credit shall be final. If
an appeal initiating Arbitration is taken, the
decision of the Arbitrator or, if an appeal from the
report and award of the Arbitrator is taken, the
decision of the Court, shall be final and binding.
E. Audits of Claims by Trustees and/or Claims Administrator(s)
1. On a quarterly basis, the Trustees and/or Claims
Administrator(s) shall audit five percent (5%) of the
total Claims for Matrix Compensation Benefits made by
Class Members and five percent (5%) of the total requests
for Credits made by AHP during the prior quarter pursuant
to an Audit Plan, which shall take into account, among
other things:
a. The fact that certain Class Members are represented
by attorneys who represent what the Trustees and/or
Claims Administrator(s) determine to be a
disproportionate number of Class Members;
b. The fact that certain Class Members rely on the
certifications of doctors who have provided
certifications for what the Trustees and/or Claims
Administrator(s) determine to be a disproportionate
number of Class Members; and
c. The need to incorporate random sampling into the
Audit Plan.
2. A Claim may not be paid or a Credit may not be allowed
while that Claim or Credit is the subject of an audit.
3. With respect to Claims which are selected for audit, the
Trustees and/or Claims Administrator(s) may require that
the Class Member(s) provide them with the following
information as a condition to consideration of the Claim:
a. Identification of all internists or sub-specialists
in internal medicine, surgeons or sub-specialists in
surgery, and obstetricians or gynecologists for the
10 year period prior to the filing of the claim;
b. Fully completed and executed authorizations which
will allow the Trustees and/or Claims
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Administrator(s) to obtain copies of the Class
Member's medical records; and
c. Such other relevant documents or information within
the Class Member's custody, possession, or control
as may reasonably be requested by the Trustees
and/or Claims Administrator(s).
If the Class Member unreasonably fails or refuses to
provide any material documents or information after being
afforded an adequate opportunity to do so, the Class
Member's Claim shall be denied.
4. With respect to requests for Credit which are selected
for audit, the Trustees and/or Claims Administrator(s)
may require that AHP provide them with the following
information as a condition to consideration of a Request
for Credit:
a. All medical records relating to the Diet Drug
Recipient whose condition is the subject of the
Request for Credit, which are in the custody,
possession, or control of AHP and its counsel;
b. All depositions, interrogatories, fact sheets, and
like documents relating to the condition and
circumstances of the Diet Drug Recipient whose
condition is the subject of the Request for Credit,
which are in the custody, possession or control of
AHP and its counsel;
c. Such other relevant documents or information within
AHP's or its counsel's custody, possession or
control as may reasonably be requested by the
Trustees and/or Claims Administrator(s).
5. If AHP unreasonably fails or refuses to provide any
material documents or information after being afforded an
opportunity to do so, its Request for Credit shall be
denied.
6. In conducting an audit of those Claims and Requests for
Credit selected for audit, the Trustees and/or Claims
Administrator(s) shall follow the following procedure:
All Accelerated Implementation Option acceptance form(s)
("PINK FORM"), registration form(s) ("BLUE FORM"),
videotapes or disks of Echocardiograms, medical reports,
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and other information submitted by AHP in support of a
Request for Credit or by a Class Member in support of a
Claim, together with a copy of the claimant's medical
records, and Echocardiogram videotapes or disks obtained
by the Trustees/Claims Administrator(s) shall be
forwarded to a highly-qualified, independent, Board-
Certified Cardiologist (hereinafter referred to as the
"Auditing Cardiologist") selected by the Trustees/Claims
Administrator(s). After thoroughly reviewing these
materials, the Auditing Cardiologist shall make a
determination as to whether or not there was a reasonable
medical basis for the representations made by any
physician in support of the Claim or Request for Credit.
7. If the Auditing Cardiologist makes the determination that
there was a reasonable medical basis to support the Class
Member's Claim or AHP's Request for Credit and if there
is no substantial evidence that the Class Member or AHP
intentionally made a material misrepresentation of fact
in connection with a Claim or a Request for Credit, then
the Claim or Credit shall be allowed. If, on the other
hand, the Auditing Cardiologist makes the determination
that there was no reasonable medical basis to support any
of the material representations made by any physician in
support of the Class Member's Claim or AHP's Request for
Credit, or if the Trustees and/or Claims Administrator(s)
determine that the Class Member or AHP intentionally made
a material misrepresentation of fact, the Trustees and/or
Claims Administrator(s) shall not pay the Claim or allow
the Credit and shall apply to the Court for an order to
show cause why the Claim should be paid or the Credit
should be allowed, and for an order to show cause as to
why other Claims or Credits involving the same attorney
and/or physician should not be subject to an audit.
8. If the Court determines that there was no reasonable
medical basis to support a material representation made
by a physician in support of a Claim or Request for
Credit or that the Class Member or AHP intentionally made
a material misrepresentation of fact in connection with
Claim or Request for Credit, after the entry of a show
cause order and a hearing pursuant to the preceding
paragraph, the Court may grant such relief as may be
appropriate, including any of the following:
a. an order disallowing the Claim or Credit;
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b. an order directing an additional audit of other
Claims or credits involving the same attorneys
and/or physicians who were involved in the Claim or
Request for Credit which was the subject of the show
cause order;
c. an order directing such other additional audits as
may be appropriate in light of the Court's findings;
d. an order imposing penalties including the payment of
the Trustees' and/or Claims Administrators' costs
and attorneys' fees to the extent permitted by law;
and/or
e. an order making a referral of the matter to the
United States Attorney or other appropriate law
enforcement officials for possible criminal
prosecution if there is probable cause to believe
that the Claim was submitted fraudulently.
F. AHP-Initiated Audits of Claims
1. AHP may have access to all Claim Forms for Fund A or Fund
B benefits submitted to the Trustees and/or Claims
Administrator(s) and to all medical records, videotapes
or disks of Echocardiograms, forms submitted by Class
Members, pharmacy records and all other documents
submitted by Class Members in support of their Claims,
upon reasonable request to the Trustees.
2. AHP shall have no right to participate in the claims
determination process for a particular Class Member as
described in Section VI.C above; provided, however, that
AHP shall have the right to identify particular Claims or
groups of Claims that it may request the Trustees and/or
Claims Administrator(s) to audit. In making such
requests, AHP shall identify to or provide the Trustees
and/or Claims Administrator(s) with all information or
documentation that it believes establishes either that
there was no reasonable medical basis to support the
Class Member's Claim or that the Class Member made a
material misrepresentation of fact in connection with a
Claim.
3. The Trustees and/or Claims Administrator(s) shall audit
all Claims submitted by AHP for audit pursuant to Section
VI.F.2 above in a particular quarter, provided that the
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Trustees shall not audit more than 5% of the total Claims
made by Class Members during that quarter in addition to
the 5% of claims per quarter to be audited pursuant to
Section VI.E.1.
4. If Class Counsel or AHP has a good faith belief that an
Auditing Cardiologist employed by the Trustees has failed
to perform his/her duties in accordance with accepted
standards of medical practice, they may apply to the
Court for appropriate relief, including an order
disqualifying the Auditing Cardiologist from any further
participation in any audits and requiring a re-audit of
those Claims or Requests for Credit for which the
Auditing Cardiologist made a determination.
5. In connection with any audit initiated by AHP under
Section VI.F.2, AHP shall have the right to obtain, at
its expense, an independent Transthoracic Echocardiogram
of a Diet Drug Recipient who has made a claim for Matrix
Benefits under the following circumstances:
a. where AHP presents evidence to the Trustees and/or
Claims Administrator(s) that the center or physician
from which the Echocardiogram was obtained has a
disproportionate number of FDA Positive or Matrix-
Level Claims; or
b. where AHP submits a certification from a Board-
Certified Cardiologist under penalty of perjury that
the report of the Echocardiogram and/or the
videotape or disk deviate materially from accepted
standards of practice in the fields of Cardiology or
Echocardiography; or
c. where AHP submits to the Trustees and/or Claims
Administrator(s) evidence that the Class Member or
any physician making representations in support of a
Class Member's Claim made material
misrepresentations of fact; or
d. where AHP submits a certification from a Board-
Certified Cardiologist under penalty of perjury that
the videotape or disk of the Echocardiogram cannot
properly be read for any reason, including, but not
limited to, poor quality, or improper setting.
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6. Independent AHP Echocardiograms conducted pursuant to
Section VI.F.5 above, shall be subject to the following
conditions:
a. the affected Class Member will be afforded at least
ninety (90) days within which to schedule the
Echocardiogram at a time convenient to the Class
Member;
b. the Echocardiogram shall take place not more than
twenty-five (25) miles from the Class Member's place
of residence unless AHP provides transportation,
but, in no event, more than 100 miles;
c. AHP shall pay for the Echocardiogram;
d. the Echocardiogram shall be conducted pursuant to
the procedures set forth in Section I.54.
e. a report of the Echocardiogram together with a copy
of the videotape and/or disk of the Echocardiogram
results shall be submitted to the Trustees and/or
Claims Administrator(s) and to the Diet Drug
Recipient who was the subject of the Echocardiogram.
If the results of the report of the Independent AHP
Echocardiogram obtained by AHP pursuant to this
paragraph differ materially and significantly from
the results or report of the Echocardiogram
submitted by the Class Member in support of the
Class Member's Claim for Benefits, then the Trustees
and/or Claims Administrator(s) may in their
discretion take the results into consideration in
connection with their audit.
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VII. AHP RIGHTS AND BENEFITS
A. Credits
1. If a Class Member timely and properly exercises an
Initial, Intermediate, or Back-End Opt-Out right pursuant
to Section IV.D.2, IV.D.3, or IV.D.4 hereof, asserts a
claim and obtains any payment from AHP as a result of
such claim (whether pursuant to a pre-Judgment or post-
Judgment settlement of such claim or pursuant to a
judgment on such claim), AHP shall receive Credits
against its Fund B obligations to the extent set forth in
this Section VII.A ("Credits").
2. With respect to an Initial Opt-Out, if (a) a Diet Drug
Recipient (or his or her Representative Claimants) timely
and properly opts out of this Settlement and the Diet
Drug Recipient has a Matrix-Level Condition at the time
of such Initial Opt-Out or payment by AHP, or (b) a
Derivative Claimant of such Diet Drug Recipient is deemed
to have opted out of this Settlement pursuant to Section
IV.D.2, then AHP shall receive a Full Credit with respect
to any amounts paid by AHP to such Diet Drug Recipient
(or his or her Representative Claimant) or the Derivative
Claimant, regardless of whether such payments were made
pursuant to a Judgment, or pre-Judgment or post-Judgment
settlement.
3. With respect to a Back-End Opt-Out, if (a) a Diet Drug
Recipient (or his or her Representative Claimant) timely
and properly exercises a Back-End Opt-Out under this
Agreement and the Diet Drug Recipient has a Matrix-Level
Condition at the time of such Back-End Opt-Out or (b) a
Derivative Claimant of such Diet Drug Recipient is deemed
to have opted out of this Agreement pursuant to Section
IV.D.4, then AHP shall receive a Full Credit with respect
to any amounts paid by AHP to such Diet Drug Recipient
(or his or her Representative Claimant) or the Derivative
Claimant, regardless of whether such payments were made
pursuant to a Judgment, or pre-Judgment or post-Judgment
settlement.
4. With respect to an Intermediate Opt-Out, if a Diet Drug
Recipient (or his or her Representative Claimant) timely
and properly exercises an Intermediate Opt-Out under this
Agreement and the Diet Drug Recipient is FDA Positive but
does not have a Matrix-Level Condition at the time of
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such Intermediate Opt-Out, or a Derivative Claimant of
such Diet Drug Recipient is deemed to have opted out of
this Agreement pursuant to Section IV.D.3, and
a. if AHP makes a payment to such Diet Drug Recipient
(or his or her Representative Claimant) and/or the
Derivative Claimant pursuant to a Judgment or a
post-Judgment settlement, then AHP shall receive an
Intermediate Opt-Out Credit (determined pursuant to
Section VII.A.6 below) for any such payment, subject
to the Aggregate Intermediate Opt-Out Credit Cap; or
b. if AHP makes a payment to such Diet Drug Recipient
(or his or her Representative Claimant) and/or the
Derivative Claimant pursuant to a pre-Judgment
settlement, then AHP shall have the right to file a
petition with the Court to seek approval for an
Intermediate Opt-Out Credit (determined pursuant to
Section VII.A.6 below) for any such payment, subject
to the Aggregate Intermediate Opt-Out Credit Cap.
5. For purposes of this Section VII.A:
"Judgment" shall mean any decision by a court of law
or any other authorized tribunal.
"Full Credit" shall mean a Credit in the amount of
the lesser of:
(a) the amount of payment to the Diet Drug
Recipient (or his or her Representative
Claimant) and/or Derivative Claimant; or
(b) the Matrix payment for which such Diet
Drug Recipient (or his or her
Representative Claimant) and/or
Derivative Claimant would have qualified
(as determined at the time such
individual opted out of this Agreement
or at the time of payment of such
amount, whichever is higher), less
Common Benefit Attorneys' fees (such
fees not to exceed nine percent (9%) of
such Matrix payment).
6. An "Intermediate Opt-out Credit" shall be determined as
follows:
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a. In the event of a Credit pursuant to Section
VII.A.4.a above, such Credit shall be the lesser of:
(1) the amount of payment to the Diet Drug
Recipient (or his or her Representative
Claimant) and/or Derivative Claimant; or
(2) the Matrix payment amount that a Diet Drug
Recipient (or his or her Representative
Claimant) and/or Derivative Claimant would
receive at Level III on either Matrix A-1 or
Matrix B-1, or Matrix A-2 or Matrix B-2,
whichever is applicable depending on the
medical condition and the age of the Diet Drug
Recipient at the time of the payment pursuant
to Judgment or a post-Judgment settlement,
less Common Benefit Attorneys' fees (such fees
not to exceed nine percent (9%) of such Matrix
payment amount).
b. In the event of a Credit pursuant to Section
VII.A.4.b above, where such Credit has been approved
by the Court, such Credit shall be the lesser of:
(1) the amount of the payment to the individual;
or
(2) seventy-five percent (75%) of the amount of
the Matrix payment for a Diet Drug Recipient
(or his or her Representative Claimant) or
Derivative Claimant at Level III, on either
Matrix A-1 or Matrix B-1 whichever is
applicable depending upon the circumstances of
the Diet Drug Recipient, and at the age of the
Diet Drug Recipient at the time of payment,
less Common Benefits Attorneys' fees (such
fees not to exceed nine percent (9%) of such
Matrix payment amount).
7. The "Aggregate Intermediate Opt-Out Credit Cap" for
purposes of Section VII.A.4 above shall be an aggregate
ceiling, and Intermediate Opt-Out Credits shall not be
available to AHP to the extent that the sum of such
Intermediate Opt-Out Credit exceeds the Aggregate
Intermediate Opt-Out Credit Cap in effect in the Fiscal
Year to which the Intermediate Opt-Out Credit would
otherwise be applied. The amount of the Aggregate
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Intermediate Opt-Out Credit Cap shall be Three Hundred
Million Dollars ($300,000,000) as of the Final Judicial
Approval Date, and such amount shall accrete commencing
on that date at a rate of six percent (6%), compounded
annually until the Fiscal Quarter in which the Credit is
applied to reduce the Adjusted MAPA in the same manner as
Credits are accreted pursuant to Section III.C.4 hereof.
8. In order to qualify for any of these credits, AHP must
provide the Trustees and/or Claims Administrator(s) with
the appropriate documentation described in Section
VI.D.1.a, above.
B. Effect on Claims
1. Effective upon Final Judicial Approval, every Settled
Claim of each Class Member against AHP or any other
Released Party shall be conclusively compromised, settled
and released, and each such Class Member shall be barred
from initiating, asserting or prosecuting any Settled
Claim against AHP or any other Released Party, except to
the extent permitted by this Settlement Agreement for any
Class Member who has timely and properly exercised any
applicable opt-out right.
2. To confirm the provisions set forth in Section VII.B.1,
above, within five days after Final Judicial Approval,
the Class Representatives, individually and on behalf of
the Settlement Class and all of the Subclasses, shall
deliver to AHP a fully executed Release and Covenant Not
to Sue in the form attached as Exhibit "27" .
3. Each Class Member shall be required to execute an
individual Release and Covenant Not to Sue as part of the
forms required to be submitted by Class Members in order
to seek to participate in the benefits of the Settlement.
Such individual releases shall become ineffective, null
and void in the event that the Settlement fails to obtain
Final Judicial Approval or in the event that AHP
terminates this Agreement for any reason, other than as
to persons entering into AIO Individual Agreements. Such
individual releases shall furthermore be ineffective,
null and void as to all Settled Claims except those set
forth in I.53(e) and (g) above, with respect to any Class
Member who timely and properly exercises any applicable
opt-out right granted by this Agreement subsequent to the
execution of the releases.
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4. For purposes of any statute of limitations or similar
time bar, the AHP Released Parties shall not assert that
a Class Member actually had PPH unless and until the
condition of the Class Member meets the definition of PPH
set forth in Section I.47.
5. In the event that a Class Member initiates a claim based
on PPH, the AHP Released Parties shall not assert a
defense based on "splitting" of claims, causes of action
and/or parties by virtue of the fact that the Class
Member is included in the Settlement, but the claim based
on PPH is not a Settled Claim.
6. The forms of release necessary to effectuate this
Settlement and the Accelerated Implementation Option set
forth in Section V are set forth in the PINK FORM (for
Class Members accepting the AIO) and the BLUE FORM (for
all other Class Members) appended hereto as Exhibits "9"
and "21" respectively.
7. The amended complaint in Sheila Brown, et al. v. American
Home Products Corporation, Civil Action No. 99-20593
(E.D. Pa.), and all Settled Claims which were or could
have been asserted, including claims for punitive
damages, on behalf of the Settlement Class or any
subclass against AHP and/or any Released Parties shall be
dismissed with prejudice upon Trial Court Approval. Such
dismissal will be vacated in the event that the
Settlement does not receive Final Judicial Approval.
8. After Date 2, the following persons shall have no further
right to any benefits under the Settlement and shall have
no right to pursue any Settled Claims against AHP or any
Released Party, except to the extent such persons timely
and properly exercise, or have exercised, an Initial,
Intermediate, Back-End or Financial Insecurity Opt-Out:
a. with respect to all Settled Claims against AHP or
any Released Party other than those based on
Endocardial Fibrosis, any Class Member asserting a
claim based on a Diet Drug Recipient who: (a) has
not been diagnosed by a Qualified Physician as FDA
Positive nor as having Mild Mitral Regurgitation by
an Echocardiogram performed between the commencement
of Diet Drug use and the end of the Screening
Period, or (b) has been diagnosed by a Qualified
Physician as FDA Positive or as having Mild Mitral
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Regurgitation by an Echocardiogram performed between
the commencement of Diet Drug use and the end of the
Screening Period, but the Class Member has not
registered or been deemed to have registered for
settlement benefits by Date 2.
b. with respect to Settled Claims against AHP or any
Released Party based on Endocardial Fibrosis, any
Class Member asserting a claim based on a Diet Drug
Recipient who: (a) has not been diagnosed by a
Qualified Physician as having Endocardial Fibrosis
by September 30, 2005, or (b) has been diagnosed by
a Qualified Physician as having Endocardial Fibrosis
by September 30, 2005, but the Class Member has not
registered or been deemed to have registered for
settlement benefits by January 31, 2006.
C. Protection of AHP From Claims by Non-Settling Defendants
1. It is the intent of this Settlement Agreement that no
Settlement Class Member shall recover, directly or
indirectly, any sums for Settled Claims from AHP or any
Released Party other than those received under the
Settlement Agreement and that AHP shall make no payments
to any third party defined herein as a Non-Settling
Defendant for any amounts arising out of a Settled Claim
brought by a Class Member against such Non-Settling
Defendant, except to the extent that Class Members timely
and properly exercise an Initial, Intermediate, or Back-
End Opt-Out right provided by the Settlement Agreement.
It is the further intent of this Settlement Agreement
that Settlement Class Members agree to reduce any
judgments against Non-Settling Defendants to the extent
necessary, under applicable law, to relieve AHP and the
Released Parties of liability for contribution or non-
contractual indemnity to any Non-Settling Defendant. In
particular:
a. The Parties shall seek an order from the Court,
which shall be a condition to AHP's obligations
under this Agreement as set forth in Section VIII.D
hereof, enjoining and barring all Non-Settling
Defendants from commencing or prosecuting any claim
against AHP or any other Released Party for
contribution and/or non-contractual indemnity,
arising out of a claim against such Non-Settling
Defendant on behalf of any Class Member asserting
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Settled Claims in any present or future litigation,
other than any Class Member who has timely and
properly exercised an Initial, Intermediate or Back-
End Opt-Out right provided by this Agreement and
subject to the provisions of Section VII.C.2 below.
b. Nothing in this Agreement is intended to adversely
affect any Non-Settling Defendant's right, if any,
to set-off or judgment reduction under any state
contribution among tortfeasors act or other
applicable law. Non-Settling Defendants will be
entitled, at a minimum, to whatever set-off or
judgment reduction is afforded them by operation of
applicable law. Settlement Class Members who do not
timely and properly exercise Initial, Intermediate
or Back-End Opt-Out rights agree that all defendants
are joint tortfeasors in cases in which Settlement
Class Members have joined Non-Settling Defendants,
AHP, and/or the Released Parties or in any other
case in which a Settled Claim is asserted.
c. The Parties recognize that, under the law of some
states, claims for contribution or non-contractual
indemnity against a settling defendant survive a
Settlement unless the Settlement provides set-off or
judgment reduction rights that go beyond those that
would otherwise exist by operation of applicable
law. In those cases, the Parties intend that Non-
Settling Defendants shall be entitled to the
additional set-off or judgment reduction necessary
under applicable law to extinguish Non-Settling
Defendants' claims, if any, for contribution or non-
contractual indemnity against AHP and the Released
Parties arising from Settled Claims only.
Settlement Class Members, however, reserve their
right to contend that, due to the nature of the
theories of liability alleged or presented against
the Non-Settling Defendants (i.e., conspiracy or
concert of action), Non-Settling Defendants have no
right to contribution or non-contractual indemnity
from AHP or the Released Parties as a matter of law
even though they are joint tortfeasors.
d. In the event that any claim that a Non-Settling
Defendant would have for contribution or non-
contractual indemnity against AHP or the Released
Parties in the absence of this Settlement Agreement
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with respect to a Settled Claim would not be
extinguished under applicable law by the set-off or
judgment reduction to which the Non-Settling
Defendant would be entitled by operation of law, any
Settlement Class Member who recovers a judgment
against any Non-Settling Defendant with respect to a
Settled Claim for which AHP and/or any Released
Party would be liable by a claim for contribution or
non-contractual indemnity but for the provisions of
this Settlement Agreement, shall reduce his judgment
against the Non-Settling Defendant by the amount,
percentage, or share of such judgment necessary,
under applicable law, to relieve AHP and the
Released Parties of liability for contribution or
non-contractual indemnity. By way of example, under
a statute modeled on the 1939 version of the Uniform
Contribution Among Tortfeasors Act, Settlement Class
Members would reduce their judgments against Non-
Settling Defendants in the situation described in
this Section to the extent of the pro rata shares
(as determined under applicable law) of AHP and any
relevant Released Party. In the absence of a
statute, Settlement Class Members would reduce their
judgments against Non-Settling Defendants in the
situation described in this Section by the amount,
percentage, or share of such judgment that would
lawfully be attributable to AHP and/or the Released
Party or Parties but for the provisions of this
Settlement Agreement.
e. To avoid inconvenience and expense to AHP, the other
Released Parties, and the Settlement Class Members,
and to eliminate the objection that certain states'
law requires that AHP and the Released Parties
remain as parties in a lawsuit to facilitate the
adjudication of Non-Settling Defendants' set-off or
judgment reduction rights with respect to a Settled
Claim, the releases provided under this Settlement
Agreement shall incorporate, to the extent required
by applicable law, what is known in Pennsylvania as
a "Griffin release" and/or what is known in
Wisconsin and elsewhere as a "Pierringer release."
By this provision, Settlement Class Members and
Class Counsel acting on behalf of Settlement Class
Members agree that the lack of a judicial
determination that the settling defendant is a joint
tortfeasor does not preclude Non-Settling Defendants
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from obtaining set-off or judgment reduction rights
they would otherwise have under applicable law in
the absence of this Agreement. See Griffin v.
United States, 500 F.2d 1059 (3d Cir. 1974);
Pierringer v. Hoger, 124 N.W.2d 106 (Wis. 1963). By
this provision, Settlement Class Members and Class
Counsel acting on behalf of Settlement Class Members
further agree to waive any rights that they might
have against Non-Settling Defendants, the assertion
of which would, under applicable law, allow Non-
Settling Defendants to add or retain AHP and/or the
Released Parties as defendants in actions brought by
Settlement Class Members against Non-Settling
Defendants with respect to Settled Claims for the
purpose of adjudicating Non-Settling Defendants'
rights, if any, to set-off or judgment reduction.
This provision is intended to obviate the necessity
and expense of having AHP and the Released Parties
added or remain as parties on the record and obliged
to participate in a trial merely for the purpose of
determining if in fact they were tortfeasors so as
to entitle other tortfeasors to a reduction of any
verdict. This provision, however, in no way
constitutes an admission of liability by AHP and the
Released Parties or an admission by Settlement Class
Members that any Non-Settling Defendant is entitled
to contribution or non-contractual indemnity from
AHP or a Released Party.
f. The Parties intend that this Settlement Agreement
result in the termination or bar of all claims for
contribution and/or non-contractual indemnity
against AHP and the Released Parties with respect to
Settled Claims. To the extent that the Parties'
intent is not fully realized, and a Non-Settling
Defendant obtains a judgment for contribution or
non-contractual indemnity against AHP and/or a
Released Party with respect to Settled Claims,
Settlement Class Members agree to reduce their
judgments against Non-Settling Defendants by the
amount, percentage, or share of such judgment
necessary to satisfy any such judgment or non-
contractual indemnity for the benefit of AHP and/or
the Released Party. If, despite the provisions of
this section, AHP or any Released Party incurs any
judgments due to a claim for contribution or non-
contractual indemnification arising out of a claim
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brought by a Settlement Class Member against a Non-
Settling Defendant, such Settlement Class Member
shall indemnify AHP and the Released Parties for
such amount, provided that AHP and the Released
Parties shall have made all reasonable efforts to
avoid liability for contribution and/or non-
contractual indemnity to Non-Settling Defendants
under the Settlement Agreement. In this regard, AHP
shall have the right to recover indemnity
obligations from any unpaid Matrix payments that may
be due to the Class Member.
g. If, despite the provisions of this section, AHP or
any Released Party makes a payment of any judgment
due to a claim for contribution and/or non-
contractual indemnity arising out of a claim brought
by a Settlement Class Member against a Non-Settling
Defendant with respect to a Settled Claim, such
Settlement Class Member shall indemnify AHP and the
Released Parties for such amount, and AHP shall make
reasonable efforts to reduce such indemnity
obligations to judgment in the underlying litigation
involving the Non-Settling Defendant. To the extent
that, for any reason, a Settlement Class Member has
failed to satisfy an indemnity obligation arising
under this paragraph or the prior paragraph (either
directly or through recovery of payments for Matrix-
Level Conditions otherwise due the Class Member)
within 90 days after AHP makes any such payment, AHP
may, at any time thereafter, assign its indemnity
rights against the Class Member to the Trustees and,
in such event, shall receive a credit against its
Fund B obligations in the amount of the unsatisfied
portion of the indemnity (a "Cross-Claim Credit").
Cross-Claim Credits shall accrete at six percent
(6%), compounded annually, commencing in the Fiscal
Year in which AHP makes the payment from which the
Cross-Claim Credit arises. Accreted Cross-Claim
Credits shall accumulate and shall be applied in the
same manner as Credits are applied pursuant to
Section III.C.4 of this Agreement.
2. To protect further the Non-Settling Defendants'
interests, the Parties have agreed that the bar order
shall incorporate the following provisions:
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a. If, despite the provisions of Section VII.C.1, (i)
applicable law precludes a Non-Settling Defendant
from obtaining a set-off or judgment reduction to
which a Non-Settling Defendant would otherwise be
entitled under applicable law in an individual case
brought by a Settlement Class Member with respect to
a Settled Claim without naming AHP or a Released
Party as a party in the lawsuit, and (ii) the Non-
Settling Defendant and the Settlement Class Member
cannot reach agreement on this issue sufficient to
eliminate the Non-Settling Defendant's alleged need
to name AHP or a Released Party in the lawsuit, the
Non-Settling Defendant may apply to the Court for
relief from the bar order.
b. The Non-Settling Defendant's application to the
Court shall set forth with specificity (i) the facts
and law that would give rise to a claim for
contribution and/or non-contractual indemnity but
for the provisions of this Settlement Agreement;
(ii) the efforts that the Non-Settling Defendant has
made to reach an accommodation with the Settlement
Class Member with respect to the need to name AHP or
a Released Party as a defendant in the case; and
(iii) the factual and legal bases for the Non-
Settling Defendant's claim that, under the
particular facts of the case and the particular
provisions of applicable law, the Non-Settling
Defendant must be permitted to name AHP or a
Released Party in the case despite the bar order.
c. A copy of the Non-Settling Defendant's application
to the Court shall be served on Class Counsel and on
counsel for AHP.
d. The Court shall modify the bar order to permit a
Non-Settling Defendant to name AHP or a Released
Party in a particular case brought against a Non-
Settling Defendant by a Settlement Class Member with
respect to a Settled Claim, only where doing so is
essential to protect set-off or judgment reduction
rights to which the Non-Settling Defendant would be
entitled under applicable law but for the provisions
of this Settlement Agreement. Any order modifying
the bar order will contain provisions that protect
the interests of AHP and the Released Parties in
finality under this Settlement Agreement, including,
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among other things, provisions affirming that the
Settlement Class Member has agreed (i) to forego any
direct or indirect recovery from AHP or the Released
Parties of sums over and above those received under
this Settlement Agreement and (ii) to give up any
portion of any judgment obtained against a Non-
Settling Defendant that is attributed to AHP or any
Released Party with respect to a Settled Claim.
e. Applications made by Non-Settling Defendants for
modification of the bar order will be subject to the
provisions of Fed. R. Civ. P. 11.
3. For purposes of this Section VII.C of the Settlement
Agreement:
a. "Non-Settling Defendant" shall mean any person or
entity that is not AHP or a Released Party as
defined herein, against whom or which a Settled
Claim has been or is hereafter made, asserted or
commenced. A physician or other Released Party may
be a Non-Settling Defendant as to any claim with
respect to which he, she, or it is not a Released
Party. The term Non-Settling Defendant is not
limited to persons or entities who are sued in an
action in which AHP or another Released Party is
also a party.
b. "Non-Contractual Indemnity" or "Non-Contractual
Indemnification" means a right of indemnity based
upon the relationship between or conduct of the
parties. These terms include, and the protections
provided AHP and the Released Parties herein apply
to, a contractual obligation of indemnification
voluntarily assumed by AHP to the extent AHP would
have been liable to such claimant for indemnity in
the absence of such contractual indemnification.
c. "Settlement Class Member" shall mean any member of
the Settlement Class who has not timely and properly
exercised an Initial Opt-Out right, an Intermediate
Opt-Out right, a Back-End Opt-Out right, or a
Financial Insecurity Opt-Out right pursuant to the
terms of this Agreement. Upon the timely and proper
exercise of any such opt-out rights, the provisions
of this Section VII.C shall become ineffective in
connection with any action brought by each Class
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Member who has timely and properly exercised any
such right of opt-out.
4. To implement the bar order provided for in this Section
VII.C, all claims pending against AHP or any other
Released Party in any court which are prohibited by such
bar order shall be dismissed with prejudice upon Trial
Court Approval. Such dismissals will be vacated in the
event that the Settlement does not receive Final Judicial
Approval.
5. In the event any Class Member who has received a payment
for a Matrix-Level Condition under this Agreement
subsequently obtains a judgment or award against a Non-
Settling Defendant, other than a physician, and the Non-
Settling Defendant successfully asserts a contractual
indemnity claim against AHP and/or a Released Party,
then, to the extent not already required by Sections
VII.C.1-4 above, the Class Member shall reduce the
judgment or award against the Non-Settling Defendant by
the percentage of fault, liability or other liability-
producing conduct attributable to AHP and/or a Released
Party. In the event a Class Member who has not received
a payment for a Matrix-Level Condition under this
Agreement subsequently obtains a judgment or award
against a Non-Settling Defendant, other than a physician,
and the Non-Settling Defendant successfully asserts a
contractual indemnity claim against AHP and/or a Released
Party, then, to the extent not already required by
Sections VII.C.1-4 above, the Class Member shall reduce
the judgment or award against the Non-Settling Defendant
by the percentage of fault, liability or other liability-
producing conduct attributable to AHP and/or a Released
Party or, in the alternative, shall waive any claim to
additional benefits under this Agreement, including
payments for a Matrix-Level Condition.
D. Protection of AHP From Possible Subrogation Claims
1. To the extent that any person has rights of subrogation
by virtue of a payment or payments made to or for the
benefit of any specific Class Member who has not properly
and timely exercised a right of opt-out, such rights of
subrogation may be asserted with respect to the Trustees'
obligation to make payments to that Class Member from
Fund B but shall not be asserted directly against AHP
and/or the Released Parties except to the extent required
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by applicable Federal or State law. AHP will promptly
notify the Trustees and/or Claims Administrator(s), and
the affected Class Member of the assertion of such a
subrogation claim against AHP. The Parties shall move
the Court, upon granting Trial Court Approval, to enter a
bar order to preclude the assertion of such subrogation
claims against AHP and/or the Released Parties, except to
the extent that it would be impermissible to bar such
claims under provisions of applicable law.
2. The Trustees and/or Claims Administrator(s) shall provide
notice of subrogation claims received by the Trustees to
affected Class Members and afford them an opportunity to
contest, otherwise object to or compromise any such
claims. In making distribution of any amounts to which
Class Members are entitled from Fund B, the Trustees
shall recognize and pay subrogation claims from the
amount otherwise payable to such Class Member, but only
to the extent that the subrogation claim is recognized by
applicable law. Unless the law clearly sets forth
different principles, the Trustees shall not recognize a
subrogation claim unless: (1) it is affirmatively brought
to their attention prior to distribution of Funds to a
Class Member; (2) it is based on a positive provision of
law or a valid enforceable contract; (3) the putative
subrogee clearly establishes that the subrogee actually
made a payment or payments to or for the benefit of the
Class Member which is of a type that the putative
subrogee would be entitled to recover against AHP and/or
the Released Parties, and then (4) only to the extent of
the actual payment made less an equitable debit for
attorneys' fees, and any other allowable or appropriate
charges against the putative subrogee.
E. Walkaway Rights
1. AHP shall have the option to terminate and withdraw from
the Settlement Agreement, in its sole discretion, based
upon the number of persons who have timely and properly
elected during the Initial Opt-Out Period to be excluded
from the Settlement Class. If AHP elects to exercise
this "walkaway right," it shall do so by giving written
notice to the Court and to Class Counsel within 60 days
of the close of the Initial Opt-Out Period. AHP shall
seek to reach its decision with respect to exercise of
its "walkaway right" at the earliest practicable date.
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2. The exercise of this "walkaway right" by AHP will not
affect its obligation to provide the benefits to those
Class Members who have accepted the Accelerated
Implementation Option prior to AHP's exercise of its
"walkaway right" or during any subsequent period in which
AHP continues to offer the AIO.
F. Limitation On Financial Obligations
1. The maximum amount that AHP shall be obligated to pay
under this Settlement Agreement shall be AHP's obligation
to make the payments to Fund A and the Escrow Agent as
specified in Section III.B and AHP's obligation to make
payments to Fund B in accordance with Section III.C.
These limitations shall also apply to AHP's obligations
under Individual Agreements entered into pursuant to the
Accelerated Implementation Option.
VIII. SETTLEMENT IMPLEMENTATION
A. General
1. In order to become effective, the Settlement must receive
Final Judicial Approval, except as to the Accelerated
Implementation Option and as otherwise expressly provided
herein.
2. The Parties recommend that the Court establish an
Advisory Committee of Class Counsel, which would consist
of counsel actively involved in State and Federal Diet
Drug Litigation. The purpose of the Advisory Committee
of Class Counsel would be to advise the Trustees
concerning the proper operation and implementation of the
Settlement Agreement.
B. Jurisdiction
1. The United States District Court for the Eastern District
of Pennsylvania will have original jurisdiction over all
provisions of this Agreement, including the creation and
operation of the Settlement Trust and the award of
attorneys' fees and reimbursement of litigation expenses,
subject to appropriate participation by State Courts in
the manner set forth herein. In the event that Final
Judicial Approval is not obtained or if this Agreement is
terminated by AHP for any reason, the Court will retain
jurisdiction to enforce AIO Individual Agreements entered
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into pursuant to the AIO, including jurisdiction to act
on petitions for attorneys' fees relating thereto, and to
enforce the decisions of any arbitration entered into
pursuant to Section V.H.5 hereof.
2. In order to become effective as to Class Members who do
not exercise the Accelerated Implementation Option, the
Settlement contemplated by this Settlement Agreement must
receive Final Judicial Approval within the federal
judicial system.
3. A State Court Judicial Advisory Committee will be
established within 15 days of Preliminary Approval and
will consist of the judges from the State Courts which,
as of October 7, 1999, had issued any order certifying
state-wide class actions in relation to the effects of
Pondimin (Registered Trademark) and/or Redux (Trademark).
4. The State Court Judicial Advisory Committee shall provide
advice and counsel to the Federal District Court on all
matters pertinent to the Settlement, including approval
of the Settlement, which affect Class Members residing in
the States of each committee member. In addition, prior
to making any award of counsel fees and reimbursement of
litigation expenses, the Federal District Court shall
consult with and give substantial deference to the views
of the State Court Judicial Advisory Committee concerning
the actual contribution which was made to the overall
resolution of the litigation by the attorneys with whom
the members of the committee are familiar.
5. The costs incurred by members of the State Court Judicial
Advisory Committee in fulfillment of their obligations,
such as expenses for travel, shall be reimbursed as
administrative expenses of the Settlement Trust.
6. During the period of time from the date on which the
Trust is established until December 31, 2004, the
majority of the Trustees or Administrators shall be
approved by the State Court Judicial Advisory Committee.
C. Approval Process and Notice Provisions
1. Within 10 days after executing this Agreement, the
Parties shall jointly move the Court, by filing a motion
for the entry of an order granting Preliminary Approval,
in the form attached as Exhibit "11". Such Order shall
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preliminarily and conditionally appoint the Plaintiffs in
Sheila Brown, et al. v. American Home Products
Corporation as the Class Representatives of the
Settlement Class and of each of Subclasses 1(a), 1(b),
2(a), 2(b) and 3; preliminarily and conditionally appoint
counsel for such plaintiffs as Class Counsel for the
Settlement Class; preliminarily and conditionally certify
the Settlement Class, for Settlement purposes only; grant
Preliminary Approval of this Agreement; approve the
appointment of the Interim Escrow Agent and Interim
Claims Administrator(s); authorize the dissemination of
the Settlement notice in accordance with Section VI.B.
hereof; designate the Initial Opt-Out Period to terminate
90 days after the date on which publication and/or
mailing of the Settlement notice commences in accordance
with the Order granting Preliminary Approval; schedule
the date for filing objections to the Settlement; and
schedule a formal fairness hearing to review comments
concerning this Agreement, to consider its fairness,
reasonableness and adequacy under Fed. R. Civ. P. 23(e)
and to determine whether an Order should be entered
granting Trial Court Approval.
2. Fund A will pay 50%, and Fund B will pay 50% of the total
costs of printing, publishing and otherwise disseminating
the notice. In the event that the Settlement does not
receive Final Judicial Approval, the costs of printing,
publishing or otherwise disseminating notice shall be
borne by AHP, and the Settlement Trust will therefore
have no obligation to return or refund such costs to AHP.
3. AHP shall retain its right to contest class certification
for litigation purposes.
4. The Parties shall cooperate and assist in all of the
filings and proceedings relating to the obtaining of
Preliminary Approval as well as Trial Court Approval and
in any further filings and proceedings necessary to
obtain Final Judicial Approval of the Settlement, and in
any related appeals.
5. Upon Final Judicial Approval, the Class Counsel and all
Class Members shall cooperate with AHP and any other
Released Party to cause the dismissal, with prejudice and
without costs, of any action against AHP or any Released
Party asserting a Settled Claim brought by or on behalf
of any Class Member who has not timely and properly
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exercised an Initial Opt-Out right, including but not
limited to class actions, whether or not certified as
such, which are pending in any state, federal or
territorial court. Upon Trial Court Approval, the Class
Counsel and all such Class Members shall cooperate with
AHP and any other Released Party to cause further
proceedings in all such settled actions in which the
Class Members did not timely and properly opt out to be
stayed pending Final Judicial Approval.
D. Conditions
1. AHP's obligations under this Agreement, other than its
obligations to Class Members who accept the AIO during
the period in which it is available for acceptance, will
be subject to the following conditions:
a. Trial Court Approval of the Settlement, which
approval order or orders shall:
(1) Confirm the certification of the Settlement
Class and the creation of Subclasses 1(a),
1(b), 2(a), 2(b), and (3), under Fed. R. Civ.
P. 23(a), 23(b)(2), 23(b)(3), 23(c)(1) and
23(e), for Settlement purposes only;
(2) Confirm the appointment of the plaintiffs in
Sheila Brown, et al. v. American Home Products
Corporation as the representatives of the
Settlement Class and of each of Subclasses
1(a), 1(b), 2(a), 2(b) and 3;
(3) Approve this Agreement in its entirety
pursuant to Fed. R. Civ. P. 23(e) as fair,
reasonable, adequate, and non-collusive;
(4) Dismiss with prejudice and without costs the
Amended Complaint in Sheila Brown, et al. v.
American Home Products Corporation, as well as
all other claims or actions asserting Settled
Claims against AHP pending before the Court,
with the condition that such complaints may be
reinstated in the event that Final Judicial
Approval is not obtained;
(5) Bar and enjoin all Class Members who have not
timely and properly exercised an Initial
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Intermediate, Back-End, or Financial
Insecurity Opt-Out right from asserting and/or
continuing to prosecute against AHP or any
other Released Party any and all Settled
Claims which the Class Member had, has, or may
have in the future in any federal, state or
territorial court;
(6) Bar and enjoin the commencement and/or
prosecution of any claim for contribution
and/or non-contractual indemnity, pursuant to
Section VII.C hereof and subject to the
provisions of Section VII.C.2, in any federal,
state or territorial court against AHP or any
other Released Party by any Non-Settling
Defendant arising from or relating to any
Settled Claim asserted by any Class Member;
(7) Bar and enjoin the commencement and/or
prosecution of any claim or action against AHP
in any federal, state or territorial court
based on rights of subrogation by virtue of a
payment or payments made to or for the benefit
of a Class Member arising out of or in
relation to any Settled Claims, except to the
extent that it would be impermissible to bar
such claims under provisions of applicable
law;
(8) Reserve the Court's continuing and exclusive
jurisdiction over the Parties, including AHP
and the Class Members, to administer,
supervise, interpret, and enforce this
Agreement in accordance with its terms and to
supervise the operation of the Settlement
Trust; and
(9) Enter such other orders as are needed to
effectuate the terms of the Settlement;
b. Final Judicial Approval of this Agreement.
2. AHP may at its election terminate this Settlement
Agreement if the Final Judicial Approval does not meet
all the conditions set forth in Section VIII.D.1.a
above.
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E. Attorneys' Fees
1. In the event that the Settlement receives Final Judicial
Approval, the Court shall award counsel fees and
litigation expenses from the Settlement funds to those
attorneys who actually contributed to the creation of the
Settlement funds through work devoted to the "common
benefit" of Class Members, including any attorney who
actually conferred benefits upon the class through State
Court litigation ("Common Benefit Attorneys") and may
award Class Action Representative Incentive Fees to the
certified State and Federal Court Class Representatives
in accordance with applicable principles of law and
subject to the following provisions.
a. As provided in this Section, AHP agrees to pay to
Class Counsel, Common Benefit Attorneys and the
certified State and Federal Class Action
Representatives fees in an aggregate amount of up to
$200,000,000, together with any accrued interest
thereon from the date of deposit into the Fund A
Escrow Account, for the services related to Fund A,
subject to approval by the Court. To the extent
that such fees are awarded by the Court, they shall
be paid by the Escrow Agent from the escrow account
into which AHP is required to deposit said amounts
for that purpose, as set forth above in Section
III.B.3 (Fund A Escrow Account)
b. Attorneys' fees relating to Fund B shall be paid
from Fund B. For purposes of awarding attorneys'
fees from Fund B, AHP agrees that attorneys' fees
should be awarded and paid as a percentage of or
otherwise based on the net present value, as of the
Final Judicial Approval Date, of the maximum amounts
which AHP may be legally obligated to pay to Fund B
for the benefit of the Settlement Class, regardless
of the amount of claims actually paid at any given
point in time, pursuant to the principle expressed
in the case law, see Boeing v. Van Gemert, 444 U.S.
472 (1980). The Parties stipulate that, only for
purposes of calculating payment of attorneys' fees,
the net present value, as of the Final Judicial
Approval Date, of the maximum amounts which AHP may
be legally obligated to pay to Fund B for the
benefit of the class is $2,550,000,000. The Parties
further agree that the attorneys' fees payable from
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Fund B to counsel for the Settlement Class ("Class
Counsel") and Common Benefit Attorneys from Fund B
shall not exceed $229 million, which is 9% of the
$2,550,000,000 dollar amount, and that the actual
amount of attorneys' fees shall be as determined by
the Court. An amount shall be deducted from each
payment made to a Class Member from Fund B in an
amount equal to 9% of the total Matrix payment due
the Class Member before any deductions. Individual
Class Members who are represented by attorneys
entitled to a contingent fee under any valid written
contingent fee agreement with such Class Member
shall be subject to a further reduction for
attorneys' fees due to their attorney. The amount
to be paid to the Class Member's attorney shall be
the total attorneys' fee due under the terms of the
contingency fee arrangement less 9% of the total
Matrix payment due to the Class Member before any
deductions. Fund B payments to any such
individually-represented Class Members shall also be
reduced by the amount of reasonable out-of-pocket
costs of such Class Member's attorney to the extent
authorized in the document evidencing such
attorney's retention and the individual attorneys'
agreement with the Class Member and to the extent
permitted or allowed by applicable law in which the
agreement was entered. It is expected that the
Trustees will not honor contingent fee agreements
with private counsel which were entered into in
violation of applicable law.
c. If the Court awards less than 9% of the present
value amount stated above as payment for the
attorneys' fees of Class Counsel and Common Benefit
Attorneys from Fund B, the Court shall direct that
appropriate adjustments be made in the distribution
of Fund B amounts to Class Members and their
individual attorneys, including, if necessary,
additional payments to Class Members and individual
attorneys who received Fund B distributions prior to
the Court's decision concerning the award of counsel
fees to Class Counsel and Common Benefit Attorneys.
2. In the event that the Settlement does not receive Final
Judicial Approval or is terminated by AHP for any reason,
AHP shall make a payment for attorneys' fees for Fund A
benefits paid or provided under the AIO to an account to
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be established, subject to the supervision of the Court.
The first such payment shall be in the amount of 20% of
the dollar value of all Fund A benefits paid or provided
to individuals under the AIO as of the date of such fee
payment. At quarterly intervals thereafter, AHP shall
pay into the account an amount equal to 20% of the dollar
value of all Fund A benefits paid or provided to
individuals under the AIO during the preceding quarter.
Any amounts paid into this account which are not awarded
in attorneys' fees shall be returned to AHP by order of
the Court. Any attorney who reasonably believes that he
or she actually conferred benefits upon individuals
electing the AIO through State Court litigation, may
apply to the Court for a portion of the amount deposited
in such account and may receive payment of such common
benefit fees in accordance with applicable provisions of
law. Those accepting the AIO must expressly agree to
this provision regarding fees as a condition to
exercising the option. This paragraph shall not be
construed to require AHP to make any payment for
attorneys' fees for Fund A benefits prior to Final
Judicial Approval unless this Agreement is terminated
prior to that date.
3. Prior to the time that the Settlement receives Final
Judicial Approval or in the event that the Settlement
does not receive Final Judicial Approval or is terminated
by AHP for any reason, AHP shall deduct from any Fund B
benefits paid to those accepting the AIO an amount equal
to 9% of the total Matrix payment due to the Class Member
before any deductions and shall deposit such amounts in
the account to be established pursuant to Section
VIII.E.2 above. At such time as the Settlement fails to
receive Final Judicial Approval or is terminated by AHP
for any reason, any attorney who reasonably believes
that he or she actually conferred benefits upon
individuals electing the AIO through State Court
litigation, may apply to the Court for a portion of the
amount deposited in such account and may receive payment
of such common benefit fees and costs in accordance with
applicable provisions of law. Individual Class Members
who are represented by attorneys entitled to a contingent
fee under any valid written contingent fee agreement with
such Class Member shall be subject to a further reduction
for attorneys' fees due to their attorney. The amount to
be paid to the Class Member's attorney shall be the total
attorneys' fee due under the terms of the contingency fee
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<PAGE>
arrangement less 9% of the total Matrix payment due to
the Class Member before any deductions. Payment of Fund
B benefits to any such individually-represented Class
Member shall also be reduced by the amount of reasonable
out-of-pocket costs of such Class Member's attorney to
the extent authorized in the document evidencing such
attorney's retention and individual attorney's agreement
with the Class Member and to the extent permitted or
allowed by law. Those accepting the AIO must expressly
agree to this provision regarding fees as a condition to
exercising the option. If the Court awards less than 9%
of the amount stated above as payment for the attorneys'
fees of Class Counsel and Common Benefit Attorneys from
the amount paid to individuals accepting the AIO, the
Court shall direct that appropriate adjustments be made
in the distribution of these fund amounts to individuals
accepting the AIO and their individual attorneys,
including, if necessary, additional payments to
individuals who accepted the AIO and their individual
attorneys who received payment prior to the Court's
decision concerning the award of counsel fees to Class
Counsel and Common Benefit Attorneys.
4. In the event that the Settlement receives Final Judicial
Approval, no additional attorneys' fees or litigation
expenses shall be paid for benefits conferred on those
individuals who accepted the AIO.
5. The Parties shall recommend that the Court enter an Order
precluding a Class Member's individual attorney from
recovering a fee in connection with the recovery of the
$3,000 cash benefit provided by Section IV.A.2.c or the
$6,000 cash benefit provided by Section IV.A.1.c, which
is greater than 20% of such amounts. This 20% fee for a
Class Member's individual attorney shall not be affected
by fees paid to Class Counsel or Common Benefit
Attorneys, pursuant to the Court's order.
F. Other Provisions
1. Any information provided by or regarding a Class Member
or otherwise obtained pursuant to this Agreement shall be
kept confidential and shall not be disclosed except to
appropriate persons to the extent necessary to process
Claims or provide benefits under this Agreement or as
otherwise expressly provided in this Agreement. All
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<PAGE>
Class Members shall be deemed to have consented to the
disclosure of this information for these purposes.
2. This Settlement Agreement shall be binding on the
successors and assigns of the Parties.
3. The Parties to the Settlement, including AHP, the
Released Parties, or any Class Member, shall not seek to
introduce and/or offer the terms of the Settlement
Agreement, any statement, transaction or proceeding in
connection with the negotiation, execution or
implementation of this Settlement Agreement, any
statements in the notice documents appended to this
Settlement Agreement, stipulations, agreements, or
admissions made or entered into in connection with the
fairness hearing or any finding of fact or conclusion of
law made by the Trial Court, or otherwise rely on the
terms of this Settlement, in any judicial proceeding,
except insofar as it is necessary to enforce the terms of
the Settlement. If a Class Member who has timely and
properly exercised an Opt-Out right seeks to introduce
and/or offer any of the matters described herein in any
proceeding, the restrictions of this Section shall not be
applicable to AHP and the Released Parties with respect
to that Class Member.
4. Neither this Agreement nor any exhibit, document or
instrument delivered hereunder nor any of the statements
in the notice documents appended to this Settlement
Agreement or in connection herewith, nor any statement,
transaction or proceeding in connection with the
negotiation, execution or implementation of this
Agreement, is intended to be or shall be construed as or
deemed to be evidence of an admission or concession by
AHP or the Released Parties of any liability or
wrongdoing or of the truth of any allegations asserted by
any plaintiff against it or them, or as an admission by
the Class Representatives or members of the Settlement
Class of any lack of merit in their claims, and no such
statement, transaction or proceeding shall be admissible
in evidence for any such purpose except for purposes of
obtaining approval of this Settlement Agreement in this
or any other proceeding.
5. The headings of the sections and paragraphs of this
Agreement are included for convenience only and shall not
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<PAGE>
be deemed to constitute part of this Agreement or to
affect its construction.
6. As soon as practicable after the execution of the
Settlement Agreement, the Parties shall take all steps
which are reasonably necessary to enable the Trustees
and/or Claims Administrator(s) promptly to provide Fund A
benefits upon Final Judicial Approval to all Class
Members not exercising Initial Opt-Out rights. This
includes reasonable and necessary steps to establish the
Settlement Trust; to establish a mechanism to operate the
Settlement Trust and administer claims; to solicit,
receive and process claims from Class Members which will
be necessary to provide benefits to Class Members; to
establish a mechanism to provide medical screening,
services and cash to members of the class; to communicate
with Class Members and like activities. These expenses
shall not exceed $25 million. In the event that the
Settlement is not approved, AHP will not be entitled to a
refund of any of the money spent for these purposes.
7. Any notice, request, instruction or other document to be
given by AHP to Class Counsel or Class Counsel to AHP
shall be in writing and delivered personally or sent by
Federal Express or facsimile as follows, or as otherwise
instructed by a notice delivered to the other Party
pursuant to this subsection:
a. If to AHP:
Louis L. Hoynes, Jr., Esquire
Senior Vice President and General Counsel
American Home Products Corporation
5 Giralda Farms
Madison, NJ 07940-0874
b. If to the Class Representatives or Class Counsel:
Arnold Levin, Esquire
Levin, Fishbein, Sedran & Berman
510 Walnut Street
Suite 500
Philadelphia, PA 19106
Gene Locks, Esquire
Greitzer & Locks
1500 Walnut Street
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<PAGE>
20th Floor
Philadelphia, PA 19102
8. Any form or other documentation required to be submitted
under this Agreement shall be deemed timely if postmarked
on or before the date by which it is required to be
submitted under this Settlement Agreement. Subject to
other provisions for eligibility, a properly completed
and executed AIO Individual Agreement or Opt-Out Form
will be effective on the date it is postmarked.
9. No provision of this Settlement Agreement or any Exhibit
thereto is intended to create any third-party beneficiary
to this Settlement Agreement.
10. Upon execution of the Memorandum of Understanding dated
October 7, 1999 ("MOU"), AHP and Class Counsel jointly
established a toll-free telephone number and website for
persons requesting additional information regarding the
Settlement. This number and website has been and shall
continue to be used to record the names and addresses of
such individuals and other information, so that
individual notice concerning the Settlement may be
provided to them. These names and addresses shall be
kept strictly confidential and shall not be disclosed to
any person or used for any purpose other than for
issuance of settlement notice upon prior order of the
Court pursuant to Section VI.B.1.f(3). AHP shall pay all
costs relating to the toll-free telephone line and
website. In the event that the settlement receives Final
Judicial Approval, all expenditures made by AHP in
relation to the toll-free telephone line and website
shall be considered administrative expenses of Fund A,
and AHP shall receive a credit in the amount of all such
expenditures in calculating its next payment to Fund A.
11. This Agreement contains the entire Agreement between the
Parties with respect to the subject matter hereof and
supersedes and cancels all previous Agreements,
negotiations, and commitments in writings between the
Parties hereto with respect to the subject matter hereof,
including without limitation the MOU. This Agreement may
not be changed or modified in any manner unless in
writing and signed by a duly authorized officer of AHP
and by a duly authorized representative of the Class
Representatives.
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<PAGE>
IN WITNESS WHEREOF, the Parties have duly executed this
Nationwide Class Action Settlement Agreement between American Home
Products Corporation and the Class Representatives, by their respective
counsel as set forth below, on this 19th day of November, 1999.
American Home Products Corporation
By: /s/ Louis L. Hoynes, Jr.
-----------------------------------
Louis L. Hoynes, Jr., Esquire
General Counsel
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<PAGE>
Class Counsel
/s/ Arnold Levin /s/ Gene Locks
----------------------------------- ----------------------------------
Arnold Levin, Esquire Gene Locks, Esquire
Levin, Fishbein, Sedran & Berman Greitzer & Locks
510 Walnut Street, Suite 500 1500 Walnut Street, 20th Floor
Philadelphia, PA 19106 Philadelphia, PA 19102
215-592-1500 800-828-3489
/s/ Michael D. Fishbein /s/ Sol H. Weiss
----------------------------------- ----------------------------------
Michael D. Fishbein, Esquire Sol H. Weiss, Esquire
Levin, Fishbein, Sedran & Berman Anapol, Schwartz, Weiss, Cohan,
510 Walnut Street, Suite 500 Feldman & Smalley, P.C.
Philadelphia, PA 19106 1900 Delancey Place
215-592-1500 Philadelphia, PA 19103
215-735-2098
/s/ Stanley Chesley /s/ Christopher Placitella
----------------------------------- ----------------------------------
Stanley Chesley, Esquire Christopher Placitella, Esquire
Waite, Schneider, Bayless & Chesley Wilentz, Goldman & Spitzer
1513 Central Trust Tower 90 Woodbridge Center Drive
Fourth & Vine Streets Suite 900, Box 10
Cincinnati, OH 45202 Woodbridge, NJ 07095-0958
513-621-0267 732-636-8000
/s/ John J. Cummings
-----------------------------------
John J. Cummings, Esquire
Cummings, Cummings & Dudenhefer
416 Gravier Street
New Orleans, LA 70130
504-586-0000
For the Plaintiffs' Management Committee
For Subclass 1(a):
/s/ Dianne Nast
-----------------------------------
Dianne Nast, Esquire
Roda & Nast
801 Estelle Drive
Lancaster, PA 17601
717-892-3000
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<PAGE>
For Subclass 1(b):
/s/ Richard Lewis
-----------------------------------
Richard Lewis, Esquire
Cohen, Milstein, Hausfeld & Toll
1100 New York Avenue, N.W.
Suite 500, West Tower
Washington, DC 20005-3934
202-408-4600
For Subclass 2(a):
/s/ Mark W. Tanner
-----------------------------------
Mark W. Tanner, Esquire
Feldman, Shepherd & Wohlgelernter
1845 Walnut Street, 25th Floor
Philadelphia, PA 19103
215-567-8300
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<PAGE>
For Subclass 2(b):
/s/ R. Eric Kennedy
-----------------------------------
R. Eric Kennedy, Esquire
Weisman, Goldberg, Weisman & Kaufman
1600 Midland Building
101 Prospect Avenue West
Cleveland, OH 44115
216-781-1111
For Subclass 3:
/s/ Richard Wayne
-----------------------------------
Richard Wayne, Esquire
Strauss & Troy
The Federal Reserve Building
150 East 4th
Cincinnati, OH 45202-4018
513-621-2120
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<PAGE>
-----------------------
[FN]
<F1> Heart Disease: A Textbook of Cardiovascular Medicine 1433-34
(Eugene Braunwald ed., 5th ed. 1997) [hereinafter "Braunwald I"].
<F2> J. P. Singh, et al., Prevalence of Clinical Determinants of
Mitral, Tricuspid and Aortic Regurgitation (The Framingham Heart
Study), 83 Am. J. Cardiology 897, 898 (1999) [hereinafter
"Singh"].
<F3> Harvey Feigenbaum, Echocardiography 68-133 (5th ed. 1994)
[hereinafter "Feigenbaum"].
<F4> Arthur E. Weyman, Principles and Practice of Echocardiography 75-
97 (2d ed. 1994) [hereinafter "Weyman"].
<F5> Singh, supra note 2.
<F6> Feigenbaum, supra note 3.
<F7> Weyman, supra note 4.
<F8> See Lisa A. Freed, et al., Prevalence and Clinical Outcomes of
Mitral Valve Prolapse, 341 New Eng. J. Med. 1, 2 (1999) [hereinafter
"Freed"].
<F9> See, L. J. Rubin & S. Rich, 99 Primary Pulmonary Hypertension
(1997) [hereinafter "Rubin & Rich"].
<F10> See Eugene Braunwald, Essential Atlas of Heart Diseases, Current
Med. For Atty's 10-9 (1997) [hereinafter "Braunwald II"].
<F11> See, Rubin & Rich, supra note 9.
<F12> See Braunwald I, supra note 1 at 796-798.
<F13> Stuart Rich, Executive Summary from the Symposium on Primary
Pulmonary Hypertension, Evian, France, co-sponsored by the World
Health Organization, September 6-10, 1998,<_ HYPERLINK
http://www.who.int/ncd/cvd/pph-html.
<F14> See Singh, supra note 2.
<F15> See id.
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<PAGE>
<F16> See Frederick Helmcke, et al., Color Doppler Assessment of Mitral
Regurgitation with Orthogonal Planes, 75 Circulation 175, 177, 183
(1987 [hereinafter "Helmcke"].
<F17> See Centers for Disease Control and Prevention, U.S. Dep't of
Health and Human Services, Cardiac Valvulopathy Associated with
Exposur to Fenfluramine or Dexfenfluramine: US Department of
Health and Human Services Interim Public Health Recommendations,
46 Morbidity & Mortalit Weekly Rep. 1061, 1061-1066 (1997).
<F18> See Singh, supra note 2.
<F19> See id.
<F20> See Braunwald I, supra note 1 at 796-98.
<F21> See Feigenbaum, supra note 3 at 201-03.
<F22> See Kwan-Leung Chan, et al., Comparison of Three Doppler
Ultrasound Methods in the Prediction of Pulmonary Artery Disease,
9 J. Am C. Cardiology 549, 550 (1987) [hereinafter "Chan"].
<F23> See Robert O. Bonow, et al., Guidelines for the Management of
Patients With Valvular Heart Disease: A Report of the American
College of Cardiology/American Heart Association Task Force on
Practice Guidelines (Committee on Management of Patients With
Valvular Heart Disease), 32 J. Am. C. Cardiology 1486, 1511 (1998)
[hereinafter "Bonow"].
<F24> See id.
<F25> See id. at 1512.
<F26> See Singh, supra note 2.
<F27> See id.
<F28> See Braunwald I, supra note 1 at 796-98.
<F29> See Weyman, supra note 4 at 1290-92.
<F30> See Walter L. Henry, et al., Report of the American Society of
Echocardiography Committee on Nomenclature and Standards in Two-
dimensional Echocardiography, 62 Circulation 212, 212-13 (1980)
[hereinafter "Henry"].
<F31> See Bonow, supra note 23 at 1533-35.
-149-
<PAGE>
<F32> See id.
<F33> See id. at 1510.
<F34> See id. at 1533-35.
<F35> See Margaret Kelley-Hayes, et al., The American Heart Association
Stroke Outcome Classification, 29 Stroke 1274, 1275 (1998). It
should be noted that this classification was approved by the
American Heart Association Science Advisory and Coordinating
Committee [hereinafter "Kelley-Hayes"].
<F36> See id.
<F37> See id.
<F38> See Braunwald I, supra note 1 at 1433-34.
<F39> See Kelley-Hayes, supra note 35.
<F40> See Braunwald I, supra note 1 at 796-98.
<F41> See Encyclopedia of Neuroscience 268 (George Adelman ed., 1987).
<F42> See Harrison's Principles of Internal Medicine 1878, 1885 (14th
ed. 1998).
<F43> See C. Otto, The Practice of Clinical Echocardiography 589-93
(1997) [hereinafter "Otto"].
<F44> See Feigenbaum, supra note 3.
<F45> See Weyman, supra note 4.
<F46> See Singh, supra note 2.
<F47> See A.S. Pearlman et al., Guidelines for Optimal Physician
Training in Echocardiography: Recommendations of the American
Society of Echocardiography Committee on Physician Training in
Echocardiography, 60 Am J. Cardiol 158-163 (1987).
<F48> As set forth in Section VI.C.3.f. below, "deidentified" shall
mean redaction of all patient identifying information, including
but not limited to patient name, address ,telephone number, e-
mail address, social security number and other personal
identifiying information.
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