<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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) December 17, 1996
Chiron Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-12798 94-2754624
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
4560 Horton Street, Emeryville, CA 94608
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (510) 655-8730
--------------
N/A
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On December 17, 1996, Chiron Corporation issued a press release, the text
of which is attached hereto as Exhibit 99.1, announcing that it has agreed to
grant royalty-bearing licenses to its patents for the HSV-tk (herpes simplex
virus -- thymidine kinase) gene for use in gene therapy, in conjunction with a
consent and agreement that resolves the Federal Trade Commission (FTC) review of
the merger between Ciba Geigy Limited and Sandoz Ltd., creating Novartis AG.
Attached hereto as Exhibit 10.92 are the following agreements relating to the
above-mentioned matters: an agreement dated as of November 27, 1996 between
Ciba-Geigy Limited and Chiron Corporation containing as Annex A an Agreement
containing Consent Order before the United States Federal Trade Commission in
the matter of CIBA-GEIGY Limited, ET AL.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Sequentially Numbered
Exhibit Number Page
-------------- ---------------------
99.1 Press Release dated December 17,
1996 referred to in Item 5 above
10.92 Agreement dated as of November
27, 1996 between Ciba-Geigy
Limited and Chiron Corporation
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SIGNATURES
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.
CHIRON CORPORATION
Date: December 17, 1996 By: /s/ William G. Green
-------------------------
William G. Green
Senior Vice President and
General Counsel
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INDEX TO EXHIBITS
Exhibit No. Description Sequentially Numbered Page
99.1 Press Release dated
December 17, 1996.
10.92 Agreement dated as of
November 27, 1996 between
Ciba-Geigy Limited and
Chiron Corporation.
<PAGE>
RELEASE DATE: Immediate
CONTACT: Larry Kurtz
Vice President, Corporate Communications
510-923-2476
CHIRON TO LICENSE RPR FOR HSV-TK GENE
AND CROSS-LICENSE TECHNOLOGIES WITH CIBA (NOVARTIS)
EMERYVILLE, CALIF., DECEMBER 17, 1996 -- Chiron Corporation (NASDAQ:CHIR)
announced today that it has agreed to grant royalty-bearing licenses to its
patents for the HSV-tk (herpes simplex virus -- thymidine kinase) gene for use
in gene therapy, in conjunction with a consent and agreement that resolves the
the Federal Trade Commission (FTC) review of the merger between Ciba Geigy
Limited and Sandoz Ltd., creating Novartis AG. Use of the HSV-tk gene in gene
therapy to address specific cancers is a leading gene therapy product
development strategy of Chiron and others. Chiron expects that the licensee
will be Rhone Poulenc Rorer, Inc.
In partial consideration of Chiron's action to unblock its HSV-tk gene
patents, Novartis will pay Chiron $60 million over the next five years, and has
agreed to provide cross-licenses of certain Novartis gene therapy technologies
and other accommodations to Chiron. These agreements are subject to the
completion of the Novartis merger, which itself is subject to final approval by
the FTC.
Chiron Corporation, headquartered in Emeryville, California, is a
diversified, science-driven healthcare company that combines diagnostic, vaccine
and therapeutic strategies for controlling disease. Chiron participates in four
global healthcare markets: diagnostics, including immunodiagnostics, critical
care diagnostics and new quantitative probe tests; therapeutics, with an
emphasis on oncological, infectious, neurological and cardiovascular disease;
pediatric and adult vaccines: and ophthalmic surgical products for the
correction of vision. Chiron also conducts research and development in the
fields of biological proteins, gene therapy and combinatorial chemistry.
# # #
<PAGE>
AGREEMENT
CIBA-GEIGY LIMITED and CHIRON CORPORATION hereby agree as follows:
A. FTC CONSENT ORDER
Chiron will enter into the FTC Consent Order substantially as set forth on
Annex A. Each of Ciba and Chiron agrees to perform its obligations under
the FTC Consent Order.
B. COMPENSATION
Ciba will compensate Chiron for the value of its loss of exclusionary
rights as a result of the HSV-tk patent licenses granted to RPR at the
FTC's insistence (which value shall in no event be less than zero), net of
(i) any royalties and other compensation (if any and without duplication)
paid by RPR to Chiron and the value of any licenses or sublicenses received
by Chiron from RPR in connection therewith and (ii) the net value to Chiron
of the cross-licensing arrangement (with respect to HSV-tk matters) (which,
for purposes of this calculation, may be a negative number) between GTI and
Chiron referred to in Section D1 of this Agreement (including any net
compensation paid by GTI to Chiron (other than compensation paid under
Section 3E hereof). The foregoing calculation will take into account the
time value of money and, with respect to the future component of any value,
an appropriate discount rate. The valuation will be determined at such
time as the parties shall mutually agree and in any event no later than
November 24, 2001. In making such determination the loss of value to
Chiron shall be determined as of the date of this agreement based upon all
relevant facts and circumstances which are known at the time the valuation
is determined. The valuation shall take into account (i) the actual and
reasonably foreseeable decrease in Chiron's profits with respect to Chiron
products covered by such HSV-tk patents due to lower profit margins
resulting from the loss of such exclusionary rights and (ii) the actual and
reasonably foreseeable profits lost by Chiron as a result of other
companies receiving profits that would otherwise have accrued to Chiron but
for the loss of such exclusionary rights, in each case over the life of the
relevant patents. The parties agree that lost or reduced profits include,
without limitation, (a) actual and reasonably foreseeable lost royalties
from RPR and its sublicensees and the Novartis Parties (as defined below)
as a result of the favorable royalty rates permitted by the FTC to be
charged to RPR and the Novartis parties, and (b) actual and reasonably
foreseeable lost royalties from any other license or sublicense of the HSV-
tk patents entered into by Chiron as a result of lower royalty rates
attributable to the loss of exclusivity, it being acknowledged by the
parties that any licensing and sublicensing of the HSV-tk patents by Chiron
in the absence of the FTC Consent Order as set forth in clauses (a) and (b)
above would have resulted in reducing the amounts set forth in clauses (i)
and (ii) of the preceding sentence, so that in no event shall Chiron be
compensated under
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clauses (a) and (b) above without a related reduction in the amounts
calculated pursuant to clauses (i) and (ii) of the preceding sentence. The
loss of value to Chiron shall not take into account enhanced, exemplary or
consequential damages (including, without limitation, consequential damages
in the nature of harm to Chiron's strategy in gene therapy research and
development generally) or damages in respect of lost opportunity, except to
the extent expressly described in the previous two sentences. Chiron and
Novartis will negotiate to determine amounts owed, with binding arbitration
if agreement is not reached.
C. FUTURE TRANSACTIONS
Chiron and Ciba believe that as a result of the arrangements contained in
the Governance Agreement, Chiron and its assets and businesses are and
should be considered to be separate from and independent of Novartis and
its assets and businesses. Ciba and Chiron agree that whenever possible
they will continue to assert that they are independent for purposes of
antitrust laws, it being understood that this undertaking will in no way
directly or indirectly change or limit the ability of either party to
exercise its rights under the Governance Agreement or other agreements
between the parties or restrict the Investor Directors or the Independent
Directors acting in such capacity or either party from taking any action
required by law, rule, regulation or order.
In the event that in connection with any transaction involving one party, a
governmental or regulatory authority believes that the other party (or its
assets) is not independent and separate, then Chiron and Ciba/Novartis will
reasonably cooperate and reasonably assist each other in achieving a
satisfactory resolution. All such cooperation and assistance shall be on
an arm's length basis on terms consistent with the Governance Agreement and
the Cooperation and Collaboration Agreement (including the preferred
partnership principle), and subject to the exhaustion of reasonable
alternatives by the group initiating the transaction giving rise to the
applicable regulatory proceeding.
All of the foregoing shall be subject in all respects to the terms of the
Governance Agreement and other agreements between Ciba and Chiron, and
shall in no way directly or indirectly limit the rights or obligations of
the parties thereunder or except as explicitly set forth herein create any
additional obligation or restriction of the type addressed by the
Governance Agreement. In no event shall any party be required to take any
action with respect to the foregoing which in its business judgment is not
reasonable.
D. TECHNOLOGY AND PRODUCTS
1. RPR/GTI Ciba will cause Novartis, Sandoz and/or GTI
(collectively, the "Novartis Parties") to grant to
Chiron a sublicense (without
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further sub-licensing rights except to Chiron majority
owned subsidiaries) to all rights licensed by RPR (or
to the extent another entity succeeds to the role of
RPR under the FTC Consent Order, such other entity) to
the Novartis Parties in connection with the FTC Consent
Order on the same terms as the license to the Novartis
Parties, including the E-1, E-4 deleted adenoviral
vector. In addition, Chiron and the Novartis Parties
will enter into a cross-license agreement pursuant to
which (i) Chiron will license to the Novartis Parties
all of the rights that Chiron has agreed to license to
RPR (or to the extent another entity succeeds to the
role of RPR under the FTC Consent Order, such other
entity) in connection with the FTC Consent Order, all
on the same terms on which such rights are licensed to
RPR, and (ii) the Novartis Parties will license or
sublicense to Chiron (without the right to sublicense
except to Chiron majority owned subsidiaries and, with
the consent of the Novartis Parties (which consent may
be withheld in their sole discretion) to collaborative
partners with whom Chiron shares substantial product
development and downstream commercial responsibilities)
all of the rights that the Novartis Parties have agreed
to license or sublicense to RPR (or to the extent
another entity succeeds to the role of RPR under the
FTC Consent Order, such other entity) in connection
with the FTC Consent Order (including, in addition to
HSV-tk rights, non-exclusive rights to Factor VIII and
Factor IX gene for any gene therapy, GM-CSF gene for
HSV-tk gene therapy using any vector system, and any
other rights required to be made available to RPR (or
such other entity)), all on the same terms on which
such rights are licensed or sublicensed to RPR (or
such other entity), including as may be set forth in
agreements entered into with RPR (or such other entity)
pursuant to the terms of the FTC Consent Order (i.e.,
the letter of intent between Sandoz and RPR dated
November 20, 1996, the definitive documentation
relating thereto and any other agreements entered into
in place of such agreements); PROVIDED, HOWEVER, that
all of the foregoing grants of licenses and sublicenses
will, with respect to HSV-tk rights, exclude both graft
v. host disease and other uses of the HSV-tk gene in a
safety mode, unless Chiron elects to include (i) graft
v. host disease, (ii) all other uses of the HSV-tk gene
in a safety mode or (iii) both of the foregoing clauses
(i) and (ii) by notice to Novartis at any time prior to
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November 24, 1997. If Chiron so elects to include
graft v. host disease and/or all other uses of HSV-tk
in safety mode, such election with respect to the scope
of the licenses shall apply to all of the foregoing
licenses or sublicenses of HSV-tk rights.
Notwithstanding anything herein to the contrary, in no
event shall any of the licenses or sublicenses
described in this paragraph include know-how or
technical assistance.
2. Aredia Following termination of the existing arrangements
between Chiron and Ciba regarding Aredia, and without
limiting the existing obligations of each party
(including any existing obligation of Ciba to pay a
trailing compensation based upon sales levels achieved
and, consistent with previous discussions, the
performance by each party with respect to Aredia
promotion (which may involve sole promotion, co-
promotion or some other similar arrangement as the
parties may agree) during a transition period of six
months on commercially reasonable terms to be promptly
negotiated in good faith. Chiron shall have the right
to co-promote Aredia in the United States for a minimum
of two years on commercially reasonable terms customary
for transactions of such type to be promptly negotiated
in good faith.
3. Cell Separation Ciba agrees to use its reasonable efforts to assist
and Isolation Chiron in obtaining a license on commercially
Technology reasonable terms from Systemix relating to cell
separation and isolation and other technology, all
reasonably necessary for the isolation, transduction,
selection, maintenance, propagation and use of stem
cells or other hematopoietic cells in gene therapy with
respect to HIV and Factor VIII and Factor IX.
E. ADDITIONAL AGREEMENTS
1. Debt
Guarantee TERM. Ciba will extend its commitment under the
Investment Agreement to guarantee certain Chiron debt
until 2008, with related repayment obligation (assuming
Chiron is then non-investment grade) to be extended
until 2011.
PRINCIPAL AMOUNT. Ciba and Chiron agree that Chiron
will have an option, exercisable from time to time and
at any time, to
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cause the Debt Guarantee under the Investment Agreement
to be irrevocably increased by an amount which, when
taken together with all prior increases, will not
exceed $300 million, PROVIDED that the put right under
the Subscription Agreement will thereupon automatically
be irrevocably reduced by the amount of the increase in
the Debt Guarantee. As a result, the Debt Guarantee
may be increased to a maximum of $725 million, in which
case the put right under the Subscription Agreement
would be reduced to $200 million. The foregoing
provisions do not take into account or affect the
guarantee obligation provided for under "Additional
Tranche" below.
ADDITIONAL TRANCHE. Ciba agrees to provide an
additional guarantee in the amount of $200 million for
the sole purpose of guaranteeing non-convertible debt
incurred under a U.S. dollar denominated revolving
credit facility to prepay (at a time when conversion
would not be economically attractive for the debt
holders) in cash (i) the Cetus Corporation 5.25%
Convertible Subordinated Debt due 2002 and (ii) the
Chiron Corporation 1.90% Convertible Subordinated Notes
due 2000. The terms of such debt and additional
guarantee, including, without limitation, the term and
interest rate thereof, shall be reasonably acceptable
to Ciba (it being understood that Ciba shall have no
obligation whatsoever in respect of debt that is not
exempt from registration under the United States
securities laws).
2. R&D Facility Ciba and Chiron agree to extend the deadline for
payment of the Buy-Out Amount under the Limited
Liability Company Agreement to January 1, 2005, it
being understood that this will in no way affect the
existing obligation of Chiron to provide notice to Ciba
by January 1, 2002 as to whether it will exercise its
Buy-Out Right thereunder.
3. Deblocking In consideration of Chiron's granting to Novartis a
cross-license with respect to the HSV-tk patents WO
89/09271, WO 90/07936, US Application 08-237783 and US
Application 08-194114, including for research uses and
other uses within the scope of the Chiron HSV-tk
license to Novartis, Ciba shall pay to Chiron $15
million on each of January 1, 1997 (or, if later, the
Novartis closing date) and January 1, 1998, and $10
million on each of January 1, 1999, January 1, 2000 and
January 1,
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2001). Each such payment shall be fully earned by
Chiron when paid (and shall not be reimbursable). In
the event that Ciba shall terminate Chiron's
obligations (i) to Ciba under Section D1 of this
Agreement and (ii) to RPR under Section A of this
Agreement (to the extent so agreed by RPR) any future
obligations of Ciba under this Section E3 shall be null
and void.
F. SUCCESSION
Ciba and Chiron agree that upon consummation of the Novartis transaction
Novartis will succeed to all the rights and obligations of Ciba-Geigy
Limited under this Agreement and all other agreements between Ciba-Geigy
Limited and Chiron or any subsidiary of Chiron. Ciba agrees to cause
Novartis and GTI to comply with their obligations under this agreement.
G. DOCUMENTATION
This agreement is fully binding on the parties hereto. Nevertheless, the
parties agree that they will promptly proceed to negotiate documentation
that more fully sets forth the rights and obligations of the parties hereto
with respect to the matters that are the subject hereof. Such
documentation will supersede this Agreement only if, and only to the
extent, that the parties expressly agree in writing. The failure to enter
into such further documentation shall not affect the rights or obligations
of the parties hereunder.
H. INDEMNITIES
Ciba will indemnify Chiron for actual damages to Chiron resulting from a
breach by RPR or the Novartis Parties of their respective obligations under
the RPR-CTI cross-license agreement. Ciba shall take such action as may be
necessary to assure that Chiron's performance hereunder and under the FTC
Consent Order are sufficient to satisfy the condition (set forth in Section
1(f)(i) of the Letter Agreement between RPR and Novartis dated November 20,
1996) for the grant back by RPR to Chiron of the E-1, E-4 deleted
adenoviral vector (as provided in such Section 1(f)(ii).
I. MISCELLANEOUS
This Agreement will be governed by and construed in accordance with the
laws of the State of New York, without regard to such State's principles of
conflicts of law. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
shall constitute one and the same instrument.
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This Agreement will be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. Except as described
under Section F above, the rights and obligations of the parties hereto may
not be assigned without the prior written consent of the other party. This
Agreement will terminate if the FTC fails to give its final approval to the
Novartis transaction or if the Novartis transaction is not consummated by
March 31, 1997, so long as Chiron is not subject to any obligation under
the FTC Consent Order or to RPR or any person or entity under or with
respect to the FTC Consent Order, any agreement entered into pursuant
thereto or this Agreement at or after such time. Ciba shall have the right
to terminate Chiron's obligations to Novartis and to RPR (to the extent so
agreed by RPR) under Sections A and D1 of this Agreement, but only if such
termination would not be in violation of any legally binding obligation of
Ciba.
J. ARBITRATION
To the extent that this Agreement requires that any agreement or
arrangement required to be entered into pursuant hereto be entered into on
commercially reasonably terms and the parties negotiate in good faith but
after a reasonable period of time are unable to agree as to such terms,
then either party shall be entitled to initiate binding arbitration to
resolve any differences or disputes that have precluded reaching an
agreement or arrangement.
Arbitration shall be the exclusive means of resolving a dispute with
respect to the negotiation of commercially reasonable terms under this
Agreement except that each party, shall be entitled to compel arbitration
and/or enforce the arbitration decision in any court of competent
jurisdiction.
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K. SPECIFIC PERFORMANCE
Ciba and Chiron acknowledge and agree that each of them would be damaged
irreparably in the event any of the agreements set forth herein are not
performed in accordance with their specific terms. Accordingly, each such
party hereto agrees that the other shall be entitled to equitable relief
including an injunction to prevent any breach of the covenants contained in
this Agreement and to specifically enforce this Agreement in addition to
any other remedy to which the parties may be entitled at law or in equity
without the necessity of posting any bond.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 27th day of November 1996.
CHIRON CORPORATION,
a Delaware corporation,
By /s/ William J. Rutter
----------------------------
Name: William J. Rutter
Title: Chairman
CIBA-GEIGY LIMITED,
a Swiss corporation,
By /s/ Alex Krauer
----------------------------
Name: Dr. Alex Krauer
Title: Chairman and CEO
By /s/ Herbert Gut
----------------------------
Name: Herbert Gut
Title: Senior Division Counsel
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<PAGE>
UNITED STATES OF AMERICA Annex A
BEFORE FEDERAL TRADE COMMISSION
__________________________
)
In the Matter of )
)
CIBA-GEIGY LIMITED, )
a corporation, )
)
CIBA-GEIGY CORPORATION, )
a corporation, )
)
CHIRON CORPORATION, )
a corporation, ) File No. 961-00055
)
SANDOZ LTD., )
a corporation, )
)
SANDOZ CORPORATION, )
a corporation, and )
)
NOVARTIS AG, )
a corporation. )
__________________________)
AGREEMENT CONTAINING CONSENT ORDER
The Federal Trade Commission ("Commission"), having initiated an
investigation of the proposed merger ("Merger") between Ciba-Geigy Limited,
including its wholly-owned subsidiary Ciba-Geigy Corporation (collectively,
"Ciba"), and Sandoz Ltd., including its wholly-owned subsidiary, Sandoz
Corporation (collectively, "Sandoz") into Novartis AG ("Novartis"), and it now
appearing that Ciba, Sandoz, Novartis, and Chiron Corporation ("Chiron") in whom
Ciba-Geigy Limited, together with its subsidiaries, is the largest shareholder,
holding as of September 30, 1996, not solely as an investment approximately
46.5% of the Chiron capital stock, hereinafter sometimes collectively referred
to as "Proposed Respondents," are willing to enter into an agreement containing
an Order to divest certain assets and businesses and to provide for other
relief:
IT IS HEREBY AGREED by and between Proposed Respondents, by their duly
authorized officers and attorneys, and counsel for the Commission that:
<PAGE>
CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 2 of 36
1. Proposed Respondent Ciba-Geigy Limited is a corporation organized,
existing and doing business under and by virtue of the laws of Switzerland with
its office and principal place of business located at Klybeckstrasse 141,
CH-4002 Basel, Switzerland.
2. Proposed Respondent Ciba-Geigy Corporation, a wholly-owned subsidiary
of Ciba-Geigy Limited, is a corporation organized, existing, and doing business
under and by virtue of the laws of New York with is office and principal place
of business located at 520 White Plains Road, Tarrytown, New York 10591.
3. Proposed Respondent Chiron Corporation, in whom Ciba-Geigy Limited,
together with its subsidiaries, is the largest shareholder, holding as of
September 30, 1996, not solely as an investment, approximately 46.5% of the
Chiron capital stock, is a corporation organized, existing, and doing business
under and by virtue of the laws of Delaware with its office and principal place
of business located at 4560 Horton Street, Emeryville, California 94608.
4. Proposed Respondent Sandoz Ltd. is a corporation organized, existing
and doing business under and by virtue of the laws of Switzerland with its
office and principal place of business located at Lichstrasse 35, CH-4002 Basel,
Switzerland.
5. Proposed Respondent Sandoz Corporation, a wholly-owned subsidiary of
Sandoz Ltd., is a corporation organized, existing, and doing business under and
by virtue of the laws of New York with its office and principal place of
business located at 608 Fifth Avenue New York, New York 10020.
6. Proposed Respondent Novartis AG, is a corporation organized, existing,
and doing business under and by virtue of the laws of Switzerland with its
office and principal place of business located at Centralbahnstrasse 7, CH-4010
Basel, Switzerland.
7. Proposed Respondents admit all the jurisdictional facts set forth in
the draft of complaint here attached.
8. Proposed Respondents waive:
a. any further procedural steps;
b. the requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law;
c. all rights to seek judicial review or otherwise to challenge or
contest the validity of the Order entered pursuant to this agreement; and
<PAGE>
CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 3 of 36
d. any claim under the Equal Access to Justice Act.
9. Each Proposed Respondent shall submit within thirty (30) days of the
date this agreement is signed by Proposed Respondents, a verified written
report, pursuant to Section 2.33 of the Commission's Rules, signed by the
Proposed Respondents setting forth in detail the manner in which the Proposed
Respondents will comply with Paragraphs II through XII of this Order when
entered. Such report will not become part of the public record unless and until
the accompanying agreement and Order are accepted by the Commission for public
comment.
10. This agreement shall not become part of the public record of the
proceeding unless and until it is accepted by the Commission. If this agreement
is accepted by the Commission it, together with the draft of complaint
contemplated thereby, will be placed on the public record for a period of sixty
(60) days and information in respect thereto publicly released. The Commission
thereafter may either withdraw its acceptance of this agreement and so notify
the Proposed Respondents, in which event it will take such action as it may
consider appropriate, or issue and serve its complaint (in such form as the
circumstances may require) and decision, in disposition of the proceeding.
11. This agreement is for settlement purposes only and does not
constitute an admission by Proposed Respondents that the law has been
violated as alleged in the draft of complaint here attached, or that the
facts as alleged in the draft complaint, other than jurisdictional facts, are
true.
12. This agreement contemplates that, if it is accepted by the Commission,
and if such acceptance is not subsequently withdrawn by the Commission pursuant
to the provisions of Section 2.34 of the Commission's Rules, the Commission may,
without further notice to the Proposed Respondents, (1) issue its complaint
corresponding in form and substance with the draft of complaint here attached
and its decision containing the following Order to divest and providing for
other relief in disposition of the proceeding and (2) make information public
with respect thereto. When so entered, the Order shall have the same force and
effect and may be altered, modified or set aside in the same manner and within
the same time provided by statute for other orders. The Order shall become
final upon service. Delivery by personal service, by courier, or by the U.S.
Postal Service of the complaint and decision containing the agreed-to Order to
Proposed Respondent Novartis' attorney of record, Michael Malina, Esq., Kaye,
Scholer, Fierman, Hays & Handler, 425 Park Avenue, New York, NY 10022, and to
Proposed Respondent Chiron's attorney of record, William G. Green, Esq., Chiron
Corporation, 4560 Horton Street, Emeryville, CA, 94608, shall constitute
service. Proposed Respondents waive any right they may have to any other manner
of service. The complaint may by used in construing the terms of the Order, and
no agreement, understanding, representation, or interpretation not contained in
the Order or the agreement may be used to vary or contradict the terms of the
Order.
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CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 4 of 36
13. Proposed Respondents have read the proposed complaint and Order
contemplated hereby. Proposed Respondents understand that once the Order has
been issued, they will be required to file one or more compliance reports
showing how they are complying or that they have fully complied with the Order.
Proposed Respondents further understand that they may be liable for civil
penalties in the amount provided by law for each violation of the Order after it
becomes final.
ORDER
I.
IT IS ORDERED that, as used in this Order, the following definitions shall
apply:
A. "Ciba" means Ciba-Geigy Limited, its directors, officers, employees,
agents and representatives, predecessors, successors, and assigns; its
subsidiaries, divisions, groups and affiliates controlled, directly or
indirectly, by Ciba-Geigy Limited, including, but not limited to, Ciba-Geigy
Corporation, and the respective directors, officers, employees, agents and
representatives, successors, and assigns of each.
B. "Chiron" means Chiron Corporation, its directors, officers, employees,
agents and representatives, predecessors, successors, and assigns; its
subsidiaries, divisions, groups and affiliates controlled, directly or
indirectly, by Chiron, and the respective directors, officers, employees, agents
and representatives, successors, and assigns of each.
C. "Sandoz" means Sandoz Ltd., its directors, officers, employees, agents
and representatives, predecessors, successors, and assigns; its subsidiaries,
divisions, groups and affiliates controlled directly or indirectly by Sandoz
Ltd., including, but not limited to, Genetic Therapy, Inc. and Sandoz
Corporation, and the respective directors, officers, employees, agents and
representatives, successors, and assigns of each.
D. "Novartis" means Novartis AG, a company jointly formed by Ciba and
Sandoz to effectuate the merger of Ciba and Sandoz through the acquisition of
Ciba and Sandoz by Novartis. Novartis includes Ciba and Sandoz; all of
Novartis's directors, officers, employees, agents and representatives,
predecessors, successors and assigns; its subsidiaries, divisions, groups and
affiliates controlled, directly or indirectly, by Novartis AG; and the
respective directors, officers, employees, agents and representatives,
successors, and assigns of each.
<PAGE>
CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 5 of 36
E "BASF" means BASF Aktiengesellschaft, a company organized under the
laws of Germany with its principal office and principal place of business
located at Ludwigshafen, Germany.
F. "Commission" means the Federal Trade Commission.
G. "EPA" means the United States Environmental Protection Agency.
H. "FDA" means the Food and Drug Administration of the United States
Department of Health and Human Services.
I. "Respondents" means Ciba, Sandoz, or Novartis, respectively, and in
Paragraphs IX.A., IX.B., IX.F., IX.G., X, XIV, XV, XVI, and XVII, Chiron, or any
combination thereof
J. "Agricultural Chemical Active Ingredient" means a chemical that alone
or in combination with other chemicals imparts or demonstrates herbicidal,
insecticidal, fungicidal, or other pesticidal properties.
K. "Agricultural Chemical Formulation" means a formulation or pre-mix
containing one or more Agricultural Chemical Active Ingredients.
L. "Agricultural Chemical Acquirer" means the entity or entities to whom
Respondents shall divest either the Sandoz Corn Herbicide Business or the
Sandoz Agricultural Chemical Business required to be divested pursuant to
this Order.
M. "Agricultural Chemical" means any corn herbicides and other
herbicides, insecticides, fungicides, and other pesticides developed,
manufactured or sold by Sandoz in the United States or Canada or developed by
Sandoz outside the United States and Canada for production or sale in the
United States or Canada, other than products manufactured and sold by the
Sandoz Animal Health Business.
N. "Base Active Flea Ingredient" means any final or intermediate form of
any chemical, that alone or in combination with other chemicals is registered or
under development as a Flea Control Product, including, but not limited to,
Methoprene.
O. "Core Data Package" means data and information required by regulatory
authorities in the United States and Canada to register Flea Control Products,
Other Dallas Products, and ingredients for both.
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AGREEMENT CONTAINING CONSENT ORDER Page 6 of 36
P. "Corn Herbicides" means all Agricultural Chemical Active Ingredients
and Agricultural Chemical Formulations used, or suitable for use, on corn crops
to control weeds, including, but not limited to, Dimethenamid, Dicamba, and
Pyridate.
Q. "Cost" means the manufacturer's average direct per unit cost of
manufacturing exclusive of any overhead expenses.
R. "Dicamba" means technical concentrate of dicamba, chemical name 3, 6-
dichloro-o-anisic acid, and salts of dicamba, e.g., dimethylamine,
diglycolamine, potassium, sodium, isopropylamine, DPL, and APM salts of dicamba,
and any Agricultural Chemical Formulation containing dicamba.
S. "Dimethenamid" means technical concentrate of dimethenamid, chemical
name 2-chloro-N-[(1 -methyl-2-methoxy)ethyl]-N-(2,4-dimethyl-thien-3-yl)-
acetamide or (1RS, aRS)-2-chloro-N-(2,4-dimethyl-3-thienyl)-N-(2-methoxy-l-
methylethyl)-acetamide, and any Agricultural Chemical Formulation containing
dimethenamid.
T. "FIFRA" means the Federal Insecticide, Fungicide, and Rodenticide Act
and all statutory amendments, modifications or replacements thereof.
U. "Flea Control Products" means all products used or intended to be used
to treat or prevent ectoparasitic (flea) infestation in connection with canines
or felines and all research and development projects to develop products to be
used to treat or control ectoparasitic infestation in connection with canines
and felines.
V. "Merger" means the Merger of Ciba and Sandoz into Novartis.
W. "Methoprene" means (S)-Methoprene, chemical name Isopropyl (2E, 4E,
7S)-11-methoxy-3,7,11,- trimethyl-2,4-dodecadienoate, and (RS)-Methoprene,
chemical name Isopropyl (E,E)-11-methoxy-3,7,11-trimethyl-2,4-dodecadienoate.
X. "Other Dallas Products" means products other than Flea Control
Products, that are manufactured or produced at the Sandoz facility located in
Dallas, Texas and are sold in the United States or Canada.
Y. "Pyridate" means technical concentrate of pyridate, chemical name O-
(6-chloro-3-phenyl-4-pyridazinyl)-S-octyl-carbonothioate, and includes any
Agricultural Chemical Formulation containing pyridate.
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Z. "Registration Data" means all data relating to the applicable
Agricultural Chemical Active Ingredient or Agricultural Chemical Formulation
that has been, or will be, submitted to the EPA, under FIFRA, or to any state or
foreign regulatory agency for purposes of obtaining or maintaining any
registration or authorizations for any product containing such Agricultural
Chemical Active Ingredient or Agricultural Chemical Formulation.
AA. "Sandoz Corn Herbicide Business" means all physical assets,
properties and business located in the United States or Canada and all goodwill,
tangible and intangible assets, used by Sandoz in the research, development
manufacture, formulation, registration, distribution or sale of Corn Herbicides
(other than Pyridate) in the United States or Canada, all as specified in the
Asset Purchase Agreement dated as of September 26, 1996, between Sandoz and
BASF.
BB. "Sandoz Agricultural Chemical Business" means all physical assets,
properties and business located in the United States or Canada and all goodwill,
tangible and intangible assets, used by Sandoz in the research, development,
manufacture, formulation registration, distribution or sale of Agricultural
Chemicals in the United States or Canada, or for production or sale in the
United States or Canada, excluding the Sandoz Animal Health Business, including,
without limitation, the following:
1. all owned or leased production facilities used in the manufacture
of Agricultural Chemical Active Ingredients or Agricultural Chemical
Formulations, including, but not limited to, the following:
a. the Dimethenamid plant and assets at Beaumont, Texas; and
b. the Dicamba plant and assets at Beaumont, Texas;
2. all EPA, state and foreign registrations and approvals relating
to the manufacture or sale of Agricultural Chemical Active Ingredients and
Agricultural Chemical Formulations in North America, including, but not
limited to, EPA registrations 55947-1 (Banvel), 55947-24 (Weedmaster),
55947-28 (Banvel SGF), 55947-39 (Marksman), 55947-46 (Clarity), 55947-47
(dicamba, isopropylamine salt), 55947-140 (Frontier), 55947-141
(dimethenamid 96% technical), 55947-149 (dicamba, potassium salt), 55947-
150(Guardsman), 55947-l55(dicamba WG/70.0% wettable granule), 55947-159
(Frontier 6.0), 55947-160 (sodium dicambate technical 85% wettable
granule), 55947-161 (Tough 3.75 EC), Tough 5 EC (56% EC), 55947-162 (Tough
45% WP), 55947-164 (Banvel 10G), 55947-165 (dicamba, diglycolamine salt),
and 55947-166 (66% sodium salt of dicamba, + 10% metribuzin);
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3. all Registration Data, submissions and supporting data and
documents, including, without limitation, all labels, label extensions, or
planned or pending label extensions for any application;
4. all intellectual property located, generated, obtained, or used
in the United States and Canada, including, but not limited to, trade
secrets, test data, technology and know-how, and all United States and
Canadian patents, patent applications, patent rights and licenses;
5. a paid-up, non-exclusive right to develop, manufacture and sell
any Agricultural Chemical Active Ingredient or Agricultural Chemical
Formulation anywhere in the world under all foreign patents, patent
applications, licenses, registrations, submissions and approvals and to use
all other intellectual property located, generated, obtained, or used
outside the United States and Canada, including copy of all trade secrets,
test data, technology and know-how;
6. all trademarks and trade names for Agricultural Chemical Active
Ingredients and Agricultural Chemical Formulations, including, without
limitation, exclusive world rights to the trademarks or trade names
Frontier, Guardsman, Century, Banvel, Clarity, Marksman, Dycleer, Vanquish,
Weedmaster, Tough, Lentagran and Phoenix;
7. all contracts and agreements relating to formulating and
packaging, including, without limitation, all toll supply agreements;
8. all owned or leased facilities, equipment, real property and
other assets used in research, development, technical support, testing, or
product registration in the United States and Canada, including, but not
limited to, the Gilroy Research Center, the Palo Alto Research Center, the
Greenville Field Station, and facilities at Des Plaines, Illinois;
9. all tangible and intangible assets associated with research and
development projects, process improvement projects, production projects,
and label extension projects; and all registrations, submissions and
approvals, Registration Data, supporting data and documents, patents,
patent applications, and other intellectual property relating to each such
project;
10. all owned or leased offices, distribution facilities, real
property and other assets used in sales or technical service of Sandoz
Agricultural Chemicals, including, but
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CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 9 of 36
not limited to, offices and facilities located in Englewood, Colorado, Des
Plaines, Illinois and Palo Alto, California;
11. all books, records and files, customer lists, customer records
and files, vendor lists, catalogs, sales promotion literature, advertising
materials, research materials, technical information, management
information systems, software, inventions, specifications, designs,
drawings, processes and quality control data;
12. all interest in and to contracts and agreements with customers,
joint venturers, suppliers, sales representatives, distributors, agents,
personal property lessors, personal property lessees, licensees, licensees,
consignors and consignees, and rights under warranties and guarantees,
express or implied; and
13. rights to make or sell Pyridate in the United States and Canada
and to make or sell, or license others to make or sell, in the United
States and Canada, Agricultural Chemical Formulations containing Pyridate.
CC. "Sandoz Animal Health Business" means the business units of Sandoz
that are engaged in the research, development, manufacture and production of
Flea Control Products and Other Dallas Products at the Sandoz facility in
Dallas, Texas which products are distributed and sold in the United States and
Canada, excluding the Sandoz Agricultural Chemical Business, and all assets,
properties, business and goodwill, tangible and intangible, trademarks and trade
names used, in whole or in part, in the research, development, manufacture, and
production of Flea Control Products and Other Dallas Products at the Sandoz
facility located in Dallas, Texas which products are distributed and sold in the
United States and Canada, including, but not limited to, the following:
1. all machinery, fixtures, equipment, vehicles, transportation
facilities, furniture, tools and other tangible personal property;
2. all customer lists, vendor lists, catalogs, sales promotion
literature, advertising materials, research materials, technical
information, management information systems, software, inventions, trade
secrets, intellectual property, patents, technology, know-how,
specifications, designs, drawings, processes and quality control data;
3. inventory and storage capacity;
4. all rights, titles and interests in and to owned or leased real
property at the Sandoz facility located at 12200 Denton Drive, Dallas,
Texas, together with appurtenances, licenses and permits;
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5. all rights, titles and interests in and to the contracts entered
into in the ordinary course of business with customers (together with
associated bid and performance bonds), suppliers, sales representatives,
distributors, agents, personal property lessors, personal property lessees,
licensors, licensees, consignors and consignees;
6. all rights, titles and interests in and to development projects;
7. all rights under warranties and guarantees, express or implied;
8. all books, records, and files;
9. all rights, titles and interests in registrations or other
governmental approvals for manufacture and sale of any Flea Control
Products and Other Dallas Products or research and development efforts for
Flea Control Products and Other Dallas Products; provided, however,
Respondents shall retain rights of referral to the Core Data Package for
uses outside the United States and Canada;
10. a non-exclusive license to develop, manufacture and sell any Flea
Control Products and Dallas Products, including research and development
efforts for Flea Control Products and Other Dallas Products, anywhere in
the world under all foreign patents, patent applications, and licenses, and
to use all other intellectual property located, generated, obtained, or
used anywhere in the world, including all trade secrets, test data,
technology and know-how; and
11. all items of prepaid expense.
Notwithstanding the foregoing, Sandoz Animal Health Business shall exclude the
production facility located at Muttenz, Switzerland, operated by Sandoz to
produce Methoprene and other materials, Flea Control Products and other Dallas
Products that are sold outside of the United States and Canada, and assets that
were part of Ciba prior to the Merger.
DD. "Sandoz Animal Health Business Acquirer" means the entity or entities
to whom Respondents shall divest the Sandoz Animal Health Business required to
be divested pursuant to this Order.
EE. "Sandoz Flea Control Products" means all Flea Control Products that as
of November 22, 1996, are: (1) being manufactured, distributed and sold by
Sandoz in the United States and Canada; and (2) all projects in research and
development by Sandoz in the United
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CIBA-GEIGY LIMITED AND SANDOZ LTD
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States and Canada that relate to improving existing, or developing new Flea
Control Products or Base Active Flea Ingredients therefor.
FF. "Strategic Plan" means a detailed plan that sets forth INTER ALIA the
means by which the Sandoz Animal Health Business Acquirer will begin the
manufacture and sale of Methoprene, including dates by which the Sandoz Animal
Health Business Acquirer plans to have received necessary governmental approvals
to manufacture and sell Methoprene in the United States and Canada.
GG. "Anderson Patent" means US Patent Number 5,399,346 issued March 21
1995, and any pending divisionals, continuations, continuations in part,
extensions or reissues of said original US patent application number 07/365,567.
HH. "Anderson Patent License" means a non-exclusive license obtained by
any Person under the Anderson Patent for any gene therapy product or process.
II. "Anderson Patent Licensee" means a Person that obtains an Anderson
Patent License.
JJ. "Cytokine License" means, as to each Respondent, a non-exclusive
license or sublicense under such Respondent's Cytokine Patent Rights for use in
any Cytokine Licensed Product as follows: (a) as to Respondent Chiron, with
respect to IL-2, the right to use IL-2 sold by Respondent Chiron in a Cytokine
Licensed Product, or if Respondent Chiron ceases offering IL-2 for sale, then
the right to manufacture and use IL-2 in a Cytokine Licensed Product; and (b) as
to Respondent Novartis with respect to IL-3 and IL-6, the right to manufacture
and use IL-3 and/or IL-6 in a Cytokine Licensed Product.
KK. "Cytokine Licensed Product" means any research protocol or commercial
product and/or service incorporating or to be used with cells that have been
expanded, mobilized or cultured EX VIVO with IL-2, IL-3 and/or IL-6 proteins.
LL. "Cytokine Licensee" means each and every Person that requests and
obtains a Cytokine License.
MM. "Cytokine Patent Rights" means with respect to each Respondent, all
worldwide patents and patent applications, issued or pending, which, as of
the date this Order becomes final, are owned or controlled by such Respondent
or licensed by a third patty to such Respondent with the right to sublicense,
which, in the case of Respondent Chiron, are directed to the manufacture,
use, or sale of IL-2 in Cytokine Licensed Products, and in the case of
Respondent Novartis, are directed to the manufacture, use, or sale of IL-3
and/or IL-6 in Cytokine Licensed Products.
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Additionally, at the option of the Cytokine Licensee, the Cytokine Patent Rights
shall also include a cross-reference right to the licensing Respondent's
respective drug regulatory files at the FDA with respect to IL-2 in the case of
Respondent Chiron, and with respect to IL-3 and/or IL-6 in the case of
Respondent Novartis.
NN. "Gene Therapy" means a therapeutic intervention in humans based on
modification of the genetic material of autologous, allogeneic, or xenogenic
living cells. Cells may be modified EX VIVO for subsequent administration or
altered IN VIVO by gene therapy products given directly to the patient.
OO. "Gene Therapy License" means any and all of the HSV-tk License,
Cytokine License, Anderson Patent License, and Hemophilia License.
PP "Hemophilia License" means one (1) non-exclusive license under patents
and/or patent applications to which Sandoz held rights, as of October 1, 1996,
to develop a gene therapy product using the beta-domain deleted Factor VIII gene
for the treatment of hemophilia, including, at the option of RPR or the
Subsequent Hemophilia Licensee, all technical information, know-how or materials
owned or controlled by Sandoz, as of the date on which this Order becomes final,
necessary for the development and manufacture of such product, including, but
not limited to, hemophilia gene therapy vectors.
QQ. "HSV-tk Gene Therapy" means the introduction of the HSV-tk gene into a
patient by IN VIVO, and/or EX VIVO transduction for the treatment of human
disease.
RR. "HSV-tk License" means, as to each Respondent, the license or
sublicense granted to RPR or the HSV-tk Licensee under such Respondent's HSV-tk
Patent Rights, to make, use, or sell an HSV-tk Licensed Product, including, at
the option of RPR or the HSV-tk Licensee, the right to sublicense in fields that
are not being developed by RPR or the HSV-tk Licensee.
SS. "HSV-tk Licensee" means a pharmaceutical company, other than RPR, with
the demonstrated plan and ability to commercialize the HSV-tk Licensed Product,
including vector production facilities and clinical gene therapy experience.
TT. "HSV-tk Licensed Product" means an HSV-tk Gene Therapy product in
development or to be developed by RPR or the HSV-tk Licensee.
UU. "HSV-tk Patent Rights" means the following:
1. With respect to Respondent Novartis, all claims in issued U.S.
and foreign patents and all claims in the pending patent applications,
respectively, to make, have
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CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 13 of 36
made, use and sell HSV-tk Licensed Products, owned by or under the control
of Respondent Novartis as of the date this Order becomes final, including
divisionals, continuations, extensions and reissues of such patents or
pending patent applications, and including those which Respondent Novartis
has licensed from a third party as of said date and has a right to
sublicense, all to the extent that such patents or patent applications are
directed to the use of the HSV-tk gene in the development of any and all
HSV-tk Licensed Products. The HSV-tk Patent Rights owned by or under the
control of Respondent Novartis are referenced in Part 1 of non-public
Appendix A. Respondent Novartis HSV-tk Patent Rights shall include any and
all rights obtained in the future to the patents and patent applications
listed in Part 3 of non-public Appendix A under exclusive license with the
right to sublicense. Respondent Novartis' HSV-tk Patent Rights may also
include, at the option of RPR or the HSV-tk Licensee, all technical
information, know-how or materials, owned or controlled by Respondent
Novartis as of the date on which this Order becomes final, necessary to
enable RPR or the HSV-tk Licensee to adequately and fully research and
develop any and all HSV-tk Licensed Products; and
2. With respect to Respondent Chiron, all claims in the issued U.S.
and foreign patents which are issued from patent applications corresponding
to, derived from or equivalent to those United States patent applications
listed in Part 2 of non-public Appendix A, and divisionals, continuations,
extensions and reissues thereof, which claims are directed specifically to
the use of the HSV-tk gene in HSV-tk Gene Therapy, or would otherwise
dominate such use of the HSV-tk gene. Respondent Chiron's HSV-tk Patent
Rights do not include claims to proprietary manufacturing methods, methods
of administration, vector constructs, packaging or producer cells lines,
genes, or other compositions, methods or processes that may be useful in
making, using, or selling HSV-tk Licensed Products, but which do not
dominate the use of the HSV-tk gene in HSV-tk Gene Therapy. Respondent
Chiron's HSV-tk Patent Rights also do not include technical information,
know-how or materials. Respondent Chiron's HSV-tk Patent Rights shall
include any and all rights obtained in the future to the claims in patents
and patent applications listed in Part 3 of non-public Appendix A under
exclusive license with the right to sublicense, which claims are directed
specifically to the use of the HSV-tk gene in HSV-tk Gene Therapy, or would
otherwise dominate such use of the HSV-tk gene.
VV. "HSV-tk Business" means all the assets utilized by Respondent Sandoz
in the research and development of HSV-tk Gene Therapy products, or at the
option of all Respondents in the event that the requirements of Paragraph IX.A
have not been satisfied, all the assets utilized by Respondent Chiron in the
research and development of HSV-tk Gene Therapy products.
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WW. "HSV-tk Sublicensee" means any Person that receives a sublicense under
the HSV-tk Patent Rights from RPR or the HSV-tk Licensee in fields not being
developed by RPR or the HSV-tk Licensee.
XX "MDR-1" means the multiple drug resistance-I gene.
YY. "MRP" means the multiple resistance protein gene.
ZZ. "Net Sales Price" means the total amount received from the sale of
royalty bearing products and/or services, less transportation charges and
insurance, sales taxes, use taxes, excise taxes, value added taxes, customs
duties or other imposts, normal and customary quantity and cash discounts,
rebates (to the extent actually made) and disallowed reimbursements and
allowances and credit on account of rejection or return of royalty bearing
products or services. Royalty bearing products or services shall be considered
"sold" when billed out or invoiced. The total amount received by Cytokine
Licensee from the sale of Cytokine Licensed Products and/or by Anderson Patent
Licensee from the sale of gene therapy products covered by the Anderson Patent
Rights may or may not incorporate hospital and/or physician costs relating to
the EX VIVO gene therapy treatment (e.g., physician charges related to the
removal and readministration of cells).
AAA. "Other Cytokines" means all cytokines, other than IL-2, IL-3, and IL-
6, including but not limited to, stem cell factors, interferons, colony
stimulating factors, tumor necrosis factors and erythropoetins.
BBB. "Person" means any natural person, corporate entity, partnership,
association, joint venture, non-profit organization, university, government
entity, or trust.
CCC. "RPR" means Rhone Poulenc Rorer, Inc., 500 Arcola Road, (Collegeville,
PA 19426-0107.
DDD. "Subsequent Hemophilia License" means any Person, other than RPR, that
may obtain a Hemophilia License from Novartis, or from Genetics Institute, Inc.
if Novartis converts its exclusive license from Genetics Institute, Inc. to a
non-exclusive license.
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II.
IT IS FURTHER ORDERED that:
A. Respondents shall divest, absolutely and in good faith, as an ongoing
business, the Sandoz Corn Herbicide Business to BASF pursuant to the agreement
between Sandoz and BASF dated as of September 26, 1996, no later than ten (10)
days after the date on which this Order becomes final; or, in the event that
BASF breaches that agreement, Respondents shall divest, absolutely and in good
faith, as an ongoing business, the Sandoz Corn Herbicide Business, at no minimum
price, within sixty (60) days of the date on which this Order becomes final, to
an Agricultural Chemical Acquirer that receives the prior approval of the
Commission and in a manner that receives the prior approval of the Commission,
and shall also divest such additional ancillary assets and businesses and effect
such arrangements as are necessary to assure the marketability and the
independence, viability and competitiveness of the Sandoz Corn Herbicide
Business.
B. The purpose of the divestiture of the Sandoz Corn Herbicide Business
is to ensure the continuation of the Sandoz Corn Herbicide Business as an
ongoing, viable enterprise engaged in the research, development, manufacture,
distribution and sale of Corn Herbicides independent of Ciba, Sandoz, and
Novartis and able to compete with Ciba, Sandoz and Novartis and to remedy the
lessening of competition alleged in the Commission's complaint.
C. Pending divestiture of the Sandoz Corn Herbicide Business, Respondents
shall take such actions as are necessary to maintain the viability and
marketability of the Sandoz Corn Herbicide Business and the Sandoz Agricultural
Chemical Business and shall not cause or permit the destruction, removal,
wasting, deterioration, or impairment of the Sandoz Corn Herbicide Business or
of the Sandoz Agricultural Chemical Business, except in the ordinary course of
business and except for ordinary wear and tear.
III.
IT IS FURTHER ORDERED that:
A. Respondents shall divest, absolutely and in good faith, as an ongoing
business, within the time periods specified in Paragraph III.B. below, the
Sandoz Animal Health Business. Respondents shall also enter into, and fulfill
the terms of, a Contract Manufacturing Agreement ("CMA"), as specified in
Paragraph V below, and effect such arrangements as are necessary to assure the
marketability, independence, viability and competitiveness of the Sandoz Animal
Health Business.
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CIBA-GEIGY LIMITED AND SANDOZ LTD.
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B. Respondents shall divest the Sandoz Animal Health Business to Central
Garden and Pet Company and/or its affiliates pursuant to the Asset Purchase
Agreement dated as of October 11, 1996, among Sandoz Ltd. Central Garden and
Pet Company, and Centic Acquisition Corp., as amended to conform to the terms of
this Order in a manner that receives the prior approval of the Commission,
within thirty (30) days of the date on which this Order becomes final; or,
Respondents shall divest the Sandoz Animal Health Business, at no minimum
price, within ninety (90) days of the date on which this Order becomes final, to
a Sandoz Animal Health Business Acquirer that receives the prior approval of the
Commission and in a manner that receives the prior approval of the Commission.
The purpose of the divestiture of the Sandoz Animal Health Business is to ensure
the continued use of the assets of the Sandoz Animal Health Business in the same
business in which the assets of the Sandoz Animal Health Business are engaged at
the time of the proposed divestiture and to remedy the lessening of competition
from the proposed merger of Ciba and Sandoz as alleged in the Commission's
complaint.
C. Pending divestiture of the Sandoz Animal Health Business, Respondents
shall take such actions as are necessary to maintain the viability and
marketability of the Sandoz Animal Health Business and shall not cause or permit
the destruction, removal, wasting, deterioration or impairment of the Sandoz
Animal Health Business, except in the ordinary course of business and except for
ordinary wear and tear. Respondents shall maintain research and development of
all current research and development projects at the levels planned by Sandoz
for such projects as of June 4, 1996.
D. The contract of divestiture shall provide that, at the option of
Respondent Novartis, the Sandoz Animal Health Business Acquirer shall enter into
a transitional toll manufacturing agreement of up to two year's duration to
produce for Respondents products currently produced at Dallas, but not subject
to the divestiture pursuant to this Paragraph, for sale by Respondents outside
the United States and Canada, all at a price equal to the Sandoz Animal Health
Business Acquirer's Cost plus twenty percent (20%) mark-up.
IV.
IT IS FURTHER ORDERED that:
Upon reasonable notice and request to Respondents from the Sandoz Animal
Health Business Acquirer, Respondents shall provide information, assistance and
advice with respect to the Sandoz Animal Health Business divested pursuant to
this Order such that Sandoz Animal Health Business Acquirer or its designee will
be capable of:
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CIBA-GEIGY LIMITED AND SANDOZ LTD.
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(1) manufacturing all products currently produced by the Sandoz Animal
Health Business divested pursuant to this Order, and
(2) manufacturing and/or obtaining all necessary ingredients, other than
Methoprene, for products of the Sandoz Animal Health Business divested
pursuant to this Order.
in substantially the same manner and quality employed, achieved or planned by
the Respondents prior to divestiture. Such information, assistance and advice
shall include reasonable consultation with knowledgeable employees of
Respondents for a period of time sufficient to satisfy the Sandoz Animal Health
Business Acquirer's management that its personnel are appropriately trained in
the research, development, manufacture, distribution and sale of the products
and research and development projects of the Sandoz Animal Health Business
divested pursuant to this Order. Respondents shall convey all know-how
necessary to manufacture or have manufactured, distribute, sell and obtain all
necessary governmental approvals, including EPA approvals, and licenses to
research, develop, manufacture or have manufactured, distribute and sell in the
United States and Canada the products of the Sandoz Animal Health Business
divested pursuant to this Order. Respondents shall provide such information,
assistance and advice for one (1) year from the date Respondents divest the
Sandoz Animal Health Business divested pursuant to this Order. Respondents may
charge the Sandoz Animal Health Business Acquirer at a rate no greater than
Respondents' Cost for providing such technical assistance.
V.
IT IS FURTHER ORDERED that:
Respondents shall enter into a Contract Manufacturing Agreement ("CMA")
with the Sandoz Animal Health Business Acquirer to contract manufacture and
deliver to the Sandoz Animal Health Business Acquirer, in a timely manner,
Methoprene in the volumes requested by the Sandoz Animal Health Business
Acquirer. The CMA shall be effective for the shorter of six (6) years from the
date Respondents divest the Sandoz Animal Health Business or three (3) months
after the Sandoz Animal Health Business Acquirer or is designee obtains all EPA
or FDA approvals necessary to manufacture all Methoprene required for products
of the Sandoz Animal Health Business. The CMA shall contain the following
provisions:
A. Respondents shall make representations and warranties to the Sandoz
Animal Health Business Acquirer that the Methoprene manufactured pursuant to the
CMA meets all applicable EPA, FDA and other government requirements for the
United States and Canada, and Respondents shall agree to indemnify, defend and
hold the Sandoz Animal Health Business Acquirer harmless from any and all suits,
claims, actions, demands, liabilities, expenses or losses
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CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 18 of 36
alleged to result from the failure of Methoprene manufactured pursuant to the
CMA to meet such governmental specifications. This obligation shall be
contingent upon the Sandoz Animal Health Business Acquirer giving Respondents
prompt adequate notice of such claim, cooperating fully in the defense of such
claim, and permitting Respondents to assume the sole control of all phases of
the defense and/or settlement of such claim, including the selection of counsel.
This obligation shall not require Respondents to be liable for any negligent act
or omission of the Sandoz Animal Health Business Acquirer or for any
representations and warranties, express or implied, made by the Sandoz Animal
Health Business Acquirer that exceed the representations and warranties made by
Respondents to the Sandoz Animal Health Business Acquirer.
B. Respondents shall agree to package and deliver the Methoprene
manufactured pursuant to the CMA in a manner and form and according to a
schedule reasonably requested by the Sandoz Animal Health Business Acquirer.
C. The CMA shall require that, for the first three years during which the
CMA is effective, the Sandoz Animal Health Business Acquirer shall compensate
Respondents for all Methoprene supplied pursuant to the CMA at a rate not to
exceed Respondents' Cost of producing such Methoprene during the period from
July 1, 1995, through June 30, 1996, which Cost may be adjusted for
demonstrated input expenditure increases as determined by the trustee appointed
pursuant to Paragraph VIII of this Order.
D. The contract of divestiture shall be submitted to and approved by the
Commission prior to the divestiture of the Sandoz Animal Health Business
required by this Order. Respondents' application for approval of the divestiture
pursuant to this Order shall include: (1) a certification attesting to the good
faith intention of the Sandoz Animal Health Business Acquirer to obtain, or to
cause its designee to obtain, in an expeditious manner all FDA, EPA and other
governmental approvals required in the United States and Canada to manufacture
and sell Methoprene; (2) a Strategic Plan to obtain all FDA, EPA and other
governmental approvals required in the United States and Canada to manufacture
or have manufactured, and sell Methoprene; and (3) a CMA pursuant to this
Paragraph.
E. Respondents shall provide information, assistance and advice to the
Sandoz Animal Health Business Acquirer, or its designee, to enable the Sandoz
Animal Health Business Acquirer, or its designee, to manufacture and sell
Methoprene in the United States or Canada. Respondents shall convey all know-
how required to manufacture, sell and obtain all necessary EPA, FDA and other
government approvals to manufacture and sell Methoprene in the United States or
Canada. Such information, assistance and advice shall include reasonable
consultation with knowledgeable employees of Respondents and training at either
or both the Sandoz Animal Health Business Acquirer's facilities, or those of its
designee, and the Respondents' facilities for a period of time sufficient to
satisfy the Sandoz Animal Health Business Acquirer's management
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CIBA-GEIGY LIMITED AND SANDOZ LTD.
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that its personnel, or those of its designee, are appropriately trained in the
manufacture of Methoprene. Respondents shall continue to provide such
information, assistance and advice until the ninetieth (90th) day following the
date on which the Sandoz Animal Health Business Acquirer, or its designee,
obtains EPA approval to manufacture and sell Methoprene. Respondents may charge
the Sandoz Animal Health Business Acquirer at a rate no greater than
Respondents' direct cost for providing such technical assistance.
F. Respondents shall use best efforts to facilitate the Sandoz Animal
Health Business Acquirer's ability to obtain adequate supplies of Methoprene
starter material, chemical name S-(3,7-Dimethyl-7-methoxy-1-octanal) from
Takasago Iwata.
VI.
IT IS FURTHER ORDERED that for a period of six (6) years from the date on
which the Sandoz Animal Health Business is divested, Respondents shall not: (1)
manufacture and sell, or cause to be manufactured for sale, in the United States
and Canada, Methoprene to any entity other than the Sandoz Animal Health
Business Acquirer, or its designee; and (2) sell any products that contain
Methoprene in the United States and Canada.
VII.
IT IS FURTHER ORDERED that for a period of six (6) years from the date this
Order is placed on the public record for comment, except as required to comply
with the terms of this Order, Respondents shall not provide, disclose or
otherwise make available to any other Person or to any employee of Novartis, any
non-public information relating to any research and development project ongoing
as of March 1, 1996, at Sandoz to develop or improve any Base Active Flea
Ingredient or any Sandoz Flea Control Product, if said Person or employee did
not have knowledge of such non-public information as of March 1, 1996.
VIII.
IT IS FURTHER ORDERED that:
A. The Commission may appoint a trustee to ensure that Respondents and
the Sandoz Animal Health Business Acquirer expeditiously perform their
responsibilities required under this Order with respect to the Sandoz Animal
Health Business. The trustee shall also ensure that the provisions of the
Agreement to Hold Separate between Respondents and the
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CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 20 of 36
Commission, dated November 26, 1996, are carried out in good faith. Respondents
shall consent to the following terms and conditions regarding the trustee's
powers, duties, authority, and responsibilities:
1. The Commission shall select the trustee, subject to the consent
of Respondents, which consent shall not be unreasonably withheld. If
Respondents have not opposed, in writing, including the reasons for
opposing, the selection of any proposed trustee within ten (10) days after
notice by the staff of the Commission to Respondents of the identity of any
proposed trustee, Respondents shall be deemed to have consented to the
selection of the proposed trustee.
2. The trustee shall have the power and authority to assure
Respondents' compliance with the terms of this Order.
3. Within ten (10) days after appointment of the trustee,
Respondents shall execute a trust agreement that, subject to the prior
approval of the Commission, transfers to the trustee all rights and powers
necessary to permit the trustee to assure Respondents' compliance with the
terms of this Order relating to the Sandoz Animal Health Business. As part
of the trust agreement, the trustee shall execute confidentiality
agreement(s) with Respondents.
4. The trustee shall serve until the ninetieth (90th) day following
the date on which the Sandoz Animal Health Business Acquirer or its
designee obtains EPA approval to manufacture and sell Methoprene. If the
responsibilities of the trustee are extended pursuant to the provisions of
Paragraph X, the trustee shall serve until such date as required by that
Paragraph.
5. The trustee shall have full and complete access to the personnel,
books, records and facilities related to the Sandoz Animal Health Business
or to any other relevant information, as the trustee may request.
Respondents shall develop such financial or other information as such
trustee may request and shall cooperate with the trustee. Respondents
shall take no action to interfere with or impede the trustee's
accomplishment of his or her responsibilities pursuant to this Order.
6. The trustee shall serve, without bond or other security, at the
cost and expense of Respondents, on such reasonable and customary terms and
conditions as set forth in the trust agreement. The trustee shall have the
authority to employ, at the cost and expense of Respondents, such
consultants, accountants, attorneys, investment bankers, business brokers,
appraisers, and other representatives and assistants as are necessary to
carry out the trustee's duties and responsibilities. The trustee shall
account
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CIBA-GEIGY LIMITED AND SANDOZ LTD.
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for all expenses incurred. The Commission shall approve the account of the
trustee, including fees for his or her services.
7. Respondents shall indemnify the trustee and hold the trustee
harmless against any losses, claims, damages, liabilities, or expenses
arising out of, or in connection with, the performance of the trustee's
duties, including all reasonable fees of counsel and other expenses
incurred in connection with the preparation for, or defense of any claim,
whether or not resulting in any liability, except to the extent that such
liabilities, losses, damages, claims, or expenses result from misfeasance,
gross negligence, willful or wanton acts, or bad faith by the trustee.
8. If the trustee ceases to act or fails to act diligently, a
substitute trustee shall be appointed in be same manner as provided in
Subparagraph A. of this Paragraph.
9. The Commission may on its own initiative or at the request of the
trustee issue such additional orders or directions as may be necessary or
appropriate to assure compliance with the requirements of this Order.
B. The agreement pursuant to which Respondents divest the Sandoz Animal
Health Business shall require the Sandoz Animal Health Business Acquirer to
submit to the trustee appointed pursuant to this Paragraph, periodic written
reports setting forth in detail the efforts of the Sandoz Animal Health
Business Acquirer to obtain all FDA, EPA and other governmental approvals
required in the United States and Canada to continue the research, development,
manufacture and sale of the products and projects of the Sandoz Animal Health
Business. The first report shall be submitted within sixty (60) days after the
date on which the Commission approves the Sandoz Animal Health Business Acquirer
and every ninety (90) days thereafter until the Sandoz Animal Health Business
Acquirer has obtained all FDA, EPA and other governmental approvals required in
the United States and Canada to continue the research, development, manufacture
and sale of the products and projects of the Sandoz Animal Health Business.
C. Respondents shall comply with all reasonable directives of the trustee
regarding Respondents' obligations to comply with this Order.
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AGREEMENT CONTAINING CONSENT ORDER Page 22 of 36
IX.
IT IS FURTHER ORDERED that:
A.
1. On or before September 1, 1997, each Respondent shall (i) grant a
non-exclusive license to RPR to make, use and sell HSV-tk Licensed Products
under such Respondent's HSV-tk Patent Rights, in a manner that has received
prior Commission approval and, except as provided in this Order, is
consistent with the Letter of Intent dated November 20, 1996 between RPR
and Sandoz Ltd., which contains licensing terms concerning Sandoz and
Chiron HSV-tk Patent Rights, hemophilia gene rights, and the Anderson
Patent; or (ii) grant a non-exclusive license to make, use and sell HSV-tk
Licensed Products under such Respondent's HSV-tk Patent Rights to an HSV-tk
Licensee that receives the prior approval of the Commission and in a manner
that receives the prior approval of the Commission, in perpetuity and in
good faith, at no minimum price. In consideration for the HSV-tk License,
each Respondent may request from the HSV-tk Licensee compensation in the
form of royalties and/or an equivalent cross-license.
2. At the option of RPR or the HSV-tk Licensee, Novartis shall,
in good faith, within one (1) year of execution of said HSV-tk License,
or within one (1) year of the execution of any sublicense to the HSV-tk
Patent Rights by RPR or the HSV-tk Licensee, provide to RPR or the
HSV-tk Licensee, or the HSV-tk Sublicensee(s), technical information,
know-how or material owned or controlled by Novartis as of the date on
which this Order became final, as is necessary to develop the HSV-tk
Licensed Products. Such technical assistance may include reasonable
consultation with knowledgeable employees of Novartis and training at
RPR or the HSV-tk Licensee's facilities, or the HSV-tk Sublicensee's
facilities, or at such other place as is mutually satisfactory to
Novartis and RPR or the HSV-tk Licensee or the HSV-tk Sublicensee(s),
such consultation to be for a period of time within the one-year period
reasonably sufficient to satisfy RPR or the HSV-tk Licensee or the
HSV-tk Sublicensee(s).
3. RPR or the HSV-tk Licensee may sublicense, to any HSV-tk
Sublicensee, fields that are not being developed by RPR or said HSV-tk
Licensee.
4. The purpose for the HSV-tk License is to ensure the continuation
of HSV-tk gene therapy research and development for an HSV-tk Gene Therapy
product to be approved by the FDA for sale in the United States and to
remedy the lessening of competition resulting from the Merger as alleged in
the Commission's complaint.
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CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 23 of 36
5. Pending licensing of the HSV-tk Patent Rights, each Respondent
shall take such action as is necessary to maintain the viability and
marketability of the HSV-tk Patent Rights and the HSV-tk Licensed Products,
including, but not limited to, maintaining in the ordinary course the
research and development of HSV-tk products.
B. For the purpose of ensuring continuation of EX VIVO gene therapy
research and development, and to ensure the availability of cytokines for Gene
Therapy, and to remedy the lessening of competition and research and development
of Gene Therapy resulting from the Merger as alleged in the Commission's
complaint, commencing within thirty (30) days of the date this Order becomes
final, Respondents shall perform the following obligations:
1. Respondent Novartis shall grant to each Person who so requests a
Cytokine License, in perpetuity and in good faith. In payment for such
license, Respondent Novartis shall receive a royalty, or its equivalent, of
no greater than three percent (3%) of the Net Sales Price of Cytokine
Licensed Products, paid from the date of first commercial sale of royalty
bearing products or services until a time no later than the expiration of
the last to expire patent. Respondent Novartis may also request certain
non-exclusive rights to obtain and use safety and efficacy data generated
by said Cytokine Licensee to support its own regulatory filings.
2. Respondent Chiron shall grant to each Person who so requests a
Cytokine License, in perpetuity and in good faith. In payment for such
license, Respondent Chiron shall receive a royalty, or its equivalent,
of no greater than three percent (3%) of the Net Sales Price of Cytokine
Licensed Products, paid from the date of first commercial sale of
royalty bearing products or services until a time no later than the
expiration of the last to expire patent; provided, however, that if
Respondent Chiron's grant of a Cytokine License includes the right to
manufacture, then Respondent Chiron shall receive a royalty of no
greater than one percent (1%) above the royalty due from Respondent
Chiron to all third party IL-2 licensors of Respondent Chiron.
Respondent Chiron may also request certain non-exclusive rights to
obtain and use safety and efficacy data generated by said Cytokine
Licensee to support its own regulatory filings.
3. In the event that royalties are to be paid by any such Cytokine
Licensee under a Cytokine License described in Subparagraphs 1 or 2 to a
party who is not an affiliate of such Cytokine Licensee for royalty bearing
products or services, then the royalties to be paid to Respondents shall be
reduced by up to one-half of the negotiated royalty rate of said Cytokine
License, but in no event shall any royalties under Subparagraphs 1 and/or 2
be reduced by more than fifty percent (50%). These stacking provisions
shall also apply if at any time in the future it becomes scientifically
advantageous to combine IL-2, IL-3, and IL-6, or any combination therof,
into a single
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CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 24 of 36
Cytokine Licensed Product so that the royalty payable to all Respondents
shall be no more than three percent (3%). However, if Respondent Chiron's
grant of a Cytokine License includes the right to manufacture, this
Subparagraph IX.B.3, shall not apply to reduce the Cytokine Licensee's
obligations to pay royalties owed to third party IL-2 licensors of Chiron.
4. If a Person seeking a Cytokine License has patent rights and/or
drug regulatory files on Other Cytokines for use in EX VIVO cell expansion,
the licensing Respondent may require equivalent cross licenses for such
Other Cytokines from such Person.
C. For the purpose of ensuring continuation of EX VIVO gene therapy
research and development, and to ensure the availability of Anderson Patent
Licenses, and to remedy the lessening of competition in research and development
of Gene Therapy resulting from the Merger as alleged in the Commission's
complaint, commencing within thirty (30) days of the date this Order becomes
final, Respondent Novartis shall grant to each Person who requests an Anderson
Patent License a non-exclusive license or sub-license under any and all
Anderson Patent Rights, in perpetuity and in good faith, in the United States.
In payment for such license, Respondent Novartis shall be entitled to receive:
(i) a one-time payment of Ten Thousand Dollars ($10,000) and (ii) a royalty
based on the Net Sales Price of any gene therapy product covered by the Anderson
Patent Rights of no greater than one percent (1%) above the royalty due from
Respondent Novartis to the United States National Institutes of Health. Such
royalty shall be paid from the date of first commercial sale of royalty bearing
products or services in the United States, provided that the Anderson Patent is
valid and enforceable, until the expiration of the last to expire patent.
D. Respondent Novartis shall by no later than September 1, 1997, either
(i) convert its exclusive rights to the beta-domain deleted Factor VIII
hemophilia gene from Genetics Institute to a non-exclusive license; or (ii)
grant a Hemophilia License to RPR in a manner that has received prior Commission
approval and in a manner consistent with the Letter of Intent dated November 20,
1996 between RPR and Sandoz Ltd.; or (iii) grant a Hemophilia License to a
Subsequent Hemophilia Licensee that receives the prior approval of the
Commission and in a manner that receives the prior approval of the Commission,
at no minimum amount. In consideration for the Hemophilia License, Respondent
Novartis may request from RPR or the Subsequent Hemophilia Licensee compensation
in the form of royalties and/or an equivalent cross-license. At the option of
RPR or the Subsequent Hemophilia Licensee, Respondent Novartis shall, in good
faith, within one (1) year of the execution of the Hemophilia License provide to
RPR or the Subsequent Hemophilia Licensee, such technical information, know-how
or materials, owned or controlled by Genetic Therapy, Inc. as of the date on
which this Order
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CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 25 of 36
become final, necessary for the development of a gene therapy product using the
beta-domain deleted Factor VIII gene for the treatment of hemophilia.
E. Respondent Novartis shall not acquire from Ingenex, Inc. or the United
States National Institutes of Health exclusive rights in intellectual property
related to the gene sequence for MDR-1 or MRP.
F. Respondents shall include in each license granted pursuant to this
Paragraph a provision that ensures Respondents have no access to any Licensee's
Net Sales Price information. Respondents shall, in each license granted
pursuant to this Paragraph, provide for:
1. The appointment of an independent auditor agreed upon among the
respective parties who shall: (a) enter into appropriate confidentiality
agreements; (b) have full and complete access to the pertinent personnel,
books, records, technological information, or any other information as to
which the auditor may reasonably require; and (c) be authorized to collect,
audit, aggregate and distribute the respective aggregated royalties on an
annual basis. Respondents shall notify the Commission of the appointment of
any independent auditor.
2. A binding arbitration clause to resolve any and all disputes
regarding the royalties or any other License terms. Respondents shall
notify the Commission of the institution of any arbitration.
G. There will be no limitations upon the rights of any Respondent or any
licensee or sublicensee hereunder to license or sublicense its own patents or
patent applications to other third parties. Nothing in this Order requires any
Respondent to guarantee freedom of operation under any third party patents not
included within such Respondent's HSV-tk Patent Rights, Cytokine Patent Rights,
Anderson Patent Rights or the patent rights subject to the Hemophilia License.
X.
IT IS FURTHER ORDERED that:
A. If Respondent Novartis has not divested, absolutely and in good faith
and with the Commission's prior approval, the Sandoz Corn Herbicide Business
within the time required by Paragraph II of this Order, the Commission may
appoint one or more trustees, or direct the trustee appointed pursuant to
Paragraph VIII of this Order, to divest the Sandoz Agricultural Chemical
Business.
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CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 26 of 36
B. If Respondent Novartis has not divested, absolutely and in good faith
and with the Commission's prior approval, the Sandoz Animal Health Business
within the time required by Paragraph III of this Order, the Commission may
appoint a trustee or direct the trustee appointed pursuant to Paragraph VII of
this Order, to divest the Sandoz Animal Health Business.
C. If Respondents have not, by September 1, 1997, complied with the
requirements of Paragraph IX.A. of this Order, the Commission may appoint a
trustee to divest the HSV-tk Business to a buyer that receives the prior
approval of the Commission, and in a manner that receives the prior approval
of the Commission, at no minimum price. If Respondent Novartis has not, by
September 1, 1997, complied with requirements of Paragraph IX.D. of this
Order, the Commission may appoint a trustee to convert Respondent Novartis'
exclusive rights to the beta-domain deleted Factor VIII gene from Genetics
Institute to a non-exclusive license.
D. In the event that the Commission or the Attorney General brings an
action pursuant to Section 5(l) of the Federal Trade Commission Act, 15
U.S.C. Section 45(l), or any other statute enforced by the Commission,
Respondents shall consent to the appointment of a trustee in such action.
Neither the appointment or extension of responsibilities of a trustee nor a
decision not to appoint or extend the responsibilities of a trustee, under
this Paragraph shall preclude the Commission or the Attorney General from
seeking civil penalties or any other relief available to it, including a
court-appointed trustee, pursuant to Section 5(l) of the Federal Trade
Commission Act, 15 U.S.C. Section 45(l), or any other statute enforced by the
Commission, for any failure by the Respondents to comply with this Order.
E. If a trustee is appointed or directed by the Commission or a court
pursuant to Subparagraph A. of this Paragraph to divest the Sandoz
Agricultural Chemical Business, or pursuant to Subparagraph B. of this
Paragraph to divest the Sandoz Animal Health Business, or pursuant to
Subparagraph C. of this Paragraph to divest the HSV-tk Business, Respondents
shall consent to the following terms and conditions regarding the trustee's
powers, duties, authority, and responsibilities:
1. The Commission shall select the trustee, subject to the consent
of Respondents, which consent shall not be unreasonably withheld. The
trustee shall be a person with experience and expertise in acquisitions
and divestitures. If Respondents have not opposed, in writing, including
the reasons for opposing the selection of any proposed trustee within
ten (10) days after notice by the staff of the Commission to Respondents of
the identity of any proposed trustee, Respondents shall be deemed to have
consented to the selection of the proposed trustee.
2. If a trustee is directed under Subparagraph A. of this Paragraph
to divest the Sandoz Agricultural Chemical Business, the Commission may
extend the authority
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CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 27 of 36
and responsibilities of the trustee appointed under Paragraph VIII of this
Order to include divesting the Sandoz Agricultural Chemical Business.
3. If a trustee is directed under Subparagraph B. of this Paragraph
to divest the Sandoz Animal Health Business, the Commission may extend the
authority and responsibilities of the trustee appointed under Paragraph
VIII of this Order to include divesting the Sandoz Animal Health Business.
4. If a trustee is directed under Subparagraph C. of this Paragraph
to divest the HSV-tk Business, the Commission may extend the authority and
responsibilities of the trustee appointed under Paragraph VIII of this
Order to include divesting the HSV-tk Business. If a trustee is directed
under Subparagraph C. of this Paragraph to convert Respondent Novartis'
exclusive rights to the beta-domain deleted Factor VIII gene from Genetics
Institute to a non-exclusive license, the Commission may extend the
authority and responsibilities of the trustee appointed under Paragraph
VIII of this Order to include converting Respondent Novartis' exclusive
rights to the beta-domain deleted Factor VIII gene from Genetics Institute
to a non-exclusive license.
5. Subject to the prior approval of the Commission and consistent
with Paragraphs II through IX, the trustee shall have the exclusive power
and authority to divest the assets identified in the Commission's
appointment or extension of the trustee's authority and responsibilities.
6. Within ten (10) days after the appointment of the trustee or
the extension of the trustee's authority and responsibilities, Respondents
shall execute a trust agreement, or shall amend the existing trust
agreement in a manner that, subject to the prior approval of the Commission
and, in the case of a court-appointed trustee, of the court, transfers to
the trustee all rights and powers necessary to permit the trustee to effect
the divestiture required by this Order.
7. The trustee shall have twelve (12) months from the date the
Commission approves the trust agreement or the amended trust agreement,
described in Subparagraph E. of this Paragraph, to accomplish the
divestiture or divestitures, which shall be subject to the prior approval
of the Commission. If, however, at the end of the applicable twelve- month
period, the trustee has submitted a plan of divestiture or believes that
divestiture can be achieved within a reasonable time, such divestiture
period may be extended by the Commission, or, in the case of a court-
appointed trustee, by the court; provided, however, the Commission may
extend each divestiture period only two (2) times.
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CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 28 of 36
8. The trustee shall have full and complete access to the
personnel, books, records and facilities related to the Sandoz
Agricultural Chemical Business, the Sandoz Animal Health Business, the
HSV-tk Business, the license to hemophilia patents and/or patent
applications granted to Respondent Novartis by Genetics Institute, or to
any other relevant information, as the trustee may request. Respondents
shall develop such financial or other information as such trustee may
request and shall cooperate with the trustee. Respondents shall take no
action to interfere with or impede the trustee's accomplishment of the
divestitures. Any delays in divestiture caused by Respondents shall
extend the time for divestiture under this Paragraph in an amount equal
to the delay, as determined by the Commission or, for a court-appointed
trustee, by the court.
9. The trustee shall make every reasonable effort to negotiate the
most favorable price and terms available in each contract submitted to the
Commission, subject to Respondents' absolute and unconditional obligation
to divest at no minimum price. The divestiture shall be made in the manner
and to the Agricultural Chemical Acquirer as set out in Paragraph II of
this Order, or to the Animal Health Business Acquirer as set out in
Paragraph III of this Order, or to the acquirer of the HSV-tk Business as
set out in Paragraph X.C. of this Order, as applicable; provided, however,
if the trustee receives bona fide offers from more than one acquiring
entity for the Sandoz Agricultural Chemicals Business, or for the Sandoz
Animal Health Business, or for the HSV-tk Business, and if the Commission
determines to approve more than one such acquiring entity, the trustee
shall divest to the acquiring entity or entities selected by Respondents
from among those approved by the Commission.
10. The trustee shall serve, without bond or other security, at the
cost and expense of Respondents, on such reasonable and customary terms and
conditions as the Commission or a court may set. The trustee shall have
the authority to employ, at the cost and expense of Respondents, such
consultants, accountants, attorneys, investment bankers, business brokers,
appraisers, and other representatives and assistants as are necessary to
carry out the trustee's duties and responsibilities. The trustee shall
account for all monies derived from the divestiture and all expenses
incurred. After approval by the Commission and, in the case of a court-
appointed trustee, by the court, of the account of the trustee, including
fees for his or her services, all remaining monies shall be paid at the
direction of the Respondents, and the trustee's power shall be terminated.
The trustee's compensation shall be based at least in significant part on a
commission arrangement contingent on the trustee's divesting the Sandoz
Agricultural Chemical Business, the Sandoz Animal Health Business, or the
HSV-tk Business, as applicable.
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CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 29 of 36
11. Respondents shall indemnify the trustee and hold the trustee
harmless against any losses, claims, damages, liabilities, or expenses
arising out of, or in connection with, the performance of the trustee's
duties, including all reasonable fees of counsel and other expenses
incurred in connection with the preparation for, or defense of any
claim, whether or not resulting in any liability, except to the extent
that such liabilities, losses, damages, claims, or expenses result from
misfeasance, gross negligence, willful or wanton acts, or bad faith by
the trustee.
12. If the trustee ceases to act or fails to act diligently, a
substitute trustee shall be appointed in the same manner as provided in
Paragraph VIII or this Paragraph of this Order.
13. The Commission or, in the case of a court-appointed trustee, the
court, may on its own initiative or at the request of the trustee issue
such additional Orders or directions as may be necessary or appropriate to
accomplish the divestiture required by this Order.
14. In the event that the trustee determines that he or she is unable
to divest the Sandoz Agricultural Chemical Business, if directed to divest
pursuant to Subparagraph A. of this Paragraph, in a manner consistent with
the Commission's purpose as described in Paragraph II of this Order; or in
the event that the trustee determines that he or she is unable to divest
the Sandoz Animal Health Business, if directed to divest pursuant to
Subparagraph B. of this Paragraph, in a manner consistent with the
Commission's purpose as described in Paragraph III of this Order; or in
the event that the trustee determines that he or she is unable to divest
the HSV-tk Business, if directed to divest pursuant to Subparagraph C. of
this Paragraph, in a manner consistent with the Commission's purpose as
described in Paragraph IX.A.2. of this Order, the trustee may divest
additional assets ancillary to the Sandoz Agricultural Chemical Business,
ancillary to the Sandoz Animal Health Business, or as applicable,
ancillary to the HSV-tk Business, and effect such arrangements as are
necessary to satisfy the requirements of this Order.
15. The trustee shall have no obligation or authority to operate or
maintain the Sandoz Agricultural Chemical Business, the Sandoz Animal
Health Business, or the HSV-tk Business.
16. The trustee shall report in writing to Respondents and the
Commission every sixty (60) days concerning the trustee's efforts to
accomplish divestiture.
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CIBA-GEIGY LIMITED AND SANDOZ LTD.
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XI.
IT IS FURTHER ORDERED that, Respondents shall comply with all terms of the
Agreement to Hold Separate attached to this Order and made a part hereof as
Appendix I. The Agreement to Hold Separate shall continue in effect until (a)
with respect to the Sandoz Corn Herbicide Business, such time as Respondents
have divested the Sandoz Corn Herbicide Business and (b) with respect to the
Sandoz Animal Health Business, such time as Respondents have divested the Sandoz
Animal Health Business pursuant to Paragraphs II and III of this Order; or, if a
trustee is appointed or the trustee's authorities and responsibilities have been
extended pursuant to Paragraph X of this Order, the Agreement to Hold Separate
shall continue in effect until such time as Respondents or the trustee have
divested all of the Sandoz Animal Health Business and, as applicable, the Sandoz
Corn Herbicide Business or the Sandoz Agricultural Chemical Business pursuant to
this Order.
XII.
IT IS FURTHER ORDERED that, for a period of ten (10) years after the date
the Order becomes final, Respondents shall not, without prior notice to the
Commission, directly or indirectly, through subsidiaries, partnerships, or
otherwise:
A. Acquire more than 5% of any stock, share capital, equity, or other
interest in any concern, corporate or non-corporate, engaged in at the time of
such acquisition, or within the two years preceding such acquisition, the
research, development, manufacture, distribution or sale of Flea Control
Products or other products containing Methoprene in the United States; or
B. Acquire any assets currently used, or used in the previous two years
(and still suitable for use for) for the research, development, manufacture,
distribution or sale of Flea Control Products or other products containing
Methoprene in the United States. Provided, however, that this Paragraph XII
shall not apply to the acquisition of equipment, machinery, supplies or
facilities constructed, manufactured or developed by or for Respondents.
The prior notifications required by this Paragraph shall be given on the
Notification and Report Form set forth in the Appendix to Part 803 of Title 16
of the Code of Federal Regulations, as amended, (hereinafter referred to as "the
Notification"), and shall be prepared and transmitted in accordance with the
requirements of that part, except that no filing fee will be required for any
such notification, notification shall be filed with the Secretary of the
Commission, notification need not be made to the United States Department of
Justice, and Notification is required only of
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CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 31 of 36
Respondents and not of any other party to the transaction. Respondents shall
provide the Notification to the Commission at least thirty (30) days prior to
consummating any such transaction (hereinafter referred to as the "first waiting
period"). If, within the first waiting period, representatives of the
Commission make a written request for additional information, Respondents shall
not consummate the transaction until twenty (20) days after substantially
complying with such request for additional information. Early termination of
the waiting periods in this Paragraph may be requested and, where appropriate,
granted by letter from the Bureau of Competition. Notwithstanding, prior
notification shall not be required by this Paragraph for a transaction for which
notification is required to be made, and has been made, pursuant to Section 7A
of the Clayton Act, 15 U.S.C Section 18a.
XIII.
IT IS FURTHER ORDERED that, Respondent Ciba and/or Respondent Novartis
shall not, without prior notice to the Commission, directly or indirectly,
through subsidiaries, partnerships, or otherwise acquire common stock of
Chiron such as to increase by more than one percent (1%) or more the
percentage of Chiron stock that Ciba owns as of the date this Order becomes
final, until the receipt by the Commission of a certification by RPR, the
trustee, or Respondents, that Respondents have complied with the requirements
of Paragraphs IX.A. and IX.D. of this Order; provided, however, in no event
shall this provision apply later than five (5) years from the date this Order
becomes final.
The prior notifications required by this Paragraph XIII shall be given
on the Notification and Report Form set forth in the Appendix to Part 803 of
Title 16 of the Code of Federal Regulations, as amended, (hereinafter
referred to as "the Notification"), and shall be prepared and transmitted in
accordance with the requirements of that part, except that no filing fee will
be required for any such notification, notification shall be filed with the
Secretary of the Commission, notification need not be made to the United
States Department of Justice, and Notification is required only of Respondent
Novartis and not of any other party to the transaction. Respondents shall
provide the Notification to the Commission at least thirty (30) days prior to
consummating any such transaction (hereinafter referred to as the "first
waiting period"). If, within the first waiting period, representatives of
the Commission make a written request for additional information, Respondent
Novartis shall not consummate the transaction until twenty (20) days after
substantially complying with such request for additional information. Early
termination of the waiting periods in this Paragraph may be requested and,
where appropriate, granted by letter from the Bureau of Competition.
Notwithstanding, prior notification shall not be required by this Paragraph
for a transaction for which notification is required to be made, and has been
made, pursuant to Section 7A of the Clayton Act, 15 U.S.C. Section 18a.
<PAGE>
CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 32 of 36
XIV.
IT IS FURTHER ORDERED that:
A. Within sixty (60) days after the date this Order becomes final and
every sixty (60) days thereafter until Respondents have fully complied with the
provisions of Paragraphs II, III, and IX.A. and IX.D. of this Order requiring,
respectively, divestiture of the Sandoz Corn Herbicide Business, divestiture of
the Sandoz Animal Health Business, and granting of the HSV-tk License,
Respondent Novartis shall submit to the Commission verified written report(s)
("Compliance Reports") setting forth in detail the manner and form in which they
intend to comply, are complying, and have complied with Paragraphs II through IX
of this Order. After completing the divestitures required under Paragraphs II,
III, the licensing required under Paragraph IX.A, and the requirements of
Paragraph IX.D. of this Order, and until the termination of the CMA required
under Paragraph V of this Order, Respondent Novartis shall submit such
Compliance Reports every one hundred eighty (180) days beginning on the date of
the divestiture of the Sandoz Animal Health Business. Following termination of
the CMA required under Paragraph V of this Order, Respondent Novartis shall
submit to the Commission annual Compliance Reports on the anniversary of the
date this Order became final, until and including the tenth anniversary date of
this Order. Respondents shall include in their Compliance Reports, among other
things that are required from time to time, a full description of the efforts
being made to comply with Paragraphs II through IX of the Order, including a
description of all substantive contacts or negotiations for the divestiture or
relating to the Gene Therapy License obligations. Respondents shall include in
their compliance reports copies of all written communications to and from such
parties all internal memoranda, and all reports and recommendations concerning
divestiture.
B. One year (1) from the date this Order becomes final, annually for the
next nine (9) years on the anniversary of the date this Order becomes final, and
at other times as the Commission may require, Respondent Novartis shall file a
verified written report with the Commission setting forth in detail the manner
and form in which they have complied and are complying with Paragraphs XII and
XIII of this Order.
<PAGE>
CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 33 of 36
XV.
IT IS FURTHER ORDERED that Respondents shall notify the Commission at least
thirty (30) days prior to any proposed change in the corporate Respondents such
as dissolution, assignment, sale resulting in the emergence of an successor
corporation, or the creation or dissolution of subsidiaries or any other change
in the corporation that may affect compliance obligations arising out of this
Order.
XVI.
IT IS FURTHER ORDERED that, for the purpose of determining or securing
compliance with this Order, upon written request, Respondents shall permit any
duly authorized representative of the Commission:
A. Access, during office hours and in the presence of counsel, to inspect
and copy all books, ledgers, accounts, correspondence, memoranda, and other
records and documents in the possession or under the control of Respondents
relating to any matters contained in this Order; and
B. Upon five days' notice to Respondents and without restraint or
interference from them, to interview officers, directors, or employees of
Respondents.
<PAGE>
CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 34 of 36
XVII.
IT IS FURTHER ORDERED that this Order shall terminate ten (10) years from
the date this Order becomes final.
Signed this day of ,1996.
------------ --------------------
FOR THE BUREAU OF COMPETITION FOR CIBA-GEIGY LIMITED
FEDERAL TRADE COMMISSION
------------------------------
/s/ Morris A. Bloom A. Krauer
- ------------------------------
Morris A. Bloom
Attorney
------------------------------
/s/ Elizabeth A. Jex H. Gut
- ------------------------------
Elizabeth A. Jex
Attorney FOR CIBA-GEIGY CORPORATION
/s/ Claudia R. Higgins
- ------------------------------ ------------------------------
Claudia R. Higgins Jeff Benjamin
Attorney
FOR CHIRON CORPORATION
/s/ Rhett R. Krulla
- ------------------------------ /s/ William J. Rutter
Rhett R. Krulla ------------------------------
Senior Litigator Dr. William J. Rutter
Chairman
<PAGE>
CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 35 of 36
APPROVED: FOR SANDOZ LTD.
------------------------------
- ------------------------------ Raymond Breu
M. Howard Morse
Assistant Director
------------------------------
H. J. Rudloff
- ------------------------------
George S. Cary
Senior Deputy Director FOR SANDOZ CORPORATION
- ------------------------------ ------------------------------
William J. Baer Robert L. Thompson, Jr.
Director
FOR NOVARTIS AG
------------------------------
Dr. Daniel Vasella
------------------------------
Urs Barlocher
<PAGE>
CIBA-GEIGY LIMITED AND SANDOZ LTD.
AGREEMENT CONTAINING CONSENT ORDER Page 36 of 36
/s/ Michael Malina
------------------------------
Michael Malina
Kaye, Scholer, Fierman, Hays & Handler
Counsel for Ciba-Geigy Ltd., Ciba-Geigy
Corporation, Sandoz Ltd., Sandoz
Corporation and Novartis AG
/s/ Kenneth S. Prince
------------------------------
Kenneth S. Prince
Shearman & Sterling
Counsel for Ciba-Geigy Ltd., Ciba-Geigy
Corporation, Sandoz Ltd., Sandoz
Corporation and Novartis AG
/s/ William G. Green
------------------------------
William G. Green
Counsel for Chiron Corporation
