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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ________ )*
TheraTech, Inc.
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(Name of Issuer)
Common Stock, $0.01 par value per share
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(Title of Class of Securities)
88338810
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(CUSIP Number)
Robert C. Funsten
Vice President, Legal Affairs
Watson Pharmaceuticals, Inc.
311 Bonnie Circle
Corona, California 91720
(909) 270-1400
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(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
October 23, 1998
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(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 (S)240.13d-1(e), (S)240.13d-1(f) or (S)240.13d-1(g), check
the following box / /.
Note. Schedules filed in paper format shall include a signed original and five
copies, including all exhibits. See Rule 13d-7 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).
Page 1 of 8
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SCHEDULE 13D
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CUSIP NO. 88338310
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Watson Pharmaceuticals, Inc. ("Watson")
95-3872914
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
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SEC USE ONLY
3
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SOURCE OF FUNDS*
4
00
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
a Nevada Corporation
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SOLE VOTING POWER
7
NUMBER OF
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
5,058,462
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
5,058,462
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
5,058,462
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
23.5%
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TYPE OF REPORTING PERSON*
14
CO
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Page 2 of 8
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Item 1. Security and Issuer.
This statement on Schedule 13D ("Schedule 13D") relates to the shares of
common stock, $0.01 par value per share ("Common Stock"), of TheraTech, Inc., a
Delaware corporation ("TheraTech"), with principal executive offices located at
417 Wakara Way, Salt Lake City, Utah 84108.
Item 2. Identity and Background.
This Schedule 13D is filed on behalf of Watson Pharmaceuticals, Inc., a
Nevada corporation ("Watson"). This Schedule 13D also includes information with
respect to the executive officers and directors of Watson (the "Control
Persons").
(a)-(c), (f)
Watson Pharmaceuticals, Inc., a Nevada Corporation
311 Bonnie Circle
Corona, California 91720
Watson is engaged in the development, production, marketing and distribution of
off-patent branded pharmaceutical products.
Allen Chao, Ph.D, a United States citizen
Watson Pharmaceuticals, Inc.
311 Bonnie Circle
Corona, California 91720
Dr. Allen Chao is the Chief Executive Officer, President and Chairman of the
Board of Watson.
David C. Hsia, Ph.D, a United States citizen
Watson Pharmaceuticals, Inc.
311 Bonnie Circle
Corona, California 91720
Dr. David C. Hsia is the Senior Vice President of Scientific Affairs of Watson.
Frederick Wilkinson, a United States citizen
Watson Pharmaceuticals, Inc.
311 Bonnie Circle
Corona, California 91720
Frederick Wilkinson is a Vice President of Watson.
Page 3 of 8
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Alec D. Keith, Ph.D, a United States citizen
269 Kuikahi Street
Hilo, Hawaii 96720
Dr. Alec D. Keith is a Director of Watson and has been a consultant of Watson
since July 1996, as well as Adjunct Professor of Biophysics at Pennsylvania
State University.
Michel J. Feldman, a United States citizen
D'Ancona & Pflaum
30 North LaSalle Street, Suite 2900
Chicago, Illinois 60602
Michael J. Feldman is Secretary and a Director of Watson and a partner of the
law firm of D'Ancona & Pflaum, which is Watson's outside counsel.
Albert F. Hummel, a United States citizen
5276 Avenida Cantaria
P.O. Box 3407
Rancho Santa Fe, California 92067
Albert F. Hummel is a Director of Watson and a partner in Affordable Residential
Communities. In addition, Mr. Hummel is President of Pentech Pharmaceuticals,
Inc.
Michael Fedida, a United States citizen
J & J Pharmacy
Cedar Chemists, Inc.
527 Cedar Lane
Teaneck, New Jersey 07666
Michael Fedida is a Director of Watson and a registered pharmacist, consultant
and owner of retail pharmacies.
Ronald R. Taylor, a United States citizen
Enterprise Partners Venture Capital
7979 Ivanhoe Avenue
Suite 550
La Jolla, CA 92037
Ronald R. Taylor is a Director of Watson and is a consultant to Cardinal Health,
Inc.
Page 4 of 8
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Andrew L. Turner, a United States citizen
Sun Healthcare Group, Inc.
101 Sun Lane N.E.
Albuquerque, NM 87109
Andrew L. Turner is a Director of Watson and Chairman and Chief Executive
Officer of Sun Healthcare Group, Inc.
Chato Abad, a United States citizen
Watson Pharmaceuticals, Inc.
311 Bonnie Circle
Corona, California 91720
Chato Abad is the Vice President of Finance of Watson.
Michael E. Boxer, a United States citizen
Watson Pharmaceuticals, Inc.
311 Bonnie Circle
Corona, California 91720
Michael E. Boxer is the Chief Financial Officer of Watson.
Robert C. Funsten, a United States citizen
Watson Pharmaceuticals, Inc.
311 Bonnie Circle
Corona, California 91720
Robert C. Funsten is the Vice President, Legal Affairs of Watson.
(d) During the last 5 years, neither Watson nor any of the Control Persons
have been convicted in a criminal proceeding (excluding traffic or similar
misdemeanors).
(e) During the last 5 years, neither Watson nor any of the Control Persons
have been 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.
Item 3. Source and Amount of Funds or Other Consideration.
Each of Dinesh C. Patel ("Patel") and William I. Higuchi ("Higuchi"),
pursuant to their respective voting agreements dated as of October 23, 1998
(each a "Voting Agreement"), attached hereto as Exhibits A and B respectively,
and hereby incorporated by reference as though
Page 5 of 8
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fully set forth herein, granted Watson certain voting rights with respect to
their Common Stock, in consideration of Watson's execution of that certain
Agreement and Plan of Merger, dated as of October 23, 1998 (the "Merger
Agreement") among Watson, TheraTech and Jazz Merger Corp., a wholly owned
subsidiary of Watson ("Watson Sub"), previously filed by TheraTech with the
Securities and Exchange Commission (the "Commission") as an exhibit to its
Report on Form 8-K on October 28, 1998, and hereby incorporated by reference as
though fully set forth herein.
Item 4. Purpose of the Transaction.
As of October 23, 1998, Watson, Watson Sub and TheraTech entered into the
Merger Agreement, pursuant to which TheraTech agreed to merge with Watson Sub
with TheraTech being the surviving corporation of the merger (the "Merger").
Pursuant to the terms of the Merger Agreement, (a) as consideration for the
Merger, each share of Common Stock will be converted into the right to receive a
portion of a share of common stock, $0.0033 par value per share, of Watson
("Watson Common Stock"). Upon consummation of the Merger, (a) Watson intends to
own all outstanding shares of Common Stock; (b) the board of directors of
TheraTech shall consist of one member appointed by Watson; (c) only 3,000 shares
of Common Stock shall be issued and outstanding and owned by Watson; (d) the
Certificate of Incorporation and by-laws of Watson Sub shall become the
Certificate of Incorporation and by-laws of TheraTech; (e) the Common Stock
shall be delisted from trading on the Nasdaq National Market, and (f) the Common
Stock shall cease to be registered under the Exchange Act.
Pursuant to the Voting Agreements, each of Patel and Higuchi agreed (i) not
to sell, transfer, pledge, assign or otherwise dispose of, or enter into any
agreement, option or other arrangement or understanding with respect to the
sale, transfer, pledge, assignment or other disposition of the Common Stock that
they hold to any person other than Watson or Watson's designee; (ii) to grant
irrevocable proxies to, and appoint any individual who shall be designated by
Watson, their proxy and attorney-in-fact to vote their Common Stock at any
meeting of the stockholders of TheraTech in any circumstance where their vote,
consent, or other approval is sought in favor of the Merger, the adoption by
TheraTech of the Merger Agreement and the approval of the other transactions
contemplated by the Merger Agreement and the calling of a special meeting of
stockholders to consider any of the foregoing, and against any alternative
proposal or frustrating transaction; and (iii) to vote in favor of the Merger
Agreement at any meeting of the TheraTech stockholders called to vote upon the
Merger Agreement or vote against any other proposal or frustrating transaction.
Consequently, the primary purpose of entering into the Voting Agreements was to
enhance Watson's ability to gain control of TheraTech through the Merger.
Item 5. Interest in the Securities of the Issuer.
(a)-(b). The ownership percentages are computed based on a total of
21,289,262 shares of Common Stock outstanding on September 30, 1998.
Page 6 of 8
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Pursuant to the Voting Agreements, Watson possesses the indirect beneficial
ownership of 5,058,462 shares (23.5% of the total number of shares of Common
Stock outstanding) of Common Stock and has the shared power to vote and direct
the vote and the shared power to dispose and direct the disposition of such
shares. Watson's beneficial ownership includes 4,837,461 shares of Common Stock
and the rights to acquire 221,001 shares of Common Stock by Patel, which if
acquired, would be subject to the Voting Agreement attached hereto as Exhibit B.
(c) Except for those shares acquired and disclosed herein, neither Watson
nor any of the Control Persons, have acquired beneficial ownership of any Common
Stock within the last sixty (60) days.
(d) Not Applicable.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or relationships with Respect
to Securities of the Issuer.
The terms of the Merger Agreement, previously filed by TheraTech with the
Commission as an exhibit to its Report on Form 8-K filed on October 28, 1998,
are hereby incorporated herein by reference as though fully set forth herein.
The terms of the Voting Agreements, attached as Exhibit A and Exhibit B to this
Schedule 13D, are hereby incorporated herein by reference as though fully set
forth herein.
Item 7. Material to be Filed as Exhibits.
Copies of the written agreements relating to the acquisition of the
Securities, contracts, arrangements and understandings have been identified in
Item 6 above and are attached or incorporated by reference as already herein
specified.
1. "Exhibit A" is the Voting Agreement dated as of October 23, 1998 between
Watson and Patel.
2. "Exhibit B" is the Voting Agreement dated as of October 23, 1998 between
Watson and Higuchi.
3. The Agreement and Plan of Merger, dated as of October 23, 1998, among
Watson, Jazz Merger Corp. and TheraTech was previously filed by TheraTech
with the Commission as an exhibit to its Report on Form 8-K filed on
October 28, 1998, and is hereby incorporated herein by reference.
Page 7 of 8
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SIGNATURE
After reasonable 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: November 10, 1998
Watson Pharmaceuticals, Inc.
By: /s/ Robert C. Funsten
-----------------------------------
Robert C. Funsten
Vice President, Legal Affairs
Page 8 of 8
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Exhibit A
VOTING AGREEMENT
VOTING AGREEMENT, dated as of October 24, 1998, between Watson
Pharmaceuticals, Inc., a Nevada corporation ("Parent"), and Dinesh C. Patel,
Ph.D. (the "Stockholder").
WHEREAS, Parent and Theratech, Inc., a Delaware corporation (the
"Company"), propose to enter into an Agreement and Plan of Merger, dated the
date hereof (as the same may be amended or supplemented, the "Merger Agreement")
providing for the merger of Jazz Merger Corp., a Delaware corporation and
wholly-owned subsidiary of Parent ("Subsidiary"), with the Company (the
"Merger");
WHEREAS, Stockholder is the record and beneficial owner of 2,687,926/*/
shares of common stock, par value $.01 per share, of the Company (the "Company
Common Stock"); such securities, as they may be adjusted by stock dividend,
stock split, recapitalization, combination or exchange of shares, merger,
consolidation, reorganization or other change or transaction of or by the
Company, together with securities that may be acquired after the date hereof by
Stockholder, including Company Common Stock issuable upon the exercise of
options to purchase Company Common Stock (as the same may be adjusted as
aforesaid), being collectively referred to herein as the "Securities"; and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Subsidiary have requested that the Stockholder enter into
this Agreement. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Merger Agreement;
NOW, THEREFORE, to induce Parent and Subsidiary to enter into, and in
consideration of them entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein and intending to be legally bound hereby, the parties hereby agree as
follows:
1. Covenants of the Stockholder. Stockholder agrees as follows:
(a) Stockholder shall not, except as contemplated by the terms of this
Agreement, (i) sell, transfer, pledge, assign or otherwise dispose of,
or enter into any agreement, option or other arrangement (including
any profit sharing arrangement) or understanding with respect to the
sale, transfer, pledge, assignment or other
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/*/ A portion of these shares are pledged to secure borrowings by Dr.
Patel. Dr. Patel has retained voting rights on the pledged shares. In
addition, Dr. Patel holds options to purchase 175,002 shares.
<PAGE>
disposition of, the Securities to any person other than Parent or
Parent's designee; (ii) enter into any voting arrangement, whether by
proxy, voting agreement, voting trust, power-of-attorney or otherwise,
with respect to the Securities or (iii) take any other action that
would in any way restrict, limit or interfere with the performance of
its obligations hereunder or the transactions contemplated hereby;
provided, however, that any Stockholder that is an individual may
transfer all or any part of his or her Securities to any sibling or
any other member of his or her immediate family, any of his or her
lineal descendants or any trust for the benefit of any of them, if the
recipient of the Securities agrees in advance in writing delivered to
Parent to be bound by this Agreement.
(b) Subject to Section 9 hereof, except as specifically provided in the
Merger Agreement, until the Merger is consummated or the Merger
Agreement is terminated, the Stockholder shall not, nor shall the
Stockholder permit any investment banker, financial adviser, attorney,
accountant or other representative or agent acting on behalf of or at
the direction of the Stockholder (a "Stockholder Representative") to,
directly or indirectly (i) solicit, initiate or encourage (including
by way of furnishing information), or take any other action designed
or reasonably likely to facilitate, any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead to,
any Alternative Proposal (as defined in the Merger Agreement) or (ii)
participate in any discussions or negotiations regarding any
Alternative Proposal. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in the preceding
sentence by a Stockholder Representative shall be deemed to be a
violation of this Section 1(b) by the Stockholder.
(c) At any meeting of stockholders of the Company called to vote upon the
Merger and the Merger Agreement or at any adjournment thereof or in
any other circumstances upon which a vote, consent or other approval
(including by written consent) with respect to the Merger and the
Merger Agreement is sought from the stockholders of the Company, the
Stockholder shall vote (or cause to be voted) Stockholder's Securities
in favor of approving the Merger, the adoption of the Merger Agreement
and the approval of the other transactions contemplated by the Merger
Agreement and the calling of a special meeting of the stockholders of
the Company to consider any of the foregoing. At any meeting of
stockholders of the Company or at any adjournment thereof or in any
other circumstances upon which the Stockholder's vote, consent or
other approval is sought, Stockholder shall vote (or cause to be
voted) Stockholder's Securities against (i) any Alternative Proposal,
or (ii) any amendment of the Company's Certificate of Incorporation or
by-laws or other proposal or transaction involving the Company or any
of its subsidiaries or any motion at a meeting of stockholders of the
Company, which amendment or other proposal or transaction or motion
would in any manner
<PAGE>
impede, frustrate, prevent or nullify, the Merger, the Merger
Agreement or any of the other transactions contemplated by the Merger
Agreement (collectively, "Frustrating Transactions").
2. Grant of Irrevocable Proxy Coupled with an Interest; Appointment of Proxy.
(a) Stockholder hereby irrevocably grants to, and appoints, any individual
who shall be designated by Parent, and each of them, Stockholder's
proxy and attorney-in-fact (with full power of substitution), for and
in the name, place and stead of such Stockholder, to vote
Stockholder's Securities, or grant a consent or approval in respect of
such Securities, at any meeting of stockholders of the Company or at
any adjournment thereof or in any other circumstances upon which their
vote, consent or other approval is sought, (i) in favor of the Merger,
the adoption by the Company of the Merger Agreement and the approval
of the other transactions contemplated by the Merger Agreement and the
calling of a special meeting of the stockholders of the Company to
consider any of the foregoing, and (ii) against any Alternative
Proposal or Frustrating Transaction.
(b) Stockholder represents that any proxies heretofore given in respect of
Stockholder's Securities are not irrevocable, and that any such
proxies are hereby revoked.
(c) STOCKHOLDER HEREBY AFFIRMS THAT THE PROXY SET FORTH IN THIS SECTION 2
IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE TIME SET
FORTH IN THE LAST SENTENCE OF THIS SECTION. Stockholder hereby further
affirms that such irrevocable proxy is given in connection with the
execution of the Merger Agreement, and that such irrevocable proxy is
given to secure the performance of the duties of Stockholder under
this Agreement. Stockholder hereby ratifies and confirms all that the
individual voting such irrevocable proxy may lawfully do or cause to
be done by virtue hereof. Such irrevocable proxy is executed and
intended to be irrevocable in accordance with the provisions of
Section 212 of the Delaware General Corporate Law ("DGCL"). Such
irrevocable proxy shall be valid until the earlier to occur of (i) one
year from the date hereof or (ii) the termination of this Agreement in
accordance with its terms.
3. Representations and Warranties of the Stockholder. Stockholder hereby
represents and warrants to Parent as follows:
(a) Authorization. The Stockholder has the legal capacity to execute,
deliver and perform this Agreement. This Agreement constitutes a valid
and binding obligation of the Stockholder enforceable against the
Stockholder in accordance
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with its terms. If the Stockholder is married and the Securities
constitute community property under applicable law, this Agreement has
been duly authorized, executed and delivered by, and constitutes the
valid and binding agreement of, the Stockholder's spouse enforceable
against such spouse in accordance with its terms.
(b) No Conflict. The execution, delivery and performance by the
Stockholder of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) result in any breach or
violation of or be in conflict with or constitute a default under any
law or agreement or arrangement to which the Stockholder is a party or
by which the Stockholder is bound, (ii) require any filing by the
Stockholder with or authorization by any governmental entity (other
than 13 D/G amendments) or (iii) require any consent or other action
by any person under, constitute a default under, or give rise to any
right of termination, cancellation or acceleration of a loss of any
benefit to which the Stockholder is entitled under any provision of
any agreement or other instrument binding on the Stockholder.
(c) Ownership of Securities. Stockholder's Securities and the
certificates representing such Securities are now held by Stockholder,
or by a nominee or custodian for the benefit of Stockholder, and the
Stockholder has good and marketable title to such Securities, free and
clear of any (i) liens, proxies, voting trusts or agreements,
understandings or arrangements and (ii) pledges, restrictions, charges
or other adverse claims of any kind or nature. Stockholder owns of
record or beneficially no securities of the Company, or any options,
warrants or rights exercisable for securities of the Company, other
than the Securities set forth opposite the Stockholder's name on
Schedule A hereto./**/
(d) Merger Agreement. Stockholder understands and acknowledges that
Parent and Subsidiary are entering into the Merger Agreement in
reliance upon the Stockholder's execution and delivery of this
Agreement.
4. Further Assurances. Stockholder will, from time to time, execute and
deliver, or cause to be executed and delivered, such additional or further
transfers, assignments, endorsements, consents and other instruments as
Parent may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement and to vest the power to
vote Stockholder's Securities as contemplated by Section 2.
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/**/ See page 1.
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5. Assignment; Binding Effect. Except as set forth herein, neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject
to the preceding sentence, this Agreement shall be binding upon, inure to
the benefit of, and be enforceable by, the parties hereto and their
respective successors and assigns. Notwithstanding anything contained in
this Agreement to the contrary, nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties hereto
or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
6. Termination. This Agreement, and all rights and obligations of the parties
hereunder, shall terminate upon the earliest to occur of the Effective Time
or the termination of the Merger Agreement in accordance with its terms.
Nothing in this Section 6 shall relieve any party from liability for
willful breach of this Agreement.
7. Stop Transfer. The Company agrees with, and covenants to, Parent that the
Company shall not register the transfer of any certificate representing
Stockholder's Securities unless such transfer is made in accordance with
the terms of this Agreement.
8. General Provisions.
(a) Expenses. All costs and expenses incurred by Parent in connection
with this Agreement and the transactions contemplated hereby shall be
paid by Parent. All costs and expenses incurred by the Stockholder in
connection with this Agreement and the transactions contemplated
hereby shall be paid by the Company; provided, however, that Parent
shall reimburse Stockholder, or pay for directly if practicable, any
expenses incurred in connection with actions requested by Parent.
(b) Amendments. This Agreement may not be amended except by an instrument
in writing signed by each of the parties hereto.
(c) Notice. All notices and other communications hereunder shall be in
writing and shall be deemed given upon receipt to the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice):
(i) if to Parent, to:
Watson Pharmaceuticals, Inc.
311 Bonnie Circle
Corona, California 91720
Fax: (909) 270-1429
<PAGE>
Attn: Chairman & CEO
with a copy to:
Watson Pharmaceuticals, Inc.
311 Bonnie Circle
Corona, California 91720
Fax: (909) 270-1429
Attn: Legal Department
; and
(ii)if to Stockholder, to the address set forth under the name of
Stockholder on Schedule A attached hereto;
with a copy to:
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022
Fax: (212) 446-4900
Attn: Stephen P. H. Johnson
(d) Interpretation. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include",
"includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
(e) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts
have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
(f) Entire Agreement; No Third-party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, among the parties with
respect to the subject matter hereof and (ii) is not intended to
confer upon any person other than the parties hereto any rights or
remedies hereunder.
<PAGE>
(g) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without regard to
any applicable conflicts of law.
9. Stockholder Capacity. Stockholder signs solely in his capacity as the
record holder and beneficial owner of, or the trustee of a trust whose
beneficiaries are the beneficial owners of, Stockholder's Securities and
nothing herein shall limit or affect any actions taken by Stockholder in
his capacity as an officer or director, if applicable, of the Company to
the extent specifically permitted by the Merger Agreement.
10. Enforcement. The parties agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in a court of the
United States. This being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto
waives any right to trial by jury with respect to any claim or proceeding
related to or arising out of this Agreement or any of the transactions
contemplated hereby.
STOCKHOLDER AGREES THAT, IN CONNECTION WITH ANY LEGAL SUIT OR PROCEEDING
ARISING WITH RESPECT TO THIS AGREEMENT, IT SHALL SUBMIT TO THE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE AND AGREES
TO VENUE IN SUCH COURTS. STOCKHOLDER HEREBY APPOINTS THE SECRETARY OF THE
COMPANY AS HIS AGENT FOR SERVICE OF PROCESS FOR PURPOSES OF THE FOREGOING
SENTENCE ONLY. EACH PARTY HERETO WAIVES ANY RIGHT TO JURY TRIAL IN
CONNECTION WITH ANY SUCH SUIT OR PROCEEDING.
********
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
WATSON PHARMACEUTICALS, INC.
By: /s/ Robert C. Funsten
--------------------------------------
Name: Robert C. Funsten
------------------------------------
Title: Vice President, Legal Affairs
------------------------------------
STOCKHOLDER
/s/ Dinesh C. Patel, Ph.D.
--------------------------------------
Dinesh C. Patel, Ph.D.
<PAGE>
SCHEDULE A
STOCKHOLDER SECURITIES HELD
Dinesh C. Patel, Ph.D. 2,687,926/***/
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/***/ A portion of these shares are pledged to secure borrowings by Dr. Patel.
Dr. Patel has retained voting rights on the pledged shares. In addition,
Dr. Patel holds options to purchase 175,002 shares.
<PAGE>
Exhibit B
VOTING AGREEMENT
VOTING AGREEMENT, dated as of October 24, 1998, between Watson
Pharmaceuticals, Inc., a Nevada corporation ("Parent"), and William I. Higuchi
(the "Stockholder").
WHEREAS, Parent and Theratech, Inc., a Delaware corporation (the
"Company"), propose to enter into an Agreement and Plan of Merger, dated the
date hereof (as the same may be amended or supplemented, the "Merger Agreement")
providing for the merger of Jazz Merger Corp., a Delaware corporation and
wholly-owned subsidiary of Parent ("Subsidiary"), with the Company (the
"Merger");
WHEREAS, Stockholder is the record and beneficial owner of 2,299,034 shares
of common stock, par value $.01 per share, of the Company (the "Company Common
Stock"); such securities, as they may be adjusted by stock dividend, stock
split, recapitalization, combination or exchange of shares, merger,
consolidation, reorganization or other change or transaction of or by the
Company, together with securities that may be acquired after the date hereof by
Stockholder, including Company Common Stock issuable upon the exercise of
options to purchase Company Common Stock (as the same may be adjusted as
aforesaid), being collectively referred to herein as the "Securities"; and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Subsidiary have requested that the Stockholder enter into
this Agreement. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Merger Agreement;
NOW, THEREFORE, to induce Parent and Subsidiary to enter into, and in
consideration of them entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein and intending to be legally bound hereby, the parties hereby agree as
follows:
1. Covenants of the Stockholder. Stockholder agrees as follows:
(a) Stockholder shall not, except as contemplated by the terms of this
Agreement, (i) sell, transfer, pledge, assign or otherwise dispose of,
or enter into any agreement, option or other arrangement (including
any profit sharing arrangement) or understanding with respect to the
sale, transfer, pledge, assignment or other disposition of, the
Securities to any person other than Parent or Parent's designee; (ii)
enter into any voting arrangement, whether by proxy, voting agreement,
voting trust, power-of-attorney or otherwise, with respect to the
Securities or (iii) take any other action that would in any way
restrict, limit or interfere with the performance of its obligations
hereunder or the transactions contemplated hereby;
<PAGE>
provided, however, that any Stockholder that is an individual may
transfer all or any part of his or her Securities to any sibling or
any other member of his or her immediate family, any of his or her
lineal descendants or any trust for the benefit of any of them, if the
recipient of the Securities agrees in advance in writing delivered to
Parent to be bound by this Agreement. Notwithstanding subsection (i)
above, Stockholder may sell up to 65,000 shares of Company Common
Stock for the limited purpose of satisfying any cash settlement of, or
the unwinding of, his "zero-cost collar" arrangement which expires on
March 9, 1999, as identified on Stockholder's Form 4 for March, 1998,
filed with the Securities and Exchange Commission on April 10, 1998,
if Stockholder has complied with the following: (x) Stockholder has
complied with all legal obligations in order to sell such shares,
including without limitation, compliance with all applicable
securities laws and regulations, compliance with all insider trading
legislation and policies and receipt of an opinion of counsel
authorizing such sale, if necessary, and (y) Stockholder has provided
Parent with at least ten (10) days prior written notice of his
intention to sell such shares, with appropriate documentation
evidencing compliance with (x) above, such documentation to be
reasonably acceptable to Parent, and (z) such sale does not in any way
jeopardize or otherwise alter the pooling of interest accounting
treatment of the Merger, as determined in the sole discretion of
Parent.
(b) Except as specifically provided in the Merger Agreement, until the
Merger is consummated or the Merger Agreement is terminated, the
Stockholder shall not, nor shall the Stockholder permit any investment
banker, financial adviser, attorney, accountant or other
representative or agent acting on behalf of or at the direction of the
Stockholder (a "Stockholder Representative") to, directly or
indirectly (i) solicit, initiate or encourage (including by way of
furnishing information), or take any other action designed or
reasonably likely to facilitate, any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead to,
any Alternative Proposal (as defined in the Merger Agreement) or (ii)
participate in any discussions or negotiations regarding any
Alternative Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the
preceding sentence by a Stockholder Representative shall be deemed to
be a violation of this Section 1(b) by the Stockholder.
(c) At any meeting of stockholders of the Company called to vote upon the
Merger and the Merger Agreement or at any adjournment thereof or in
any other circumstances upon which a vote, consent or other approval
(including by written consent) with respect to the Merger and the
Merger Agreement is sought from the stockholders of the Company, the
Stockholder shall vote (or cause to be voted) Stockholder's Securities
in favor of approving the Merger, the adoption of the
<PAGE>
Merger Agreement and the approval of the other transactions
contemplated by the Merger Agreement and the calling of a special
meeting of the stockholders of the Company to consider any of the
foregoing. At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, Stockholder
shall vote (or cause to be voted) Stockholder's Securities against (i)
any Alternative Proposal, or (ii) any amendment of the Company's
Certificate of Incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries or any
motion at a meeting of stockholders of the Company, which amendment or
other proposal or transaction or motion would in any manner impede,
frustrate, prevent or nullify, the Merger, the Merger Agreement or any
of the other transactions contemplated by the Merger Agreement
(collectively, "Frustrating Transactions").
2. Grant of Irrevocable Proxy Coupled with an Interest; Appointment of Proxy.
(a) Stockholder hereby irrevocably grants to, and appoints, any individual
who shall be designated by Parent, and each of them, Stockholder's
proxy and attorney-in-fact (with full power of substitution), for and
in the name, place and stead of such Stockholder, to vote
Stockholder's Securities, or grant a consent or approval in respect of
such Securities, at any meeting of stockholders of the Company or at
any adjournment thereof or in any other circumstances upon which their
vote, consent or other approval is sought, (i) in favor of the Merger,
the adoption by the Company of the Merger Agreement and the approval
of the other transactions contemplated by the Merger Agreement and the
calling of a special meeting of the stockholders of the Company to
consider any of the foregoing, and (ii) against any Alternative
Proposal or Frustrating Transaction.
(b) Stockholder represents that any proxies heretofore given in respect of
Stockholder's Securities are not irrevocable, and that any such
proxies are hereby revoked.
(c) STOCKHOLDER HEREBY AFFIRMS THAT THE PROXY SET FORTH IN THIS SECTION 2
IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE TIME SET
FORTH IN THE LAST SENTENCE OF THIS SECTION. Stockholder hereby
further affirms that such irrevocable proxy is given in connection
with the execution of the Merger Agreement, and that such irrevocable
proxy is given to secure the performance of the duties of Stockholder
under this Agreement. Stockholder hereby ratifies and confirms all
that the individual voting such irrevocable proxy may lawfully do or
cause to be done by virtue hereof. Such irrevocable proxy is executed
and intended to be irrevocable in accordance with the provisions of
Section 212 of the Delaware
<PAGE>
General Corporate Law ("DGCL"). Such irrevocable proxy shall be valid
until the earlier to occur of (i) one year from the date hereof or
(ii) the termination of this Agreement in accordance with its terms.
3. Representations and Warranties of the Stockholder. Stockholder hereby
represents and warrants to Parent as follows:
(a) Authorization. The Stockholder has the legal capacity to execute,
deliver and perform this Agreement. This Agreement constitutes a
valid and binding obligation of the Stockholder enforceable against
the Stockholder in accordance with its terms. If the Stockholder is
married and the Securities constitute community property under
applicable law, this Agreement has been duly authorized, executed and
delivered by, and constitutes the valid and binding agreement of, the
Stockholder's spouse enforceable against such spouse in accordance
with its terms.
(b) No Conflict. The execution, delivery and performance by the
Stockholder of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) result in any breach or
violation of or be in conflict with or constitute a default under any
law or agreement or arrangement to which the Stockholder is a party or
by which the Stockholder is bound, (ii) require any filing by the
Stockholder with or authorization by any governmental entity (other
than 13 D/G amendments) or (iii) require any consent or other action
by any person under, constitute a default under, or give rise to any
right of termination, cancellation or acceleration of a loss of any
benefit to which the Stockholder is entitled under any provision of
any agreement or other instrument binding on the Stockholder.
(c) Ownership of Securities. Stockholder's Securities and the
certificates representing such Securities are now held by Stockholder,
or by a nominee or custodian for the benefit of Stockholder, and the
Stockholder has good and marketable title to such Securities, free and
clear of any (i) liens, proxies, voting trusts or agreements,
understandings or arrangements and (ii) pledges, restrictions, charges
or other adverse claims of any kind or nature (other than the "zero-
cost collar" arrangement described in Section 1(a) above).
Stockholder owns of record or beneficially no securities of the
Company, or any options, warrants or rights exercisable for securities
of the Company, other than the Securities set forth opposite the
Stockholder's name on Schedule A hereto.
(d) Merger Agreement. Stockholder understands and acknowledges that
Parent and Subsidiary are entering into the Merger Agreement in
reliance upon the Stockholder's execution and delivery of this
Agreement.
<PAGE>
4. Further Assurances. Stockholder will, from time to time, execute and
deliver, or cause to be executed and delivered, such additional or further
transfers, assignments, endorsements, consents and other instruments as
Parent may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement and to vest the power to
vote Stockholder's Securities as contemplated by Section 2.
5. Assignment; Binding Effect. Except as set forth herein, neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject
to the preceding sentence, this Agreement shall be binding upon, inure to
the benefit of, and be enforceable by, the parties hereto and their
respective successors and assigns. Notwithstanding anything contained in
this Agreement to the contrary, nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties hereto
or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
6. Termination. This Agreement, and all rights and obligations of the parties
hereunder, shall terminate upon the earliest to occur of the Effective Time
or the termination of the Merger Agreement in accordance with its terms.
Nothing in this Section 6 shall relieve any party from liability for
willful breach of this Agreement.
7. Stop Transfer. The Company agrees with, and covenants to, Parent that the
Company shall not register the transfer of any certificate representing
Stockholder's Securities unless such transfer is made in accordance with
the terms of this Agreement.
8. General Provisions.
(a) Expenses. All costs and expenses incurred by Parent in connection
with this Agreement and the transactions contemplated hereby shall be
paid by Parent. All costs and expenses incurred by the Stockholder in
connection with this Agreement and the transactions contemplated
hereby shall be paid by the Company; provided, however, that Parent
shall reimburse Stockholder, or pay for directly if practicable, any
expenses incurred in connection with actions requested by Parent.
(b) Amendments. This Agreement may not be amended except by an instrument
in writing signed by each of the parties hereto.
(c) Notice. All notices and other communications hereunder shall be in
writing and shall be deemed given upon receipt to the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice):
<PAGE>
(i) if to Parent, to:
Watson Pharmaceuticals, Inc.
311 Bonnie Circle
Corona, California 91720
Fax: (909) 270-1429
Attn: Chairman & CEO
with a copy to:
Watson Pharmaceuticals, Inc.
311 Bonnie Circle
Corona, California 91720
Fax: (909) 270-1429
Attn: Legal Department
; and
(ii)if to Stockholder, to the address set forth under the name of
Stockholder on Schedule A attached hereto;
with a copy to:
[Kirkland & Ellis
153 East 53rd Street
New York, New York 10022
Fax: (212) 446-4900
Attn: Stephen P. H. Johnson]
(d) Interpretation. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include",
"includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
(e) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts
have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
<PAGE>
(f) Entire Agreement; No Third-party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, among the parties with
respect to the subject matter hereof and (ii) is not intended to
confer upon any person other than the parties hereto any rights or
remedies hereunder.
(g) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without regard to
any applicable conflicts of law.
9. Stockholder Capacity. Stockholder signs solely in his capacity as the
record holder and beneficial owner of, or the trustee of a trust whose
beneficiaries are the beneficial owners of, Stockholder's Securities and
nothing herein shall limit or affect any actions taken by Stockholder in
his capacity as an officer or director, if applicable, of the Company to
the extent specifically permitted by the Merger Agreement.
10. Enforcement. The parties agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in a court of the
United States. This being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto
waives any right to trial by jury with respect to any claim or proceeding
related to or arising out of this Agreement or any of the transactions
contemplated hereby.
STOCKHOLDER AGREES THAT, IN CONNECTION WITH ANY LEGAL SUIT OR PROCEEDING
ARISING WITH RESPECT TO THIS AGREEMENT, IT SHALL SUBMIT TO THE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE AND AGREES
TO VENUE IN SUCH COURTS. STOCKHOLDER HEREBY APPOINTS THE SECRETARY OF THE
COMPANY AS HIS AGENT FOR SERVICE OF PROCESS FOR PURPOSES OF THE FOREGOING
SENTENCE ONLY. EACH PARTY HERETO WAIVES ANY RIGHT TO JURY TRIAL IN
CONNECTION WITH ANY SUCH SUIT OR PROCEEDING.
********
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
WATSON PHARMACEUTICALS, INC.
By: /s/ Robert C. Funsten
--------------------------------------
Name: Robert C. Funsten
------------------------------------
Title: Vice President, Legal Affairs
-----------------------------------
STOCKHOLDER
/s/ William I. Higuchi
------------------------------------------
William I. Higuchi
<PAGE>
SCHEDULE A
STOCKHOLDER SECURITIES HELD
William I. Higuchi 2,299,034
