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August 8, 2000
James R. Sulat
CFO
Chiron Corporation
4680 Horton Street
Emeryville, CA 94808-2916
Dear Sir:
Goldman, Sachs & Co. ("Goldman Sachs") is acting as financial advisor to
PathoGenesis Corporation (the "Company") in connection with exploring
strategic alternatives, including the potential sale of all or a portion of
the Company (the "Transaction"). In that connection, you have requested
certain information concerning the Company from officers, directors,
employees and/or agents of the Company, including Goldman Sachs. all such
information (whether written or oral) furnished to you and/or your
Representatives (as defined below), whether directly or indirectly, whether
prior to, on or following the date hereof, together with analyses,
compilations, forecasts, studies or other documents or records prepared by
you or your Representatives which contain, are based on or otherwise reflect
or are generated in whole or in part from such information, including that
stored on any computer, word processor or other similar device, are
collectively referred to herein as the "Evaluation Material."
As a condition of receiving such Evaluation Material, you hereby agree as
follows:
(1) You shall use the Evaluation Material solely for the purpose of
evaluating the Transaction and for no other purpose whatsoever. You
shall keep the Evaluation Material confidential, except that you may
disclose the Evaluation Material or portions thereof to those of your
directors, officers, employees, affiliates and representatives
(including, without limitation, financial advisors, attorneys and
accountants), or to such other persons as to whom disclosure is
expressly permitted pursuant to the specific prior written consent of
Goldman Sachs or the Company (collectively, the "Representatives"), and
(a) who need to know such information for the purpose of evaluating the
Transaction and (b) who are informed by you of the confidential nature
of the Evaluation Material. You shall be fully responsible for any
failure of any of your Representatives to comply with this Agreement as
if they were the Company. In the event that you or any of your
Representatives are requested or required in connection with any
judicial or administrative proceedings (by deposition, interrogatory,
request for documents, subpoena, civil investigative demand or similar
process) or in order, in the
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James R. Sulat
Chiron Corporation
August 8, 2000
Page 2
opinion of your outside counsel, to avoid violating the federal
securities laws, to disclose any of the Evaluation Material, you shall
provide the Company with prompt prior written notice of such
requirement and, to the extent legally permissible, your proposed
disclosure in response thereto, you shall furnish only that portion of
the Evaluation Material which you are advised by opinion of counsel is
legally required, and you shall exercise your reasonable best efforts
to obtain an appropriate protective order or other reliable assurance
that confidential treatment will be accorded such Evaluation Material
and shall cooperate with any Company efforts to achieve the same.
(2) If you determine not to proceed with the Transaction, you will promptly
inform Goldman Sachs of that decision and, in that case or at any time
upon the request of the Company or Goldman Sachs for any reason, you
and your Representatives shall promptly, at the option of the Company,
either (a) destroy all copies of the written Evaluation Material in
your or their possession or under your or their custody or control
(including that stored in any computer, word processor or similar
device) and confirm such destruction to the Company in writing or (b)
return to Goldman Sachs all copies of the Evaluation Material furnished
to you in your possession or in the possession of your Representatives;
provided that you shall be entitled to retain one secure archival copy
of the Evaluation Materials in the offices of outside legal counsel.
Notwithstanding the return or destruction of the Evaluation Material,
you will continue to be bound by your obligations of confidentiality
and other obligations hereunder.
(3) The term "Evaluation Material" does not include any information which
(a) at the time of disclosure is generally available to and known by
the public (other than as a result of a disclosure by you or by any of
the Representatives in violation of this Agreement), (b) was available
to you on a non-confidential basis from a source (other than the
Company or its representatives) that is not and was not prohibited from
disclosing such information to you by a contractual, legal or fiduciary
obligation or (c) was to become available or known to you pursuant to
the Collaboration Agreement, dated December 15, 1988, by and between
you and the Company.
(4) You acknowledge and agree that (x) Goldman Sachs and the Company are
free to conduct the process leading up to a possible Transaction as
Goldman Sachs and the Company, in their sole discretion, may determine
(including, without
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James R. Sulat
Chiron Corporation
August 8, 2000
Page 3
limitation, by negotiating with any prospective buyer and entering into
a preliminary or definitive agreement without prior notice to you or
any other person), (y) Goldman Sachs and the Company reserve the right,
in their sole discretion, to change the procedures relating to your
consideration of the Transaction at any time without prior notice to
you or any other person, to reject any and all proposals made by you or
any of your Representatives with regard to the Transaction, and to
terminate discussions and negotiations with you at any time and for any
reason, and (z) unless and until a written definitive agreement
concerning the Transaction has been executed with the Company (and then
only to the extent provided in such written definitive agreement),
neither Goldman Sachs nor the Company, nor their respective officers,
directors, employees, affiliates, stockholders, agents or controlling
persons will have any legal obligation to you or any kind whatsoever
with respect to the Transaction, whether by virtue of this agreement,
any other written or oral expression with respect to the Transaction or
otherwise. For purposes hereof, the term "definitive agreement" does
not include an executed letter of intent or any other preliminary
written agreement, nor does it include any written or oral acceptance
of an offer or bid on your part. The Company acknowledges and agrees
that you have undertaken no obligation pursuant to this letter
agreement to participate in any process conducted by the Company and
Goldman Sachs concerning a possible Transaction.
(5) You acknowledge that you and your Representatives may receive material
non-public information in connection with your evaluation of the
Transaction and you are aware (and you will so advise your
Representatives) that the United States securities laws impose
restrictions on trading in securities when in possession of such
information.
(6) You understand and acknowledge that none of the Company, Goldman Sachs
or any of their respective officers, directors, employees, affiliates,
stockholders, agents, representatives or controlling persons is making
any representation or warranty, express or implied, as to the accuracy
or completeness of the Evaluation Material, and each of the Company,
Goldman Sachs and such other persons expressly disclaims any and all
liability to you or any other person that may be based upon or relate
to (a) the use of the Evaluation Material by you or any of the
Representatives or (b) any errors therein or omissions therefrom. You
further agree that you are not entitled to rely on the accuracy and
completeness of the
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James R. Sulat
Chiron Corporation
August 8, 2000
Page 4
Evaluation Material and that you will be entitled to rely solely on
those particular representations and warranties, if any, that are made
to you in a definitive agreement relating to the Transaction when, as,
and if it is executed, and subject to such limitations and restrictions
as may be specified in such definitive agreement.
(7) You acknowledge that remedies at law may be inadequate to protect the
Company against any actual or threatened breach of this agreement by
you or your Representatives, and, without prejudice to any other rights
and remedies otherwise available to the Company, you agree to the
granting of equitable relief (including specific performance or
injunction) in the Company's favor without proof of actual damages. You
agree to indemnify and hold harmless the Company from any damage, loss,
cost or liability (including reasonable legal fees and disbursements
and the costs of enforcing this indemnity) arising out of or resulting
from any unauthorized use or disclosure by you or your Representatives
of the Evaluation Material. Any equitable relief shall not be deemed
to be the exclusive remedy for a breach of this agreement, but shall be
in addition to all other remedies available at law or equity. If any
term, provision, covenant or restriction of this agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of
this agreement shall remain in full force and effect and shall in no
way be affected, impaired or invalidated.
(8) You agree that no failure or delay by the Company in exercising any
right, power or privilege hereunder will operate as a waiver thereof,
nor will any single or partial exercise thereof preclude any other or
further exercise thereof of the exercise of any other right, power or
privilege hereunder.
(9) This agreement is for the benefit of and shall be enforceable by the
Company and its successors and assigns. The rights of the Company under
this agreement may be assigned in whole or in part to any party to a
business combination with the Company, which party shall be entitled to
enforce this agreement to the same extent and in the same manner as the
Company is entitled to enforce this agreement.
(10) You hereby irrevocably and unconditionally consent to submit to the
exclusive jurisdiction of the courts of the State of New York for any
actions, suits or
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James R. Sulat
Chiron Corporation
August 8, 2000
Page 5
proceedings arising out of or relating to this agreement and the
transactions contemplated hereby regardless of how characterized (and
you agree not to commence any action, suit or proceeding relating
thereto except in such courts). You hereby irrevocably and
unconditionally waive any objection to the laying of venue of any
action, suit or proceeding arising out of this agreement or the
transactions contemplated hereby in the courts of the State of Ne York,
and hereby further irrevocably and unconditionally waive and agree not
to plead a claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an
inconvenient forum.
(11) This agreement and all controversies arising from or relating to
performance under this agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without
giving effect to its conflicts of law principles.
This agreement contains the entire agreement between you and the Company
concerning the subject matter hereof, and no modification of this agreement or
waiver of the terms and conditions hereof will be binding unless approved in
writing by the Company and you.
Please confirm your agreement to the foregoing by signing both copies of this
agreement and returning one to Nicholas Vita.
Very truly yours,
PATHOGENESIS CORPORATION
By:
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GOLDMAN, SACHS & CO.
On Behalf of PATHOGENESIS CORPORATION
CONFIRMED AND AGREED AS
OF THE DATE WRITTEN ABOVE:
CHIRON CORPORATION
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James R. Sulat
Chiron Corporation
August 8, 2000
Page 6
By:
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William G. Green
General Counsel
