We’ve been told that it’s a 10 day hearing and that it was set for late October/early November. Therefore, I would expect that the Hearing commenced either last Monday or today.
With respect to the discussion of if and when Mylan might settle, I think it’s important to not forget that Mylan isn’t totally independent in its actions. Because POH’s claims are said to relate to the TPM/Daptomycin R&D and licensing agreements it signed with Agila Strides in 2011 and 2012 respectively, and because Agila was subsequently sold to Mylan, Mylan’s actions in this matter would be controlled by the Sale and Purchase Agreement it made with Strides in 2013 (see below). In fact, if Mylan doesn’t follow the processes set out in that SPA, Strides would be entitled to claim a deduction from any liability it might have to pay Mylan.
Clauses within the 2013 Strides/Mylan SPA state that Mylan cannot settle this arbitration without the written consent of Strides, provided such consent is not “unreasonably withheld or delayed or conditioned”. On the other hand, if Strides
does want this matter to be settled, Mylan is supposed to do so, provided that Strides’ request is “reasonable”. Another clause of note in the SPA makes it clear that if Agila/Strides were to be found guilty of “fraud or fraudulent representation”, any limitations of Strides’ liability to Mylan under the terms of the SPA would not apply.
As I’ve stated before, if I were in Strides’ position and had any reason for concern that the Arbitrator might find validity in POH’s claim of fraud, I would be keen for Mylan to settle the case before the Hearing. Not just because it would be a really bad look to be found fraudulent, but there’s simply no way I would want to risk a “no limitations on liability” scenario with Mylan.
However, if I were in Mylan’s position and thought there was a decent chance that the Arbitrator might find against Agila/Strides, I think I would prefer that the matter went to Hearing rather than be settled beforehand. Armed with any legal finding against Agila’s directors or employees, I’d be eyeing the cash in escrow and/or the corporate guarantee to pay out POH + Mylan’s legal costs. If, after the Hearing had played out, I felt that the case looked poor for Mylan/Agila, I think I’d aim to settle with POH. Before the end of November, for a number of reasons. In this scenario, Strides would be unlikely to withhold consent – too much to lose. On the other hand, if, after the Hearing had played out, I felt that POH’s case looked weak, my options would be to either wait for the Decision to be handed down, or wrestle POH’s arm to settle for a much more modest sum. But if I waited for the Arbitrator’s decision to be handed down and the Arbitrator subsequently found in favour of POH, I doubt that l’d be keen to appeal vigorously just to save Strides' loss from escrow monies and corporate guarantee.
- ACTIONS BY THIRD PARTIES
10.1 If the Purchaser becomes aware of any claim, action or demand made against it or any Group Company by a third party which may give rise to a claim under the Transaction Documents (a "Third Party Claim"), subject to the Purchaser and each member of the Purchaser Group and each Group Company being indemnified and secured to the Purchaser's reasonable satisfaction by the Seller against all costs and expenses, including those of its professional advisers, which may be incurred or suffered in respect of such Third Party Claim, the Purchaser shall:
10.1.2 as soon as reasonably practicable, notify the Seller and the Promoters giving reasonably available details of the relevant facts and circumstances relating to the Third Party Claim;
10.1.3 procure that the relevant Group Company shall keep the Seller and the Promoters reasonably informed of all material developments in relation to the Third Party Claim and not settle or make any admission of liability, agreement or compromise any claim or matter relating to the Third Party Claim without written consent of the Seller and the Promoters, such consent not to be unreasonably withheld or delayed or conditioned; and
10.1.4 procure that the relevant Group Company shall (subject to the Purchaser and its relevant Affiliates being entitled to employ its own professional advisers) consult with and take all such action as the Seller and the Promoters may reasonably request in relation to the Third Party Claim, including commencing conducting, defending, resisting, settling, compromising or appealing against any Proceedings.
- MISCELLANEOUS
15.1 None of the limitations of liability contained in this Schedule 9 shall apply to any liability for any Claim to the extent that the same (or the delay in discovery of it) is attributable to or the consequence of (or is increased as a consequence of) fraud or fraudulent misrepresentation, on the part of the Seller, the Promoters or any member of the Seller's Group or any of their respective Affiliates, directors, officers or employees.
15.2 Any failure by the Purchaser or any member of the Purchaser's Group to comply with their obligations in this Schedule 9 (other than pursuant to paragraphs 2.2 and 2.4), shall not absolve or release the Seller, the Promoters or any member of the Seller's Group from liability, but shall entitle the Seller and the Promoters to claim a deduction from their liability to pay any Claim to the extent they are financially prejudiced by such failure, and provided that the Seller and the Promoters shall have taken all reasonable steps to mitigate such financial prejudice.
http://www.sec.gov/Archives/edgar/data/69499/000006949913000017/myl_ex102x20130331-10q.htm
(20min delay)