<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
GENSIA, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
GENSIA, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
9360 Towne Centre Drive
San Diego, CA 92121
(619) 546-8300
May 22, 1996
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
which will be held on June 25, 1996, at 11:00 a.m., at the San Diego Marriott-La
Jolla, 4240 La Jolla Village Drive, La Jolla, California.
The formal notice of the Annual Meeting and the Proxy Statement have been
made a part of this invitation.
After reading the Proxy Statement, please mark, date, sign and return, at
an early date, the enclosed proxy in the prepaid envelope to ensure that your
shares will be represented. YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN, DATE
AND RETURN THE ENCLOSED PROXY OR ATTEND THE ANNUAL MEETING IN PERSON.
A copy of the Company's Annual Report to Stockholders is also enclosed.
The Board of Directors and Management look forward to seeing you at the
meeting.
Sincerely yours,
David F. Hale
Chairman of the Board,
President and Chief Executive Officer
<PAGE>
GENSIA, INC.
____________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 25, 1996
____________
The Annual Meeting of Stockholders of Gensia, Inc. (the "Company") will be
held at the San Diego Marriott-La Jolla, 4240 La Jolla Village Drive, La Jolla,
California, on June 25, 1996, at 11:00 a.m., for the following purposes:
1. To elect three Class I directors.
2. To consider and vote upon a proposal to amend and restate the Gensia,
Inc. Amended and Restated 1990 Stock Plan.
3. To consider and vote upon a proposal to amend and restate the Gensia,
Inc. Employee Stock Purchase Plan.
4. To ratify the selection of Ernst & Young LLP as the Company's
independent auditors.
5. To transact such other business as may properly come before the
Meeting and any adjournment of the Meeting.
The Board of Directors has fixed the close of business on May 16, 1996, as
the record date for determining the stockholders entitled to notice of and to
vote at the Meeting and any adjournment of the Meeting. A complete list of
stockholders entitled to vote will be available at the Secretary's office, 9360
Towne Centre Drive, San Diego, California, for ten days before the meeting.
WHETHER YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING OR NOT, WE URGE YOU
TO MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
By order of the Board of Directors.
Wesley N. Fach
Secretary
May 22, 1996
<PAGE>
GENSIA, INC.
____________
PROXY STATEMENT
____________
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Gensia, Inc., a Delaware corporation (the "Company"),
with principal executive offices at 9360 Towne Centre Drive, San Diego,
California 92121, of proxies in the accompanying form to be used at the Annual
Meeting of Stockholders (the "Annual Meeting") to be held on June 25, 1996, and
any adjournment of the Annual Meeting. The shares represented by the proxies
received in response to this solicitation and not revoked will be voted at the
Annual Meeting. A proxy may be revoked at any time before it is exercised by
filing with the Secretary of the Company a written revocation or a duly executed
proxy bearing a later date or by voting in person at the Annual Meeting. On the
matters coming before the Annual Meeting for which a choice has been specified
by a stockholder by means of the ballot on the proxy, the shares will be voted
accordingly. If no choice is specified, the shares will be voted FOR the
election of the three nominees for Class I director listed in this Proxy
Statement and FOR approval of proposals 2, 3 and 4 described in the Notice of
Annual Meeting and in this Proxy Statement.
Stockholders of record at the close of business on May 16, 1996 are
entitled to notice of and to vote at the Annual Meeting. As of May 16, 1996 the
Company had 35,892,899 shares of Common Stock outstanding and entitled to vote.
Each holder of Common Stock is entitled to one vote for each share held as of
the record date.
Directors are elected by a plurality vote. The other matters submitted for
stockholder approval at the Annual Meeting will be decided by the affirmative
vote of a majority of shares present in person or represented by proxy and
entitled to vote on each such matter. Abstentions with respect to any matter
are treated as shares present or represented and entitled to vote on that matter
and thus have the same effect as negative votes. If shares are not voted by the
broker who is the record holder of the shares, or if shares are not voted in
other circumstances in which proxy authority is defective or has been withheld
with respect to any matter, these non-voted shares are not deemed to be present
or represented for purposes of determining whether stockholder approval of that
matter has been obtained.
The expense of printing and mailing proxy materials will be borne by the
Company. In addition to the solicitation of proxies by mail, solicitation may
be made by certain directors, officers and other employees of the Company by
personal interview, telephone or telegraph. No additional compensation will be
paid to such persons for such solicitation. The Company will reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation materials to beneficial owners of the Company's Common Stock.
Employees of Georgeson & Co., Inc. will also solicit proxies at an anticipated
fee of approximately $7,500 plus reasonable out-of-pocket expenses.
This Proxy Statement and the accompanying form of proxy are being mailed to
stockholders on or about May 22, 1996.
IMPORTANT
WHETHER YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING OR NOT, WE URGE
YOU TO MARK, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT AT YOUR
EARLIEST CONVENIENCE IN THE ENCLOSED POSTAGE-PREPAID RETURN ENVELOPE.
THIS WILL NOT LIMIT YOUR RIGHTS TO ATTEND OR VOTE AT THE ANNUAL
MEETING.
-1-
<PAGE>
ELECTION OF DIRECTORS
The Company has three classes of directors serving staggered three-year
terms. Class I and Class II each consist of three directors and Class III
consists of four directors. Three Class I directors are to be elected at the
Annual Meeting for a term of three years expiring at the Annual Meeting in 1999
or until each such director's successor shall have been elected and qualified.
The other directors of the Company will continue in office for their existing
terms, which expire in 1997 and 1998 for Class II and Class III directors,
respectively.
Unless authority to vote for directors is withheld, it is intended that the
shares represented by the enclosed proxy will be voted for the election of
Daniel O. Pegg, Alan R. Timms, Ph.D. and Monroe E. Trout, M.D. as Class I
directors. The Nominating Committee has nominated Daniel O. Pegg, Alan R.
Timms, Ph.D. and Monroe E. Trout, M.D., currently members of the Board of
Directors of the Company, as Class I directors. In the event any of such
nominees becomes unable or unwilling to accept nomination or election, the
shares represented by the enclosed proxy will be voted for the election of the
balance of those named and such other person as the Board of Directors may
select. The Board of Directors has no reason to believe that any such nominee
will be unable or unwilling to serve.
Set forth below is information regarding the nominees for Class I director
and the continuing directors of Class II and Class III, including information
furnished by them as to their principal occupations at present and for the past
five years, certain directorships held by each, their ages as of April 8, 1996,
and the year in which each became a director of the Company.
Name Age
- ---- ---
CLASS I
Daniel O. Pegg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Mr. Pegg has been a director of Gensia since 1987. He has been President
of the San Diego Economic Development Corporation since 1982. Prior to
1982, Mr. Pegg held various senior management positions with a number of
health care-related businesses.
Alan R. Timms, Ph.D. . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Dr. Timms has been a director of Gensia since May 1991. Dr. Timms is
presently President of Timms Biomedical Consultants, Inc., a private company,
and was employed by Gensia as Acting Vice President, Research from August
1995 to May 1996. From July 1988 until July 1994, he was a director and
Chief Executive Officer of Glycomed Incorporated, a biotechnology company.
From July 1987 until July 1988 he was President of Timms Biomedical
Consultants, Inc. From 1984 until July 1987 Dr. Timms worked for
Monsanto/Searle, where his positions included that of President and Corporate
Vice President at Searle Research & Development, G.D. Searle & Co. Prior to
1984, Dr. Timms held various positions with Sandoz, Inc. including Corporate
Vice President and Director, Pharmaceutical Research and Development and Full
Member Board of Management Sandoz AG. He received his doctorate in
pharmacology from the University of Birmingham, England. Dr. Timms is also a
director of Ansan, Inc., a publicly traded company.
-2-
<PAGE>
Monroe E. Trout, M.D. . . . . . . . . . . . . . . . . . . . . . . . . . 65
Dr. Trout has been a director of Gensia since May 1993. Dr. Trout has been
Interim Chief Executive Officer of Cytran, Inc., a private company, since
March 1996. Dr. Trout was President and Chief Executive Officer of American
Healthcare Systems from October 1986 through December 1994 and Chairman of
the Board from June 1987 through December 1994. From December 1978 until
October 1986, Dr. Trout was responsible for drug regulatory affairs,
worldwide research, employee health and medical aspects of Sterling Drug,
Inc.'s marketing divisions. Dr. Trout also served on the Board of Directors
from December 1978 until October 1986. Dr. Trout received his medical degree
from the University of Pennsylvania and a Juris Doctor from Dickinson School
of Law. Dr. Trout is also a director of The West Company, Incorporated,
Science Applications International Corporation, Baxter International, Cytyc,
Inc. and the UCSD Foundation.
CLASS II
Jerry C. Benjamin. . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Mr. Benjamin has been a director of Gensia since 1987. He has been a
General Partner of Advent Limited, a venture capital management firm in
London, England, since 1985. Prior to that he was employed for 18 years
with Monsanto Corporation in various executive management positions.
Mr. Benjamin is a Director of Biomagnetic Technologies, Inc., Dura
Pharmaceuticals, Inc. and Orthofix International N.V.
Paul K. Laikind, Ph.D. . . . . . . . . . . . . . . . . . . . . . . . . . 40
Dr. Laikind, a co-founder of Gensia, has been a Vice President and
director since the Company's incorporation in November 1986. From 1985 to
1987, Dr. Laikind was an Assistant Research Biochemist at UCSD. From 1984
to 1985, Dr. Laikind was a Postdoctoral Fellow in the Department of
Medicine at UCSD. He received his doctoral degree in chemistry from UCSD.
L. John Wilkerson, Ph.D. . . . . . . . . . . . . . . . . . . . . . . . . 52
Dr. Wilkerson has been a director of Gensia since May 1991. Dr. Wilkerson
has been Chairman of the Board of The Wilkerson Group since 1982. The
Wilkerson Group is a healthcare products consulting firm. Prior to
joining The Wilkerson Group, Dr. Wilkerson was a Vice President and
partner responsible for medical supply security analysis and research at
Smith Barney, Harris, Upham & Co. Dr. Wilkerson is also a director of
British Bio-Technology Corporation, plc, TheraTx Incorporated and several
private companies. He received his doctorate from Cornell University.
CLASS III
James C. Blair, Ph.D.. . . . . . . . . . . . . . . . . . . . . . . . . . 56
Dr. Blair is currently Vice Chairman of the Board of Gensia and was
Chairman of the Board from 1986 to May 1991. He has been a General
Partner of Domain Associates, a venture capital management company, since
1985. Previously, Dr. Blair was employed in venture capital management,
investment research and engineering management. He holds a doctoral
degree in engineering from the University of Pennsylvania. Dr. Blair is
also a director of Amylin Pharmaceuticals, Inc., CoCensys, Inc., Dura
Pharmaceuticals, Inc., Genta Incorporated and Houghten Pharmaceuticals,
Inc.
-3-
<PAGE>
Herbert J. Conrad. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Mr. Conrad has been a Director of Gensia since September 1993. From April
1988 to August 1993, Mr. Conrad was President of the Pharmaceuticals
Division, and Senior Vice President, of Hoffmann-La Roche Inc. Mr. Conrad
was a member of the Board of Directors of Hoffmann-La Roche and a member
of its Executive Committee from December 1981 through August 1993.
Mr. Conrad joined Hoffmann-La Roche in 1960 and held various positions
over the years including Senior Vice President of the Pharmaceuticals
Division, Chairman of the Board of Medi-Physics, Inc. and Vice President,
Public Affairs and Planning Division. Mr. Conrad is also a director of
Biotechnology General Corp., Bradley Pharmaceuticals and Dura
Pharmaceuticals, Inc.
David F. Hale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Mr. Hale has been President and Chief Executive Officer of Gensia since
June 1987 and Chairman of the Board since 1991. Prior to joining Gensia,
Mr. Hale was President and Chief Executive Officer of Hybritech
Incorporated, a biotechnology company which was acquired by Eli Lilly &
Company in 1986. Mr. Hale joined Hybritech in 1982 as Senior Vice
President of Marketing and Business Development, became Executive Vice
President and Chief Operating Officer later that year, President in 1983
and Chief Executive Officer in 1986. Before joining Hybritech, Mr. Hale
was Vice President and General Manager of BBL Microbiology Systems, a
division of Becton, Dickinson and Company. Earlier in his career, he held
several positions at Ortho Pharmaceutical Corporation, a division of
Johnson & Johnson, including Director of the Ortho Dermatological Division
and Director of Product Management. Mr. Hale serves on the boards of Dura
Pharmaceuticals, Inc. and Genta Incorporated.
Steven C. Mendell. . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Mr. Mendell has been a Director of Gensia since April 1990. He is
President and Chief Executive Officer of Prizm Pharmaceuticals, Inc., a
private biotechnology company. From 1984 until 1993 he was Chairman of
the Board of Directors of XOMA Corporation, a biotechnology company, and
from 1986 until 1992 he was also its Chief Executive Officer. Prior to
joining XOMA, Mr. Mendell was associated with Becton, Dickinson & Company,
where his positions included President of the BBL Microbiology Systems
Division and a number of other international and domestic management
positions. Mr. Mendell still serves as a director of XOMA.
The Board of Directors held 12 meetings during the 1995 fiscal year. All
Directors attended at least 75% of the aggregate number of meetings of the Board
and of the Committees on which such Directors serve except for Director
Wilkerson who attended less than 75% of such meetings.
The Board of Directors has appointed a Stock Option Committee, a
Compensation Committee, an Audit Committee, an Executive Committee and a
Nominating Committee.
The members of the Stock Option Committee are James C. Blair, Jerry C.
Benjamin and Steven C. Mendell. The Stock Option Committee held seven meetings
during the 1995 fiscal year. The Stock Option Committee's function is to
administer the Gensia, Inc. Amended and Restated 1990 Stock Plan (the "1990
Plan"). See "Report to Stockholders on Executive Compensation."
The members of the Compensation Committee are James C. Blair, Jerry C.
Benjamin, Herbert J. Conrad and Steven C. Mendell. The Compensation Committee
held five meetings during the 1995 fiscal year. The Compensation Committee's
functions are to determine and supervise compensation to be paid to officers and
directors of the Company. See "Report to Stockholders on Executive
Compensation."
-4-
<PAGE>
The members of the Audit Committee are James C. Blair, Steven C. Mendell
and Daniel O. Pegg. The Audit Committee held two meetings during the 1995
fiscal year. The Audit Committee's functions are to monitor the effectiveness
of the audit effort, to supervise the Company's financial and accounting
organization and financial reporting and to select a firm of certified public
accountants whose duty it is to audit the books and accounts of the Company for
the fiscal year for which they are appointed.
The members of the Executive Committee are James C. Blair, David F. Hale,
Jerry C. Benjamin, Steven C. Mendell and L. John Wilkerson. The Executive
Committee held one meeting during the 1995 fiscal year. The Executive Committee
has been delegated the right to exercise all the power and authority of the
Board of Directors to the extent permitted by Delaware law and the Company's
Charter.
The members of the Nominating Committee are David F. Hale, Alan R. Timms,
Monroe E. Trout and L. John Wilkerson. The Nominating Committee held no
meetings during the 1995 fiscal year. The Nominating Committee's function is to
select and nominate individuals to fill vacancies in the Company's Board of
Directors. The Nominating Committee will not consider nominees recommended by
security holders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE CLASS I DIRECTOR NOMINEES
LISTED ABOVE.
-5-
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of May 10, 1996, as to shares
of Common Stock beneficially owned by (i) each director and nominee for
director, (ii) the officers of the Company named in the Summary Compensation
Table set forth herein, (iii) the directors and executive officers of the
Company as a group and (iv) each person known by the Company to be the
beneficial owner of more than 5% of the outstanding shares of Common Stock of
the Company. Except as otherwise indicated and subject to applicable community
property laws, each person has sole investment and voting power with respect to
the shares shown. Ownership information is based upon information furnished by
the respective individuals or entities, as the case may be.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK
---------------------------
NUMBER OF PERCENT
SHARES(1) OF CLASS(2)
--------- -----------
<S> <C> <C>
Hoechst Marion Roussel, Inc. . . . . . . . . 3,396,442 (3) 9.5%
10236 Marion Park Drive
Kansas City, MO 64134-0627
State of Wisconsin Investment Board. . . . . 3,161,400 (4) 8.8
P. O. Box 7842
Madison, WI 53707
David F. Hale. . . . . . . . . . . . . . . . 896,058 (5) 2.4
Jerry C. Benjamin. . . . . . . . . . . . . . 23,750 (6) *
James C. Blair . . . . . . . . . . . . . . . 102,762 (7) *
Daniel D. Burgess. . . . . . . . . . . . . . 94,432 (8) *
Herbert J. Conrad. . . . . . . . . . . . . . 14,024 (9) *
Thomas P. Donahoe. . . . . . . . . . . . . . 104,853 (10) *
Stephen C. Eisold. . . . . . . . . . . . . . 124,288 (11) *
Paul K. Laikind. . . . . . . . . . . . . . . 390,837 (12) 1.1
Steven C. Mendell. . . . . . . . . . . . . . 23,812 (13) *
Daniel O. Pegg . . . . . . . . . . . . . . . 39,728 (14) *
Alan R. Timms. . . . . . . . . . . . . . . . 34,375 (15) *
Monroe E. Trout. . . . . . . . . . . . . . . 18,779 (16) *
Patrick D. Walsh. . . . . . . . . . . . . . 40,813 (17) *
L. John Wilkerson. . . . . . . . . . . . . . 63,562 (18) *
All directors and executive officers
as a group (17 persons) . . . . . . . . . 2,613,294 (19) 7.1
</TABLE>
_____________
*Less than one percent
(1) To the Company's knowledge, the persons named in the table have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable and the information contained in the footnotes to this table.
(2) For purposes of computing the percentage of outstanding shares held by each
person or group of persons named above on a given date, shares which such
person or group has the right to acquire within 60 days after such date are
deemed to be outstanding, but are not deemed to be outstanding for the
purposes of computing the percentage ownership of any other person.
(3) Based on its amended Schedule 13G dated February 12, 1996 wherein Hoechst
Marion Roussel, Inc. (formerly Marion Merrell Dow, Inc.) reported the
beneficial ownership of 3,396,442 shares of Common Stock at December 31,
1995.
(4) Based on its amended Schedule 13G dated February 15, 1996 wherein State of
Wisconsin Investment Board reported the beneficial ownership of 3,161,400
shares of Common Stock at December 31, 1995.
(5) Includes 438,000 shares held by a trust as to which Mr. Hale has shared
voting and investment power, 42,000 shares held by Mr. Hale as custodian
for his minor children as to which Mr. Hale has sole voting and investment
power, and 346,704 shares which Mr. Hale has the right to acquire within 60
days of May 10, 1996 pursuant to the exercise of options and warrants.
(6) Includes 21,750 shares Mr. Benjamin has the right to acquire within 60 days
of May 10, 1996 pursuant to the exercise of options.
-6-
<PAGE>
(7) Includes 13,125 shares which Dr. Blair has the right to acquire within 60
days of May 10, 1996 pursuant to the exercise of options and warrants.
Includes 1,125 shares beneficially owned by Domain Partners, L.P.
Dr. Blair is a General Partner of One Palmer Square Associates, L.P., the
general partner of Domain Partners, L.P. Includes 50,000 shares which
Domain Partners III, L.P. has the right to acquire within 60 days of
May 10, 1996. Dr. Blair is a General Partner of One Palmer Square
Associates III, L.P., the general partner of Domain Partners III, L.P.
Dr. Blair has an indirect beneficial interest in these shares. Includes
1,041 shares beneficially owned by Domain Associates Profit Sharing Plan.
Includes 4,125 shares and 1,875 shares which Domain Associates and Domain
Associates Profit Sharing Plan, respectively, have the right to acquire
within 60 days of May 10, 1996 pursuant to the exercise of warrants.
Dr. Blair is a General Partner of Domain Associates.
(8) Includes 52,814 shares which Mr. Burgess has the right to acquire within
60 days of May 10, 1996, pursuant to the exercise of options and warrants.
(9) Includes 14,024 shares which Mr. Conrad has the right to acquire within
60 days of May 10, 1996 pursuant to the exercise of options.
(10) Includes 76,455 shares which Mr. Donahoe has the right to acquire within
60 days of May 10, 1996 pursuant to the exercise of options and warrants.
(11) Includes 24,816 shares which Mr. Eisold has the right to acquire within
60 days of May 10, 1996 pursuant to the exercise of options and warrants.
(12) Includes 53,979 shares which Dr. Laikind has the right to acquire within
60 days of May 10, 1996 pursuant to the exercise of options.
(13) Includes 23,812 shares which Mr. Mendell has the right to acquire within 60
days of May 10, 1996 pursuant to the exercise of options and warrants.
(14) Includes 15,562 shares which Mr. Pegg has the right to acquire within
60 days of May 10, 1996 pursuant to the exercise of options and warrants.
(15) Includes 34,375 shares which Dr. Timms has the right to acquire within
60 days of May 10, 1996 pursuant to the exercise of options and warrants.
(16) Includes 14,779 shares which Dr. Trout has the right to acquire within
60 days of May 10, 1996 pursuant to the exercise of options.
(17) Includes 13,778 shares which Mr. Walsh has the right to acquire within
60 days of May 10, 1996 pursuant to the exercise of options.
(18) Includes 2,062 shares which Dr. Wilkerson has the right to acquire within
60 days of May 10, 1996 pursuant to the exercise of warrants. Includes
41,250 shares owned by Longbow Partners and 20,250 shares which Longbow
Partners has the right to acquire within 60 days of May 10, 1996 pursuant
to the exercise of options. Longbow Partners is a partnership of which the
partners are certain shareholders of The Wilkerson Group. Dr. Wilkerson
disclaims beneficial ownership of the shares and options held by Longbow
Partners. Dr. Wilkerson is Chairman of The Wilkerson Group.
(19) Includes 817,327 shares which may be acquired within 60 days of May 10,
1996 pursuant to the exercise of options and warrants. Includes 1,022,698
shares held by trusts for the benefit of family members of directors and
officers as to which such directors and officers have voting and investment
power.
-7-
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Information is set forth below concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal years
ended December 31, 1993, 1994 and 1995, of those persons who were at
December 31, 1995 (i) the chief executive officer and (ii) the other four most
highly compensated executive officers of the Company whose salary and bonus
exceeded $100,000. Mr. Hale's base salary for 1996 has been set at the same
level as his 1995 base salary. Mr. Eisold left the Company effective May 10,
1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------------- -------------------------------
AWARDS
-------------------------------
SECURITIES ALL OTHER
NAME AND PRINCIPAL OTHER ANNUAL RESTRICTED STOCK UNDERLYING COMPEN-
POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) AWARDS ($) OPTIONS (#) SATION ($)
- ------------------ ---- ---------- --------- ---------------- ---------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
David F. Hale 1995 $450,000 $50,800 - $149,625(1) 75,000 $19,200(2)
President, Chief 1994 $450,000 - - - 200,000(3) $14,100(2)
Executive Officer 1993 $415,000 $58,700 - - 25,000 $10,600(2)
and Chairman of the
Board
Daniel D. Burgess 1995 $160,000 $40,800 - $ 59,850(1) 15,000 $22,400(4)
Vice President, 1994 $152,500 - - $ 72,975(5) 65,000(6) $ 2,300(4)
Finance, Chief 1993 $120,000 $21,600 - - 10,000 $ 1,300(4)
Financial Officer
and Treasurer
Thomas P. Donahoe 1995 $160,000 $40,800 - $ 59,850(1) 15,000 $ 4,100(7)
Vice President, 1994 $160,000 - - $ 72,975(5) 38,750(8) $ 3,500(7)
General Counsel and 1993 $150,000 $16,500 - - 10,000 $ 2,700(7)
Assistant Secretary
Stephen C. Eisold 1995 $175,000 $27,000 - $ 59,850(1) 15,000 $ 5,700(9)
Vice President and 1994 $170,000 - - $ 72,975(5) 37,500(10) $ 4,700(9)
General Manager, 1993 $155,000 $16,600 - - 10,000 $ 3,100(9)
Pharmaceuticals
North America
Patrick D. Walsh 1995 $185,000 $35,800 $53,500(11) $ 59,850(1) 25,000 $ 1,500(12)
President and Chief 1994 $ 89,400 - $65,500(11) $ 72,975(5) 65,000(13) $ 300(12)
Operating Officer 1993 - - - _ - -
of Gensia
Laboratories, Ltd.
</TABLE>
(1) Represents the aggregate of the fair market value of the shares of
restricted stock as of the date of grant ($4.00 per share) less the
aggregate consideration paid therefor ($.01 per share). On December 20,
1995, the Company's Board of Directors authorized awarding officers and
certain employees the opportunity to exchange certain of their outstanding
stock options for restricted stock awards. Accordingly, Messrs. Hale,
Burgess, Donahoe, Eisold and Walsh each had the right to purchase
restricted shares of Common Stock of the Company for a nominal cash
purchase price equal to the par value of the stock ($.01 per share) in
exchange for certain options held by each. The restricted shares vest in
full on January 31, 1997 or earlier upon, among other things, a change in
control. However, in the event of an involuntarily termination without
cause prior to January 31, 1997, the shares vest on a pro rata basis, in
which case the number of vested shares will equal the number of restricted
shares purchased times .0025 times the number of days of Gensia service
completed after December 20, 1995. Mr. Hale received an award of 37,500
shares of restricted stock and each of Messrs. Burgess, Donahoe, Eisold and
Walsh received an award of 15,000 shares of restricted stock. The
aggregate number and value of all restricted shares held by Mr. Hale at
December 31, 1995 were 37,500 and $196,500, respectively. The aggregate
number and value of all restricted shares held by each of Messrs. Burgess,
Donahoe, Eisold and Walsh at December 31, 1995 were 30,000 and $119,700,
respectively. The foregoing calculation of values of the restricted shares
assumes that the shares of restricted stock awarded by the Board in
December 1995 were outstanding as of December 31, 1995.
(2) Represents $8,700, $9,100 and $14,700, the respective amounts paid by the
Company for long-term disability insurance premiums for Mr. Hale in 1993,
1994 and 1995, and $1,900, $5,000 and $4,500, the respective amounts paid
by the Company for life insurance premiums for Mr. Hale in 1993, 1994 and
1995.
-8-
<PAGE>
(3) Includes options to purchase 150,000 shares of the Company's Common Stock
at exercise prices greater than $4.875 which were cancelled in October 1994
in exchange for an option to purchase 150,000 shares of the Company's
Common Stock at an exercise price of $4.875 per share, the fair market
value on the date of grant.
(4) Represents $1,100, $1,900 and $1,900, the respective amounts paid by the
Company for long-term disability insurance premiums for Mr. Burgess in
1993, 1994 and 1995, and $200, $400, and $500, the respective amounts paid
by the Company for certain life insurance premiums for Mr. Burgess in 1993,
1994 and 1995. For 1995, also represents certain indebtedness of Mr.
Burgess forgiven by the Company in the amount of $20,000. See "Certain
Transactions."
(5) Represents the aggregate of the fair market value of the shares of
restricted stock as of the date of grant ($4.875 per share) less the
aggregate consideration paid therefor ($.01 per share). As of October 29,
1994, officers and certain employees were given the opportunity to exchange
certain of their outstanding stock options for restricted stock awards.
Accordingly, Messrs. Burgess, Donahoe, Eisold and Walsh each had the right
to purchase restricted shares of Common Stock of the Company for a nominal
cash purchase price equal to the par value of the stock ($.01 per share) in
exchange for certain options held by each. The restricted shares vested in
full on March 31, 1996. Each of Messrs. Burgess, Donahoe, Eisold and Walsh
received an award of 15,000 shares of restricted stock.
(6) Includes options to purchase 30,000 shares of the Company's Common Stock at
exercise prices greater than $4.875 which were cancelled in October 1994 in
exchange for an option to purchase 30,000 shares of the Company's Common
Stock at an exercise price of $4.875 per share, the fair market value on
the date of grant.
(7) Represents $2,200, $2,600 and $2,600, the respective amounts paid by the
Company for long-term disability insurance premiums for Mr. Donahoe in
1993, 1994 and 1995, and $500, $900, and $1,500, the respective amounts
paid by the Company for certain life insurance premiums for Mr. Donahoe in
1993, 1994 and 1995.
(8) Includes options to purchase 13,750 shares of the Company's Common Stock at
exercise prices greater than $4.875 which were cancelled in October 1994 in
exchange for an option to purchase 13,750 shares of the Company's Common
Stock at an exercise price of $4.875 per share, the fair market value on
the date of grant.
(9) Represents $2,200, $3,100 and $4,000, the respective amounts paid by the
Company for long-term disability insurance premiums for Mr. Eisold in 1993,
1994 and 1995, and $900, $1,600, and $1,700, the respective amounts paid by
the Company for certain life insurance premiums for Mr. Eisold in 1993,
1994 and 1995.
(10) Includes options to purchase 12,000 shares of the Company's Common Stock at
exercise prices greater than $4.875 which were cancelled in October 1994 in
exchange for an option to purchase 12,000 shares of the Company's Common
Stock at an exercise price of $4.875 per share, the fair market value on
the date of grant.
(11) Represents $65,500 and $53,500, the respective amounts paid by the Company
to Mr. Walsh for expenses in connection with his relocation to San Diego in
1994 and 1995, and includes payments to Mr. Walsh for taxes he incurred on
certain relocation expenses. The respective amounts of relocation
reimbursement and tax reimbursement for 1994 are $45,500 and $20,000. The
respective amounts of relocation reimbursement and tax reimbursement for
1995 are $32,500 and $21,000.
(12) Represents $1,000 paid by the Company for long-term disability insurance
premiums for Mr. Walsh in 1995 and $300 and $500, the respective amounts
paid by the Company for certain life insurance premiums for Mr. Walsh in
1994 and 1995.
(13) Includes options to purchase 25,000 shares of the Company's Common Stock at
exercise prices greater than $4.875 which were cancelled in October 1994 in
exchange for an option to purchase 25,000 shares of the Company's Common
Stock at an exercise price of $4.875 per share, the fair market value on
the date of grant.
COMPENSATION OF DIRECTORS
The members of the Board of Directors who are not employees of the Company
will receive an annual retainer of $10,000 commencing June 1996, and they are
reimbursed for reasonable expenses incurred in connection with meetings of the
Board of Directors and its committees. In addition, the non-employee directors
receive automatic grants of options to purchase shares of the Company's Common
Stock, as described under "Proposal 2, Approval of the Gensia, Inc. Amended and
Restated 1990 Stock Plan."
SEVERANCE AGREEMENTS
The Company is a party to certain Severance Agreements (the "Severance
Agreements") with David F. Hale and the following Named Executive Officers:
Daniel D. Burgess and Thomas P. Donahoe. Pursuant to the Severance Agreements,
(i) if, within the first 12-month period after the occurrence of a "Change in
Control" of
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the Company, (a) the officer voluntarily resigns for "Good Reason" or (b) the
Company terminates the officer's employment for any reason other than "Cause" or
"Disability," or (ii) if the Company terminates the officer's employment because
his position has been eliminated in connection with a restructuring or reduction
in force, as determined by the Company, the officer will be entitled to receive
a severance payment during the "Continuation Period" at an annual rate equal to
the sum of (i) the employee's base compensation at the annual rate in effect on
the date when the termination of his employment with the Company is effective
plus (ii) the arithmetic mean of the employee's annual bonuses for the last
three calendar years completed prior to the date when the termination of his
employment with the Company is effective. Further, the Continuation Period is
treated as employment for purposes of determining the employee's vesting in any
stock options and shares of restricted stock granted to him by the Company.
The "Continuation Period" is defined (except with respect to Mr. Hale's
Severance Agreement) as the period commencing on the effective date of the
employee's termination of employment and ending on the earlier of (i) the date
nine months after the date when the employment termination was effective or
(ii) the date of the employee's death. If, however, the employee is not
employed in a new position comparable to his position with the Company on the
date nine months after his employment termination was effective, then the
Continuation Period is extended to the date when the employee becomes employed
in such a position, but in no event by more than three months. With respect to
Mr. Hale only, the Continuation Period is defined as the period commencing on
the effective date of Mr. Hale's termination of employment and ending on the
earlier of (i) 18 months after the date when the employment termination was
effective or (ii) the date of Mr. Hale's death.
"Change in Control" is defined as the occurrence of any of the following
events: (i) the first purchase of shares of the Company's Common Stock pursuant
to a tender offer or exchange offer (other than an offer by the Company) for
all, or any part, of such Common Stock; (ii) any acquisition of voting
securities of the Company by any person or group, which theretofore did not
beneficially own voting securities, representing more than 30% of the voting
power of all outstanding voting securities of the Company, if such acquisition
results in such entity, person or group owning beneficially securities
representing more then 30% of the voting power of all outstanding voting
securities of the Company; (iii) approval by the Company's stockholders of a
merger in which the Company does not survive as an independent publicly-owned
corporation, a consolidation, or a sale, exchange or other disposition of all,
or substantially all, of the Company's assets; or (iv) a change in the
composition of the Company's Board of Directors during any period of two
consecutive years such that individuals who at the beginning of such period were
members of the Board cease for any reason to constitute at least a majority
thereof, unless the election, or the nomination for election by the Company's
stockholders, of each new Director was approved by a vote of at least two-thirds
of the Directors then still in office who were Directors at the beginning of the
period.
"Good Reason" means that the employee: (i) has been demoted or has
incurred a material reduction in his authority or responsibility as an employee
of the Company; (ii) has incurred a reduction in his total compensation
(including benefits) as an employee of the Company; (iii) has not received a
contemporaneous increase in his total compensation (including benefits) which is
commensurate with increases in total compensation (including benefits) received
by a majority of executive-level employees of the Company with duties and
responsibilities substantially comparable to those of the employee; (iv) has not
received a bonus commensurate with bonuses (if any) received by a majority of
executive-level employees of the Company with duties and responsibilities
substantially comparable to those of the employee; or (v) has been notified that
his principal place of work as an employee of the Company will be relocated by a
distance of 50 miles or more.
"Cause" means (i) a willful act by the employee which constitutes
misconduct or fraud and which is injurious to the Company or (ii) conviction of,
or a plea of "guilty" or "no contest" to, a felony.
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STOCK OPTIONS
The following tables summarize option grants and exercises during fiscal
1995 to or by the executive officers named in the Summary Compensation Table
above, and the value of the options held by such persons at the end of fiscal
1995. The Company does not grant Stock Appreciation Rights.
OPTION GRANTS IN FISCAL 1995
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK APPRECIATION
INDIVIDUAL GRANTS(1) FOR OPTION TERM(2)
-------------------------------------------------------------------- ----------------------------
NUMBER OF % OR TOTAL
SECURITIES OPTIONS GRANTED
UNDERLYING TO EMPLOYEES EXERCISE
OPTIONS EMPLOYEES IN OR BASE EXPIRATION
NAME GRANTED (#) FISCAL YEAR 1995 PRICE ($/SH) DATE 5% ($) 10% ($)
- ---- ----------- ---------------- ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
David F. Hale, 50,000 4.2% $3.375 01/13/2005 $106,126 $268,944
Chief Executive 25,000 2.1% $4.00 12/20/2005 $ 62,889 $159,374
Officer
Daniel D. Burgess 15,000 1.3% $4.00 12/20/2005 $ 37,734 $ 95,625
Thomas P. Donahoe 15,000 1.3% $4.00 12/20/2005 $ 37,734 $ 95,625
Stephen C. Eisold 15,000 1.3% $4.00 12/20/2005 $ 37,734 $ 95,625
Patrick D. Walsh 10,000 .8% $4.50 11/16/2005 $ 28,300 $ 71,718
15,000 1.3% $4.00 12/20/2005 $ 37,734 $ 95,625
</TABLE>
(1) Generally, options become exercisable ratably on a daily basis over a four-
year period and vest in full in the event of a change in control with
respect to the Company and in the event of the death of the optionee. The
exercise price per share of options granted in 1995 represented the fair
market value of the underlying shares on the date of grant. Generally,
options granted have a term of 10 years, subject to earlier termination in
certain events related to termination of employment.
(2) The 5% and 10% assumed rates of appreciation are mandated by the rules of
the Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price.
Automatic vesting of all options will occur on or following (1) the first
purchase of shares of the Company's Common Stock pursuant to a tender offer or
exchange offer (other than an offer by the Company) for all, or any part of, the
Company's Common Stock, (2) approval by the Company's stockholders of a merger
in which the Company does not survive as an independent, publicly owned
corporation (other than a merger that leaves the stockholders of the Company
with substantially the same ownership interest in the new corporation), a
consolidation, or a sale or exchange or other disposition of all or
substantially all the Company's assets, (3) a change in the composition of the
Board of Directors as a result of which fewer than a majority of the incumbent
directors are directors who had been directors of the Company 24 months prior to
such change, unless each new director was elected or nominated for election to
the Board of Directors with the approval of at least two-thirds of the directors
who had been directors of the Company 24 months prior to such change and who
were still in office at the time of the election or nomination or (4) an
acquisition of voting securities by any person or group which theretofore did
not beneficially own more than 30% of the voting power of all outstanding voting
securities of the Company, if such acquisition results in such person or group
owning beneficially securities representing more than 30% of the voting power of
the Company's outstanding securities. A change in the relative beneficial
ownership under (4) by reason of a repurchase by the Company of its own
securities will be disregarded.
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<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL 1995 AND VALUE OF OPTIONS
AT END OF FISCAL 1995
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT END OF OPTIONS AT END OF
FISCAL 1995 (#) FISCAL 1995 ($)(1)
SHARES ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- --------------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
David F. Hale, - - 294,223/153,277 $345,323/$135,678
Chief Executive
Officer
Daniel D. Burgess - - 38,662/43,838 $ 34,610/$ 29,465
Thomas P. Donahoe - - 67,073/34,177 $ 44,939/$ 25,843
Stephen C. Eisold - - 15,760/31,740 $6,009/$ 24,929
Patrick D. Walsh - - 7,896/37,104 $3,196/$ 30,554
</TABLE>
(1) Calculated on the basis of the fair market value of the underlying
securities at December 31, 1995 ($5.25), minus the exercise price.
REPORT TO STOCKHOLDERS ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Company (the
"Committee") and the Stock Option Committee are pleased to present their report
on executive compensation. This report is provided by the Committee to assist
stockholders in understanding the Committee's objectives and procedures in
establishing the compensation of the Company's executive officers and describes
the basis on which compensation determinations for 1995 were made by the
Committee. In making its determinations, the Committee has relied, in part, on
geographic and competitive considerations, independent surveys of compensation
of management of companies in the biotechnology and pharmaceutical industries,
including companies included in the Nasdaq Pharmaceutical Stock Index used in
the Company's Stock Price Performance Graph set forth in this proxy statement,
and recommendations of management.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Committee believes that compensation of the Company's executive
officers should:
- Encourage creation of stockholder value and achievement of strategic
corporate objectives.
- Integrate compensation with the Company's annual and long-term
corporate objectives and strategy, and focus executive behavior on the
fulfillment of those objectives.
- Recognize individual initiative, effort and accomplishment.
- Provide a competitive total compensation package that enables the
Company to attract and retain, on a long-term basis, high caliber
personnel.
- Provide a total compensation opportunity that is competitive with
companies in the biotechnology and pharmaceutical industries, taking
into account relative company size, stage of development, performance
and geographic location as well as individual responsibilities and
performance.
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<PAGE>
- Align the interests of management and stockholders and enhance
stockholder value by providing management with longer term incentives
through equity ownership by management.
KEY ELEMENTS OF EXECUTIVE COMPENSATION
Because the Company is still in the process of developing its proprietary
products and so has not yet brought any such products to market, the use of
traditional corporate performance standards, such as revenues, profit levels and
return on equity, are not appropriate in the evaluation of executive officer
performance. Accordingly, there is no specific relationship of traditional
corporate performance standards to executive compensation. Instead, the
compensation of executive officers is based, in part, on the Company's
achievements during the year in advancing its products and accomplishing other
business objectives, as well as the individual contributions and achievements of
each executive officer. The Company's existing compensation structure for
executive officers generally includes a combination of cash compensation and
stock options.
CASH COMPENSATION. Compensation levels are largely determined through
comparisons with companies of similar size and/or complexity in the
biotechnology and pharmaceutical industries and/or companies with which the
Company competes for key personnel. Cash compensation for the Company's
executive officers, including its Chief Executive Officer, is generally targeted
at the median of the companies reviewed. As stated above, because the Company
is still developing its proprietary products and so has not yet brought any such
products to market, the use of traditional corporate performance standards, such
as profit levels, revenues and return on equity, was not appropriate in the
evaluation of executive officer performance in 1995. In establishing base
salaries for 1995, the Committee instead considered, among other things, the
Company's achievements in advancing its products and accomplishing other
business objectives, and the individual contributions and achievements of each
executive officer. Actual compensation is based on an evaluation of job
responsibilities for the position, comparisons of compensation levels, Company
achievements and individual performance. Individual performance is evaluated by
reviewing organizational and management development progress against individual
contributions and achievements and the degree to which teamwork and Company
values are fostered. At the beginning of fiscal 1995, goals were established
for the Company and approved by the Board of Directors. Goals set for 1995
included obtaining marketing approval and the launching of the GenESA System in
the United Kingdom and Germany; obtaining approvals of the GenESA System in the
United States and Canada; the initiation of pivotal studies for Geomatrix
nifedipine; completion of Phase 1 studies with GP-531, a second generation
adenosine regulating agent ("ARA") compound; making a final determination with
respect to the acquisition, sale or continued funding of Aramed, Inc.
("Aramed"); at Gensia Laboratories Ltd. ("GLL"), obtaining approval of certain
ANDAs and the filing of key additional ANDAs for approval; finalization of an
agreement with Atrix, Inc. to develop an oncology product; raising additional
financial resources for the Company; and licensing-in additional products for
commercialization by the Gensia sales and marketing organization. Further,
compensation levels for the executive officers are competitive within a range
that the Committee considers to be reasonable and necessary.
The Committee may award additional cash compensation in the form of a bonus
at the end of a fiscal year, based on the Company's achievements and the
individual's contributions to those achievements, if it deems such an award to
be appropriate. Based on the Company's achievement of a number of key
objectives in 1995 that were important for the continued growth and development
of the Company, including obtaining marketing approval and the launching of the
GenESA System in the United Kingdom and Germany; completion of Phase 1 studies
with GP-531; completion of the acquisition of Aramed; obtaining approval of
certain ANDAs and the filing of key additional ANDAs at GLL, finalization of an
agreement with Atrix to develop an oncology product, raising additional
financial resources for the Company; and licensing-in additional products for
commercialization by the Gensia sales and marketing organization, the Committee
decided to award cash bonuses for 1995 to certain officers and key employees.
STOCK OPTIONS. The Company's Stock Option Plan is administered by the
Company's Stock Option Committee, which is a committee of outside directors of
the Company. The Stock Option Committee believes that by providing those
persons who have substantial responsibility for the management and growth of the
Company with an opportunity to increase their ownership of Company stock, the
best interest of stockholders and executives
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<PAGE>
will be closely aligned. Therefore, executive officers, as well as all
employees, are eligible to receive stock options from time to time, giving them
the right to purchase shares of common stock of the Company at a specified
price. The number of stock options granted to executive officers, including the
Chief Executive Officer, is based on the Company's achievements during the year
and the individual's contributions to those achievements and a review of data on
the range of aggregate annual option grants compared to the number of shares of
stock outstanding for officers with similar duties and titles at biotechnology
companies taking into account differences in such companies' stock prices, stage
of development, achievements and the like.
In December 1995 the Committee determined that in order to encourage its
employees, including officers, to continue to play a key role in building long-
term value at the Company, it should provide such employees with an additional
restricted stock award as an incentive to stay at the Company and assist in
creating this value. Accordingly, certain employees, including officers, of the
Company were granted the opportunity to exchange some of their stock options for
"restricted stock awards" under the 1990 Plan. In addition, each such employee
who elected to exchange his or her options was granted additional restricted
stock awards for a number of shares equal to two times the number of shares
which had been exchanged. The shares of restricted stock were sold to employees
for a nominal cash purchase price equal to the par value of the shares of the
Company's Common Stock ($.01 per share). The restricted shares vest in full on
January 31, 1997; provided, that (i) if an employee leaves the Company
voluntarily or is terminated for cause prior to January 31, 1997, then all of
the restricted stock award shares are forfeited, (ii) in the event of an
involuntary termination of an employee without cause prior to January 31, 1997,
the shares vest on a pro rata basis, and (iii) the restricted stock award shares
vest in full on the occurrence of a change in control. In the event of
involuntary termination without cause prior to January 31, 1997, the number of
vested shares will equal the number of shares purchased times .0025 times the
number of days of service at the Company completed after December 20, 1995.
1995 CEO COMPENSATION
The annual salary of David F. Hale, the Company's President, Chief
Executive Officer and Chairman of the Board, for fiscal 1995 was $450,000, which
was the same as 1994. Because of the disappointing Protara results and the
difficult financing environment for the Company, the Committee did not award a
salary increase to Mr. Hale for 1995. As stated above, because the Company is
still developing its proprietary products and so has not yet brought any such
products to market, the use of traditional performance standards, such as profit
levels, revenues and return on equity, are not appropriate in the evaluation of
Mr. Hale's performance. The Company and Mr. Hale achieved a number of the
corporate and individual objectives (which objectives were identical) for 1995.
Some of these achievements were as follows: receipt of marketing approval in
seven European countries for the GenESA System, filing of an NDA amendment in
October 1995 for the GenESA System in the United States addressing issues raised
by the FDA in its not approvable letter with respect to the product, the
acquisition of Aramed which provided the Company with certain second generation
ARA compounds, completion of Phase 1 clinical trials for GP-531, a second
generation ARA compound, restructuring the agreement with the Upjohn Company and
Delta West, a subsidiary of Upjohn, on terms favorable to Gensia, receipt of
ANDA approval of doxorubicim, the first oncolytic product approved in the United
States in polymer vials, and extension of the Company's exclusive distribution
agreement with the LMA in the United States and the obtaining of rights to four
new airway management products. The Compensation Committee determined that
these achievements were critical to the Company's future growth and could assist
the Company in enhancing stockholder value and determined to compensate Mr. Hale
for his role in achieving these accomplishments. Accordingly, the Committee
awarded a cash bonus of $50,000 to Mr. Hale for 1995.
Additionally, the Stock Option Committee granted Mr. Hale new options to
purchase 75,000 shares of the Company's Common Stock in 1995. As part of the
restricted stock award program, Mr. Hale received an award of 37,500 shares of
restricted stock of the Company at $.01 per share in exchange for outstanding
options to purchase 12,500 shares of the Company's Common Stock.
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<PAGE>
MISCELLANEOUS
Section 162(m) of the Internal Revenue Code was enacted in 1993 and took
effect for fiscal years beginning in 1994. Section 162(m) disallows the
deductibility by the Company of any compensation over $1 million per year paid
to each of the chief executive officer and the four other most highly
compensated executive officers, unless certain criteria are satisfied. The
Board of Directors has approved the amendment of the Company's 1990 Stock Plan
to, among other things, qualify for an exemption from the $1 million limit on
deductions under Section 162(m) with respect to option grants under the 1990
Stock Plan.
This Compensation Committee Report shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent the Company specifically
incorporates this report by reference, and shall not otherwise be deemed filed
under such Acts.
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
James C. Blair James C. Blair
Jerry C. Benjamin Jerry C. Benjamin
Herbert J. Conrad Steven C. Mendell
Steven C. Mendell
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are James C. Blair, Herbert J.
Conrad, Jerry C. Benjamin and Steven C. Mendell. The members of the Stock
Option Committee are James C. Blair, Jerry C. Benjamin and Steven C. Mendell.
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<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following graph illustrates a comparison of the cumulative total
stockholder return (change in stock price plus reinvested dividends) of the
Company's Common Stock with the CRSP Total Return Index for The Nasdaq Stock
Market (U.S. and Foreign) (the "Nasdaq Composite Index") and the CRSP Total
Return Index for Nasdaq Pharmaceutical Stocks (the "Nasdaq Pharmaceutical
Index"). The comparisons in the graph are required by the Securities and
Exchange Commission and are not intended to forecast or be indicative of
possible future performance of the Company's Common Stock.
[GRAPH]
12/31/90 12/31/91 12/31/92 12/31/93 12/30/94 12/31/95
-------- -------- -------- -------- -------- --------
Gensia $100.00 $554.72 $261.34 $264.00 $ 45.33 $ 56.00
Nasdaq Composite 100.00 159.61 185.20 214.40 207.37 288.17
Nasdaq Pharmaceutical 100.00 265.74 221.14 197.11 148.35 271.90
Assumes a $100 investment on December 31, 1990 in each of the Company's
Common Stock, the securities comprising the Nasdaq Composite Index, and the
securities comprising the Nasdaq Pharmaceutical Index.
The Nasdaq Pharmaceutical Index includes all companies listed on The Nasdaq
Stock Market within SIC Code 283. A list of those companies included in the
Nasdaq Pharmaceutical Index may be obtained by contacting Wesley N. Fach,
Secretary, at (619) 546-8300.
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<PAGE>
CERTAIN TRANSACTIONS
RELATIONSHIP WITH ARAMED, INC.
In late 1991, the Company formed Aramed, Inc. ("Aramed"), which became a
publicly owned company, to accelerate the discovery, research and development of
certain compounds utilizing the Company's adenosine regulating agent ("ARA")
technology (the "Products"). The Company licensed to Aramed certain technology
to develop and commercialize the Products in the United States, Canada and
Europe. Aramed engaged the Company to perform research and development with
respect to three program areas: second generation ARAs for the intravenous
treatment of acute cardiovascular disorders, ARAs for the oral and intravenous
treatment of certain seizure disorders and ARAs and adenosine agonists for the
intravenous treatment of acute cerebrovascular disorders. In 1995, Aramed paid
the Company an aggregate of approximately $8.3 million to perform such research
and development. Prior to the Company's acquisition of Aramed described below,
Mr. Hale was Chairman of the Board of Aramed and Dr. Laikind was a director and
President of Aramed.
As a way of simplifying its corporate structure and because the Company was
attempting to find corporate partners for its ARA technology generally, the
Company determined that it could be advantageous to acquire Aramed. After
negotiating with a Special Committee of the Aramed Board of Directors during the
second quarter of 1995, the Company and Aramed announced a definitive agreement
in June 1995 under which, subject to Aramed stockholder approval, the Company
would acquire Aramed. In November 1995, Aramed stockholders voted at a special
meeting to approve the acquisition of Aramed by the Company, and Aramed became a
wholly-owned subsidiary of the Company. The consideration paid for each Aramed
share was (a) $8.00 in cash, (b) approximately 0.64 of a share of Common Stock
of the Company, and (c) one contingent value right ("CVR") that represents
(i) the right to receive $1.00 per Aramed share payable in cash or in the Common
Stock of the Company (at the Company's option) at March 31, 1996, and (ii) a
right maturing at December 31, 1996 to potentially receive for each Aramed share
up to an additional 0.75 of a share of Common Stock of the Company. If the
price of the Common Stock of the Company equals or exceeds $4.50 per share for
20 consecutive trading days between issuance and maturity, then the rights
maturing on December 31, 1996 will be reduced to represent for each share of
Aramed a right potentially to receive 0.375 of a share of Common Stock of the
Company. The Company's Common Stock price equaled or exceeded $4.50 per share
for 20 consecutive trading days from December 26, 1995 to January 23, 1996 and
the right was so reduced. The rights maturing on December 31, 1996 will expire
and have no value if the price of Common Stock of the Company equals or exceeds
$5.25 per share for 20 consecutive trading days between issuance and maturity.
An aggregate of approximately 1.8 million shares of Common Stock of the Company
were issued pursuant to the acquisition at closing and the Company issued
approximately 567,554 additional shares to satisfy the $1.00 per share payable
to Aramed stockholders on March 31, 1996. The cash compensation paid as part of
the acquisition consideration was funded out of Aramed's available cash
balances.
RELATIONSHIP WITH GENSIA CLINICAL PARTNERS
In July 1991, the Company organized Gensia Clinical Partners to provide
funding for further research and clinical development of the Company's
GenESA-Registered Trademark- System technology. Gensia Clinical Partners
received net proceeds of approximately $23.0 million from its limited
partners, all of which has been paid to the Company pursuant to a research
and development contract. Gensia Development Corporation, a wholly-owned
subsidiary of the Company, is the sole general partner of Gensia Clinical
Partners.
The Company has granted Gensia Clinical Partners an exclusive royalty-free
license to use certain patent rights and technology that are related to the
GenESA System in the United States, Canada and Europe. Under its development
and marketing agreement with Gensia Clinical Partners, the Company conducts
research and development relating to the GenESA System, and Gensia Clinical
Partners reimbursed the Company for these services through May 1993. The full
amount of proceeds from the partnership has now been utilized and the Company is
funding all further expenses related to the GenESA System. The Company is
obligated under the agreements to market the GenESA System in the United States,
Canada and certain countries in Europe, if
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approved by regulatory authorities in these countries, and to pay royalties
based on those sales. In addition, the Company is required to make a milestone
payment of approximately $5 million payable in cash or Common Stock of the
Company upon approval of the GenESA System by the United States Food and Drug
Administration.
During the two to four-year period following the initial commercialization
of the GenESA System, the Company has the option to purchase the limited
partners' interests in Gensia Clinical Partners. If the Company exercises this
option, it will pay the limited partners approximately $22 million payable in
cash or shares of Common Stock of the Company (the "Advance Payment"), and a
royalty on product sales of the GenESA System for an eleven-year period
following the purchase of the interests. At a limited partner's option, in lieu
of the right to receive the Advance Payment and royalty, a limited partner may
elect to receive a predetermined number of shares of Common Stock of the
Company. If all limited partners were to elect this option, the Company would
issue 1,976,250 shares of Common Stock of the Company (and would not be required
to make the Advance Payment or pay any royalty). In return for the option to
purchase the partnership interests in Gensia Clinical Partners, the Company
issued warrants to the limited partners to purchase 2,173,875 shares of Common
Stock of the Company. If Gensia fails to exercise its option, the Company will
lose all rights to the GenESA System in the United States, Canada and Europe.
The Company plans to continue to fund the development of the GenESA System
using internally available funds. The Company contributed approximately $5.4
million for funding of expenses related to the GenESA System during 1995.
RELATIONSHIP WITH GENTA/JAGOTEC JOINT VENTURE
In January 1993, Gensia and a joint venture ("Genta-Jago") between Genta
Incorporated and Jagotec AG, an affiliate of Jago Pharma AG ("Jago"), formed a
collaboration to develop and market certain oral products for the treatment of
cardiovascular disease using Geomatrix controlled-release drug delivery
technology. Products incorporating Jagotec AG's Geomatrix technology are
intended to be once-daily oral controlled-release formulations of certain
cardiovascular products now marketed by others in once-daily and multiple-daily
dose formats. Gensia has exclusive rights to market and distribute the products
in North America, Europe and certain other countries. In January 1993, Gensia
made an initial payment of $2 million to Genta-Jago as a prepayment for
formulation and development work to be conducted at Jago, and will make future
payments to fund this work in amounts to be agreed upon by the parties. Gensia
will also pay Genta-Jago milestone payments based on regulatory submissions and
approvals on each product, up to a maximum of $4 million for any one product, a
portion of which can be offset against future royalty payments if the product is
marketed. In February 1996, Gensia informed Genta-Jago that it would be
focusing its efforts in the future on Geomatrix nifedipine and that it will not
pursue development of the Geomatrix formulations of verapamil and metaprolol.
Jago will retain manufacturing rights for Gensia's product requirements in
Europe. Under certain circumstances, Genta-Jago will have co-promotion rights
to products developed by this collaboration.
David F. Hale, Chairman of the Board, President and Chief Executive Officer
of the Company and James C. Blair, Vice Chairman of the Board of the Company,
are directors of Genta Incorporated, and Thomas H. Adams, chairman of the Board
and Chief Executive Officer of Genta Incorporated, is a member of Gensia's
Scientific Advisory Board.
OTHER TRANSACTIONS
The Company has paid Domain Partners III, L.P. ("Domain III") the amount of
$75,000 as partial consideration for financial commitments made by Domain III in
connection with the possible funding of the development of a new product
opportunity involving a feedback controlled heparin drug delivery system (the
"Automedics Project"). In February 1996, the Board authorized the issuance of a
warrant to purchase up to 50,000 shares of the Company's Common Stock to Domain
III as partial consideration for financial commitments made in furtherance of
the Automedics Project. During 1995, Domain III made a loan in the principal
amount of $250,000 to Automedics, Inc., a wholly-owned subsidiary of the
Company, in connection with the Automedics
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Project. The loan, along with accrued interest in the amount of $13,636, was
repaid on January 2, 1996. Dr. Blair, a director of the Company, is a general
partner of One Palmer Square Associates III, L.P., the general partner of Domain
III.
The Wilkerson Group, an affiliate of Dr. Wilkerson, a director of the
Company, has provided consulting services to the Company in 1995 for which the
Company has paid The Wilkerson Group approximately $149,000.
Ian McBeath, who was the Vice President of Gensia Europe Limited until
April 8, 1996, is indebted to the Company in the aggregate amount of
approximately L47,400. The indebtedness is evidenced by two loans, one secured
by real property and the other unsecured. The principal amount of the secured
loan is L27,000. The secured loan is accruing interest at a rate of 5% per
annum. Although not payable until the secured loan's maturity date, accrued
interest as of March 31, 1996 was approximately L2,400. The maturity date of
the secured loan was extended to June 30, 1997. The principal amount of the
unsecured loan is L18,014. The Company agreed to forgive 25% of the principal
amount of the unsecured loan on December 31 of each year; provided that, among
other things, Mr. McBeath is employed by the Company on such date and there
exists no default under the loan. Although Mr. McBeath has resigned as an
officer of the Company, he will continue to render consulting services through
July 1, 1996, at which time the secured loan and the unsecured loan will become
due.
Daniel D. Burgess, the Company's Vice President Finance, Chief Financial
Officer and Treasurer, is indebted to the Company in the principal amount of
$40,000. In May 1995, the Company agreed to forgive $20,000 of the principal
amount of such loan on June 1, 1995 and, thereafter, on January 5 of each year
until maturity commencing as of January 1996; provided that, among other things,
Mr. Burgess is employed by the Company on such date and no default exists under
the loan. In addition, under certain circumstances the outstanding principal
amount of the loan will be forgiven in connection with voluntary resignation by,
or termination of, Mr. Burgess' employment following a change in control or
restructuring or reduction in force. Interest at the rate of 5% per annum is
payable quarterly. Mr. Burgess made interest payments of an aggregate of $3,400
in 1995. The loan is secured by shares of Common Stock of the Company. In May
1995, the maturity date of the loan was extended to January 6, 1998.
Two relocation loans were previously made by the Company to Patrick D.
Walsh, President and Chief Operating Officer of Gensia Laboratories, Ltd. One
of the loans, in the principal amount of $35,000 was repaid in 1996. Mr. Walsh
is indebted to the Company in the aggregate principal amount of $100,000 with
respect to the other loan. Interest at the rate of 5% per annum is payable on
the loan. Accrued interest as of March 31, 1996 is approximately $7,400. The
loan is secured by real property and is due on October 12, 1999.
As a result of a loan made by the Company to David F. Hale in April 1995,
Mr. Hale is indebted to the Company in the principal amount of $125,000.
Interest is accruing on the loan at the rate of 10% per annum. The loan is
secured by real property. Accrued interest on the loan is payable in full at
maturity and, as of March 31, 1996, was approximately $12,000. The maturity
date of the loan was recently extended. Accordingly, all principal and interest
is due on the first to occur of (i) the sale of the real property securing
repayment of the loan, or (ii) April 12, 1997.
The Company believes that the foregoing transactions were in its best
interests. It is the Company's current policy that all transactions by the
Company with officers, directors, 5% stockholders or their affiliates will be
entered into only if such transactions are approved by a majority of the
disinterested directors, and are on terms no less favorable to the Company than
could be obtained from unaffiliated parties.
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PROPOSAL 2
APPROVAL OF THE GENSIA, INC. AMENDED
AND RESTATED 1990 STOCK PLAN
The Company has adopted the Gensia, Inc. Amended and Restated 1990 Stock
Plan, under which 5,983,334 shares of Common Stock have been reserved for
issuance either by direct sale or upon exercise of options granted to employees,
directors, consultants and advisers of the Company. On February 22, 1996, the
Board of Directors amended the Plan to reserve an additional 400,000 shares for
issuance under the 1990 Plan, subject to the approval of the Company's
stockholders at the Annual Meeting. On May 17, 1996, the Board of Directors
amended and restated the Plan (as amended and restated, the "1990 Plan") to
increase the number of shares covered by the automatic option grants to non-
employee members of the Board of Directors, subject to the approval of the
Company's stockholders at the Annual Meeting.
DESCRIPTION OF THE AMENDED AND RESTATED PLAN
The full text of the 1990 Plan, substantially in the form in which it will
take effect if the amendment and restatement is approved by the stockholders, is
set forth in Exhibit A to this Proxy Statement. The following summary of the
principal features of the 1990 Plan is subject to, and qualified in its entirety
by, Exhibit A.
PURPOSE
The purpose of the 1990 Plan is to assist the Company in the recruitment,
retention and motivation of employees, directors and independent contractors who
are in a position to make material contributions to the Company's progress. The
1990 Plan offers a significant incentive to the employees, directors and
independent contractors of the Company by enabling such individuals to acquire
the Company's Common Stock, thereby increasing their proprietary interest in the
growth and success of the Company.
ADMINISTRATION
The 1990 Plan is administered by the Stock Option Committee of the Board of
Directors (the "Option Committee"), composed of three disinterested members of
the Board of Directors. Subject to the limitations set forth in the 1990 Plan,
the Option Committee has the authority to determine to whom options will be
granted and shares will be sold, the term during which an option may be
exercised, and the rate at which the options may be exercised and the shares
vest. A separate committee of the Board of Directors may administer the 1990
Plan with respect to employees who are not officers or directors of the Company.
ELIGIBILITY AND SHARES SUBJECT TO THE 1990 PLAN
Under the 1990 Plan, 6,383,334 shares of Common Stock (which number
includes the 400,000-share increase that stockholders are being asked to
approve) have been reserved for issuance either by direct sale or upon exercise
of options granted to outside directors, employees (including officers and
directors who are also employees) and independent contractors (who are not
directors). The 1990 Plan provides for the grant of both incentive stock
options ("ISOs") intended to qualify as such under section 422 of the Internal
Revenue Code, as amended, and nonstatutory stock options ("NSOs"). ISOs may be
granted only to employees (including officers and directors who are also
employees) of the Company. NSOs may be granted, and Common Stock may be sold
directly, to outside directors, employees (including officers and directors who
are also employees) and independent contractors of the Company. If any options
granted under the 1990 Plan for any reason expire or are cancelled or otherwise
terminated without having been exercised in full, the shares allocable to the
unexercised portion of such options again become available for the 1990 Plan.
If shares issued under the 1990 Plan are forfeited, they also become available
for new grants. Options to purchase more than 200,000 shares may not be granted
in a single calendar year to any participant in the 1990 Plan.
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As of May 10, 1996, options to purchase an aggregate of 4,431,766 shares of
Common Stock at a weighted average exercise price of $5.44 per share were
outstanding under the 1990 Plan. As of May 10, 1996, approximately
483 employees, 10 directors and 39 consultants or advisors were eligible to
participate in the 1990 Plan. On May 10, 1996, the closing price for the
Company's Common Stock on the Nasdaq National Market was $5.125. The foregoing
numbers do not include options granted to former employees. To date, all
employee stock options have been granted with exercise prices equal to the fair
market value of the Company's Common Stock on the date of grant, as determined
by the Option Committee in accordance with the provisions of the 1990 Plan. Of
the options granted under the 1990 Plan, 615,289 have been exercised. As of
May 10, 1996, 620,250 shares of Common Stock had been issued for direct sale
under the 1990 Plan. As of May 10, 1996, a total of 504,365 shares of Common
Stock are available for future options, grants or direct sales under the 1990
Plan.
The allocation of the additional shares of stock which the stockholders are
being asked to approve has not been determined. The Company believes that the
granting of options is necessary to attract the highest quality personnel as
well as to reward and thereby retain existing key personnel. Moreover, the
attraction and retention of such personnel is essential to the continued
progress of the Company, which ultimately is in the interests of the Company's
stockholders.
As of May 10, 1996, the following persons or groups had in total, received
options to purchase shares of Common Stock under the 1990 Plan as follows:
(i) the Chief Executive Officer and the other officers named in the Summary
Compensation Table: Mr. Hale 447,500 shares, Mr. Burgess 82,500 shares,
Mr. Donahoe 101,250 shares, Mr. Eisold 47,500 shares, Mr. Walsh 45,000 shares;
(ii) all current executive officers of the Company as a group: 936,250 shares;
(iii) all current directors who are not executive officers as a group: 148,000
shares; (iv) each nominee for director: Mr. Pegg 10,500 shares, Dr. Timms
30,250 shares and Dr. Trout 17,250 shares; (v) each associate of any of such
directors, executive officers or nominees: no shares; (vi) each person who has
received five percent of options granted other than those named above: no
shares; and (vii) all employees and consultants of the Company, including all
current officers who are not executive officers, as a group: 3,779,401 shares.
The foregoing numbers do not include options that were surrendered in connection
with the grant of restricted stock awards or options for 12,750 shares which
have been exercised.
TERMS OF OPTIONS
Options granted pursuant to the 1990 Plan will vest at the time or times
determined by the Option Committee, generally over a four-year period, except
for the grants to non-employee directors described below. Vesting may be
accelerated upon certain changes in control of the Company and upon the death of
the optionee.
The maximum term of each option granted under the 1990 Plan is 10 years.
Stock options granted under the 1990 Plan must be exercised by the optionee
during the earlier of their term or within 90 days after termination of the
optionee's employment, except that the period may be extended on certain events,
including death and termination of employment due to disability.
The exercise price of shares of Common Stock subject to options qualifying
as ISOs must not be less than the fair market value of the Common Stock on the
date of the grant. The exercise price of NSOs granted under the 1990 Plan must
not be less than 85% of the fair market value of the Common Stock on the date of
grant. The exercise price of any NSOs granted to executive officers will not be
less than the fair market value of the Common Stock on the date of grant. Under
the 1990 Plan, the exercise price is payable in cash, Common Stock or full-
recourse promissory note. The 1990 Plan also permits an optionee to pay the
exercise price of an option by delivery (on a form prescribed by the Company) of
an irrevocable direction to a securities broker approved by the Company to sell
the optionee's shares and deliver all or a part of the sale proceeds to the
Company in payment of all or part of the exercise price and any withholding
taxes ("exercise/sale" directions) or by delivery of an irrevocable direction to
pledge the optionee's shares to a securities broker or lender approved by the
Company as security for a loan and to deliver all or part of the loan proceeds
to the Company in payment of all or part of the exercise price and any
withholding taxes ("exercise/pledge" directions).
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TERMS OF SHARES OFFERED FOR SALE
The terms of any sale of shares of Common Stock under the 1990 Plan will be
set forth in a stock purchase agreement to be entered into between the Company
and each purchaser. The terms of stock purchase agreements entered into under
the 1990 Plan need not be identical, and the Option Committee shall determine
all terms and conditions of each such agreement, which shall be consistent with
the 1990 Plan. The purchase price for shares sold under the 1990 Plan shall not
be less than 85% of the fair market value of such shares. The purchase price
may be paid, at the Option Committee's discretion, with a full-recourse
promissory note secured by the shares, except that the par value of the shares
must be paid in cash. Shares may also be awarded under the 1990 Plan in
consideration of services rendered prior to the award, without a cash payment
other than the par value of the shares.
Shares sold under the 1990 Plan will vest upon satisfaction of the
conditions specified in the stock purchase agreement. Vesting may be
accelerated upon certain changes in control of the Company and upon the death of
the holder of the shares. Any right to acquire shares under the 1990 Plan
(other than an option) will automatically expire if not exercised within 30 days
after the grant of such right was communicated by the Option Committee. A
holder of shares sold under the 1990 Plan has the same voting, dividend and
other rights as the Company's other stockholders.
NON-EMPLOYEE DIRECTORS
Non-employee directors are not eligible to receive stock or options under
the 1990 Plan other than an automatic grant of one NSO for 5,000 shares each
year at the conclusion of the regular annual meeting of the stockholders of the
Company. This option becomes fully exercisable on the earlier of (a) the first
anniversary of the date of grant or (b) the next annual meeting. Newly elected
or appointed non-employee directors are entitled to an initial grant of an NSO
to purchase 20,000 shares upon taking office. This option vests ratably over a
four-year period. No director will receive both of these grants in the same
calendar year. Each non-employee director in office on May 17, 1996, received
on that date an NSO covering a number of shares equal to the difference between
(a) 20,000 shares and (b) the number of shares covered by the director's initial
option grant from the Company. This option becomes fully exercisable upon the
approval of the amended 1990 Plan by the Company's stockholders at the Annual
Meeting.
All options granted to non-employee directors have an exercise price equal
to 85% of the fair market value of Common Stock on the date of grant and have a
10-year term, subject to earlier expiration in the event that the director's
service terminates. The increase in the annual grants from 3,000 to 5,000
shares, the increase in the initial grants from 15,000 to 20,000 shares and the
supplemental grant on May 17, 1996, all are contingent upon the approval of the
amended 1990 Plan by the Company's stockholders at the Annual Meeting. If
approval is not granted, the annual grants would remain at 3,000 shares, the
initial grants would remain at 15,000 shares and the May 17, 1996 grant would be
void.
DURATION, AMENDMENT AND TERMINATION
The Board may amend, suspend or terminate the 1990 Plan at any time, except
that any amendment, suspension or termination shall not affect any option
previously granted. Any amendment of the 1990 Plan, however, which increases
the number of shares available for issuance, materially changes the class of
persons who are eligible for the grant of ISOs or, if required by Rule 16b-3 (or
any successor) under the Securities Exchange Act of 1934, as amended, would
materially increase the benefits accruing to participants under the 1990 Plan or
would materially modify the requirements as to eligibility for participation in
the 1990 Plan, is subject to approval of the Company's stockholders.
Stockholder approval is not required for any other amendment of the 1990 Plan.
Unless sooner terminated by the Board of Directors, the 1990 Plan will terminate
in May 2006, and no further options may be granted or stock sold pursuant to
such plan following the termination date.
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EFFECT OF CERTAIN CORPORATE EVENTS
The Company's outstanding employee stock option agreements and common stock
purchase agreements provide for the automatic vesting of employee stock options
and (in the case of the common stock purchase agreements) the automatic
termination of the Company's right of repurchase upon certain corporate events.
Future employee stock option agreements and common stock purchase agreements
entered into pursuant to the 1990 Plan will contain similar provisions, unless
otherwise determined by the Option Committee.
Automatic vesting of all options and shares will occur on or following
(1) the first purchase of shares of the Company's Common Stock pursuant to a
tender offer or exchange offer (other than an offer by the Company) for all, or
any part of, the Company's Common Stock, (2) approval by the Company's
stockholders of a merger in which the Company does not survive as an
independent, publicly owned corporation (other than a merger that leaves the
stockholders of the Company with substantially the same ownership interest in
the new corporation), a consolidation, or a sale or exchange or other
disposition of all or substantially all the Company's assets, (3) a change in
the composition of the Board of Directors as a result of which fewer than a
majority of the incumbent directors are directors who had been directors of the
Company 24 months prior to such change, unless each new director was elected or
nominated for election to the Board of Directors with the approval of at least
two-thirds of the directors who had been directors of the Company 24 months
prior to such change and who were still in office at the time of the election or
nomination or (4) an acquisition of voting securities by any person or group
which theretofore did not beneficially own more than 30% of the voting power of
all outstanding voting securities of the Company, if such acquisition results in
such person or group owning beneficially securities representing more than 30%
of the voting power of the Company's outstanding securities. A change in the
relative beneficial ownership under (4) by reason of a repurchase by the Company
of its own securities will be disregarded.
In the event of a subdivision of the outstanding Common Stock or a
combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise) into a lesser number of shares, or a similar
occurrence, or declaration of a dividend payable in Common Stock or, if in an
amount that has a material effect on the price of the shares, in cash, the
Option Committee will make adjustments in the number and/or exercise price of
options and/or the number of shares available under the 1990 Plan, as
appropriate.
Subject to the accelerated vesting provisions described above, in the event
of a merger or other reorganization, outstanding options will be subject to the
agreement of merger or reorganization. Such agreement may provide for the
assumption of outstanding options by the surviving corporation or its parent,
for their continuation by the Company (if the Company is the surviving
corporation), for payment of a cash settlement equal to the difference between
the amount to be paid for one share under the agreement of merger or
reorganization and the exercise price for each option, or for the acceleration
of the exercisability of each option followed by the cancellation of options not
exercised, in all cases without the optionee's consent.
AUTOMATIC VESTING UPON DEATH
The Company's outstanding employee stock option agreements and common stock
purchase agreements provide for the automatic vesting of employee stock options
and, in the case of the common stock purchase agreements, the automatic
termination of the Company's right of repurchase in the event that the optionee
or the holder of restricted shares dies either before his or her service
terminates or after his or her service has terminated due to total and permanent
disability. Future employee stock option agreements and common stock purchase
agreements entered into pursuant to the 1990 Plan will contain similar
provisions, unless otherwise determined by the Option Committee.
FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS UNDER THE 1990 PLAN
Neither the optionee nor the Company will incur any federal tax
consequences as a result of the grant of an option. The optionee will have no
taxable income upon exercising an ISO (except that the alternative minimum tax
may apply), and the Company will receive no deduction when an ISO is exercised.
Upon exercising an NSO,
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the optionee generally must recognize ordinary income equal to the "spread"
between the exercise price and the fair market value of Common Stock on the date
of exercise; the Company will be entitled to a deduction for the same amount.
In the case of an employee, the option spread at the time an NSO is exercised is
subject to income tax withholding. The tax treatment of a disposition of option
shares acquired under the 1990 Plan depends on how long the shares have been
held and on whether such shares were acquired by exercising an ISO or by
exercising an NSO. The Company will not be entitled to a deduction in
connection with a disposition of option shares, except in the case of a
disposition of shares acquired under an ISO before the applicable ISO holding
periods have been satisfied.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE AMENDMENT
AND RESTATEMENT OF THE GENSIA, INC. AMENDED AND RESTATED 1990 STOCK PLAN.
PROPOSAL 3
APPROVAL OF THE AMENDED AND RESTATED GENSIA, INC.
EMPLOYEE STOCK PURCHASE PLAN
In order to provide employees of the Company with an opportunity to
purchase Common Stock through payroll deductions, the Board of Directors has
adopted the Gensia, Inc. Employee Stock Purchase Plan under which 300,000 shares
of Common Stock have been reserved for issuance. The stockholders approved the
adoption of the Plan in May 1992. On February 22, 1996, the Board of Directors
amended and restated the Plan (as amended and restated, the "ESPP") to reserve
an additional 100,000 shares for issuance under the ESPP, subject to the
approval of the Company's stockholders at the Annual Meeting. As of May 10,
1996, an aggregate of 73,333 shares were available for issuance under the ESPP.
The full text of the ESPP, substantially in the form in which it will take
effect if the ESPP is approved by the stockholders, is set forth in Exhibit B to
this Proxy Statement. The following description of the ESPP is a summary only.
It is subject to, and qualified in its entirety by, Exhibit B.
Under the ESPP, an aggregate of 400,000 shares of Common Stock (which
number includes the 100,000-share increase that stockholders are being asked to
approve) have been reserved for issuance, subject to anti-dilution adjustments.
Any full-time employee will be eligible to participate in the ESPP after he or
she has been continuously employed by the Company for three consecutive months.
Eligible employees may elect to contribute up to 12% of their total compensation
during each six-month offering period, subject to certain statutory limits. At
the end of each six-month offering period, the Company will apply the amount
contributed by the participant during the offering period to purchase whole
shares of Common Stock, but not more than 1,000 shares. Shares of Common Stock
are purchased for 85% of the lower of (i) the market price of the Common Stock
immediately before the beginning of the purchase period or (ii) the market price
of such Common Stock on the last business day of the purchase period. All
expenses incurred in connection with the implementation and administration of
the ESPP will be paid by the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE AMENDMENT
AND RESTATEMENT OF THE GENSIA, INC. EMPLOYEE STOCK PURCHASE PLAN.
PROPOSAL 4
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
appointed the firm of Ernst & Young LLP ("Ernst & Young") as the Company's
independent auditors for the fiscal year ended December 31,
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1996, subject to ratification by the stockholders. Representatives of Ernst &
Young are expected to be present at the Company's Annual Meeting. They will
have an opportunity to make a statement, if they desire to do so, and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG.
STOCKHOLDER PROPOSALS
To be considered for presentation at the Annual Meeting of Stockholders to
be held in 1996 a stockholder proposal must be received at the offices of the
Company, 9360 Towne Centre Drive, San Diego, CA 92121 not later than February
25, 1997.
OTHER MATTERS
The Board of Directors knows of no other business that will be presented at
the Annual Meeting. If any other business is properly brought before the Annual
Meeting, it is intended that proxies in the enclosed form will be voted in
accordance with the judgment of the persons voting the proxies.
Under the securities laws of the United States, the Company's directors and
executive officers, and any persons holding more than 10% of the Company's
Common Stock, are required to report their initial ownership of the Company's
Common Stock and any subsequent changes in that ownership to the Securities and
Exchange Commission. Specific due dates for these reports have been established
and the Company is required to identify in this proxy statement those persons
who failed to timely file these reports. All of the filing requirements were
satisfied for 1995 except for Director Pegg who failed to timely report on his
Form 5 for 1995 an increase in his Common Stock of the Company resulting from
the acquisition of Aramed by the Company.
Any stockholder or stockholder's representative who, because of a
disability, may need special assistance or accommodation to allow him or her to
participate at the Annual Meeting may request reasonable assistance or
accommodation from the Company by contacting Gensia, Inc., 9360 Towne Centre
Drive, San Diego, California, (619) 546-8300. To provide the Company sufficient
time to arrange for reasonable assistance or accommodation, please submit all
requests by June 15, 1996.
Whether you intend to be present at the Annual Meeting or not, we urge you
to return your signed proxy promptly.
Wesley N. Fach
Secretary
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GENSIA, INC.
PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING -
JUNE 25,1996
The undersigned stockholder of Gensia, Inc. (the "Company") acknowledges
receipt of the Notice of the Annual Meeting of Stockholders and Proxy Statement,
each dated May 22, 1996, and the undersigned revokes all prior proxies and
appoints David F. Hale and Wesley N. Fach, or each of them, proxies for the
undersigned to vote all shares of Common Stock of the Company which the
undersigned would be entitled to vote at the Annual Meeting of Stockholders to
be held at the San Diego Marriott-La Jolla, 4240 La Jolla Village Drive, La
Jolla, California at 11:00 a.m., on June 25, 1996, and any postponement or
adjournment thereof, and instructs said proxies to vote as follows:
- -------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
<PAGE>
Please mark your votes as indicated in this example /X/
FOR all nominees listed WITHHOLD AUTHORITY
below (except as marked to vote for all nominees
to the contrary below) listed below
1. ELECTION OF CLASS I / / / /
DIRECTORS.
Daniel O. Pegg, Alan R. Timms, Ph.D. and Monroe E. Trout, M.D.
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
______________________________________________________________________________
FOR AGAINST ABSTAIN
2. TO APPROVE THE AMENDMENT AND
RESTATEMENT OF THE COMPANY'S 1990 / / / / / /
STOCK PLAN:
FOR AGAINST ABSTAIN
3. TO APPROVE THE AMENDMENT AND
RESTATEMENT OF THE COMPANY'S / / / / / /
EMPLOYEE STOCK PURCHASE
FOR AGAINST ABSTAIN
4. TO RATIFY THE APPOINTMENT
OF ERNST & YOUNG LLP AS THE / / / / / /
INDEPENDENT AUDITORS OF THE
COMPANY:
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE. IF NO
SPECIFICATIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
THREE NOMINEES FOR CLASS I DIRECTOR AND FOR PROPOSALS 2, 3 AND 4.
Dated this ______ day of 1996___________________________________________
__________________________________________________________________________
Signature of Stockholder
__________________________________________________________________________
Signature of Stockholders
Please sign exactly as your name or names appear hereon. When signing as
attorney, executor, administrator, trustee or guardian, please give full
title as such. If shares are held jointly, each holder should sign.
Please Mark, Sign, Date and Mail This Proxy Card
Promptly, Using the Enclosed Envelope.
- -------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
<PAGE>
EXHIBIT A
GENSIA, INC.
AMENDED AND RESTATED
1990 STOCK PLAN
SECTION 1. ESTABLISHMENT AND PURPOSE.
The Plan was established in 1990 to offer selected employees,
directors, advisors and consultants an opportunity to acquire a proprietary
interest in the success of the Company, or to increase such interest, by
purchasing Shares of the Company's Common Stock. The Plan was most recently
amended and restated by the Board of Directors effective May 17, 1996. The Plan
provides both for the direct award or sale of Shares and for the grant of
Options to purchase Shares. Options granted under the Plan may include
Nonstatutory Options as well as ISOs intended to qualify under section 422 of
the Code. The Plan is intended to comply in all respects with Rule 16b-3 (or
its successor) under the Exchange Act.
SECTION 2. DEFINITIONS.
(a) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company, as constituted from time to time.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMITTEE" shall mean a committee of the Board of Directors, as
described in Section 3(a).
(d) "COMPANY" shall mean Gensia, Inc., a Delaware corporation.
(e) "EMPLOYEE" shall mean (i) any individual who is a common-law
employee of the Company or of a Subsidiary, (ii) a member of the Board of
Directors, including (without limitation) an Outside Director, or an affiliate
of a member of the Board of Directors, (iii) a member of the board of directors
of a Subsidiary and (iv) an independent contractor who performs services for the
Company or a Subsidiary. Service as a member of the Board of Directors,
a member of the board of directors of a Subsidiary or as an independent
contractor shall be considered employment for all purposes of the Plan, except
as provided in Sections 4(a) and 4(b).
(f) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(g) "EXERCISE PRICE" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
(h) "FAIR MARKET VALUE" shall mean the market price of Stock,
determined by the Committee as follows:
(i) If Stock was traded on a stock exchange on the date in
question, then the Fair Market Value shall be equal to the closing
price reported for such date by the applicable composite-transactions
report;
(ii) If Stock was traded over-the-counter on the date in question and
was traded on the Nasdaq system or the Nasdaq National Market, then the Fair
Market Value shall be equal to the last-transaction price quoted for such date
by the Nasdaq system or the Nasdaq National Market;
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(iii) If Stock was traded over-the-counter on the date in question
but was not traded on the Nasdaq system or the Nasdaq National Market,
then the Fair Market Value shall be equal to the mean between the last
reported representative bid and asked prices quoted for such date by
the principal automated inter-dealer quotation system on which Stock
is quoted or, if the stock is not quoted on any such system, by the
"Pink Sheets" published by the National Quotation Bureau, Inc.; and
(iv) If none of the foregoing provisions is applicable, then the
Fair Market Value shall be determined by the Committee in good faith
on such basis as it deems appropriate.
In all cases, the determination of Fair Market Value by the Committee shall be
conclusive and binding on all persons.
(i) "ISO" shall mean an employee incentive stock option described in
section 422(b) of the Code.
(j) "NONSTATUTORY OPTION" shall mean an employee stock option not
described in sections 422(b) or 423(b) of the Code.
(k) "OFFEREE" shall mean an individual to whom the Committee has
offered the right to acquire Shares under the Plan (other than upon exercise of
an Option).
(l) "OPTION" shall mean an ISO or Nonstatutory Option granted under
the Plan and entitling the holder to purchase Shares.
(m) "OPTIONEE" shall mean an individual who holds an Option.
(n) "OUTSIDE DIRECTOR" shall mean a member of the Board of Directors
who is not a common-law employee of the Company or of a Subsidiary.
(o) "PLAN" shall mean this Amended and Restated 1990 Stock Plan of
Gensia, Inc.
(p) "PURCHASE PRICE" shall mean the consideration for which one Share
may be acquired under the Plan (other than upon exercise of an Option), as
specified by the Committee.
(q) "SERVICE" shall mean service as an Employee.
(r) "SHARE" shall mean one share of Stock, as adjusted in accordance
with Section 9 (if applicable).
(s) "STOCK" shall mean the Common Stock of the Company.
(t) "STOCK OPTION AGREEMENT" shall mean the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to his or her Option.
(u) "STOCK PURCHASE AGREEMENT" shall mean the agreement between the
Company and an Offeree who acquires Shares under the Plan which contains the
terms, conditions and restrictions pertaining to the acquisition of such Shares.
(v) "SUBSIDIARY" shall mean any corporation, if the Company and/or
one or more other Subsidiaries own not less than 50 percent of the total
combined voting power of all classes of outstanding stock of such corporation.
A corporation that attains the status of a Subsidiary on a date after the
adoption of the Plan shall be considered a Subsidiary commencing as of such
date.
(w) "TOTAL AND PERMANENT DISABILITY" shall mean that the Optionee is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can
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be expected to result in death or which has lasted, or can be expected to last,
for a continuous period of not less than one year.
SECTION 3. ADMINISTRATION.
(a) COMMITTEE COMPOSITION. The Plan shall be administered by the
Committee. The Committee shall consist exclusively of two or more directors of
the Company, who shall be appointed by the Board of Directors. In addition, the
composition of the Committee shall satisfy:
(i) Such requirements as the Securities and Exchange Commission may
establish for administrators acting under plans intended to qualify for
exemption under Rule 16b-3 (or its successor) under the Exchange Act; and
(ii) Such requirements as the Internal Revenue Service may establish
for outside directors acting under plans intended to qualify for exemption
under section 162(m)(4)(C) of the Code.
The Board of Directors may also appoint one or more separate committees of the
Board of Directors, each consisting of one or more directors of the Company who
need not satisfy the foregoing requirements. Such committees may administer the
Plan with respect to Employees who are not subject to section 16 of the Exchange
Act or section 162(m) of the Code, may grant Shares or Options under the Plan to
such Employees and may determine all terms of such grants.
(b) COMMITTEE RESPONSIBILITIES. Subject to the provisions of the
Plan, the Committee shall have full authority and discretion to take the
following actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms
relating to the Plan;
(iii) To authorize any person to execute, on behalf of the
Company, any instrument required to carry out the purposes of the
Plan;
(iv) To determine when Shares are to be awarded or offered for
sale and when Options are to be granted under the Plan;
(v) To select the Offerees and Optionees;
(vi) To determine the number of Shares to be offered to each
Offeree or to be made subject to each Option;
(vii) To prescribe the terms and conditions of each award or sale
of Shares, including (without limitation) the Purchase Price, and to
specify the provisions of the Stock Purchase Agreement relating to
such award or sale;
(viii) To prescribe the terms and conditions of each Option,
including (without limitation) the Exercise Price, to determine
whether such Option is to be classified as an ISO or as a Nonstatutory
Option, and to specify the provisions of the Stock Option Agreement
relating to such Option;
(ix) To amend any outstanding Stock Purchase Agreement or Stock
Option Agreement, subject to applicable legal restrictions and to the
consent of the Offeree or Optionee who entered into such agreement;
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(x) To prescribe the consideration for the grant of each Option
or other right under the Plan and to determine the sufficiency of such
consideration; and
(xi) To take any other actions deemed necessary or advisable for
the administration of the Plan.
All decisions, interpretations and other actions of the Committee shall be final
and binding on all Offerees, all Optionees, and all persons deriving their
rights from an Offeree or Optionee. No member of the Committee shall be liable
for any action that he or she has taken or has failed to take in good faith with
respect to the Plan, any Option, or any right to acquire Shares under the Plan.
SECTION 4. ELIGIBILITY.
(a) GENERAL RULE. Only Employees shall be eligible for designation
as Optionees or Offerees by the Committee. In addition, only individuals who
are employed as common-law employees by the Company or a Subsidiary shall be
eligible for the grant of ISOs.
(b) OUTSIDE DIRECTORS. Any other provision of the Plan
notwithstanding, the participation of Outside Directors in the Plan shall be
subject to the following restrictions:
(i) EXCLUSIVE PROVISION. Outside Directors shall receive no grants
other than the Options described in this Subsection (b).
(ii) ONE-TIME GRANT TO EXISTING OUTSIDE DIRECTORS. Each Outside
Director who is a member of the Board of Directors on May 17, 1996, shall
on such date receive a one-time grant of a Nonstatutory Option covering a
number of Shares equal to (A) 20,000 minus (B) the number of Shares covered
by the one-time grant of a Nonstatutory Option received by such Outside
Director upon becoming a member of the Board of Directors. An Option
granted under this Paragraph (ii) shall become exercisable in full on the
date when the Company's stockholders approve the amendments of the Plan
adopted by the Board of Directors on May 17, 1996. This Paragraph (ii)
shall be void if the Company's stockholders fail to approve such
amendments.
(iii) INITIAL GRANT TO NEW OUTSIDE DIRECTORS. Each Outside Director
who first becomes a member of the Board of Directors after May 17, 1996,
shall receive a one-time grant of a Nonstatutory Option covering 20,000
Shares (subject to adjustment under Section 9). Such Option shall be
granted on the date when such Outside Director first joins the Board of
Directors and shall become exercisable ratably over a four-year period
commencing on the date of grant. If the Company's stockholders fail to
approve the amendments of the Plan adopted by the Board of Directors on May
17, 1996, grants under this Paragraph (iii) shall continue to cover 15,000
Shares.
(iv) ANNUAL GRANTS. Each Outside Director shall receive an annual
grant of a Nonstatutory Option covering 5,000 Shares (subject to adjustment
under Section 9); provided however, that such grant shall not be made in
any calendar year in which the same individual receives an Option under
Paragraph (iii) above. Subject to the preceding sentence, such
Nonstatutory Option shall be granted each year as of the day next following
the conclusion of the annual meeting of the Company's stockholders to each
Outside Director who then serves on the Board of Directors. An Option
granted under this Paragraph (iv) shall become exercisable in full on the
earlier of (A) the commencement of the next annual meeting of the Company's
stockholders or (B) the first anniversary of the date of grant. If the
Company's stockholders fail to approve the amendments of the Plan adopted
by the Board of Directors on May 17, 1996, grants under this Paragraph (iv)
shall continue to cover 3,000 Shares.
(v) EXERCISE PRICE. The Exercise Price under all Options granted
under this Subsection (b) shall be equal to 85 percent of the Fair Market
Value of a Share on the date of grant, payable in cash.
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(vi) TERM. All Options granted under this Subsection (b) shall
terminate on the 10th anniversary of the date of grant, subject to earlier
expiration in the event that the Outside Director's Service terminates. No
additional Options granted under this Subsection (b) shall become
exercisable after the Outside Director's Service has terminated for any
reason.
(c) TEN-PERCENT STOCKHOLDERS. An Employee who owns more than 10
percent of the total combined voting power of all classes of outstanding stock
of the Company or any of its Subsidiaries shall not be eligible for the grant of
an ISO unless (i) the Exercise Price is at least 110 percent of the Fair Market
Value of a Share on the date of grant and (ii) such ISO by its terms is not
exercisable after the expiration of five years from the date of grant.
(d) ATTRIBUTION RULES. For purposes of Subsection (c) above, in
determining stock ownership, an Employee shall be deemed to own the stock owned,
directly or indirectly, by or for such Employee's brothers, sisters, spouse,
ancestors and lineal descendants. Stock owned, directly or indirectly, by or
for a corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its stockholders, partners or beneficiaries. Stock
with respect to which such Employee holds an option shall not be counted.
(e) OUTSTANDING STOCK. For purposes of Subsection (c) above,
"outstanding stock" shall include all stock actually issued and outstanding
immediately after the grant. "Outstanding stock" shall not include shares
authorized for issuance under outstanding options held by the Employee or by any
other person.
SECTION 5. STOCK SUBJECT TO PLAN.
(a) BASIC LIMITATION. Shares offered under the Plan shall be
authorized but unissued Shares or treasury Shares. The aggregate number of
Shares which may be issued under the Plan (upon exercise of Options or other
rights to acquire Shares) shall not exceed 6,383,334 Shares, subject to
adjustment pursuant to Section 9. The number of Shares which are subject to
Options or other rights outstanding at any time under the Plan shall not exceed
the number of Shares which then remain available for issuance under the Plan.
The Company, during the term of the Plan, shall at all times reserve and keep
available sufficient Shares to satisfy the requirements of the Plan.
(b) ADDITIONAL SHARES. In the event that any outstanding Option or
other right for any reason expires or is cancelled or otherwise terminated, the
Shares allocable to the unexercised portion of such Option or other right shall
again be available for the purposes of the Plan. In the event that Shares
issued under the Plan are reacquired by the Company pursuant to a forfeiture
provision, a right of repurchase or a right of first offer, such Shares shall
again be available for the purposes of the Plan.
SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES.
(a) STOCK PURCHASE AGREEMENT. Each award or sale of Shares under the
Plan (other than upon exercise of an Option) shall be evidenced by a Stock
Purchase Agreement between the Offeree and the Company. Such award or sale
shall be subject to all applicable terms and conditions of the Plan and may be
subject to any other terms and conditions which are not inconsistent with the
Plan and which the Committee deems appropriate for inclusion in a Stock Purchase
Agreement. The provisions of the various Stock Purchase Agreements entered into
under the Plan need not be identical.
(b) DURATION OF OFFERS AND NONTRANSFERABILITY OF RIGHTS. Any right
to acquire Shares under the Plan (other than an Option) shall automatically
expire if not exercised by the Offeree within 30 days after the grant of such
right was communicated to the Offeree by the Committee. Such right shall not be
transferable and shall be exercisable only by the Offeree to whom such right was
granted.
(c) PURCHASE PRICE. The Purchase Price of Shares to be offered under
the Plan shall not be less than 85 percent of the Fair Market Value of such
Shares. Subject to the preceding sentence, the Purchase Price
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shall be determined by the Committee at its sole discretion. The Purchase Price
shall be payable in a form described in Section 8.
(d) WITHHOLDING TAXES. As a condition to the award, sale or vesting
of Shares, the Offeree shall make such arrangements as the Committee may require
for the satisfaction of any federal, state, local or foreign withholding tax
obligations that arise in connection with such Shares.
(e) RESTRICTIONS ON TRANSFER OF SHARES. Any Shares awarded or sold
under the Plan shall be subject to such special forfeiture conditions, rights of
repurchase, rights of first offer and other transfer restrictions as the
Committee may determine. Such restrictions shall be set forth in the applicable
Stock Purchase Agreement and shall apply in addition to any general restrictions
that may apply to all holders of Shares.
SECTION 7. TERMS AND CONDITIONS OF OPTIONS.
(a) STOCK OPTION AGREEMENT. Each grant of an Option under the Plan
shall be evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms and conditions of
the Plan and may be subject to any other terms and conditions which are not
inconsistent with the Plan and which the Committee deems appropriate for
inclusion in a Stock Option Agreement. The provisions of the various Stock
Option Agreements entered into under the Plan need not be identical.
(b) NUMBER OF SHARES. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 9. Options granted to any
Optionee in a single calendar year shall in no event cover more than 200,000
Shares, subject to adjustment in accordance with Section 9. The Stock Option
Agreement shall also specify whether the Option is an ISO or a Nonstatutory
Option.
(c) EXERCISE PRICE. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price of an ISO shall not be less than 100 percent
of the Fair Market Value of a Share on the date of grant, except as otherwise
provided in Section 4(c). The Exercise Price of a Nonstatutory Option shall not
be less than 85 percent of the Fair Market Value of a Share on the date of
grant. Subject to the preceding two sentences, the Exercise Price under any
Option shall be determined by the Committee at its sole discretion. The
Exercise Price shall be payable in a form described in Section 8.
(d) WITHHOLDING TAXES. As a condition to the exercise of an Option,
the Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that arise in connection with such exercise. The Optionee shall also make such
arrangements as the Committee may require for the satisfaction of any federal,
state, local or foreign withholding tax obligations that may arise in connection
with the disposition of Shares acquired by exercising an Option.
(e) EXERCISABILITY AND TERM. Each Stock Option Agreement shall
specify the date when all or any installment of the Option is to become
exercisable. The vesting of any Option shall be determined by the Committee at
its sole discretion. A Stock Option Agreement may provide for accelerated
exercisability in the event of the Optionee's death, Total and Permanent
Disability or retirement or other events. The Stock Option Agreement shall also
specify the term of the Option. The term shall not exceed 10 years from the
date of grant, except as otherwise provided in Section 4(c). Subject to the
preceding sentence, the Committee at its sole discretion shall determine when an
Option is to expire.
(f) NONTRANSFERABILITY. During an Optionee's lifetime, such
Optionee's Option(s) shall be exercisable only by him or her and shall not be
transferable. In the event of an Optionee's death, such Optionee's Option(s)
shall not be transferable other than by will, beneficiary designation or by the
laws of descent and distribution.
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(g) TERMINATION OF SERVICE (EXCEPT BY DEATH). If an Optionee's
Service terminates for any reason other than the Optionee's death, then such
Optionee's Option(s) shall expire on the earliest of the following occasions:
(i) The expiration date determined pursuant to Subsection (e)
above;
(ii) The date 90 days after the termination of the Optionee's
Service for any reason other than Total and Permanent Disability; or
(iii) The date six months after the termination of the Optionee's
Service by reason of Total and Permanent Disability.
The Optionee may exercise all or part of his or her Option(s) at any time before
the expiration of such Option(s) under the preceding sentence, but only to the
extent that such Option(s) had become exercisable before the Optionee's Service
terminated or became exercisable as a result of the termination. The balance of
such Option(s) shall lapse when the Optionee's Service terminates. In the event
that the Optionee dies after the termination of the Optionee's Service but
before the expiration of the Optionee's Option(s), all or part of such Option(s)
may be exercised (prior to expiration) by the executors or administrators of the
Optionee's estate or by any person who has acquired such Option(s) directly from
the Optionee by beneficiary designation, bequest or inheritance, but only to the
extent that such Option(s) had become exercisable before the Optionee's Service
terminated or became exercisable as a result of the termination.
(h) LEAVES OF ABSENCE. For purposes of Subsection (g) above, Service
shall be deemed to continue while the Optionee is on military leave, sick leave
or other bona fide leave of absence (as determined by the Committee). The
foregoing notwithstanding, in the case of an ISO granted under the Plan, Service
shall not be deemed to continue beyond the first 90 days of such leave, unless
the Optionee's reemployment rights are guaranteed by statute or by contract.
(i) DEATH OF OPTIONEE. If an Optionee dies while he or she is in
Service, then such Optionee's Option(s) shall expire on the earlier of the
following dates:
(i) The expiration date determined pursuant to Subsection (e)
above; or
(ii) The date six months after the Optionee's death.
All or part of the Optionee's Option(s) may be exercised at any time before the
expiration of such Option(s) under the preceding sentence by the executors or
administrators of the Optionee's estate or by any person who has acquired such
Option(s) directly from the Optionee by beneficiary designation, bequest or
inheritance, but only to the extent that such Option(s) had become exercisable
before the Optionee's death or became exercisable as a result of the Optionee's
death. The balance of such Option(s) shall lapse when the Optionee dies.
(j) NO RIGHTS AS A STOCKHOLDER. An Optionee, or a transferee of an
Optionee, shall have no rights as a stockholder with respect to any Shares
covered by his or her Option until the date of the issuance of a stock
certificate for such Shares. No adjustments shall be made, except as provided
in Section 9.
(k) MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Within the
limitations of the Plan, the Committee may modify, extend or renew outstanding
Options or may accept the cancellation of outstanding Options (to the extent not
previously exercised) in return for the grant of new Options at the same or a
different price. The foregoing notwithstanding, no modification of an Option
shall, without the consent of the Optionee, impair such Optionee's rights or
increase his or her obligations under such Option.
(l) RESTRICTIONS ON TRANSFER OF SHARES. Any Shares issued upon
exercise of an Option shall be subject to such special forfeiture conditions,
rights of repurchase, rights of first offer and other transfer restrictions as
the Committee may determine. Such restrictions shall be set forth in the
applicable Stock Option Agreement and shall apply in addition to any general
restrictions that may apply to all holders of Shares.
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SECTION 8. PAYMENT FOR SHARES.
(a) GENERAL RULE. The entire Purchase Price or Exercise Price of
Shares issued under the Plan shall be payable in lawful money of the United
States of America at the time when such Shares are purchased, except as follows:
(i) In the case of Shares sold under the terms of a Stock
Purchase Agreement subject to the Plan, payment shall be made only
pursuant to the express provisions of such Stock Purchase Agreement.
However, the Committee (at its sole discretion) may specify in the
Stock Purchase Agreement that payment may be made in one or both of
the forms described in Subsections (e) and (f) below.
(ii) In the case of an ISO granted under the Plan, payment shall
be made only pursuant to the express provisions of the applicable
Stock Option Agreement. However, the Committee (at its sole
discretion) may specify in the Stock Option Agreement that payment may
be made pursuant to Subsections (b), (c), (d) or (f) below.
(iii) In the case of a Nonstatutory Option granted under the Plan,
the Committee (at its sole discretion) may accept payment pursuant to
Subsections (b), (c), (d) or (f) below.
(b) SURRENDER OF STOCK. To the extent that this Subsection (b) is
applicable, payment may be made all or in part with Shares which have already
been owned by the Optionee or his or her representative for more than 12 months
and which are surrendered to the Company in good form for transfer. Such Shares
shall be valued at their Fair Market Value on the date when the new Shares are
purchased under the Plan.
(c) EXERCISE/SALE. To the extent that this Subsection (c) is
applicable, payment may be made by the delivery (on a form prescribed by the
Company) of an irrevocable direction to a securities broker approved by the
Company to sell Shares and to deliver all or part of the sales proceeds to the
Company in payment of all or part of the Exercise Price and any withholding
taxes.
(d) EXERCISE/PLEDGE. To the extent that this Subsection (d) is
applicable, payment may be made by the delivery (on a form prescribed by the
Company) of an irrevocable direction to pledge Shares to a securities broker or
lender approved by the Company, as security for a loan, and to deliver all or
part of the loan proceeds to the Company in payment of all or part of the
Exercise Price and any withholding taxes.
(e) SERVICES RENDERED. To the extent that this Subsection (e) is
applicable, Shares may be awarded under the Plan in consideration of services
rendered to the Company or a Subsidiary prior to the award. If Shares are
awarded without the payment of a Purchase Price in cash, the Committee shall
make a determination (at the time of the award) of the value of the services
rendered by the Offeree and the sufficiency of the consideration to meet the
requirements of Section 6(c).
(f) PROMISSORY NOTE. To the extent that this Subsection (f) is
applicable, a portion of the Purchase Price or Exercise Price, as the case may
be, of Shares issued under the Plan may be payable by a full-recourse promissory
note, provided that (i) the par value of such Shares must be paid in lawful
money of the United States of America at the time when such Shares are
purchased, (ii) the Shares are security for payment of the principal amount of
the promissory note and interest thereon and (iii) the interest rate payable
under the terms of the promissory note shall be no less than the minimum rate
(if any) required to avoid the imputation of additional interest under the Code.
Subject to the foregoing, the Committee (at its sole discretion) shall specify
the term, interest rate, amortization requirements (if any) and other provisions
of such note.
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SECTION 9. ADJUSTMENT OF SHARES.
(a) GENERAL. In the event of a subdivision of the outstanding Stock,
a declaration of a dividend payable in Shares, a declaration of a dividend
payable in a form other than Shares in an amount that has a material effect on
the value of Shares, a combination or consolidation of the outstanding Stock (by
reclassification or otherwise) into a lesser number of Shares, a
recapitalization, a spinoff or a similar occurrence, the Committee shall make
appropriate adjustments in one or more of (i) the number of Shares available for
future grants under Section 5, (ii) the number of Options to be awarded to
Outside Directors under Section 4(b), (iii) the limit set forth in Section 7(b),
(iv) the number of Shares covered by each outstanding Option or (v) the Exercise
Price under each outstanding Option.
(b) REORGANIZATIONS. In the event that the Company is a party to a
merger or other reorganization, outstanding Options shall be subject to the
agreement of merger or reorganization. Such agreement may provide, without
limitation, for the assumption of outstanding Options by the surviving
corporation or its parent, for their continuation by the Company (if the Company
is a surviving corporation), for payment of a cash settlement equal to the
difference between the amount to be paid for one Share under such agreement and
the Exercise Price, or for the acceleration of their exercisability followed by
the cancellation of Options not exercised, in all cases without the Optionees'
consent. Any cancellation shall not occur until after such acceleration is
effective and Optionees have been notified of such acceleration. In the case of
Options that have been outstanding for less than 12 months, a cancellation need
not be preceded by an acceleration.
(c) RESERVATION OF RIGHTS. Except as provided in this Section 9, an
Optionee or Offeree shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class, the payment of any dividend or
any other increase or decrease in the number of shares of stock of any class.
Any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option. The grant of an Option pursuant
to the Plan shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure, to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.
SECTION 10. SECURITIES LAWS.
Shares shall not be issued under the Plan unless the issuance and
delivery of such Shares complies with (or is exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange on which the
Company's securities may then be listed.
SECTION 11. NO EMPLOYMENT RIGHTS.
No provision of the Plan, nor any right or Option granted under the
Plan, shall be construed to give any person any right to become, to be treated
as, or to remain an Employee. The Company and its Subsidiaries reserve the
right to terminate any person's Service at any time and for any reason.
SECTION 12. DURATION AND AMENDMENTS.
(a) TERM OF THE PLAN. The Plan, as set forth herein, shall become
effective May 17, 1996, the date the Board of Directors last amended and
restated the Plan. The Plan shall terminate automatically on May 16, 2006, and
may be terminated on any earlier date pursuant to Subsection (b) below.
(b) RIGHT TO AMEND OR TERMINATE THE PLAN. The Board of Directors may
amend, suspend or terminate the Plan at any time and for any reason; provided,
however, that any amendment of the Plan which:
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(i) increases the number of Shares available for issuance under the Plan (except
as provided in Section 9); (ii) materially changes the class of persons who are
eligible for the grant of ISOs; or (iii) if required by Rule 16b-3 (or any
successor) under the Exchange Act, would materially increase the benefits
accruing to participants under the Plan or would materially modify the
requirements as to eligibility for participation in the Plan, shall be subject
to the approval of the Company's stockholders. Stockholder approval shall not
be required for any other amendment of the Plan.
(c) EFFECT OF AMENDMENT OR TERMINATION. No Shares shall be issued or
sold under the Plan after the termination thereof, except upon exercise of an
Option granted prior to such termination. The termination of the Plan, or any
amendment thereof, shall not affect any Share previously issued or any Option
previously granted under the Plan.
SECTION 13. EXECUTION.
To record the amendment and restatement of the Plan by the Board of
Directors on May 17, 1996, the Company has caused its authorized officer to
execute the same.
GENSIA, INC.
By /s/ David F. Hale
---------------------------
David F. Hale
Chairman, President
and Chief Executive Officer
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EXHIBIT B
GENSIA, INC.
AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN
SECTION 1. PURPOSE OF THE PLAN.
The Plan was established effective as of July 1, 1992, subject to the
approval of the Company's stockholders. The purpose of the Plan is to provide
Eligible Employees with an opportunity to increase their proprietary interest in
the success of the Company by purchasing Stock from the Company on favorable
terms and to pay for such purchases through payroll deductions. The Plan was
restated and amended by the Board of Directors effective February 22, 1996. The
Plan is intended to qualify under section 423 of the Internal Revenue Code of
1986, as amended.
SECTION 2. ADMINISTRATION OF THE PLAN.
(a) THE COMMITTEE. The Plan shall be administered by the Committee.
The interpretation and construction by the Committee of any provision of the
Plan or of any right to purchase Stock granted under the Plan shall be
conclusive and binding on all persons.
(b) RULES AND FORMS. The Committee may adopt such rules and forms
under the Plan as it considers appropriate.
SECTION 3. ENROLLMENT AND PARTICIPATION.
(a) PARTICIPATION PERIODS. While the Plan is in effect, there shall
be two Participation Periods in each calendar year, consisting of the six-month
periods commencing on each January 1 and July 1.
(b) ENROLLMENT. Any individual who, on the date preceding the first
day of a Participation Period, qualifies as an Eligible Employee may elect to
become a Participant in the Plan for such Participation Period by executing the
enrollment form prescribed for this purpose by the Committee. The enrollment
form shall be filed with the Company not later than the last working day prior
to the commencement of such Participation Period.
(c) DURATION OF PARTICIPATION. Once enrolled, a Participant shall
continue to participate in the Plan for each succeeding Participation Period
until he or she discontinues contributions, withdraws from the Plan or ceases to
be an Eligible Employee. A Participant who discontinues contributions under
Section 4(d) or withdraws from the Plan under Section 5(a) may again become a
Participant, if he or she then is an Eligible Employee, by following the
procedure described in Subsection (b) above.
SECTION 4. EMPLOYEE CONTRIBUTIONS.
(a) FREQUENCY OF PAYROLL DEDUCTIONS. A Participant may purchase
shares of Stock under the Plan solely by means of payroll deductions. Payroll
deductions, as designated by the Participant pursuant to Subsection (b) below,
shall commence with the first payday in the Participation Period and shall
continue on each subsequent payday during participation in the Plan.
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(b) AMOUNT OF PAYROLL DEDUCTIONS. An Eligible Employee shall
designate on the enrollment form the portion of his or her Compensation that he
or she elects to have withheld for the purchase of Stock. Such portion shall be
a whole percentage of the Eligible Employee's Compensation, but not less than 1%
nor more than 12%.
(c) CHANGING WITHHOLDING RATE. If a Participant wishes to change the
rate of payroll withholding, he or she may do so by filing a new enrollment form
with the Company not later than the last working day prior to the commencement
of the Participation Period for which such change is to be effective.
(d) DISCONTINUING PAYROLL DEDUCTIONS. If a Participant wishes to
discontinue employee contributions entirely, he or she may do so by filing a new
enrollment form at any time. Payroll withholding shall cease as soon as
reasonably practicable after such form has been received by the Company.
SECTION 5. WITHDRAWAL FROM THE PLAN.
(a) WITHDRAWAL. A Participant may elect to withdraw from the Plan by
filing the prescribed form with the Company at any time before the last day of a
Participation Period. As soon as reasonably practicable thereafter, payroll
deductions shall cease and the entire amount credited to the Participant's Plan
Account shall be refunded to him or her in cash, without interest. No partial
withdrawals shall be permitted.
(b) RE-ENROLLMENT AFTER WITHDRAWAL. A former Participant who has
withdrawn from the Plan shall not be a Participant until he or she re-enrolls
for a subsequent Participation Period under Section 3(b).
SECTION 6. TERMINATION OF EMPLOYMENT AND DEATH.
(a) TERMINATION OF EMPLOYMENT. Termination of employment as an
Eligible Employee for any reason, including death, shall be treated as an
automatic withdrawal from the Plan under Section 5(a). (A transfer from one
Participating Company to another shall not be treated as a termination of
employment.)
(b) DEATH. In the event of the Participant's death, the amount
credited to his or her Plan Account shall be paid to a beneficiary designated by
him or her for this purpose on the prescribed form or, if none, to the
Participant's estate.
SECTION 7. PLAN ACCOUNTS AND PURCHASE OF SHARES.
(a) PLAN ACCOUNTS. The Company shall maintain a Plan Account on its
books in the name of each Participant. As of each payday in a Participation
Period, the amount deducted from the Participant's Compensation shall be
credited to the Participant's Plan Account. No interest shall be credited to
Plan Accounts.
(b) PURCHASE PRICE. The Purchase Price for each share of Stock shall
be the lower of (i) 85% of the Fair Market Value of such share on the last
trading day before the Participation Period commences or (ii) 85% of the Fair
Market Value of such share on the last trading day in the Participation Period.
(c) NUMBER OF SHARES PURCHASED. As of the last day of each
Participation Period, each Participant shall be deemed to have elected to
purchase the number of whole shares of Stock calculated in
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accordance with this Subsection (c), unless the Participant has previously
elected to withdraw from the Plan in accordance with Section 5(a). The amount
then in the Participant's Plan Account shall be divided by the Purchase Price,
and the number of whole shares that results shall be purchased from the Company
with the funds in the Participant's Plan Account. The foregoing
notwithstanding, no Participant shall purchase more than a maximum of 1,000
shares of Stock with respect to any Participation Period nor shares of Stock in
excess of the amounts set forth in Sections 8 and 12(a).
(d) AVAILABLE SHARES INSUFFICIENT. In the event that the aggregate
number of shares that all Participants elect to purchase during a Participation
Period exceeds the maximum number of shares remaining available for issuance
under Section 12(a), then the number of shares to which each Participant is
entitled shall be determined by multiplying the number of shares available for
issuance by a fraction, the numerator of which is the number of shares that such
Participant has elected to purchase and the denominator of which is the number
of shares that all Participants have elected to purchase.
(e) ISSUANCE OF STOCK. Certificates representing the number of
shares of Stock purchased shall be issued as soon as reasonably practicable
after the close of the Participation Period. Shares may be registered in the
name of the Participant or jointly in the name of the Participant and his or her
spouse as joint tenants with right of survivorship or as community property.
(f) UNUSED CASH BALANCES. Any amount remaining in the Participant's
Plan Account that represents the Purchase Price for a fractional share shall be
carried over in the Participant's Plan Account to the next Participation Period.
Any amount remaining in the Participant's Plan Account that represents the
Purchase Price for whole shares which could not be purchased under
Subsection (c) above or Section 12(a) shall be refunded to the Participant in
cash, without interest.
SECTION 8. LIMITATIONS ON STOCK OWNERSHIP.
Any other provision of the Plan notwithstanding, no Participant shall
be granted a right to purchase Stock under the Plan if:
(a) Such Participant, immediately after his or her election to
purchase such Stock, would own stock possessing more than 5% of the total
combined voting power or value of all classes of stock of the Company or
any parent or Subsidiary of the Company; or
(b) Under the terms of the Plan, such Participant's rights to
purchase stock under this and all other qualified employee stock purchase
plans of the Company or any parent or Subsidiary of the Company would
accrue at a rate that exceeds $25,000 of the fair market value of such
stock (determined at the time when such right is granted) for each calendar
year for which such right or option is outstanding at any time.
Ownership of stock shall be determined after applying the attribution rules of
section 424(d) of the Internal Revenue Code of 1986, as amended. For purposes
of this Section 8, each Participant shall be considered to own any stock that he
or she has a right or option to purchase under this or any other plan, and each
Participant shall be considered to have the right to purchase 1,000 shares of
Stock under this Plan with respect to each Participation Period.
SECTION 9. RIGHTS NOT TRANSFERABLE.
The rights of any Participant under the Plan, or any Participant's
interest in any Stock or moneys to which he or she may be entitled under the
Plan, shall not be transferable by voluntary or involuntary assignment or by
operation of law, or in any other manner other than by will or the laws of
descent and distribution. If a Participant in any manner attempts to transfer,
assign or otherwise encumber
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his or her rights or interest under the Plan, other than by will or the laws of
descent and distribution, then such act shall be treated as an election by the
Participant to withdraw from the Plan under Section 5(a).
SECTION 10. NO RIGHTS AS AN EMPLOYEE.
Nothing in the Plan shall be construed to give any person the right to
remain in the employ of a Participating Company. Each Participating Company
reserves the right to terminate the employment of any person at any time, with
or without cause.
SECTION 11. NO RIGHTS AS A STOCKHOLDER.
A Participant shall have no rights as a stockholder with respect to
any shares that he or she has purchased, or may have a right to purchase, under
the Plan until the date of issuance of a stock certificate for such shares.
SECTION 12. STOCK OFFERED UNDER THE PLAN.
(a) AUTHORIZED SHARES. The aggregate number of shares of Stock
available for purchase under the Plan shall be 400,000, subject to adjustment
pursuant to this Section 12.
(b) ANTI-DILUTION ADJUSTMENTS. The aggregate number of shares of
Stock offered under the Plan, the 1,000-share limitation described in Section
7(c) and the price of shares that any Participant has elected to purchase shall
be adjusted proportionately by the Committee for any increase or decrease in the
number of outstanding shares of Stock resulting from a subdivision or
consolidation of shares, the payment of a stock dividend, any other increase or
decrease in such shares effected without receipt or payment of consideration by
the Company or the distribution of the shares of a Subsidiary to the Company's
stockholders.
(c) REORGANIZATIONS. In the event of a dissolution or liquidation of
the Company, or a merger or consolidation to which the Company is a constituent
corporation, the Plan shall terminate unless the plan of merger, consolidation
or reorganization provides otherwise, and all amounts that have been withheld
but not yet applied to purchase Stock hereunder shall be refunded, without
interest. The Plan shall in no event be construed to restrict in any way the
Company's right to undertake a dissolution, liquidation, merger, consolidation
or other reorganization.
SECTION 13. AMENDMENT OR DISCONTINUANCE.
The Board of Directors shall have the right to amend, suspend or
terminate the Plan at any time and without notice; provided that no
Participant's existing rights are adversely affected thereby and that, except as
provided in Section 12, any increase in the aggregate number of shares of Stock
to be issued under the Plan shall be subject to approval by a vote of the
stockholders of the Company.
SECTION 14. DEFINITIONS.
(a) "BOARD OF DIRECTORS" means the Board of Directors of the Company,
as constituted from time to time.
(b) "COMMITTEE" means the Stock Option Committee of the Board of
Directors.
(c) "COMPANY" means Gensia, Inc., a Delaware corporation.
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(d) "COMPENSATION" means the base compensation paid in cash to a
Participant by a Participating Company, including salaries and wages, but
excluding bonuses, incentive compensation, commissions, overtime pay, moving or
relocation allowances, car allowances, imputed income attributable to cars,
taxable fringe benefits and similar items, all as determined by the Committee.
(e) "ELIGIBLE EMPLOYEE" means any employee of a Participating Company
(i) whose customary employment is for more than five months per calendar year
and for more than 20 hours per week and (ii) who has been an employee of a
Participating Company for not less than three consecutive months.
(f) "FAIR MARKET VALUE" shall mean the market price of Stock,
determined by the Committee as follows:
(i) If the Stock was traded over-the-counter on the date in question
but was not classified as a national market issue, then the Fair Market
Value shall be equal to the mean between the last reported representative
bid and asked prices quoted by the Nasdaq system for such date;
(ii) If the Stock was traded over-the-counter on the date in question
and was classified as a national market issue, then the Fair Market Value
shall be equal to the closing price quoted by the Nasdaq system for such
date;
(iii) If the Stock was traded on a stock exchange on the date in
question, then the Fair Market Value shall be equal to the closing price
reported by the applicable composite transactions report for such date; and
(iv) If none of the foregoing provisions is applicable, then the Fair
Market Value shall be determined by the Committee in good faith on such
basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee shall
be based on the prices reported in the Western Edition of THE WALL STREET
JOURNAL. Such determination shall be conclusive and binding on all persons.
(g) "PARTICIPANT" means an Eligible Employee who elects to
participate in the Plan, as provided in Section 3(b).
(h) "PARTICIPATING COMPANY" means the Company and each present or
future Subsidiary, except Subsidiaries excluded by the Committee.
(i) "PARTICIPATION PERIOD" means a period during which contributions
may be made toward the purchase of Stock under the Plan, as determined pursuant
to Section 3(a).
(j) "PLAN" means this Gensia, Inc. Employee Stock Purchase Plan, as
amended from time to time.
(k) "PLAN ACCOUNT" means the account established for each Participant
pursuant to Section 6(a).
(l) "PURCHASE PRICE" means the price at which Participants may
purchase Stock under the Plan, as determined pursuant to Section 7(b).
(m) "STOCK" means the Common Stock of the Company.
(n) "SUBSIDIARY" means a corporation, 50% or more of the total
combined voting power of all classes of stock of which is owned by the Company
or by another Subsidiary.
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SECTION 15. EXECUTION.
To record the amendment and restatement of the Plan by the Board of
Directors on February 22, 1996, the Company has caused its duly authorized
officer to affix the corporate name and seal hereto.
GENSIA, INC.
By /s/ David F. Hale
--------------------------------
Chairman, President
and Chief Executive Officer
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