SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 8)*
Chiron Corporation
- ---------------------------------------------------------------------
(Name of Issuer)
Common Stock, Par Value $0.01 Per Share
- ---------------------------------------------------------------------
(Title of Class of Securities)
170040109
-----------------------------------------------------
(CUSIP Number)
Dr. Herbert Gut Philip A. Gelston, Esq.
Novartis AG Cravath, Swaine & Moore
Schwarzwaldallee 215 Worldwide Plaza
CH-4058, Basel 825 Eighth Avenue
Switzerland New York, New York 10019
41-61-696-1111 (212) 474-1000
- ---------------------------------------------------------------------
(Name, Address and Telephone Number of Persons Authorized
to Receive Notices and Communications)
December 20, 1996
----------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D,
and is filing this schedule because of Rule 13d-1(b)(3) or (4), check
the following box [ ].
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to the
liabilities of that section of the Act but shall be subject to all
other provisions of the Act (however, see the Notes).
(Continued on following page(s))
Page 1 of 78
<PAGE>
SCHEDULE 13D
CUSIP No. 170040109
- ---------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Novartis Biotech Partnership, Inc.
I.R.S. No.
- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- ---------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- ---------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ---------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY -------------------------------------------
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 85,352,824*
PERSON WITH -------------------------------------------
9 SOLE DISPOSITIVE POWER
-0-
-------------------------------------------
10 SHARED DISPOSITIVE POWER
85,352,824*
- ---------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
85,352,824*
- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- ---------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED
13 BY AMOUNT IN ROW (11)
46.9%*
- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------
*Assuming the exercise of an option to purchase such number of
shares of Common Stock as will result in the ownership of 49.9% of the
outstanding Common Stock, and subtracting shares of Common Stock
beneficially owned by Novartis Corp, Novartis Pharma or Novartis that
are not so owned by Novartis Biotech.
Page 2 of 78
<PAGE>
SCHEDULE 13D
CUSIP No. 170040109
- ---------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
- ---------------------------------------------------------------------
Novartis Corporation
I.R.S. No. 13-1834433
- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- ---------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- ---------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [X]
- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- ---------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY -------------------------------------------
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 85,360,280*
PERSON WITH -------------------------------------------
9 SOLE DISPOSITIVE POWER
-0-
-------------------------------------------
10 SHARED DISPOSITIVE POWER
85,360,280*
- ---------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
85,360,280*
- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- ---------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED
13 BY AMOUNT IN ROW (11)
46.9%*
- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- ---------------------------------------------------------------------
- --------
*Assuming the exercise of an option to purchase such number of
shares of Common Stock as will result in the ownership of 49.9% of the
outstanding Common Stock, and subtracting shares of Common Stock
beneficially owned by Novartis Pharma or Novartis but not by Novartis
Corp.
Page 3 of 78
<PAGE>
SCHEDULE 13D
CUSIP No. 170040109
- ---------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Novartis Pharma Inc.
- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- ---------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- ---------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Switzerland
- ---------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY -------------------------------------------
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 5,121,460
PERSON WITH -------------------------------------------
9 SOLE DISPOSITIVE POWER
-0-
-------------------------------------------
10 SHARED DISPOSITIVE POWER
5,121,460
- ---------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,121,460
- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- ---------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED
13 BY AMOUNT IN ROW (11)
3%
- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- ---------------------------------------------------------------------
Page 4 of 78
<PAGE>
SCHEDULE 13D
CUSIP No. 170040109
- ---------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Novartis Inc.
- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- ---------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- ---------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [X]
- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Switzerland
- ---------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 348,028
BENEFICIALLY -------------------------------------------
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 90,481,740*
PERSON WITH -------------------------------------------
9 SOLE DISPOSITIVE POWER
328,028
-------------------------------------------
10 SHARED DISPOSITIVE POWER
90,481,740*
- ---------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
90,829,768*
- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- ---------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED
13 BY AMOUNT IN ROW (11)
49.9%*
- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- ---------------------------------------------------------------------
- --------
*Assuming the exercise of an option to purchase such number of
shares of Common Stock as will result in the ownership of 49.9% of the
outstanding Common Stock.
Page 5 of 78
<PAGE>
Item 1. Security and Issuer.
This amendment to a statement on Schedule 13D relates to
Common Stock, par value $0.01 per share (the "Common Stock"), of
Chiron Corporation, a Delaware corporation (the "Company"). The
address of the principal executive offices of the Company is 4560
Horton Street, Emeryville, California 94608.
On November 28, 1994, Ciba-Geigy Limited ("Ciba"),
Ciba-Geigy Corporation ("CGC") and Ciba Biotech Partnership, Inc. (the
"Purchaser") filed a combined tender offer statement on Schedule 14D-1
(the "14D-1 Statement") and statement on Schedule 13D (the "13D
Statement and, together with the 14D-1 Statement, the "Statement") in
connection with an offer by Biotech to purchase shares of the
Company's Common Stock. On January 11, 1995, Ciba, CGC and Biotech
filed Amendment No. 7 to the Statement, which was the Final Amendment
to the 14D-1 Statement. Novartis Inc., the successor by consolidation
to Ciba-Geigy Limited ("Novartis"), Novartis Corporation, formerly
Ciba-Geigy Corporation ("Novartis Corp"), Novartis Biotech
Partnership, Inc., formerly Ciba Biotech Partnership, Inc.
("Biotech"), and Novartis Pharma Inc. ("Novartis Pharma" and, together
with Novartis, Novartis Corp and Biotech the "Reporting Persons")
hereby amend, restate and supplement the 13D Statement.
Item 2. Identity and Background.
(a), (b), (c) and (f) Novartis, a corporation organized
under the laws of Switzerland, is the publicly owned parent of a group
of affiliated companies and was formed in 1996 in connection with the
merger (the "Merger") of Ciba and Sandoz Ltd. ("Sandoz"). Shares of
Novartis are listed on various stock exchanges in Switzerland,
including principally the Zurich Stock Exchange. Novartis' principal
business is as a holding company which participates through various
investments in the fields of health care, agriculture, nutrition and
specialty chemicals and related fields. The principal office and
principal business of Novartis are located at Schwarzwaldallee 215,
CH-4002 Basel, Switzerland.
Novartis Pharma Inc., a corporation organized under the laws
of Switzerland, is primarily engaged in the manufacture and sale of a
broad range of products in the
Page 6 of 78
<PAGE>
healthcare field. The principal business and principal office of
Novartis Pharma are located at Lichtstrasse 35, CH-4002 Basel,
Switzerland. Novartis Pharma is a wholly owned subsidiary of Novartis.
Novartis Corp, a New York corporation, is the surviving
corporation in the merger of Sandoz Corporation with and into CGC.
Novartis Corp is a holding company which through its subsidiaries and
investments is engaged primarily in the development and manufacture of
agricultural chemicals, pharmaceuticals, nutrition and vision care
products in the United States. The principal office and principal
business of Novartis Corp is 520 White Plains Road, Tarrytown, New
York 10591. Novartis Corp is a wholly owned subsidiary of Novartis.
Biotech, a Delaware corporation, was organized to acquire
and hold shares of Common Stock of the Company and has not conducted
any unrelated activities since its organization. The principal office
and principal business of Biotech is located at 520 White Plains Road,
Tarrytown, New York 10591. Biotech is an indirect wholly owned
subsidiary of Novartis.
The name, business address, present principal occupation or
employment and citizenship of the executive officers and members of
the Board of Directors of each of the Reporting Persons is set forth
on Schedule I hereto and is incorporated herein by reference.
(d) and (e) Except as set forth on Schedule II hereto, which
is incorporated herein by reference, with respect to Novartis Corp,
none of the Reporting Persons nor, to the best knowledge of each of
them, any of the persons listed on Schedule I hereto with respect to
each such Reporting Person during the last five years, (i) has been
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a
result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or
finding any violation with respect to such laws.
Page 7 of 78
<PAGE>
Item 3. Source and Amount of Funds or other Consideration.
The information set forth in Section 10 ("Source and Amount
of Funds") of the Offer to Purchase included as Exhibit (a)(1) hereto
(the "Offer to Purchase") is incorporated herein by reference. The
shares of Common Stock held by Novartis Pharma were transferred to it
by Novartis following the Merger.
Item 4. Purpose of Transaction.
(a) - (g), (j) The information set forth in Section 12
("Purpose of the Offer; the Investment Agreement; Other Agreements")
of the Offer to Purchase is incorporated herein by reference and is
amended and supplemented by the description of the November 1996
Agreement set forth under such heading in Item 6 hereof.
(h), (i) The information set forth in Section 7 ("Effect of
the Offer on the Market for the Shares, Stock Quotation and Exchange
Act Registration") of the Offer to Purchase is incorporated herein by
reference.
Item 5. Interest in Securities of the Issuer.
(a) and (b) As of the date of this Amendment, Biotech is the
record holder of 73,842,852 shares of Common Stock. In addition,
pursuant to the Market Price Option Agreement, Biotech or its
designee, which must be Novartis or a subsidiary thereof, has the
right to purchase from the Company under certain circumstances such
number of shares of Common Stock as are necessary for the Reporting
Persons to maintain collectively up to a 49.9% ownership interest in
the Company, which as of November 1, 1996, constituted the right to
purchase an additional 11,509,972 shares, based on 170,513,610 shares
of Common Stock outstanding at November 1, 1996, as reported in the
Company's Quarterly Report on Form 10-Q for the period ended September
29, 1996. After adjusting the total number of shares beneficially
owned by Biotech to exclude 5,476,944 shares of Common Stock of which
Novartis is the beneficial owner but that are not beneficially owned
by Biotech, Biotech has a beneficial interest in 85,352,824 shares of
Common Stock, or 46.9% of the outstanding Common Stock. Biotech has
shared power to vote or to direct the vote and shared power to dispose
or to
Page 8 of 78
<PAGE>
direct the disposition with respect to all the shares of Common Stock
beneficially owned by it.
Novartis Pharma is the record holder of 5,121,460 shares of
Common Stock, or 3% of the outstanding Common Stock. Novartis Pharma
has shared power to vote or to direct the vote and shared power to
dispose or to direct the disposition with respect to all the shares of
Common Stock beneficially owned by it.
Novartis is the beneficial owner of the shares of Common
Stock beneficially owned by Novartis Pharma, Novartis Corp and
Biotech, as well as 348,028 shares that are issuable upon the exercise
of the Company's 7-1/4% Convertible Subordinated Debentures due 2015
(the "Convertible Debentures"). Novartis beneficially owns 90,829,768
shares of Common Stock, giving it a 49.9% beneficial interest in the
Company. Novartis has shared power to vote or to direct the vote and
shared power to dispose or to direct the disposition of the shares of
Common Stock beneficially owned by Biotech, Novartis Corp and Novartis
Pharma, and has sole power with respect to the shares of Common Stock
issuable upon the exercise of the Convertible Debentures.
To the best knowledge of each of the Reporting Persons, none
of the persons listed on Schedule I hereto with respect to such
Reporting Person is the beneficial owner of any shares of Common
Stock.
(c) Neither the Reporting Persons nor, to the best knowledge
of each of the Reporting Persons, any of the persons listed on
Schedule I with respect to each such Reporting Person has engaged in
any transaction in the Common Stock in the past 60 days.
Page 9 of 78
<PAGE>
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
respect to Securities of the Issuer.
Except as set forth in Section 12 ("Purpose of the Offer;
the Investment Agreement; Other Agreements") of the Offer to Purchase,
which is incorporated herein by reference, and as described below,
there are no contracts, arrangements, understandings or relationships
(legal or otherwise) among the Reporting Persons or, to the best
knowledge of each of the Reporting Persons, any of the persons listed
on Schedule I hereto with respect to each such Reporting Person, with
respect to any securities of the Company, including but not limited to
transfer or voting of any of the securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of
profits, divisions of profits or loss, or the giving or withholding of
proxies.
November 1996 Agreement
In connection with obtaining the approval of the United
States Federal Trade Commission (the "FTC") for the Merger, the
Company entered into an Agreement Containing Consent Order among Ciba,
CGC, Sandoz, Sandoz Corporation, Novartis, the Company and the FTC
(the "Consent Order"). On November 27, 1996, Novartis and the Company
entered into an agreement (the "November 1996 Agreement") providing
for, among other things, amendments to the Investment Agreement which
have the effect of, among other things, (i) extending the Guarantee
Termination Date to 2011, (ii) extending until 2008 the date until
which the Company may borrow or reborrow amounts guaranteed by
Novartis under the Credit Facility and (iii) permitting the Company at
its option to increase the amount guaranteed by Novartis under the
Credit Facility from time to time by up to $300,000,000, with a
corresponding reduction in the Subscription Amount (the dollar amount
of Common Stock that the Company can put to Biotech) under the
Subscription Agreement. Subject to certain exceptions, the November
1996 Agreement will terminate if the FTC does not give its final
approval to the Merger or if the Merger is not consummated by March
31, 1997. The Merger was consummated on December 20, 1996.
Page 10 of 78
<PAGE>
The November 1996 Agreement also provides for, among other
things, (i) the cross- licensing by the Company and Novartis of
certain patents for use in gene therapy, (ii) the payment by Novartis
to the Company of $60 million in respect of such cross-licensing,
(iii) other arrangements with respect to the licensing or sharing of
certain patents or technologies and (iv) an agreement by Novartis to
guarantee up to an additional $200 million of the Company's debt to
the extent incurred to repay certain existing indebtedness of the
Company, in each case as more fully set out in the November 1996
Agreement. The foregoing description of the November 1996 Agreement is
qualified in its entirety by reference to such Agreement, which is
filed as Exhibit (c)(11) hereto and incorporated by reference herein.
Stipulation of Settlement
On December 23, 1996, the United States District Court for
the Northern District of California, San Jose Division (the "Court"),
preliminarily approved a settlement of the matter of Dr. Michael
Perera, et al. v. Chiron Corporation, et al. Subject to final approval
by the Court and the entry of a final judgment, the settlement would
provide for cash payments by the Reporting Persons to be funded with
the proceeds of a sale by Biotech of 6,000,000 "European" put options.
Each put would entitle the holder to require Biotech to purchase, on
the third anniversary of the issuance of the puts, one share of the
Company's Common Stock for $30. Biotech will have the right, which it
expects to exercise in all cases, to settle its obligations, if any,
under any put by paying cash to the holder of the put equal to the
excess, if any, of $30 over the average of the closing market prices
for the Common Stock for the 20 trading days ending on the trading day
immediately preceding the maturity date of the put, rather than by
acquiring additional Common Stock of the Company. In the event an
organized sale (e.g., in an underwriting or other organized manner
such as block sales) of the puts cannot be consummated, no puts will
be sold.
A copy of the Stipulation of Settlement is filed as Exhibit
(c)(12) hereto.
Page 11 of 78
<PAGE>
Item 7. Material to be Filed as Exhibits.
(a)(1) Offer to Purchase.
(c)(1) Investment Agreement dated as of November 20, 1994, among
Ciba, CGC, the Purchaser and the Company.
(c)(2) Governance Agreement dated as of November 20, 1994, among Ciba,
CGC and the Company.
(c)(3) Market Price Option Agreement dated as of November 20, 1994,
among Ciba, CGC, the Purchaser and the Company.
(c)(4) Subscription Agreement dated as of November 20, among Ciba,
CGC, the Purchaser and the Company.
(c)(5) Cooperation and Collaboration Agreement dated as of November 20,
1994, between Ciba and the Company.
(c)(6) Registration Rights Agreement dated as of November 20, 1994,
between the Purchaser and the Company.
(c)(7) Amendment dated as of January 3, 1995, by and among Ciba, CGC,
the Purchaser and the Company.
(c)(8) Supplemental Agreement dated as of January 3, 1995, by and among
Ciba, CGC, the Purchaser and the Company.
(c)(9) Supplemental Benefits Agreement dated as of January 3, 1995,
by and among Ciba, CGC, the Purchaser and the Company.
(c)(10) Amendment with Respect to Employee Stock Option Arrangements,
dated as of January 3, 1995, by and among Ciba, CGC, the
Purchaser and the Company.
(c)(11) Agreement dated November 27, 1996, between Ciba and the Company.
(c)(12) Stipulation of Settlement dated October 9, 1996 (without
exhibits).
Page 12 of 78
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is
true, complete and correct.
Dated: January 17, 1997
NOVARTIS BIOTECH PARTNERSHIP,
INC.,
by
/s/ Douglas G. Watson
------------------------------
Name: Douglas G. Watson
Title: President
NOVARTIS INC.,
by
/s/ Urs Barlocher
-----------------------------
Name: Urs Barlocher
Title: General Counsel
by
/s/ Martin Henrich
-----------------------------
Name: Martin Henrich
Title: General Counsel
NOVARTIS CORPORATION,
by
/s/ Douglas G. Watson
------------------------------
Name: Douglas G. Watson
Title: President
Page 13 of 78
<PAGE>
NOVARTIS PHARMA INC.,
by
/s/ Urs Barlocher
------------------------------
Name: Urs Barlocher
Title: Secretary to the
Board
by
/s/ Herbert Gut
------------------------------
Name: Herbert Gut
Title: General Counsel
Page 14 of 78
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Name Page No.
- ------- ------------ --------
(a)(1) Offer to Purchase............................. *
(c)(1) Investment Agreement dated as of November 20,
1994, among Ciba, CGC, the Purchaser and the
Company...................................... *
(c)(2) Governance Agreement dated as of November 20,
1994, among Ciba, CGC and the Company........ *
(c)(3) Market Price Option Agreement dated as of
November 20, 1994, among Ciba, CGC, the
Purchaser and the Company................... *
(c)(4) Subscription Agreement dated as of November 20,
among Ciba, the Purchaser, CGC and the
Company...................................... *
(c)(5) Cooperation and Collaboration Agreement dated as
of November 20, 1994, between Ciba and the
Company....................................... *
(c)(6) Registration Rights Agreement dated as of
November 20, 1994, between the Purchaser and
the Company................................... *
(c)(7) Amendment dated as of January 3, 1995, by and
among Ciba, CGC, the Purchaser and the
Company....................................... *
(c)(8) Supplemental Agreement dated as of January 3, 1995,
by and among Ciba, CGC, the Purchaser and the
Company...................................... *
(c)(9) Supplemental Benefits Agreement dated as of
January 3, 1995, by and among Ciba, CGC, the
Purchaser and the Company.................... *
(c)(10) Amendment with Respect to Employee Stock Option
Arrangements, dated as of January 3, 1995, by
and among Ciba, CGC, the Purchaser and the
Company...................................... *
- --------------------
*Previously Filed
Pge 15 of 78
<PAGE>
Exhibit
Number Exhibit Name Page No.
- ------- ------------ --------
(c)(11) Agreement dated November 27, 1996,
between Ciba and the Company................. 26
(c)(12) Stipulation of Settlement dated October 9,
1996 (without exhibits)...................... 35
Page 16 of 78
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
NOVARTIS, NOVARTIS PHARMA, NOVARTIS CORP AND THE PURCHASER
Directors and Executive Officers of Novartis
The name, address, citizenship and present principal
occupation or employment of each of the directors and executive
officers of Novartis are set forth below. Unless otherwise indicated
below, each occupation set forth opposite an individual's name refers
to employment with Novartis.
Name, Function &
Business Address Citizenship Principal Occupation
- ---------------- ----------- ----------------------
Dr. Alex Krauer*, Switzerland Chairman of the Board
Chairman of the Board of Directors of Novartis
c/o Novartis Inc.
Schwarzwaldallee 215
CH-4058 Basel, Switzerland
Dr. Daniel Vasella*, Switzerland President and Chairman
Director, President and of the Executive
Chairman of Committee of Novartis
the Executive Committee
c/o Novartis Inc.
Schwarzwaldallee 215
CH-4058 Basel, Switzerland
Prof. Dr. Duilio Arigoni, Switzerland Chemistry Professor
Director at ETH Zurich
c/o Organic Chemistry Laboratory
Federal Institute of Technology
(ETH-Z)
Universitatstrasse 16
CH-8092 Zurich, Switzerland
Birgit Breuel, Director Germany Commissioner General
c/o Generalkommissariat EXPO 2000 mbH
EXPO 2000 mbH
Wallstrasse 15/15A
D-10179 Berlin, Germany
- -------------------
*Member of the Committee
of the Board
Page 17 of 78
<PAGE>
Name, Function &
Business Address Citizenship Principal Occupation
- ---------------- ----------- ----------------------
Prof. Dr. Peter Burckhardt, Switzerland Medical Professor
Director University of Lausanne
c/o Centre Hospitalier
Universitaire CHUV
Dept. de medecine interne
CH-1011 Lausanne, Switzerland
Dr.h.c. Kaspar V. Cassani, Switzerland Retired Vice-Chairman
Director, of IBM Corporation
Haldenstrasse 53
CH-8142 Uitikon, Switzerland
Dr. Hans-Ulrich Doerig, Switzerland CEO of Credit Suisse
Director of IBM Corporation
c/o Credit Suisse First Boston
Uetlibergstrasse 231
CH-8070 Zurich, Switzerland
Walter G. Frehner, Director Switzerland Retired Chairman of the
Inzlingerstrasse 276 Board of Swiss Bank
CH-4125 Riehen, Switzerland Corporation
Robert L. Genillard, Director Switzerland Vice Chairman of the
1 Quai du Mont-Blanc Supervisory Board of
CH-1211 Geneva, Switzerland TBG Holding N.V.
Alexandre Jetzer, Director Switzerland Head of International
c/o Novartis International Inc. Coordination, Human
Lichtstrasse 35 Resources, Legal, Tax of
CH-4002 Basel, Switzerland Novartis; Member of the
Executive Committee of
Novartis
Pierre Landolt, Director Switzerland Member of the Board of
c/o Fazenda Tamandua Banque Scandinave en
Santa Terezinha-Paraiba Suisse
PB 58772, Brazil
Heini Lippuner, Director Switzerland Retired; Former President
Wartenbergstrasse 33 and Chief Operating
CH-4104 Oberwil, Switzerland Officer of Ciba
Hans-Jorg Rudloff*, Vice Chairman Germany Chairman of MC Securities
of the Board Limited
c/o MC Securities Limited
Commercial Union Tower
One Undershaft
UK-London EC3A 8LH, England
Prof. Dr. William J. Rutter, USA Chairman and CEO of Chiron
Director Corporation
c/o Chiron Corporation
4560 Horton Street
Emeryville, CA 94608, USA
Page 18 of 78
<PAGE>
Name, Function &
Business Address Citizenship Principal Occupation
- ---------------- ----------- ----------------------
Prof. Dr. Helmut Sihler*,Vice- Austria Retired Chairman of the
Chairman of the Board Central Board of
c/o Henkel KGaA Management of Henkel KGaA
Henkelstrasse
D-40191 Dusseldorf, Germany
Dr. Jean Wander, Director Switzerland Tax and Legal Advisor in
Bollwerk 21 Berne
CH-3000 Berne, Switzerland
Dr. Raymond Breu Switzerland Chief Financial Officer of
c/o Novartis International Inc. Novartis; Member of
Lichtstrasse 35 the Executive Committee of
CH-4002 Basel, Switzerland Novartis
Dr. Hans Kindler Switzerland Head of Swiss Services
c/o Novartis Inc. Novartis; Member of the
Schwarzwaldallee 215 Executive Committee of
CH-4058 Basel, Switzerland Novartis
Pierre Douaze France Head of Novartis
c/o Novartis Pharma Inc. Healthcare; Member of the
Lichtstrasse 35 Executive Committee of
CH-4002 Basel, Switzerland Novartis
Dr. Wolfgang Samo Switzerland Head of Agribusiness
c/o Novartis International Inc. Novartis; Member of the
Schwarzwaldallee 215 Executive Committee of
CH-4058 Basel, Switzerland Novartis
David Pyott United Kingdom Head of Nutrition
c/o Novartis International Inc. Novartis; Member of the
Lichtstrasse 35 Executive Committee of
CH-4002 Basel, Switzerland Novartis
Dr. Hermann Vodicka Austria Head of Ciba Specialty
c/o Ciba Specialty Chemicals Inc. Chemicals; Member of
Klybeckstrasse 141 the Executive Committee of
CH-4002 Basel, Switzerland Novartis
Page 19 of 78
<PAGE>
Directors and Executive Officers of Novartis Pharma
The name, address, citizenship and present principal
occupation or employment of each of the directors and executive
officers of Novartis Pharma are set forth below. Unless otherwise
indicated below, each occupation set forth opposite an individual's
name refers to employment with Novartis Pharma.
Name, Function &
Business Address Citizenship Principal Occupation
- ---------------- ----------- ----------------------
Dr. Daniel Vasella, Chairman of Switzerland President and Head of the
the Board Executive Committee of
c/o Novartis Inc. Novartis
Schwarzwaldallee 215
CH-4058 Basel, Switzerland
Pierre Douaze, Director France Head of Novartis
c/o Novartis Pharma Inc. Healthcare; Member of the
Lichtstrasse 35 Executive Committee of
CH-4002 Basel, Switzerland Novartis Pharma
Dr. Raymond Breu, Director Switzerland Chief Financial Officer of
c/o Novartis International Inc. Novartis; Member of the
Lichtstrasse 35 Executive Committee of
CH-4002 Basel, Switzerland Novartis Pharma
Philippe Le Goff France Head of Strategic
c/o Novartis Pharma Inc. Planning and Business
Lichtstrasse 35 Development; Member of the
CH-4002 Basel, Switzerland ExecutiveCommittee of
Novartis Pharma
Christophe Jean Belgium Head of Controlling and
c/o Novartis Pharma Inc. Information System; Member
Lichtstrasse 35 of the Executive Committee
CH-4002 Basel, Switzerland of Novartis Pharma
Joerg Reinhardt Germany Head of Preclinical
c/o Novartis Pharma Inc. Development and Project
Lichtstrasse 35 Management; Member of the
CH-4002 Basel, Switzerland ExecutiveCommittee of
Novartis Pharma
Dr. William J. Jenkins Great Britain Head of Clinical
c/o Novartis Pharma Inc. Development and Regulatory
Lichtstrasse 35 Affairs; Member of the
CH-4002 Basel, Switzerland Executive Committee of
Novartis Pharma
Page 20 of 78
<PAGE>
Name, Function &
Business Address Citizenship Principal Occupation
- ---------------- ----------- ----------------------
Heinrich Scherfler Austria Head of Technical
c/o Novartis Pharma Inc. Operations; Member of the
Lichtstrasse 35 Executive Committee of
CH-4002 Basel, Switzerland Novartis Pharma
James Youmans USA Head of Marketing and
c/o Novartis Pharma Inc. Country Operations; Member
Lichtstrasse 35 of the Executive Committee
CH-4002 Basel, Switzerland of Novartis Pharma
Page 21 of 78
<PAGE>
Directors and Executive Officers of Novartis Corp
The name, address, citizenship and present principal
occupation or employment of each of the directors and executive
officers of Novartis Corp are set forth below. Unless otherwise
indicated below, each occupation set forth opposite an individual's
name refers to employment with Novartis Corp.
Name, Function &
Business Address Citizenship Principal Occupation
- ---------------- ----------- ----------------------
Richard Barth, Director USA Retired
c/o Novartis Corporation
520 White Plains Road
P.O. Box 2005
Tarrytown, NY 10591, USA
Pierre Douaze, Director France Head of Novartis
c/o Novartis Pharma Inc. Healthcare
Lichtstrasse 35
CH-4002 Basel, Switzerland
Fred J. Meyer, Director Switzerland Chief Financial Officer of
c/o Omnicom Group Inc. Omnicom Group, Inc.
437 Madison Avenue
New York, NY 10022, USA
Douglas G. Watson, Director and USA Vice Chairman,
Vice Chairman of the Board; President and Chief
President and Chief Executive Executive Officer of
Officer Novartis Corporation
c/o Novartis Corporation
520 White Plains Road
P.O. Box 2005
Tarrytown, NY 10591, USA
Dr. Raymond Breu, Director Switzerland Chief Financial Officer
c/o Novartis International Inc. and Member of the
Lichtstrasse 35 Executive Committee of
CH-4002 Basel, Switzerland Novartis Inc.
Charles O. O'Brien, Director USA Retired
c/o Novartis Corporation
520 White Plains Road
P.O. Box 2005
Tarrytown, NY 10591, USA
Page 22 of 78
<PAGE>
Name, Function & Present Principal
Business Address Citizenship Occupation
- ---------------- ----------- -----------------
Alfred Piergallini, Director USA Vice Chairman, President
c/o Gerber Products Company and Chief Executive
445 State Street Officer of Gerber Products
Fremont, MI 49413, USA Company; Vice Chairman and
President of Gerber
Holding Company
David Pyott, Director United Kingdom Head of Nutrition Division
c/o Novartis International Inc. and Member of the
Lichtstrasse 35 Executive Committee of
CH-4002 Basel, Switzerland Novartis Inc.
Dr. Wolfgang Samo, Director Switzerland President of Novartis Crop
c/o Novartis International Inc. Protection Inc.
Schwarzwaldallee 215
CH-4058 Basel, Switzerland
Prof. Dieter Seebach, Director Switzerland Professor at Swiss Federal
c/o Swiss Federal Institute of Institute of Technology,
Technology Laboratory 4, Organic Zurich, Switzerland
Chemicals
ETH Center
CH-8092 Zurich, Switzerland
Daniel Vasella, Director and Switzerland President, Chairman of the
Chairman of the Board Executive Committee of
c/o Novartis Inc. Novartis Inc.
Schwarzwaldallee 215
CH-4058 Basel, Switzerland
Page 23 of 78
<PAGE>
Directors and Executive Officers of Biotech
The name, address and present principal occupation or
employment of each of the directors and executive officers of Biotech
are set forth below.
Name, Function & Present Principal
Business Address Citizenship Occupation
- ---------------- ----------- -----------------
Jeffrey Benjamin, Director, Vice USA Attorney of Novartis
President and Secretary Corporation
c/o Novartis Corporation
520 White Plains Road
P.O. Box 2005
Tarrytown, NY 10591, USA
Kenneth R. Klauser, Sr., Director USA Formerly Vice President,
and Vice President Finance and Information
c/o Novartis Corporation Services, and Controller
520 White Plains Road of CGC
P.O. Box 2005
Tarrytown, NY 10591, USA
Douglas G. Watson, Director and USA Vice Chairman of the Board
President and President of Novartis
c/o Novartis Corporation Corporation
520 White Plains Road
P.O. Box 2005
Tarrytown, NY 10591, USA
Page 24 of 78
<PAGE>
SCHEDULE II
On February 28, 1992, Ciba-Geigy Corporation ("Ciba-Geigy")
and two employees from its Toms River plant pleaded guilty in Superior
Court, Law Division, Mercer County, New Jersey to one count of
unintentional illegal disposal of pollutants in a double-lined
landfill. Judgment of conviction was entered on March 23, 1992. As
part of the settlement agreement, Ciba-Geigy paid a criminal fine of
$3.5 million, civil penalties of $5.5 million and administrative costs
of $2.35 million. At the same time, it made a contribution to the
State of New Jersey of $2.5 million for environmental purposes.
On August 14, 1992, Ciba-Geigy pleaded no contest in
Louisiana State Court, 18th Judicial District, to fifteen misdemeanor
counts arising from falsification of certain back-up quality control
data relating to water discharge permits at its St. Gabriel plant and
paid a $250,000 fine. At the same time, it made two contributions of
$50,000 each to the Sheriff's offices of Iberville Parish and West
Baton Rouge Parish.
In 1992, Ciba-Geigy pleaded guilty to an Environmental
Control Complaint and Summons resulting from an odor emission at its
Newport, Delaware plant site. The matter was under the jurisdiction of
the Delaware Justice of the Peace Court, Newport, Delaware. A fine of
$598.50 was paid.
Page 25 of 78
<PAGE>
EXHIBIT (c)(11)
Page 26 of 78
<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
Page 27 of 78
<PAGE>
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
Page 28 of 78
<PAGE>
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
Page 29 of 78
<PAGE>
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 Ciba agrees to use its reasonable efforts to assist
Separation Chiron in obtaining a license on commercially
and Isola- reasonable terms from Systemix relating to cell
tion Tech- separation and isolation and other technology, all
logy 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
Page 30 of 78
<PAGE>
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 Ciba and Chiron agree to extend the deadline for
Facility 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,
Page 31 of 78
<PAGE>
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-GTI 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.
Page 32 of 78
<PAGE>
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.
Page 33 of 78
<PAGE>
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/ Dr. Alex Krauer
--------------------------------
Name: Dr. Alex Krauer
Title: Chairman and CEO
By /s/ Herbert Gut
--------------------------------
Name: Herbert Gut
Title: Senior Division Chairman
Page 34 of 78
<PAGE>
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
KEITH F. PARK
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058
- and -
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
JOHN E. GRASBERGER (89774)
JOHN K. GRANT (169813)
222 Kearny Street, 10th Floor
San Francisco, CA 94108
Telephone: 415/288-4545
WEISS & YOURMAN
KEVIN J. YOURMAN (147159)
JORDAN L. LURIE (130013)
10940 Wilshire Blvd.
24th Floor
Los Angeles, CA 90024
Telephone: 310/208-2800
STULL, STULL & BRODY
JULES BRODY FINKELSTEIN & ASSOCIATES
MARK LEVINE HOWARD D. FINKELSTEIN (102964)
6 East 45th Street, 4th Floor 501 West Broadway, Suite 1250
New York, NY 10017 San Diego, CA 92101
Telephone: 212/687-7230 Telephone: 619/238-1333
Attorneys for Plaintiffs
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION
DR. MICHAEL PERERA, et al., On ) No. C-95-20725-EAI
Behalf of Themselves and All Others )
Similarly Situated, ) CLASS ACTION
)
Plaintiffs, )
)
vs. )
)
CHIRON CORPORATION, et al., )
)
Defendants. )
- ------------------------------------)
STIPULATION OF SETTLEMENT
Page 36 of 78
<PAGE>
This Stipulation of Settlement (the "Stipulation"), dated as of
October 9, 1996, is made and entered into by and among the following
parties (as defined further in Section IV hereof) to the above-entitled
Litigation (as hereinafter defined): (i) The Representative Plaintiffs on
behalf of themselves and each of the Settlement Class Members, by and
through their counsel of record in the Litigation; and (ii) Ciba-Geigy
Limited, Ciba-Geigy Corporation, and Ciba Biotech Partnership, Inc.,
through their counsel of record in the Litigation (collectively the
"Settling Parties"). The Stipulation is intended by the Settling Parties to
fully, finally and forever resolve, discharge and settle the Released
Claims (as defined herein), upon and subject to the terms and conditions
hereof.
I. BACKGROUND OF THE LITIGATION
On August 25, 1994, the board of directors of Chiron Corporation
("Chiron") adopted a shareholder Rights Agreement, declaring a dividend of
rights to Chiron stockholders as of a September 6, 1994 record date (the
"Shareholder Rights Plan").
On November 21, 1994, Chiron announced that it had entered into a
series of agreements with Ciba-Geigy Ltd. ("Ciba") pursuant to which Ciba
would increase its ownership of Chiron's outstanding common stock to
approximately 49.9% by way of (a) a tender offer directly to Chiron's
stockholders (the "Ciba Tender Offer"), commencing November 28, 1994,
through which Ciba would purchase 11.86 million shares of Chiron stock for
$117 per share in cash, and (b) the issuance of 6.6 million new Chiron
shares to Ciba in exchange for Chiron's acquisition of both Ciba's
worldwide Ciba
Page 37 of 78
<PAGE>
Corning Diagnostics business and Ciba's 50% interest in the Biocine Company
and Biocine SpA, which were previously joint vaccine ventures between Ciba
and Chiron (all such transactions and all other transactions contemplated
by such series of agreements being called collectively, the "Ciba
Transaction").
At midnight on January 3, 1995, the Ciba Tender Offer closed and Ciba
subsequently made payments to Chiron's stockholders for the 11.86 million
shares tendered and accepted for payment in accordance with the terms of
the Ciba Transaction. On January 4, 1995, Chiron acquired from Ciba the
Ciba Corning Diagnostic business and the 50% interest in the Biocine
ventures that it did not already own in return for the issuance to Ciba of
6.6 million Chiron shares, again in accordance with the terms of the Ciba
Transaction. In addition, on January 4, 1995, as contemplated by the
agreements between Ciba and Chiron relating to the Ciba Transaction, the
size of the Chiron Board of Directors was increased from eight to eleven
directors and three individuals nominated by Ciba were elected to the
Board.
On October 27, 1995, Representative Plaintiffs commenced this action
(the "Litigation"), asserting both state and federal claims against Chiron,
certain of its officers and directors and Ciba, Ciba's Chairman Alex
Krauer, Ciba-Geigy Corporation, and Ciba Biotech Partnership, Inc. with
respect to the Ciba Transaction, and seeking damages and injunctive relief
with respect to the Shareholder Rights Plan and with respect to payments to
be made to certain Chiron employees pursuant to the Ciba Transaction on
account of their Chiron stock options. The claims under Sections 10(b),
14(d) and 14(e) of the Securities Exchange Act of 1934 in
Page 38 of 78
<PAGE>
connection with the Ciba Transaction challenge, among other things, the
adequacy of Ciba's and Chiron's disclosures of the treatment of employee
stock options in the Ciba Transaction.
Representative Plaintiffs, the Class (as defined below) and the Chiron
Defendants have since settled with one another. That settlement was
approved by the Court on May 21, 1996.
Since that time, initially under the auspices of Magistrate Judge
Edward A. Infante, counsel for Representative Plaintiffs and counsel for
the Settling Defendants have negotiated with one another in an effort to
resolve the claims asserted in the Litigation. Counsel for Representative
Plaintiffs have also reviewed and analyzed all of the deposition and
document discovery they have obtained concerning the Ciba Transaction. They
have also conducted research relating to legal issues involved in the Ciba
Transaction. Taking into account their investigation and the terms of the
Settlement, Representative Plaintiffs and their counsel believe that this
settlement confers substantial benefits on members of the Class and that
the terms of the Settlement are fair, reasonable, adequate and in the best
interests of the Class.
II. SETTLING DEFENDANTS' STATEMENT AND DENIAL OF
WRONGDOING AND LIABILITY
Settling Defendants have asserted and continue to assert that all
claims and contentions raised in the Litigation are without merit and have
denied and continue to deny all charges of wrongdoing or liability with
respect to each and all of the claims and contentions that were alleged or
that could have been alleged by the Class in the Litigation, including all
contentions concerning Defendants' conduct, as well as the contentions that
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such conduct constitutes wrongdoing or gives rise to legal liability or has
caused damage to the Class. In addition, Settling Defendants repeatedly
have asserted and continue to assert many defenses to the Class claims and
contentions, and, notwithstanding this Stipulation, Settling Defendants
expressly assert their defenses have merit and that they have no liability
to the members of the Class. Neither this Stipulation nor any document
referred to herein nor any action taken to carry out this Stipulation is,
may be construed as, or may be used as an admission by or against Settling
Defendants of any fault, wrongdoing or liability whatsoever. There has been
no determination by any court, administrative agency or other tribunal as
to the factual allegations made against Settling Defendants. Neither this
Stipulation nor the settlement set forth herein, nor any act performed or
document executed pursuant to or in furtherance of the Stipulation or the
settlement: (i) is or shall be deemed to be or shall be used as an
admission of Settling Defendants, any of the Released Persons, or any other
Person of the validity of any Released Claims or any wrongdoing by or
liability of any of the Released Persons; (ii) is or shall be deemed to be
or shall be used as an admission of any fault or omission of Settling
Defendants or any of the Released Persons in any statement, release or
written document or financial report issued, filed or made; (iii) shall be
offered by any Settling Party against any of the Released Persons in any
civil, criminal or administrative action or proceeding in any court,
administrative agency or other tribunal other than such proceedings as may
be necessary to consummate or enforce this Stipulation, the settlement set
forth herein, the releases executed
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pursuant thereto, and/or the Judgment, except that this Stipulation and the
Judgment and the Exhibits hereto may be filed in the Litigation or in any
subsequent action brought against Settling Defendants, and/or any Released
Person in order to support a defense or counterclaim of Settling Defendants
and/or any Released Persons of res judicata, collateral estoppel, release,
good faith settlement, or any theory of claim or issue preclusion or
similar defense or counterclaim, including without limitation specific
enforcement of the settlement embodied in the Stipulation by way of
injunctive relief.
III. CLAIMS OF THE REPRESENTATIVE PLAINTIFFS AND BENEFITS
OF SETTLEMENT
The Representative Plaintiffs believe that the claims asserted in the
Litigation have merit and that the evidence developed to date supports the
claims asserted. However, counsel for the Representative Plaintiffs and the
Class recognize and acknowledge the expense and length of continued
proceedings necessary to prosecute the Litigation against Settling
Defendants through trial and post-trial appeals. Counsel for the
Representative Plaintiffs and the Class also have taken into account the
uncertain outcome and the risk of any litigation, especially in complex
actions such as this Litigation, as well as the difficulties and delays
inherent in such litigation. Counsel for the Representative Plaintiffs also
are mindful of the inherent problems of proof under and possible defenses
to the federal securities law violations. Counsel for the Representative
Plaintiffs believe that the settlement set forth in the Stipulation confers
substantial benefits upon the Settlement Class and each of the Settlement
Class Members. Based on their
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evaluation, counsel for the Representative Plaintiffs have determined that
the settlement set forth in the Stipulation is in the best interests of the
Representative Plaintiffs and the Settlement Class and each of the
Settlement Class Members.
IV. TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT
In consideration of the mutual promises and recitals contained herein,
and other good and valuable consideration, the sufficiency of which is
hereby acknowledged, and pursuant to Rule 23 of the Federal Rules of Civil
Procedure, IT IS HEREBY STIPULATED AND AGREED by and among the
Representative Plaintiffs, on behalf of themselves and the Settlement Class
Members, and Settling Defendants, by and through their respective counsel
of record, that, subject to the approval of the Court, the Litigation and
the Released Claims shall be finally and fully compromised, settled and
released, and the Litigation shall be dismissed with prejudice, as to all
Settling Parties, upon and subject to the terms and conditions of the
Stipulation, as follows:
1. Definitions
As used in the Stipulation, including the portions of the Stipulation
preceding this paragraph, the following terms have the meanings specified
below:
1.1 "Authorized Claimant" means any Settlement Class Member whose
claim for recovery has been allowed pursuant to the terms of the
Stipulation.
1.2 "Chiron stock" or "Chiron common stock" or "Chiron shares" refers
to the common stock, par value of $0.01 per share, of Chiron.
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1.3 "Claimant" means any Settlement Class Member who files a Proof of
Claim and Release in such form and manner, and within such time, as the
Court shall prescribe.
1.4 "Class" or "Settlement Class" means all persons who owned shares
of Chiron common stock beneficially or of record at any time on or after
November 21, 1994 through and including January 3, 1995. Excluded from the
Class are Settling Defendants, Former Defendants, members of the immediate
family of any Settling Defendant or Former Defendant, any entity in which
any Settling Defendant or Former Defendant has a controlling interest, any
person who on January 3, 1995 held an employee stock option to purchase
Chiron common stock and the legal representatives, heirs, successors, or
assigns of any such excluded person or entity. Also excluded from the
Settlement Class are those persons who timely and validly request exclusion
from the Class pursuant to the "Notice of Pendency of Class Action and
Hearing on Proposed Partial Settlement of Class Action" to be sent to the
Class in connection with this settlement. The Settling Defendants stipulate
to the certification of the Class solely for the purpose of this
settlement.
1.5 "Class Member," "Settlement Class Member," "Member of the Class,"
or "Member of the Settlement Class" means a person who falls within the
definition of the "Class" as set forth in Paragraph 1.4 above.
1.6 "Court" means the United States District Court for the Northern
District of California, San Jose Division.
1.7 "Settling Defendants" means Ciba-Geigy Limited, Ciba- Geigy
Corporation and Ciba Biotech Partnership, Inc..
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1.8 "Effective Date" means the first date by which all of the events
and conditions specified in Paragraph 9.1 of the Stipulation have been met
and have occurred.
1.9 "Escrow Agent" means the law firm of Milberg Weiss Bershad Hynes &
Lerach LLP or its successors.
1.10 "Escrow Account" means the segregated account set up and
controlled by the Escrow Agent for the purpose of maintaining the
Settlement Fund until it is distributed.
1.11 "Final" means: (i) the date of final affirmance on an appeal of
the Judgment, the expiration of the time for a petition for or a denial of
a writ of certiorari to review the Judgment and, if certiorari be granted,
the date of final affirmance of the Judgment following review pursuant to
that grant; or (ii) the date of final dismissal of any appeal from the
Judgment or the final dismissal of any proceeding on certiorari to review
the Judgment; or (iii) if no appeal is filed, the expiration date of the
time for the filing or noticing of any appeal from the Court's Judgment
approving the Stipulation substantially in the form of Exhibit "B" hereto;
i.e., thirty (30) days after entry of the Judgment. Any proceeding or
order, or any appeal or petition for a writ of certiorari pertaining solely
to any plan of allocation and/or application for attorneys' fees, costs or
expenses, shall not in any way delay or preclude the Judgment from becoming
final.
1.12 "Former Defendants" or "Chiron Defendants" means Chiron
Corporation, Edward E. Penhoet, William J. Rutter, William G. Green, Dennis
L. Winger, William J. Link, Jack W. Schuler, Henri Schramek, Donald A.
Glaser, Gilbert F. Amelio, and Lewis W. Coleman.
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1.13 "Judgment" means the judgment to be rendered by the
Court, in the form attached hereto as Exhibit B.
1.14 "Person" means an individual, corporation, partnership, limited
partnership, association, joint stock company, estate, legal
representative, trust, unincorporated association, government or any
political subdivision or agency thereof, and any business or legal entity
and their spouses, heirs, predecessors, successors, representatives, or
assignees.
1.15 "Plaintiffs' Settlement Counsel" means: Milberg Weiss Bershad
Hynes & Lerach LLP, Keith F. Park, 600 W. Broadway, Suite 1800, San Diego,
California, 92101-5050, Telephone 619/231-1058; Milberg Weiss Bershad Hynes
& Lerach LLP, John Grasberger, John Grant, 222 Kearny Street, 10th Floor,
San Francisco, California, 94108, Telephone 415/288-4545
1.16 "Plan of Allocation" means a plan or formula of allocation of the
Settlement Fund which shall separately be submitted by Plaintiffs'
Settlement Counsel to the Court, whereby the Settlement Fund shall be
distributed to Authorized Claimants after payment of expenses of notice and
administration of the settlement, Taxes and Tax Expenses and such
attorneys' fees, costs, expenses and interest as may be awarded by the
Court. Any Plan of Allocation is not part of the Stipulation.
1.17 "Related Parties" means each of a Person's past or present
directors, officers, employees, partners, principals, agents, underwriters,
issuers, insurers, co-insurers, reinsurers, controlling shareholders,
attorneys, accountants, auditors, banks or investment bankers, advisors,
personal or legal representatives, predecessors, successors, parents,
subsidiaries, divisions, joint
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ventures, assigns, spouses, heirs, associates, related or affiliated
entities, any entity in which a Person has a controlling interest, any
members of their immediate families, or any past or present officer,
director, employee, partner, principal or agent of each of the foregoing
entities and their respective successors, heirs, executors, spouses,
personal representatives, administrators and assigns.
1.18 "Released Claims" means all claims, rights, causes of action,
suits, matters and issues, known or unknown, that have been or could have
been asserted in this or any other court or forum by the Representative
Plaintiffs or by any member of the Class, as defined herein, whether
directly, representatively, derivatively, individually or in any other
capacity, against any of the Settling Defendants, their respective present
or former officers, directors, agents, employees, attorneys, stockholders,
advisors, investment bankers, commercial bankers, representatives,
trustees, parents, affiliates, subsidiaries, general and limited partners,
heirs, executors, administrators, successors and assigns, or against anyone
else in connection with, arising out of, or in any way related to any of
the acts, facts, transactions, occurrences, representations or omissions
set forth, alleged, embraced or otherwise referred to in the complaints in
the Litigation, or any other action asserting claims relating to the Ciba
Transaction or any of the transactions contemplated by the Stipulation,
including any claim for violation of federal, state or other law relating
in any way to the Ciba Transaction or any of the transactions contemplated
by the Stipulation, which said Representative Plaintiffs and Class members,
or any of them, had, now have, or may
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hereafter have as a member of the Class or as an individual, and whether
directly or representatively, except for claims relating to any party's
alleged failure to comply with the terms and conditions of this Settlement
Agreement.
1.19 "Released Persons" means Settling Defendants and their Related
Parties.
1.20 "Representative Plaintiffs" means Dr. Michael Perera, Marion
Lord, John Weld, Sr. and Romair Development, Inc.
1.21 "Settlement Class Period" means the period commencing on November
21, 1994 through and including January 3, 1995.
1.22 "Settlement Fund" means (i) the proceeds from the sale of six
million "European" puts (the "Settlement Puts"), each of which entitles the
holder of such put to sell at the put's maturity date one share of Chiron
common stock to Ciba Biotech Partnership, Inc. at a price of $30.00 per
share (or to receive equivalent cash value as described in Paragraph 3.1)
and (ii) any cash payment provided pursuant to Paragraph 3.3. The
Settlement Puts are further described in Paragraphs 3.1-3.6 hereof.
1.23 "Settling Parties" means, collectively, Settling Defendants and
the Representative Plaintiffs on behalf of themselves and the Members of
the Settlement Class.
1.24 "Unknown Claims" means any Released Claims which the
Representative Plaintiffs or any Settlement Class Member does not know or
suspect to exist in his, her or its favor at the time of the release of the
Released Persons which, if known by him, her or it, might have affected
his, her or its decision to settle with and release the Released Persons,
or might have affected his, her or its decision not to object to this
Settlement. With respect to any
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and all Released Claims, the Settling Parties stipulate and agree that,
upon the Effective Date, the Representative Plaintiffs and each of the
Settlement Class Members shall be deemed to have, and by operation of the
Judgment shall have, expressly waived and relinquished, to the fullest
extent permitted by law, the provisions, rights, and benefits of Section
1542 of the California Civil Code, which provides:
A general release does not extend to claims which the
creditor does not know or suspect to exist in his
favor at the time of executing the release, which if known
by him must have materially affected his settlement
with the debtor.
The Representative Plaintiffs and each of the Settlement Class Members,
upon the Effective Date, shall be deemed to have, and by operation of the
Judgment shall have, expressly waived and relinquished any and all
provisions, rights and benefits conferred by any law of any state or
territory of the United States, or principle of common law, which is
similar, comparable or equivalent to Section 1542 of the California Civil
Code. The Representative Plaintiffs and each of the Settlement Class
Members acknowledge that they may hereafter discover facts in addition to
or different from those which he, she or it now knows or believes to be
true with respect to the subject matter of the Released Claims, but the
Representative Plaintiffs and each Settlement Class Member, upon the
Effective Date, intend to and shall be deemed to have, and by operation of
the Judgment shall have, fully, finally, and forever settled and released
any and all Released Claims, known or unknown, suspected or unsuspected,
contingent or non-contingent, whether or not concealed or hidden, which now
exist, or heretofore have existed upon any theory of law or equity now
existing or coming
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into existence in the future, including, but not limited to, conduct which
is negligent, intentional, with or without malice, or a breach of any duty,
law or rule, without regard to the subsequent discovery or existence of
such different or additional facts. The Settling Parties acknowledge that
the foregoing waiver was separately bargained for and a key element of the
Settlement of which this Release is a part.
2. Consent To Jurisdiction Of Magistrate Judge
2.1 The parties hereto consent, pursuant to 28 U.S.C. Section 636(c)
and Rule 73 of the Federal Rules of Civil Procedure, to the exercise by
United States Magistrate Judge Edward A. Infante (the "Court") of
jurisdiction over this case and to the conduct by said Court of all
proceedings and the entry by said Court of such orders and judgments as are
necessary or required to approve, implement and act upon the Stipulation,
the Plan of Allocation, the Fee and Expense Application and all related
matters.
3. The Settlement
3.1 Subject to the last sentence of Paragraph 3.3, as promptly as
practicable after entry of the Judgment contemplated by Paragraph 9.1(d)
Ciba Biotech Partnership, Inc. will provide six million "European" puts for
sale to fund the Settlement Fund. Ciba and/or Ciba Geigy Corporation will
guarantee Ciba Biotech Partnership Inc.'s performance of its obligations
under the puts and said guarantee shall survive any bankruptcy, insolvency,
receivership or similar proceeding with respect to Ciba Biotech
Partnership, Inc. Each put entitles the holder to sell to Ciba Biotech
Partnership, Inc. one share of Chiron stock on the date (the "maturity
date") that is three years from the date of issue of the puts at a strike
price of
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$30.00 provided that Ciba Biotech Partnership, Inc. may, at its election,
satisfy its obligation under any put by paying to the putholder cash equal
to the excess, if any, of $30.00 over the average of the closing market
prices for Chiron stock for the twenty trading days ending the trading day
before the maturity date of the puts. The Settlement Puts will have other
customary or appropriate terms, including customary anti-dilution
adjustments to the initial strike price.
3.2 It is contemplated that the Settlement Puts will be sold in an
underwriting or other organized manner such as block sales (an "organized
resale"). Any organized resale must, in the opinion of outside counsel to
Ciba, comply with applicable law. The settlement is not contingent on the
feasibility or success of any organized resale. None of the Settling
Defendants will pay any of the costs of any organized resale, including
underwriters' or brokers' compensation or commissions, or will take any
responsibility for or be required to cooperate in any organized resale
(except, subject to compliance with existing confidentiality obligations
owed to Chiron, to cooperate in furnishing information necessary for any
reasonably necessary due diligence) but if the Settling Defendants believe
the aggregate gross proceeds of an organized resale would be less than $35
million, they may specify the manner by which the organized resale will be
accomplished and name any firm engaged to assist in the organized resale.
Without limiting the foregoing, the Settling Parties acknowledge that none
of the Settling Defendants, any of their successors or any of their
respective affiliates shall be required, in connection with, or in order to
permit any organized resale, to register any securities
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pursuant to the Securities Act of 1933, to become a reporting company
pursuant to the Securities Exchange Act of 1934 or to publicly disclose any
information concerning Ciba, any of its successors or any of their
respective affiliates other than information currently provided by Ciba to
the Securities and Exchange Commission pursuant to Rule 12g3-2(b)(1) under
the Securities Exchange Act of 1934.
3.3 If the aggregate gross proceeds of the organized resale are less
than $35 million, Ciba Biotech Partnership Inc. will provide additional
funds as follows: (a) to the extent that the aggregate gross sales proceeds
are between $30 and $35 million, Ciba Biotech will make up 100% of the
shortfall below $35 million; and (b) to the extent that the aggregate gross
sales proceeds are less than $30 million, Ciba Biotech will make a cash
payment in an amount equal to $5 million plus one-half of the shortfall
below $30 million. In the event an organized resale cannot be consummated,
Ciba Biotech's obligation will be to make a cash payment to the Settlement
Fund of $20 million (which will satisfy the obligations of all Settling
Defendants with respect to funding the Settlement Fund), and no Settlement
Puts will be issued.
3.4 The net cash proceeds of any organized resale, consistent with the
terms of Paragraphs 3.1, 3.2 and 3.3 above, shall be delivered to the
Escrow Agent within ten (10) days of the closing of the resale for
distribution to Class Members.
3.5 Any issuance of Settlement Puts pursuant to Paragraphs 3.1 and 3.2
shall be exempt from registration under the Securities Act of 1933, as
amended. Ciba shall use reasonable efforts to list the puts on a European
Exchange for trading if such listing would materially
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enhance the value of the puts in the organized resale. This obligation
shall not require Ciba or any of its successors or any of their respective
affiliates to become a reporting company under the Securities and Exchange
Act of 1934 or to publicly disclose any information concerning Ciba or any
of its successors or any of their respective affiliates other than
information provided by Ciba to the Securities and Exchange Commission
pursuant to Rule 12g3- 2(b)(1) under the Securities Exchange Act of 1934 or
to expend any funds other than payment of incidental expenses.
3.6 Unless the final sentence of Paragraph 3.3 shall be applicable,
the obligations of the Settling Parties to effectuate the Settlement set
forth in the Stipulation are conditioned upon delivery not later than five
(5) days before the scheduled date of the hearing for final approval of
this Stipulation, to Ciba and Plaintiffs' Settlement Counsel, of a written
opinion of outside counsel to Ciba substantially to the effect that: (1)
the issuance of the Settlement Puts and the organized resale will qualify
for an exemption from the registration requirements of Section 5 of the
Securities Act of 1933 and the "blue sky" requirements of all states; and
(2) the Settlement Puts when issued in accordance with the terms of this
Stipulation will constitute a legal, valid and binding obligation of Ciba
Biotech Partnership Inc., enforceable against Ciba Biotech Partnership
Inc., in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other
similar laws relating to or affecting creditors' rights generally from time
to time in effect and to general principles of equity (including, without
limitation, concepts of materiality, reasonableness, good
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faith and fair dealing), regardless of whether considered in a proceeding
in equity or at law.
3.7 Each Settling Defendant will warrant as to itself that, as to any
contribution to the Settlement Fund made by or on behalf of such Settling
Defendant, at the time of such contribution, it was not insolvent, nor will
the contribution render it insolvent within the meaning of and/or for the
purposes of United States Bankruptcy Code, including Sections 101 and/or
547 thereof. This warranty is made by each such Settling Defendant and not
by its counsel.
3.8 If a case is commenced in respect to any Settling Defendant under
Title 11 of the United States Code (Bankruptcy), or a trustee, receiver or
conservator is appointed under any similar law, and in the event of the
entry of a final order of a court of competent jurisdiction determining the
transfer of the Settlement Fund by or on behalf of such Settling Defendant
to be a voidable transfer, fraudulent conveyance or similar transaction,
then the releases given and Judgment entered in favor of such Settling
Defendant pursuant to this Stipulation shall be null and void, if and when
the Settlement Fund is returned to that Defendant.
3.9 The Escrow Agent shall invest the Settlement Fund in instruments
backed by the full faith and credit of the United States Government or
fully insured by the United States Government or an agency thereof and
shall reinvest the proceeds of these instruments as they mature in similar
instruments at their then current market rates.
3.10 The Escrow Agent shall not disburse the Settlement Fund except as
provided in the Stipulation, or with the written
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agreement of counsel for Settling Defendants and Plaintiffs' Settlement
Counsel or pursuant to an order of the Court.
3.11 Subject to further order and/or directions as may be made by the
Court, the Escrow Agent is authorized to execute such transactions on
behalf of the Settlement Class Members as are consistent with the terms of
the Stipulation.
3.12 All funds held by the Escrow Agent shall be deemed and considered
to be in custodia legis of the Court, and shall remain subject to the
jurisdiction of the Court, until such time as such funds shall be
distributed pursuant to the Stipulation and/or further order(s) of the
Court.
3.13 (a) Settling Defendants and the Escrow Agent agree to treat the
Settlement Fund as being at all times a "qualified settlement fund" within
the meaning of Treas. Reg. Section 1.468B- 1. In addition, the Escrow Agent
and, as required and reasonably requested by the Escrow Agent, Settling
Defendants shall jointly and timely make such elections as necessary or
advisable to carry out the provisions of this Paragraph 3.13, including the
"relation-back election" (as defined in Treas. Reg. Section 1.468B-1(j)(2))
back to the earliest permitted date. Such elections shall be made in
compliance with the procedures and requirements contained in such
regulations. It shall be the responsibility of the Escrow Agent to timely
and properly prepare, and deliver the necessary documentation for signature
by all necessary parties, and thereafter to cause the appropriate filing to
occur.
(b) For the purpose of Section 468B of the Internal Revenue Code
of 1986, as amended, and the regulations promulgated thereunder, the
"administrator" shall be the Escrow Agent. The
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Escrow Agent shall timely and properly file all informational and other tax
returns necessary or advisable with respect to the Settlement Fund
(including without limitation the returns described in Treas. Reg. Sections
1.468B-2(k) and 1.468B-2(l)). Such returns (as well as the election
described in Paragraph 3.13(a)) shall be consistent with this Paragraph
3.13 and in all events shall reflect that all taxes (including any interest
or penalties) imposed on the income, assets or activities of the Settlement
Fund shall be paid out of the Settlement Fund as provided in Paragraph
3.13(c) hereof.
(c) All (i) taxes (including any interest or penalties) arising
with respect to the income, assets or activities of the Settlement Fund,
including, without limitation, all taxes described in Treas. Reg. Section
1.468B-2, and including any taxes or tax detriments that may be imposed
upon Settling Defendants with respect to any income, assets or activites of
the Settlement Fund whether or not the Settlement Fund qualifies as a
"qualified settlement fund" for Federal or state income tax purposes)
("Taxes") and (ii) expenses and costs incurred in connection with the
operation and implementation of this Paragraph 3.13 (including, without
limitation, expenses of tax attorneys and/or accountants and mailing and
distribution costs and expenses relating to filing (or failing to file) the
returns described in this Paragraph 3.13) ("Tax Expenses"), shall be paid
out of the Settlement Fund; in all events Settling Defendants shall have no
liability or responsibility for the Taxes or the Tax Expenses. The Escrow
Agent shall indemnify and hold Settling Defendants harmless for Taxes and
Tax Expenses (including, without limitation, taxes payable by reason of any
such indemnification). Further, Taxes and Tax Expenses shall be treated
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as, and considered to be, a cost of administration of the Settlement and
shall be timely paid by the Escrow Agent out of the Settlement Fund without
prior order from the Court and the Escrow Agent shall be obligated
(notwithstanding anything herein to the contrary) to withhold from
distribution to Settlement Class Members any funds necessary to pay such
amounts including the establishment of adequate reserves for any Taxes and
Tax Expenses (as well as any amounts that may be required to be withheld
under Treas. Reg. Section 1.468B-2(1)(2)); Settling Defendants are not
responsible and shall have no liability therefor. The Settling Parties
agree to cooperate with the Escrow Agent, each other, and their tax
attorneys and accountants to the extent reasonably necessary to carry out
the provisions of this Paragraph 3.13.
(d) For the purpose of this Paragraph 3.13, references to the
Settlement Fund shall include both the Settlement Fund and the Class Notice
and Administration Fund and shall also include any earnings thereon.
4. Class Notice And Administration Fund
4.1 The Escrow Agent shall establish a "Class Notice and
Administration Fund," and Settling Defendants shall deposit $100,000 in it
on or before December 31, 1996 as an advance against the amount of the
Settlement Fund. The Settling Defendants shall have no obligation hereunder
to contribute any amount in addition to this $100,000 to the Class Notice
and Administration Fund. The Class Notice and Administration Fund may be
replenished from the Settlement Fund prior to the Effective Date in the
event the $100,000 amount is exhausted. The Class Notice and Administration
Fund may be used by Plaintiffs' Settlement Counsel to pay costs and
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expenses reasonably and actually incurred in connection with providing
notice to the Class, locating Class members, soliciting Class claims,
assisting with the filing of claims, administering and distributing the
Settlement Fund to the Members of the Settlement Class, processing Proofs
of Claim and Release and paying escrow fees and costs, if any. The Class
Notice and Administration Fund may also be invested and earn interest as
provided for in Paragraph 3.9 of this Stipulation.
5. Notice Order And Settlement Hearing
5.1 Promptly after execution of the Stipulation, the Settling Parties
shall submit the Stipulation together with its Exhibits to the Court and
shall apply for entry of an order (the "Notice Order"), substantially in
the form of Exhibit A hereto. The Notice Order shall specifically include
provisions that, among other things, will:
(a) Certify the Class for Settlement purposes only;
(b) Preliminarily approve the Stipulation and the Settlement set
forth herein as being fair, just, reasonable and adequate to the Settlement
Class for purposes of Rule 23 of the Federal Rules of Civil Procedure;
(c) Approve the form of Notice of Settlement of Class Action (the
"Notice") (substantially in the form of Exhibit A-1 hereto) for mailing to
members of the Class;
(d) Approve the form of Proof of Claim and Release ("Proof of
Claim and Release") (substantially in the form of Exhibit A-2 hereto) for
mailing to Members of the Class;
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(e) Approve a summary notice of the proposed Settlement for
publication (the "Summary Notice") (substantially in the form of Exhibit
A-3 hereto);
(f) Direct Plaintiffs' Settlement Counsel to mail or cause to be
mailed by first class mail the Notice and the Proof of Claim and Release to
those Persons in the Class who can be identified through reasonable effort,
on or before the date specified in the Notice Order;
(g) Direct that nominees who owned Chiron common stock during the
Settlement Class Period for the benefit of others send the Notice and Proof
of Claim and Release form to all such beneficial owners within ten (10)
days after receipt of the Notice or send a list of the names and addresses
of such beneficial owners to Plaintiffs' Settlement Counsel within ten (10)
days of receipt of the Notice;
(h) Direct Plaintiffs' Settlement Counsel to cause the Summary
Notice to be published once in the national edition of Investor's Business
Daily on or before the date specified in the Notice Order;
(i) Provide that Class Members who wish to participate in the
Settlement provided for in this Stipulation shall complete and file Proof
of Claim and Release forms pursuant to the instructions contained therein;
(j) Find that the notice given pursuant to subparagraphs (c)-(h)
above, constitutes the best notice practicable under the circumstances,
including individual notice to all Persons in the Class who can be
identified upon reasonable effort, and constitutes valid, due and
sufficient notice to all Persons in the Class,
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complying fully with the requirements of Rule 23 of the Federal Rules of
Civil Procedure, the Constitution of the United States, and any other
applicable law;
(k) Schedule a hearing or hearings (the "Settlement Hearing") to
be held by the Court to consider and determine whether the proposed
Settlement of the Litigation as contained in the Stipulation should be
approved as fair, reasonable and adequate and whether the Judgment
approving the Settlement should be entered;
(l) Provide that Class Members who so desire may exercise the
right to exclude themselves from the Settlement Class but only if they
comply with the requirements for so doing as set forth in the Notice;
(m) Provide that at or after the Settlement Hearing, the Court
shall determine whether the proposed Plan of Allocation should be approved;
(n) Provide that at or after the Settlement Hearing the Court
shall determine and enter an order regarding whether and in what amount
attorneys' fees and reimbursement of expenses should be awarded to
Plaintiffs' Settlement Counsel;
(o) Provide that pending final determination of whether the
Settlement contained in the Stipulation should be approved, neither the
Representative Plaintiffs, nor any Class Member, either directly,
representatively, or in any other capacity shall commence or prosecute any
action or proceeding in any court or tribunal asserting any of the Released
Claims against Settling Defendants;
(p) Provide that prior to the Settlement Hearing, Plaintiffs'
Settlement Counsel or their designee shall file with
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the Clerk of the Court a sworn statement describing the mailing and
publication of the notices as required herein;
(q) Provide that any objections to (i) the proposed Settlement
contained in the Stipulation; (ii) entry of the Judgment approving the
Settlement; (iii) the proposed Plan of Allocation or entry of the order
approving same; or (iv) Representative Plaintiffs' Counsel's Fee and
Expense Application, shall be heard and any papers submitted in support of
said objections shall be received and considered by the Court at the
Settlement Hearing only if, on or before the date specified in the Notice
Order, Persons making objections shall file and serve written notice of
their intention to appear (which shall set forth each objection and the
basis therefor) and copies of any papers in support of their position as
set forth in the Notice Order;
(r) Provide that the Settlement Hearing may, from time to time
and without further notice to the Settlement Class, be continued or
adjourned by Order of the Court; and
(s) Provide that, whether or not the Effective Date occurs, any
Class Member who does not properly and timely request exclusion from the
Class shall be bound by any and all judgments or settlements entered or
approved by the Court, whether favorable or unfavorable to the Class.
6. Releases
6.1 Upon the Effective Date, as defined in Paragraph 1.8, each of the
Settlement Class Members, whether or not such Settlement Class Member
executes and delivers the Proof of Claim and Release, shall be deemed to
have, and by operation of the Judgment shall have,
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fully, finally, and forever released, relinquished and discharged all
Released Claims against the Released Persons.
6.2 The Proof of Claim and Release to be executed by the Settlement
Class Members shall release all Released Claims against the Released
Persons and shall be substantially in the form contained in Exhibit "A-2"
hereto. All Settlement Class Members shall be bound by the release set
forth in this Paragraph 6 whether or not they submit a valid and timely
proof of claim form.
6.3 Upon the Effective Date, as defined in Paragraph 1.8, each of the
Released Persons shall be deemed to have, and by operation of the Judgment
shall have, fully, finally, and forever released, relinquished and
discharged each and all of the Settlement Class Members and counsel to the
Representative Plaintiffs from all claims (including "Unknown Claims"),
arising out of, relating to, or in connection with the institution,
prosecution or assertion of the Litigation or the Released Claims.
6.4 Upon the Effective Date, as defined in Paragraph 1.8, all claims
which have been, could have been, or could be asserted against the Released
Persons, or any of them, by any person or entity who is, could be, or could
have been named or added as a defendant in the Litigation (or in any other
action where claims are, could be or could have been asserted by, or on
behalf of the Class, including the Representative Plaintiffs), which are
based on, arise from, or are in any way related to the claims in the
Litigation, the Ciba Transaction or the transactions contemplated by the
Stipulation, whether arising under federal or state law, including, without
limitation, those based in tort, contract, or under any statute or body of
law, to recover damages or other relief arising out of the
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Released Claims, including, without limitation, claims for contribution,
indemnification or reimbursement, however denominated, will be
extinguished, discharged, satisfied, dismissed with prejudice, barred, and
otherwise unenforceable, and the future filing of any such claims will be
enjoined. Notwithstanding the above, this release is not intended to, and
does not, release or extinguish any claim, right or defense which any
Released Person may have against any other Released Person(s) with respect
to claims that may be asserted by persons who timely and validly opt out of
the Settlement Class in the Litigation ("Optout Claims"); the Released
Persons reserve their respective rights, claims and defenses against each
other with respect to any Optout Claims.
7. Administration And Distribution Of Settlement Fund
7.1 Plaintiffs' Settlement Counsel, or their authorized agents, acting
on behalf of the Settlement Class, and subject to such supervision and
direction of the Court as may be necessary or as circumstances may require,
shall administer and calculate the claims submitted by Settlement Class
Members and shall oversee distribution of the Net Settlement Fund (defined
below) to Authorized Claimants.
7.2 The Settlement Fund shall be applied as follows:
(a) To pay all the costs and expenses reasonably and actually
incurred in connection with providing notice to the Class, locating Class
members, soliciting Class claims, assisting with the filing of claims,
administering and distributing the Settlement Fund to the Settlement Class,
processing Proof of Claim and Release forms and paying escrow fees and
costs, if any;
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(b) To pay Representative Plaintiffs' Counsel's attorneys' fees,
expenses and costs with interest thereon (the "Fee and Expense Award"), if
and to the extent allowed by the Court;
(c) To pay or provide for the Taxes and Tax Expenses owed by the
Settlement Fund; and
(d) To distribute the balance of the Settlement Fund (the "Net
Settlement Fund") to Authorized Claimants as allowed by the Stipulation,
the Plan of Allocation or the Court.
7.3 Upon the Effective Date and thereafter, and in accordance with the
terms of the Stipulation, the Plan of Allocation, or such further approval
and further order(s) of the Court as may be necessary or as circumstances
may require, the Net Settlement Fund shall be distributed to Authorized
Claimants, subject to and in accordance with the following:
(a) Within ninety (90) days after the mailing of the Notice or
such other time as may be set by the Court, each Person claiming to be an
Authorized Claimant shall be required to submit to the claims administrator
a completed Proof of Claim and Release form substantially in the form of
Exhibit A-2 hereto and supported by such documents as specified in the
Proof of Claim and Release form. However, any Authorized Claimant who
submitted an approved Proof of Claim in connection with the previous
partial settlement shall not be required to submit another claim form.
(b) Except as otherwise ordered by the Court, all Settlement
Class Members who fail to timely submit a valid Proof of Claim and Release
form within such period, or such other period as may be ordered by the
Court, or otherwise allowed, shall be forever barred from receiving any
payments or other consideration pursuant
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to the Stipulation and the Settlement set forth herein, but will in all
other respects be subject to and bound by the provisions of the
Stipulation, the Settlement and releases contained herein, and the
Judgment.
(c) The Net Settlement Fund shall be distributed to the
Authorized Claimants substantially in accordance with a Plan of Allocation
to be described in the Notice and approved by the Court.
7.4 Settling Defendants shall have no responsibility for, interest in,
or liability whatsoever with respect to the investment or distribution of
the Settlement Fund, the value of the Settlement Fund except to the extent
specifically set forth in Paragraph 3.3, the Plan of Allocation, the
determination, administration, calculation or payment of claims, the
payment or withholding of taxes, or any losses incurred in connection
therewith.
7.5 No Person shall have any claim against Plaintiffs' Settlement
Counsel or any claims administrator or other agent designated by
Plaintiffs' Settlement Counsel based on the distributions made
substantially in accordance with the Stipulation and the Settlement
contained herein, the Plan of Allocation, or further orders of the Court.
7.6 It is understood and agreed by the Settling Parties that any
proposed Plan of Allocation of the Net Settlement Fund including, but not
limited to, any adjustments to an Authorized Claimant's claim set forth
therein, is not a part of the Stipulation and is to be considered by the
Court separately from the Court's consideration of the fairness,
reasonableness and adequacy of the Settlement set forth in the Stipulation,
and any order or proceedings relating to the Plan of Allocation shall not
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operate to terminate or cancel the Stipulation or affect the finality of
the Court's Judgment approving the Stipulation and the Settlement set forth
herein, or any other orders entered pursuant to the Stipulation.
8. Attorneys' Fees And Reimbursement Of Expenses
8.1 The Representative Plaintiffs or their counsel may submit an
application or applications (the "Fee and Expense Application") for
distributions to them from the Settlement Fund for: (i) an award of
attorneys' fees of up to one-third of the Settlement Fund; plus (ii)
reimbursement of actual expenses and costs, including the fees of any
experts or consultants incurred in connection with prosecuting the
Litigation, plus any interest on such attorneys' fees, costs and expenses
at the same rate and for the same periods as earned by the Settlement Fund
as may be awarded by the Court. Representative Plaintiffs' Counsel reserve
the right to make additional applications for fees and expenses incurred.
8.2 The attorneys' fees, expenses and costs, including the fees of
experts and consultants, as awarded by the Court, shall be paid to
Plaintiffs' Settlement Counsel from the Settlement Fund, as ordered, within
three (3) business days after the Court executes an order awarding such
fees and expenses or the funding of the Settlement Fund, or the issuance of
the Settlement Puts -- whichever is later. In the event that the Effective
Date does not occur, or the Judgment or the Order making the Fee and
Expense Award is reversed or modified on appeal, and in the event that the
Fee and Expense Award has been paid to any extent, then Representative
Plaintiffs' Counsel shall within five (5) business days from receiving
notice from Settling Defendants' counsel or
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from a court of appropriate jurisdiction, refund to the Settlement Fund the
fees, expenses, costs and interest previously paid to them from the
Settlement Fund plus interest thereon at the same rate as earned on the
Settlement Fund in an amount consistent with such reversal or modification.
8.3 The procedure for and the allowance or disallowance by the Court
of any applications by any of the counsel to the Representative Plaintiffs
for attorneys' fees, costs and expenses, including the fees of experts and
consultants, to be paid out of the Settlement Fund, are not part of the
Settlement set forth in the Stipulation, and are to be considered by the
Court separately from the Court's consideration of the fairness,
reasonableness and adequacy of the Settlement set forth in the Stipulation,
and any order or proceedings relating to the Fee and Expense Application,
or any appeal from any order relating thereto or reversal or modification
thereof, shall not operate to terminate or cancel the Stipulation, or
affect or delay the finality of the Judgment approving the Stipulation and
the Settlement of the Litigation set forth herein.
9. Conditions Of Settlement, Effect Of Disapproval,
Cancellation Or Termination
9.1 The Effective Date of the Stipulation shall be conditioned on the
occurrence of all of the following events:
(a) Settling Defendants have funded the Settlement Fund, as
required by Paragraph 3 above;
(b) The Court has entered the Notice Order, as required by
Paragraph 5, above;
(c) The period within which Class Members who so desire may
exercise the right to exclude themselves from the Settlement
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Class as set forth in the Notice has expired and the circumstances
concerning such requests for exclusion under which Settling Defendants
shall have the option to terminate this Stipulation and Settlement, as set
forth in the Supplemental Agreement described in Paragraph 9.4, have not
occurred, or, in the alternative, Settling Defendants do not exercise the
option to terminate the Stipulation and Settlement in accordance with the
terms of the Supplemental Agreement described in Paragraph 9.4;
(d) The Court has entered the Judgment in the form of Exhibit B,
in which the Court shall:
(1) approve the Settlement and the Stipulation as fair,
reasonable and adequate, for purposes of Rule 23 of the Federal Rules of
Civil Procedure, and direct the Settling Parties to consummate the
Settlement in accordance with the terms and conditions of the Stipulation;
(2) dismiss the Complaint with prejudice as to Settling
Defendants, including and against the Representative Plaintiffs and all
Settlement Class Members (except those who file valid and timely requests
for exclusion in accordance with the procedures set forth in the Notice and
are excluded from the Class pursuant to the Judgment);
(3) irrevocably and unconditionally release, settle and
extinguish all the Released Claims and bar and permanently enjoin all
Settlement Class Members (except those who file valid and timely requests
for exclusion in accordance with the procedures set forth in the Notice and
are excluded from the Class pursuant to the Judgment) from asserting any of
the Released Claims;
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(4) find that there is no just reason for delay of entry of
a final order as to the Settling Parties;
(5) expressly direct that the Clerk of the Court enter the
Judgment in accordance with the Federal Rules of Civil Procedure;
(6) provide that the Court shall retain jurisdiction with
respect to implementation and enforcement of the terms of the Stipulation,
including the Settlement Puts, and all parties hereto submit to the
jurisdiction of the Court for purposes of implementing and enforcing the
Settlement embodied in the Stipulation, including the Settlement Puts;
(7) provide such other and further provisions consistent
with the terms and provisions of the Stipulation to which the Settling
Parties agree;
(e) The Judgment has become Final, as defined in Paragraph 1.11,
above.
9.2 The Judgment shall provide that on the Effective Date, in
consideration of the substantial benefits the Representative Plaintiffs and
the Settlement Class have received or will receive from the Settlement, all
the Released Claims shall be fully, finally and forever settled, released
and discharged, whether or not a Settlement Class Member executes and
delivers a Proof of Claim and Release, it being the intent of the Settling
Parties, upon approval of the Stipulation, to fully and finally resolve all
Released Claims.
9.3 Upon the occurrence of all of the events referenced in Paragraph
9.1 above, any and all remaining interest or right of Settling
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Defendants in or to the Settlement Fund, if any, shall be absolutely and
forever extinguished.
9.4 If prior to the Settlement Hearing, Persons who otherwise would be
members of the Settlement Class have filed with the Court timely requests
for exclusion ("Requests for Exclusion") from the Settlement Class in
accordance with the provisions of the Notice Order and the Notice given
pursuant thereto, and such Persons in the aggregate sold a number of shares
through the Ciba Tender Offer greater than the number of such shares
specified in a separate Supplemental Agreement between the Settling
Parties, or such Persons in the aggregate owned a number of shares of
Chiron common stock at any time during the period from November 21, 1994
through and including January 3, 1995, other than shares sold by such
Persons through the Ciba Tender Offer, greater than the number of such
shares specified in such separate Supplemental Agreement. Settling
Defendants shall have, in their sole and absolute discretion, the option to
terminate this Stipulation in accordance with the procedures set forth in
the Supplemental Agreement. The Supplemental Agreement will not be filed
with the Court unless and until a dispute among the Settling Parties
concerning its interpretation or application arises and in that event it
shall be filed and maintained with the Court under seal. Copies of all
Requests for Exclusion received, together with copies of all written
revocations of Requests for Exclusion, shall be delivered to counsel for
Settling Defendants no later than fifteen court days before the Settlement
Hearing(s).
9.5 If all of the conditions specified in Paragraph 9.1 are not met,
then the Stipulation shall be cancelled and terminated unless
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Plaintiffs' Settlement Counsel and counsel for Settling Defendants mutually
agree in writing to proceed with the Stipulation.
9.6 Unless otherwise ordered by the Court, in the event the
Stipulation shall terminate, or be cancelled, or shall not become effective
for any reason, within five (5) business days after written notification of
such event is sent by counsel for Settling Defendants or Plaintiffs'
Settlement Counsel to the Escrow Agent, the Settlement Fund (including
accrued interest), plus any amount then remaining in the Notice and
Administration Fund (including accrued interest), less expenses and costs
which have either been disbursed pursuant to Paragraph 4.1 hereto, or are
determined by the Court to be chargeable to the Notice and Administration
Fund, shall be refunded by the Escrow Agent to Settling Defendants pursuant
to written instructions from counsel to Settling Defendants in proportion
to their respective contributions to the Settlement Fund. In such event,
Settling Defendants shall be entitled to any tax refund owing to the
Settlement Fund. At the request of Settling Defendants, the Escrow Agent or
its designee shall apply for any such refund and pay the proceeds, less the
cost of obtaining the tax refund to Settling Defendants.
9.7 In the event that the Stipulation is not approved by the Court or
the settlement set forth in the Stipulation is terminated or fails to
become effective in accordance with its terms, the Settling Parties shall
be restored to their respective positions in the Litigation as of October
9, 1996. In such event, the terms and provisions of the Stipulation, with
the exception of Paragraphs 3.13, 8.2, 9.5-9.8, 10.3, 10.10-10.13 herein,
shall have no further force and effect with respect to the Settling Parties
and shall not be used
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in this Litigation or in any other proceeding for any purpose, and any
Judgment or Order entered by the Court in accordance with the terms of the
Stipulation shall be treated as vacated, nunc pro tunc.
9.8 If the Effective Date does not occur, or if the Stipulation is
terminated pursuant to its terms, neither the Representative Plaintiffs nor
any of their counsel shall have any obligation to repay amounts actually
and properly disbursed from the Notice and Administration Fund, subject to
the limitations set forth in Paragraph 4.1 of this Stipulation. In
addition, any expenses already incurred and properly chargeable to the
Notice and Administration Fund pursuant to Paragraphs 4.1 hereof at the
time of such termination or cancellation but which have not been paid,
shall be paid by the Escrow Agent in accordance with the terms of the
Stipulation prior to the balance being refunded in accordance with
Paragraph 9.6 above.
10. Miscellaneous Provisions
10.1 The Settling Parties (a) acknowledge that it is their intent to
consummate this agreement; and (b) agree to cooperate to the extent
necessary to effectuate and implement all terms and conditions of the
Stipulation and to exercise their best efforts to accomplish the foregoing
terms and conditions of the Stipulation provided that nothing in this
Stipulation shall require any of the Settling Defendants, any of their
successors or any of their
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respective affiliates to register any securities pursuant to the Securities
Act of 1933, to become a reporting company pursuant to the Securities
Exchange Act of 1934 or to publicly disclose any information concerning
Ciba, any of its successors or any of their respective affiliates other
than information currently provided by Ciba to the Securities and Exchange
Commission pursuant to Rule 12g3-2(b)(1) under the Securities Exchange Act
of 1934. Any issue as to whether a Settling Party or their counsel has
acted or is acting reasonably in good faith with respect to any obligation
or commitment undertaken in this Stipulation shall be submitted to the
Honorable Edward A. Infante, United States Magistrate Judge for a
determination which shall be binding and non-appealable.
10.2 The parties intend this Settlement to be a final and complete
resolution of all disputes between them with respect to the Litigation and
the Released Claims. The Settlement compromises claims which are contested
and shall not be deemed an admission by any Settling Party as to the merits
of any claim. Accordingly, no press release or other public statements,
other than what is contained in this Stipulation and the Notice, shall be
made by any Settling Party except as agreed to by the Settling Parties.
Further, the Settling Parties agree that the amount of the Settlement Fund
and the other terms of the Settlement reflect a good faith Settlement of
the claims in the Litigation, which has been reached voluntarily after
consultation with competent legal counsel.
10.3 Neither this Stipulation nor the settlement set forth herein, nor
any act performed or document executed pursuant to or in furtherance of the
Stipulation or the settlement: (i) is or shall be deemed to be or
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shall be used as an admission of Settling Defendants, any of the Released
Persons, or any other Person of the validity of any Released Claims or any
wrongdoing by or liability of any of the Released Persons; (ii) is or shall
be deemed to be or shall be used as an admission of any fault or omission
of Settling Defendants or any of the Released Persons in any statement,
release or written document or financial report issued, filed or made;
(iii) shall be offered by a Settling Party or received in evidence against
any of the Released Persons in any civil, criminal or administrative action
or proceeding in any court, administrative agency or other tribunal other
than such proceedings as may be necessary to consummate or enforce this
Stipulation, the settlement set forth herein, the releases executed
pursuant thereto, and/or the Judgment, except that this Stipulation and the
Exhibits hereto may be filed in the Litigation or in any subsequent action
brought against Settling Defendants, their Insurers and/or any Released
Person in order to support a defense or counterclaim of Settling Defendants
and/or any Released Persons of res judicata, collateral estoppel, release,
good faith settlement, or any theory of claim or issue preclusion or
similar defense or counterclaim, including without limitation specific
enforcement of the settlement embodied in the Stipulation by way of
injunctive relief.
10.4 The Settling Parties and their counsel, and each of them, agree,
to the extent permitted by law, that all agreements made during the course
of the Litigation relating to the confidentiality of information shall
survive this Stipulation.
10.5 All of the Exhibits to the Stipulation are material and integral
parts hereof and are fully incorporated herein by this reference.
10.6 The Stipulation may be amended or modified only by a written
instrument signed by or on behalf of all Settling Parties or their
respective successors-in-interest.
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10.7 The Stipulation and the Exhibits attached hereto and the
Supplemental Agreement Regarding Requests for Exclusion constitute the
entire agreement among the parties hereto and no representations,
warranties or inducements have been made to any party concerning the
Stipulation or its Exhibits other than the representations, warranties and
covenants contained and memorialized in such documents.
10.8 Plaintiffs' Settlement Counsel, on behalf of the Class, are
expressly authorized by the Representative Plaintiffs to take all
appropriate action required or permitted to be taken by the Class pursuant
to the Stipulation to effectuate its terms and also are expressly
authorized to enter into any modifications or amendments to the Stipulation
on behalf of the Class which they deem appropriate.
10.9 Each counsel or other Person executing the Stipulation or any of
its Exhibits on behalf of any party hereto hereby warrants that such person
has the full authority to do so.
10.10 The Stipulation may be executed in one or more counterparts. All
executed counterparts and each of them shall be deemed to be one and the
same instrument. A complete set of original executed counterparts shall be
filed with the Court.
10.11 The Stipulation shall be binding upon, and inure to the benefit
of, the successors and assigns of the parties hereto.
10.12 The Court shall retain jurisdiction with respect to
implementation and enforcement of the terms of the Stipulation, and all
parties hereto submit to the jurisdiction of the Court for purposes of
implementing and enforcing the Settlement embodied in the Stipulation.
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10.13 The Settling Parties agree to comply with the terms of the
stipulated protective orders entered into between them in the Litigation.
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IN WITNESS WHEREOF, the parties hereto have caused the Stipulation to
be executed by their duly authorized attorneys and dated as of October 9,
1996.
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
KEITH F. PARK
/s/ KEITH F. PARK
----------------------------
KEITH F. PARK
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
JOHN E. GRASBERGER
JOHN K. GRANT
222 Kearny Street, 10th Floor
San Francisco, CA 94108
Telephone: 415/288-4545
WEISS & YOURMAN
KEVIN J. YOURMAN
JORDAN L. LURIE
10940 Wilshire Blvd.
Suite 2300
Los Angeles, CA 90024
Telephone: 310/208-2800
STULL, STULL & BRODY
JULES BRODY
MARK LEVIN
6 East 45th Street
4th Floor
New York, NY 10017
Telephone: 212/687-7230
FINKELSTEIN & ASSOCIATES
HOWARD D. FINKELSTEIN
501 West Broadway, Suite 1250
San Diego, CA 92101
Telephone: 619/238-1333
Attorneys for Plaintiffs
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CRAVATH, SWAINE & MOORE
ROBERT H. BARON
/s/ ROBERT H. BARON
---------------------------
ROBERT H. BARON
825 Eighth Avenue
Worldwide Plaza
New York, NY 10019
Telephone: 212/474-1000
BRONSON, BRONSON & McKINNON
CARLYN CLAUSE
LAWRENCE R. KATZIN
505 Montgomery Street
San Francisco, CA 94111-2514
Telephone: 415/986-4200
Attorneys for the Ciba
Defendants
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DECLARATION OF SERVICE BY MAIL
I, the undersigned, declare:
1. That declarant is and was, at all times herein mentioned, a citizen
of the United States and a resident of the County of San Diego, over the
age of 18 years, and not a party to or interested in the within action;
that declarant's business address is 600 West Broadway, Suite 1800, San
Diego, California 92101.
2. That on December 18, 1996, declarant served the STIPULATION OF
SETTLEMENT by depositing a true copy thereof in a United States mailbox at
San Diego, California in a sealed envelope with postage thereon fully
prepaid and addressed to the parties listed on the attached Service List.
3. That there is a regular communication by mail between the place of
mailing and the places so addressed.
I declare under penalty of perjury that the foregoing is true and
correct. Executed this 18th day of December, 1996, at San Diego,
California.
------------------------------
DANELLE L. McNERTNEY
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