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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
____________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: February 28, 1997
(Date of earliest event reported)
GENSIA SICOR INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 0-18549 33-0176647
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
</TABLE>
9360 Towne Centre Drive, San Diego, California 92121
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (619) 546-8300
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Item 2. Acquisition or Disposition of Assets.
------------------------------------
On February 28, 1997, pursuant to the terms of a Stock Exchange Agreement
dated as of November 12, 1996, as amended, between Gensia Sicor Inc. ("Gensia
Sicor", formerly known as Gensia, Inc.) and Rakepoll Finance N.V. ("Rakepoll
Finance"), Gensia Sicor acquired all of the outstanding shares of capital stock
of Rakepoll Holding B.V. ("Rakepoll Holding") from Rakepoll Finance in exchange
for 29,500,000 shares of Gensia Sicor common stock and $100,000 (the "Stock
Exchange"). As a result of the Stock Exchange, Rakepoll Holding became a
wholly-owned subsidiary of Gensia Sicor. Rakepoll Holding is the parent company
of three specialty pharmaceutical businesses. In addition, pursuant to a
Shareholder's Agreement, dated as of November 12, 1996, as amended, between
Gensia Sicor and Rakepoll Finance, upon consummation of the Stock Exchange,
Rakepoll Finance became entitled to appoint three of Gensia Sicor's 10 directors
who in turn designate (jointly with two executive officer directors of Gensia
Sicor) five additional directors. The consent of the Rakepoll Finance appointed
directors is required for Gensia Sicor to take certain actions, such as a merger
or sale of substantially all of the business or assets of Gensia Sicor and
certain issuances of securities.
The following information from the Gensia Sicor Proxy Statement dated
January 15, 1997 (the "Proxy Statement") (File No. 0-18549) is hereby
incorporated by reference: (i) the information contained in "Summary-Rakepoll
Holding and Rakepoll Subsidiaries" at pages 6-7 of the Proxy Statement, (ii)
"Summary-Interests of Certain Persons in the Stock Exchange" at page 9 of the
Proxy Statement, (iii) "The Stock Exchange-Background of the Stock Exchange" at
pages 23-24 of the Proxy Statement, (iv) "The Stock Exchange-Source and Amount
of Fees and Expenses" at page 35 of the Proxy Statement and (v) "The Stock
Exchange-Conduct of Business After the Stock Exchange; Benefits and Detriments
of the Stock Exchange" at pages 33-45 of the Proxy Statement.
Item 7. Financial Statements and Exhibits.
---------------------------------
(a) Financial Statements of Business Acquired.
The balance sheets of Rakepoll Holding at December 31, 1995 and 1994,
the statements of operations, stockholders' equity and cash flows of
Rakepoll Holding for each of the three years in the period ended
December 31, 1995, including the report of independent auditors
thereon, and unaudited financial information of Rakepoll Holding as of
September 30, 1996 and 1995 and for the nine months then ended,
included in the Proxy Statement at pages F-1 to F-23, are incorporated
by reference herein.
It was impracticable to include balance sheets of Rakepoll Holding at
December 31, 1996 and the statements of operations, stockholders'
equity and cash flows of Rakepoll Holding for the year ended December
31, 1996, including the report of independent auditors thereon, at the
date of this Report. Such financial information will be filed as part
of an amendment to this Form 8-K no later than May 14, 1997.
(b) Pro Forma Financial Information.
The unaudited pro forma financial information of Gensia Sicor, based
upon the audited financial information of Gensia Sicor and Rakepoll
Holding as of December 31, 1995 and for the year then ended, and the
unaudited financial information of Gensia Sicor and Rakepoll Holding
as of September 30, 1996 and for the nine months then ended, after
giving effect to the acquisition of Rakepoll Holding pursuant to the
Stock Exchange, included in the Proxy Statement at pages 73 to 78, are
incorporated by reference herein. It was impracticable to include the
pro forma financial information of Gensia Sicor based upon financial
information of Gensia Sicor and Rakepoll Holding as of December 31,
1996 and for the year then ended, after giving effect to the
acquisition of Rakepoll Holding pursuant to the Stock Exchange. Such
pro forma information will be filed as part of an amendment to this
Form 8-K no later than May 14, 1997.
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(c) Exhibits
2.1 Stock Exchange Agreement dated as of November 12, 1996, as amended on
December 16, 1996, between Gensia Sicor Inc. and Rakepoll Finance
N.V. (incorporated herein by reference to Annex A to the Gensia Sicor
Inc. Proxy Statement dated January 15, 1997 (File No. 0-18549).
3(i) Restated Certificate of Incorporation of Gensia Sicor Inc.
3(ii) Bylaws of Gensia Sicor Inc.
4.1 Shareholder's Agreement dated November 12, 1996, as amended on
December 21, 1996 and on February 28, 1997, between Gensia Sicor Inc.
and Rakepoll Finance N.V.
23.1 Consent of KPMG Accountants N.V., Independent Auditors.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: March 14, 1997.
GENSIA SICOR INC.
By /s/ John Sayward
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Name John Sayward
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Title Vice President, Finance
Chief Financial Officer and
Treasurer
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EXHIBIT INDEX
2.1 Stock Exchange Agreement dated as of November 12, 1996, as amended
on December 16, 1996, between Gensia Sicor Inc. and Rakepoll Finance
N.V. (incorporated herein by reference to Annex A to the Gensia
Sicor Inc. Proxy Statement dated January 15, 1997 (File No.
0-18549).
3(i) Restated Certificate of Incorporation of Gensia Sicor Inc.
3(ii) Bylaws of Gensia Sicor Inc.
4.1 Shareholder's Agreement dated November 12, 1996, as amended on
December 21, 1996 and on February 28, 1997, between Gensia Sicor
Inc. and Rakepoll Finance N.V.
23.1 Consent of KPMG Accountants N.V., Independent Auditors.
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EXHIBIT 3(i)
RESTATED CERTIFICATE OF INCORPORATION
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OF
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GENSIA, INC.
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Gensia, Inc., a corporation organized and existing under the laws of the
State of Delaware, hereby certifies as follows:
FIRST: The name of the Corporation is Gensia, Inc. and shall hereby be
changed to Gensia Sicor Inc.
SECOND: The date of filing of its original Certificate of Incorporation
with the Secretary of State of Delaware was November 17, 1986. The Corporation
was originally incorporated under the name Gensia Pharmaceuticals, Inc.
THIRD: Pursuant to the sections 242 and 245 of the General Corporation Law
of the State of Delaware, this Restated Certificate of Incorporation restates,
integrates and further amends the provisions of the Certificate of Incorporation
of this Corporation.
FOURTH: This Restated Certificate of Incorporation was duly adopted in
accordance with the provisions of the General Corporation Law of the State of
Delaware.
FIFTH: That the text of the Certificate of Incorporation of Gensia, Inc.
shall be hereby restated, integrated and amended to read in full as follows:
ARTICLE I
The name of this Corporation is Gensia Sicor Inc.
ARTICLE II
The registered office of the Corporation within the State of Delaware is
located at 1209 Orange Street in the City of Wilmington, County of New Castle.
The name of its registered agent at that address is The Corporation Trust
Company.
ARTICLE III
The nature of the business and the purposes for which the Corporation is
formed are to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
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ARTICLE IV
A. Classes of Stock. The total number of shares of all classes of
----------------
capital stock which the Corporation shall have authority to issue is One Hundred
Thirty Million (130,000,000) of which One Hundred Twenty-Five Million
(125,000,000) shares of the par value of One Cent ($.01) each shall be Common
Stock (the "Common Stock") and Five Million (5,000,000) shares of the par value
of One Cent ($.01) each shall be Preferred Stock (the "Preferred Stock").
The Preferred Stock may be issued from time to time in one or more series.
The Board of Directors is authorized to fix the number of shares of any series
of Preferred Stock and to determine the designation of any such shares. The
Board of Directors is also authorized to determine or alter the rights
(including but not limited to voting rights), preferences, privileges and
restrictions granted to or imposed upon any wholly unissued series of Preferred
Stock, and within the limits and restrictions stated in any resolution or
resolutions of the Board of Directors originally fixing the number of shares
constituting any series, to increase or decrease (but not below the number of
shares of such series outstanding) the number of shares of such series
subsequent to the issue of shares of that series by filing a certificate
pursuant to the applicable laws of the State of Delaware.
B. Series I Participating Preferred Stock.
--------------------------------------
1. Designation and Amount. Of the Five Million (5,000,000) shares of
----------------------
Preferred Stock, One Hundred Twenty-Five Thousand (125,000) shares shall be
designated as "Series I Participating Preferred Stock," $0.01 par value per
share. Such number of shares may be increased or decreased by resolution of the
Board of Directors; provided, that no decrease shall reduce the number of shares
of Series I Participating Preferred Stock to a number less than that of the
shares then outstanding plus the number of shares issuable upon exercise of
outstanding rights, options or warrants or upon conversion of outstanding
securities issued by the Corporation.
2. Dividends and Distributions.
---------------------------
(a) Subject to the prior and superior rights of the holders of any shares
of any series of Preferred Stock ranking prior and superior to the shares of
Series I Participating Preferred Stock with respect to dividends, the holders of
shares of Series I Participating Preferred Stock in preference to the holders of
shares of Common Stock of the Corporation and any other junior stock, shall be
entitled to receive, when, as and if declared by the Board
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of Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the first day of March, June, September and December in each
year (each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series I Participating Preferred
Stock in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $100, or (b) subject to the provision for adjustment hereinafter set
forth, 1000 times the aggregate per share amount of all cash dividends, and 1000
times the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock, since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series I Participating Preferred Stock. In the event the Corporation
shall at any time after the close of business on March 16, 1992 (the "Rights
Declaration Date") (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, by reclassification or
otherwise, then in each such case the amount to which holders of shares of
Series I Participating Preferred Stock were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the Series
I Participating Preferred Stock as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $100 per share on the Series I
Participating Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series I Participating Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares of Series I Participating
Preferred Stock unless the date of issue of such
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shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series I Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date in either of
which events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series I Participating Preferred
Stock in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a share-by-
share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series I Participating Preferred Stock entitled to receive payment of a dividend
or distribution declared thereon, which record date shall be no more than 30
days prior to the date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Series I Participating
-------------
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series I Participating Preferred Stock shall entitle the holder thereof
to 1000 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock into a greater number
of shares, or (iii) combine the outstanding Common Stock into a smaller number
of shares, by reclassification or otherwise, then in each such case the number
of votes per share to which holders of shares of Series I Participating
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock outstanding
immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of shares of
Series I Participating Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) If at any time dividends on any Series I Participating Preferred
Stock shall be in arrears in an amount equal to six quarterly dividends thereon,
the occur-
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rence of such contingency shall mark the beginning of a period (herein called a
"default period") which shall extend until such time when all accrued and unpaid
dividends for all previous quarterly dividend periods and for the current
quarterly dividend period on all shares of Series I Participating Preferred
Stock then outstanding shall have been declared and paid or set apart for
payment. During each default period, all holders of Preferred Stock (including
holders of the Series I Participating Preferred Stock) with dividends in arrears
in an amount equal to six quarterly dividends thereon, voting as a class,
irrespective of series, shall have the right to elect two Directors.
(ii) During any default period, such voting right of the holders of Series
I Participating Preferred Stock may be exercised initially at a special meeting
called pursuant to subparagraph (iii) of this Section 3(C) or at any annual
meeting of stockholders, and thereafter at annual meetings of stockholders,
provided that neither such voting right nor the right of the holders of any
other series of Preferred Stock, if any, to increase, in certain cases, the
authorized number of Directors shall be exercised unless the holders of ten
percent (10%) in number of shares of Preferred Stock outstanding shall be
present in person or by proxy. The absence of a quorum of the holders of Common
Stock shall not affect the exercise by the holders of Preferred Stock of such
voting right. At any meeting at which the holders of Preferred Stock shall
exercise such voting right initially during an existing default period, they
shall have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two
Directors or, if such right is exercised at an annual meeting, to elect two
Directors. If the number which may be so elected at any special meeting does not
amount to the required number, the holders of the Preferred Stock shall have the
right to make such increase in the number of Directors as shall be necessary to
permit the election by them of the required number. After the holders of the
Preferred Stock shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the holders of
Preferred Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Series I Participating
Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during an existing
default period, have previously exercised their right to elect Directors, the
Board of Directors may order, or any stockholder or stockholders owning in the
aggregate not less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding, irrespective of series, may request, the calling of
a special meeting of the holders of Preferred Stock, which meeting shall there-
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upon be called by the President, a Vice President or the Secretary of the
Corporation. Notice of such meeting and of any annual meeting at which holders
of Preferred Stock are entitled to vote pursuant to this paragraph (C)(iii)
shall be given to each holder of record Preferred Stock by mailing a copy of
such notice to him at his last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not earlier than 10 days
and not later than 60 days after such order or request or in default of the
calling of such meeting within 60 days after such order or request, such meeting
may be called on similar notice by any stockholder or stockholders owning in the
aggregate not less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding. Notwithstanding the provisions of this paragraph
(C)(iii), no such special meeting shall be called during the period within 60
days immediately preceding the date fixed for the next annual meeting of the
stockholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation, if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of Preferred
Stock shall have exercised their right to elect two Directors voting as a class,
after the exercise of which right (x) the Directors so elected by the holders of
Preferred Stock shall continue in office until their successors shall have been
elected by such holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided in paragraph
(C)(ii) of this Section 3) be filled by vote of a majority of the remaining
Directors theretofore elected by the holders of the class of stock which elected
the Director whose office shall have become vacant. References in this
paragraph (C) to Directors elected by the holders of a particular class of stock
shall include Directors elected by such Directors to fill vacancies as provided
in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the right of
the holders of Preferred Stock as a class to elect Directors shall cease, (y)
the term of any Directors elected by the holders of Preferred Stock as a class
shall terminate, and (z) the number of Directors shall be such number as may be
provided for in, or pursuant to, the Certificate of Incorporation or By-Laws
irrespective of any increase made pursuant to the provisions of paragraph
(C)(ii) of this Section 3 (such number being subject, however, to change
thereafter in any manner provided by law or in the Certificate of Incorporation
or By-Laws). Any vacancies in the Board of Directors effected by the provisions
of clauses (y) and (z) in the preceding sentence may be filled by a majority of
the remaining Directors, even though less than a quorum.
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(D) Except as set forth herein, holders of Series I Participating
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
4. Certain Restrictions.
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(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series I Participating Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series I Participating
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series I Participating Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series I Participating Preferred Stock
except dividends paid ratably on the Series I Participating Preferred Stock and
all such parity stock on which dividends are payable or in arrears in proportion
to the total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares of
any stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series I Participating Preferred Stock
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any stock of
the Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series I Participating Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of Series
I Participating Preferred Stock or any shares of stock ranking on a parity with
the Series I Participating Preferred Stock except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
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(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
5. Reacquired Shares. Any shares of Series I Participating Preferred
-----------------
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
6. Liquidation, Dissolution or Winding Up.
--------------------------------------
(A) Upon any liquidation (voluntary or otherwise), dissolution or winding
up of the Corporation, no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series I Participating Preferred Stock unless, prior thereto,
the holders of shares of Series I Participating Preferred Stock shall have
received per share, the greater of 1000 times $1.00 or 1000 times the payment
made per share of Common Stock, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Series I Liquidation Preference"). Following the payment of
the full amount of the Series I Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series I Participating
Preferred Stock unless, prior thereto, the holders of shares of Common Stock
shall have received an amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (i) the Series I Liquidation Preference by (ii)
1000 (as appropriately adjusted as set forth in subparagraph (C) below to
reflect such events as stock splits, stock dividends and recapitalization with
respect to the Common Stock) (such number in clause (ii), the "Adjustment
Number"). Following the payment of the full amount of the Series I Liquidation
Preference and the Common Adjustment in respect of all outstanding shares of
Series I Participating Preferred Stock and Common Stock, respectively, holders
of Series I Participating Preferred Stock and holders of shares of Common Stock
shall receive their ratable and proportionate share of the remaining assets to
be distributed in the ratio of the Adjustment Number to 1 with respect to such
Preferred Stock and Common Stock, on a per share basis, respectively.
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(B) In the event there are not sufficient assets available to permit
payment in full of the Series I Liquidation Preference and the liquidation
preferences of all other series of Preferred Stock, if any, which rank on a
parity with the Series I Participating Preferred Stock then such remaining
assets shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the event there are
not sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.
(C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, by reclassification or
otherwise, then in each such case the Adjustment Number in effect immediately
prior to such event shall be adjusted by multiplying such Adjustment Number by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
7. Consolidation, Merger, etc. In case the Corporation shall enter into
--------------------------
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case the shares of Series I
Participating Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of shares
of Series I Participating Preferred Stock shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that are outstanding immediately prior to
such event.
8. Redemption. The shares of Series I Participating Preferred Stock shall
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not be redeemable.
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9. Ranking. The Series I Participating Preferred Stock shall rank
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junior to all other series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
10. Amendment. The Certificate of Incorporation and the By-Laws of the
---------
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series I
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least 66-2/3% of the outstanding shares of
Series I Participating Preferred Stock voting separately as a class.
11. Fractional Shares. Series I Participating Preferred Stock may be
-----------------
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series I Participating Preferred Stock.
C. $3.75 Convertible Exchangeable Preferred Stock.
----------------------------------------------
1. Designation and Amount. Of the Five Million (5,000,000) shares of
----------------------
Preferred Stock, One Million Eight Hundred Forty Thousand (1,840,000) shares
shall be designated as "$3.75 Convertible Exchangeable Preferred Stock," $.01
par value per share.
2. Definitions. For purposes of the $3.75 Convertible Exchangeable
-----------
Preferred Stock and this Section C, in addition to those terms otherwise defined
in this Restated Certificate of Incorporation, the following terms shall have
the meanings indicated:
"Board of Directors" shall mean the board of directors of the Corporation
or any committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the $3.75 Convertible Exchangeable Preferred
Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in the City of New York are authorized or obligated
by law or executive order to close.
"Closing Price" of a security on any day shall mean on such day the
reported last sales price, regular way, for the security or, in case no sale
takes place on such day, the average of the reported closing bid and asked
prices, regular way, for the security in either case as reported on the New York
Stock Exchange, on the principal national
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securities exchange on which the security is listed or admitted to trading or,
if not listed or admitted to trading on any national securities exchange, on the
Nasdaq National Market or, if the security is not quoted on such National Market
system, the average of the closing bid and asked prices for the security on such
day in or, if bid and asked prices for the security on each such date shall not
have been reported by The Nasdaq Stock Market, the average of the bid and asked
prices of the security for such day as furnished by any New York Stock Exchange
member firm regularly making a market in the security selected for such purpose
by the Board of Directors or, if no such quotations are available, the fair
market value of the security furnished by any New York Stock Exchange member
firm selected from time to time by the Board of Directors for that purpose.
"Corporation Notice" shall have the meaning set forth in paragraph (b) of
Section C5 of this Article.
"Conversion Price" shall mean the conversion price per share of Common
Stock into which the $3.75 Convertible Exchangeable Preferred Stock is
convertible, as such Conversion Price may be adjusted pursuant to Section C7 of
this Article. The initial Conversion Price will be $27.60 (equivalent to the
rate of approximately 1.8116 shares of Common Stock for each share of $3.75
Convertible Exchangeable Preferred Stock).
"Current Market Price" per share of Common Stock on any date shall mean the
Closing Price of the Common Stock on the first day which is not a Saturday, a
Sunday or a day on which banking institutions and trust companies in New York,
New York are authorized by law or executive order to close or a legal holiday.
"Dividend Payment Date" shall have the meaning set forth in paragraph (a)
of Section C3 of this Article.
"Dividend Payment Record Date" shall have the meaning set forth in
paragraph (a) of Section C3 of this Article.
"Debentures" shall mean the Corporation's 7 1/2% Convertible Subordinated
Debentures due 2003.
"Dividend Periods" shall mean quarterly dividend periods commencing on the
first day of March, June, September and December of each year and ending on and
including the day preceding the first day of the next succeeding Dividend Period
(other than the initial Dividend Period which shall commence on the Issue Date
and end on and include May 31, 1993).
-11-
<PAGE>
"Fundamental Change" shall have the meaning set forth in paragraph (c) of
Section C8 of this Article.
"Issue Date" shall mean the first date on which shares of the $3.75
Convertible Exchangeable Preferred Stock are issued.
"Person" shall mean any individual, association, partnership, corporation,
a government or a political subdivision thereof, a governmental agency or other
entity, and shall include any successor (by merger or otherwise) of such entity.
"Trading Date" with respect to Common Stock means (i) if the Common Stock
is listed or admitted for trading on the New York Stock Exchange or another
national securities exchange, a day on which the New York Stock Exchange or such
other national securities exchange is open for business or (ii) if the Common
Stock is quoted on the Nasdaq National Market, a day on which trades may be made
on such National Market system or (iii) otherwise, any Business Day.
"Transfer Agent" means ChaseMellon Shareholder Services, L.L.C., as
successor in interest to First Interstate Bank of California or such other agent
or agents of the Corporation as may be designated by the Board of Directors of
the Corporation as the transfer agent for the $3.75 Convertible Exchangeable
Preferred Stock.
3. Dividends.
---------
(a) Holders of the $3.75 Convertible Exchangeable Preferred Stock are
entitled to receive, when, as and if declared by the Board of Directors, out of
the funds of the Corporation legally available therefor, an annual cash dividend
at the annual rate of $3.75 per share of $3.75 Convertible Exchangeable
Preferred Stock, payable in quarterly installments on March 1, June 1, September
1 and December 1 (each a "Dividend Payment Date"), commencing June 1, 1993 (and,
in the case of any accrued but unpaid dividends, at such additional times and
for such interim periods, if any, as determined by the Board of Directors). If
June 1, 1993 or any other Dividend Payment Date shall be on a day other than a
Business Day, the Dividend Payment Date shall be on the next succeeding Business
Day. Dividends on the $3.75 Convertible Exchangeable Preferred Stock will be
cumulative from the Issue Date, whether or not in any Dividend Period or Periods
there shall be funds of the Corporation legally available for the payment of
such dividends and whether or not such dividends are declared, and will be
payable to holders of record as they appear on the stock books of the
Corporation on such record dates (each such date, a "Dividend Payment Record
Date"), which shall be not more than 60 days nor less than 10 days
-12-
<PAGE>
preceding the Dividend Payment Dates thereof, as shall be fixed by the Board of
Directors. Dividends on the $3.75 Convertible Exchangeable Preferred Stock
shall accrue (whether or not declared) on a daily basis from the Issue Date, and
accrued dividends for each Dividend Period shall accumulate to the extent not
paid on the Dividend Payment Date first following the Dividend Period for which
they accrue. As used herein, the term "accrued" with respect to dividends
includes both accrued and accumulated dividends.
(b) The amount of dividends payable for such full Dividend Period for the
$3.75 Convertible Exchangeable Preferred Stock shall be computed by dividing the
annual dividend rate by four (rounded down to the nearest cent). The amount of
dividends payable for the initial Dividend Period on the $3.75 Convertible
Exchangeable Preferred Stock, or any other period shorter or longer than a full
Dividend Period on the $3.75 Convertible Exchangeable Preferred Stock, shall be
computed on the basis of a 360-day year consisting of twelve 30-day months.
Holders of shares of $3.75 Convertible Exchangeable Preferred Stock called for
redemption on a redemption date falling between the close of business on a
Dividend Payment Record Date and the opening of business on the corresponding
Dividend Payment Date shall, in lieu of receiving such dividend on the Dividend
Payment Date fixed therefor, receive such dividend payment together with all
other accrued and unpaid dividends on the date fixed for redemption (unless
holder converts such shares in accordance with Section C7 of this Article).
Holders of shares of $3.75 Convertible Exchangeable Preferred Stock shall not be
entitled to any dividends, whether payable in cash, property or stock, in excess
of cumulative dividends, as herein provided. No interest, or sum of money in
lieu of interest, shall be payable in respect of any dividend payment or
payments on the $3.75 Convertible Exchangeable Preferred Stock which may be in
arrears.
(c) So long as any shares of the $3.75 Convertible Exchangeable Preferred
Stock are outstanding, no dividends, except as described in the next succeeding
sentence, shall be declared or paid or set apart for payment on any class or
series of stock of the Corporation ranking, as to the dividends, on a parity
with the $3.75 Convertible Exchangeable Preferred Stock, for any period unless
full cumulative dividends have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for such
payment on the $3.75 Convertible Exchangeable Preferred Stock for all Dividend
Periods terminating on or prior to the date of payment, or setting apart for
payment, of such dividends on such parity stock. When dividends are not paid in
full or a sum sufficient for such payment is not set apart, as aforesaid, upon
the shares of the $3.75 Convertible Exchangeable
-13-
<PAGE>
Preferred Stock and any other class or series of stock ranking on a parity as to
dividends with the $3.75 Convertible Exchangeable Preferred Stock, all dividends
declared upon shares of the $3.75 Convertible Exchangeable Preferred Stock and
all dividends declared upon such other stock shall be declared pro rata so that
the amounts of dividends per share declared on the $3.75 Convertible
Exchangeable Preferred Stock and such other stock shall in all cases bear to
each other the same ratio that accrued dividends per share on the shares of the
$3.75 Convertible Exchangeable Preferred Stock and on such other stock bear to
each other.
(d) So long as any shares of the $3.75 Convertible Exchangeable Preferred
Stock are outstanding, no other stock of the Corporation ranking on a parity
with the $3.75 Convertible Exchangeable Preferred Stock as to dividends or upon
liquidation, dissolution or winding up shall be redeemed, purchased or otherwise
acquired for any consideration (or any moneys be paid to or made available for a
sinking fund or otherwise for the purchase or redemption of any shares of any
such stock) by the Corporation (except for repurchases from employees and
consultants) unless (i) the full cumulative dividends, if any, accrued on all
outstanding shares of the $3.75 Convertible Exchangeable Preferred Stock shall
have been paid or set apart for payment for all past Dividend Periods and (ii)
sufficient funds shall have been set apart for the payment of the dividend for
the current Dividend Period with respect to the $3.75 Convertible Exchangeable
Preferred Stock.
(e) So long as any shares of the $3.75 Convertible Exchangeable Preferred
Stock are outstanding, no dividends (other than dividends or distributions paid
in shares of, or options, warrants or rights to subscribe for or purchase shares
of, Common Stock or other stock ranking junior to the $3.75 Convertible
Exchangeable Preferred Stock, as to dividends and upon liquidation, dissolution
or winding up) shall be declared or paid or set apart for payment and no other
distribution shall be declared or made or set apart for payment, in each case
upon the Common Stock or any other stock of the Corporation ranking junior to
the $3.75 Convertible Exchangeable Preferred Stock as to dividends or upon
liquidation, dissolution or winding up, nor shall any Common Stock nor any other
such stock of the Corporation ranking junior to the $3.75 Convertible
Exchangeable Preferred Stock as to dividends or upon liquidation, dissolution or
winding up be redeemed, purchased or otherwise acquired for any consideration
(or any moneys be paid to or made available for a sinking fund or otherwise for
the purchase or redemption of any shares of any such stock) by the Corporation
(except by conversion into or exchange for stock of the Corporation ranking
junior to the
-14-
<PAGE>
$3.75 Convertible Exchangeable Preferred Stock as to dividends and upon
liquidation, dissolution or winding up) unless, in each case (i) the full
cumulative dividends, if any, accrued on all outstanding shares of the $3.75
Convertible Exchangeable Preferred Stock and any other stock of the Corporation
ranking on a parity with the $3.75 Convertible Exchangeable Preferred Stock as
to dividends shall have been paid or set apart for payment for all past Dividend
Periods and all past dividend periods with respect to such other stock and (ii)
sufficient funds shall have been set apart for the payment of the dividend for
the current Dividend Period with respect to the $3.75 Convertible Exchangeable
Preferred Stock and for the current dividend period with respect to any other
stock of the Corporation ranking on a parity with the $3.75 Convertible
Exchangeable Preferred Stock as to dividends.
4. Liquidation Preference.
----------------------
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution of the assets of the Corporation (whether capital or surplus) shall
be made to or set apart for the holders of Common Stock or any other series or
class of stock of the Corporation ranking junior to the $3.75 Convertible
Exchangeable Preferred Stock upon liquidation, dissolution or winding up, the
holders of the shares of $3.75 Convertible Exchangeable Preferred Stock shall be
entitled to receive $50.00 per share plus an amount per share equal to all
dividends (whether or not earned or declared) accrued and unpaid thereon to the
date of final distribution to such holders; but such holders shall not be
entitled to any further payment. No payment on account of any liquidation,
dissolution or winding up of the Corporation shall be made to the holders of any
class or series of stock ranking on a parity with the $3.75 Convertible
Exchangeable Preferred Stock in respect of the distribution of assets upon
dissolution, liquidation or winding up unless there shall likewise be paid at
the same time to the holders of the $3.75 Convertible Exchangeable Preferred
Stock like proportionate amounts determined ratably in proportion to the full
amounts to which the holders of all outstanding shares of $3.75 Convertible
Exchangeable Preferred Stock and the holders of all outstanding shares of such
parity stock are respectively entitled with respect to such distribution. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of the
shares of, $3.75 Convertible Exchangeable Preferred Stock shall be insufficient
to pay in full the preferential amount aforesaid and liquidating payments on any
other shares of stock ranking, as to liquidation, dissolution or winding up, on
a parity with the $3.75 Convertible Exchangeable
-15-
<PAGE>
Preferred Stock, then such assets, or the proceeds thereof, shall be distributed
among the holders of shares of $3.75 Convertible Exchangeable Preferred Stock
and any such other stock ratably in accordance with the respective amounts which
would be payable on such shares of $3.75 Convertible Exchangeable Preferred
Stock and any such other stock if all amounts payable thereon were paid in full.
For the purposes of this Section C4, (i) a consolidation or merger of the
Corporation with one or more corporations or other entities, (ii) a sale, lease,
exchange or transfer of all or any part of the Corporation's assets or (iii) a
statutory share exchange shall not be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary.
(b) Subject to the rights of the holders of shares of any series or class
or classes of stock ranking on a parity with or prior to the $3.75 Convertible
Exchangeable Preferred Stock upon liquidation, dissolution or winding up, upon
any liquidation, dissolution or winding up of the Corporation, after payment
shall have been made in full to the holders of $3.75 Convertible Exchangeable
Preferred Stock, as provided in this Section C4, any other series or class or
classes of stock ranking junior to the $3.75 Convertible Exchangeable Preferred
Stock upon liquidation, dissolution or winding up shall, subject to the
respective terms and provisions (if any) applying thereto, be entitled to
receive any and all assets remaining to be paid or distributed, and the holder
of $3.75 Convertible Exchangeable Preferred Stock shall not be entitled to share
therein.
(c) Written notice of any liquidation, dissolution or winding up of the
Corporation, stating the payment date or dates when and the place or places
where the amounts distributable in such circumstances shall be payable, shall be
given by first class mail, postage prepaid, not less than thirty (30) days prior
to any payment date stated therein, to the holders of record of the $3.75
Convertible Exchangeable Preferred Stock at their respective addresses as the
same shall appear on the books of the Transfer Agent.
5. Redemption at the Option of the Corporation.
-------------------------------------------
(a) $3.75 Convertible Exchangeable Preferred Stock may not be redeemed by
the Corporation prior to March 6, 1996, on or after which the Corporation, at
its option, may redeem the shares of $3.75 Convertible Exchangeable Preferred
Stock, in whole or in part, out of funds legally available therefor, at any time
or from time to time, subject to the notice provisions and provisions for
partial redemption described below, during the period beginning on March 1, of
the years shown below (March 6 in the case of 1996), at the following redemption
prices per share plus an amount equal to accrued and unpaid dividends, if any,
to (and including)
-16-
<PAGE>
the date fixed for redemption, whether or not earned or declared:
<TABLE>
<CAPTION>
Year Price
---- ------
<S> <C>
1996 $52.50
1997 $52.08
1998 $51.67
1999 $51.25
2000 $50.83
2001 $50.42
2002 and thereafter $50.00
</TABLE>
Notwithstanding the foregoing, the $3.75 Convertible Exchangeable Preferred
Stock may not be redeemed prior to March 6, 1998 unless the Closing Price of the
Common Stock equals or exceeds 150% of the then effective Conversion Price per
share for any 20 Trading Dates during a period of 30 consecutive Trading Dates
ending within 15 days prior to the mailing of a Corporation Notice of
redemption.
(b) In the event the Corporation shall redeem shares of $3.75 Convertible
Exchangeable Preferred Stock, a Corporation Notice of such redemption shall be
given by first class mail, postage prepaid, mailed not less than 30 nor more
than 60 days prior to the redemption date, to each holder of record of the
shares to be redeemed, at such holder's address as the same appears on the stock
records of the Corporation. Each such notice shall state: (i) the redemption
date; (ii) the number of shares of $3.75 Convertible Exchangeable Preferred
Stock to be redeemed and, if less than all the shares held by such holder are to
be redeemed, the number of such shares to be redeemed from such holder; (iii)
the redemption price; (iv) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price; (v) that
payment will be made upon presentation and surrender of such $3.75 Convertible
Exchangeable Preferred Stock; (vi) the then current conversion price and the
date on which the right to convert such shares of 3.75 Convertible Exchangeable
Preferred Stock will expire; (vii) that dividends on the shares to be redeemed
shall cease to accrue following such redemption date; (viii) that such
redemption is at the option of the Corporation; and (ix) that dividends accrued
to and including the date fixed for redemption will be paid as specified in said
notice. Notice having been mailed as aforesaid, from and after the redemption
date, unless the Corporation shall be in default in providing money for the
payment of the redemption price (including any accrued and unpaid dividends to
(and including) the date fixed for redemption) (x) dividends on the shares of
the $3.75 Convertible Exchangeable Preferred Stock so called for redemption
shall cease to accrue, (y) said shares shall be deemed no longer outstanding,
and (z) all rights of the
-17-
<PAGE>
holders thereof as stockholder of the Corporation (except the right to receive
from the Corporation the money payable upon redemption without interest thereon)
shall cease. The Corporation's obligation to provide moneys in accordance with
the preceding sentence shall be deemed fulfilled if, on or before the redemption
date, the Corporation shall deposit with a bank or trust company having an
office or agency in the Borough of Manhattan, City of New York, and having a
capital and surplus of at least $50,000,000, the principal amount of funds
necessary for such redemption, in trust for the account of the holders of the
shares to be redeemed (and so as to be and continue to be available therefor),
with irrevocable instructions and authority to such bank or trust company that
such funds be applied to the redemption of the shares of $3.75 Convertible
Exchangeable Preferred Stock so called for redemption. Any interest accrued on
such funds shall be paid to the Corporation from time to time. Any funds so
deposited and unclaimed at the end of three years from such redemption date
shall be released or repaid to the Corporation, after which, subject to any
applicable laws relating to escheat or unclaimed property, the holder or holders
of such shares of $3.75 Convertible Exchangeable Preferred Stock so called for
redemption shall look only to the Corporation for payment of the redemption
price.
Upon surrender in accordance with said notice of the certificates for any
such shares so redeemed (properly endorsed or assigned for transfer, if the
Board of Directors shall so require and the notice shall so state), such shares
shall be redeemed by the Corporation at the applicable redemption price
aforesaid. If fewer than all the outstanding shares of $3.75 Convertible
Exchangeable Preferred Stock are to be redeemed, shares to be redeemed shall be
selected by the Corporation from outstanding shares of $3.75 Convertible
Exchangeable Preferred Stock not previously called for redemption by lot or pro
rata (as near as may be) or by any other equitable method determined by the
Corporation in its sole discretion. If fewer than all the shares represented by
any certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares without cost to the holder thereof.
Notwithstanding the foregoing, if the Corporation Notice of redemption has
been given pursuant to this Section C5 and any holder of shares of $3.75
Convertible Exchangeable Preferred Stock shall, prior to the close of business
on the third Business Day preceding the redemption date, give written notice to
the Corporation pursuant to Section C7(b) of this Article hereof of the
conversion of any or all of the shares to be redeemed held by such holder
(accompanied by a certificate or certificates for such shares, duly endorsed or
assigned to the Corporation), then the conversion of such shares to be redeemed
shall become effective as provided in Section C7 of this Article.
-18-
<PAGE>
6. Shares to Be Retired. Any shares of $3.75 Convertible Exchangeable
--------------------
Preferred Stock converted, redeemed or otherwise acquired by the Corporation
shall be retired and cancelled and shall upon cancellation be restored to the
status of authorized but unissued shares of Preferred Stock, subject to
reissuance by the Board of Directors as $3.75 Convertible Exchangeable Preferred
Stock or as shares of Preferred Stock of one or more other series.
7. Conversion. Holders of shares of $3.75 Convertible Exchangeable
----------
Preferred Stock shall have the right to convert all or a portion of such shares
(including fractions of such shares) into shares of Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of this Section
C7, a holder of shares of $3.75 Convertible Exchangeable Preferred Stock shall
have the right, at his or her option, at any time, to convert any of such shares
(or fractions thereof) into the number of fully paid and nonassessable shares of
Common Stock (calculated as to each conversion to the nearest 1/100th of a
share) obtained by dividing the aggregate liquidation preference of the shares
to be converted by the Conversion Price and by surrender of such shares, such
surrender to be made in the manner provided in paragraph (b) of this Section C7;
provided, however, that the right to convert shares called for redemption
- -------- -------
pursuant to Section C5 of this Article shall terminate at the close of business
on the third Business Day preceding the date fixed for such redemption, unless
the Corporation shall default in making payment of the amount payable upon such
redemption. Subject to the following provisions of this Section C7(a), any
shares of $3.75 Convertible Exchangeable Preferred Stock may be converted, at
the option of its holder, in part into Common Stock under the procedures set
forth above. If a part of a share of $3.75 Convertible Exchangeable Preferred
Stock is converted, then the Corporation will convert such share into the
appropriate number of shares of Common Stock (subject to paragraph (c) of this
Section C7) and issue a fractional shares of $3.75 Convertible Exchangeable
Preferred Stock evidencing the remaining interest of such holder.
(b) In order to exercise the conversion right, the holder of each share of
$3.75 Convertible Exchangeable Preferred Stock (or fraction thereof) to be
converted shall surrender the certificate representing such share, duly endorsed
or assigned to the Corporation or in blank, at the office or agency of the
Transfer Agent in the Borough of Manhattan, City of New York or Los Angeles,
California, accompanied by written notice to the Corporation that the holder
thereof elects to convert the holder's $3.75 Convertible Exchangeable Preferred
Stock or a specified portion thereof. Unless the shares issuance on conversion
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<PAGE>
are to be issued in the same name as the name in which such share of $3.75
Convertible Exchangeable Preferred Stock is registered, each share surrendered
for conversion shall be accompanied by instruments of transfer, in form
satisfactory to the Corporation, duly executed by the holder or such holder's
duly authorized attorney and an amount sufficient to pay any transfer or similar
tax (or evidence reasonably satisfactory to the Corporation demonstrating that
such taxes have been paid or are not required to be paid).
Holders of shares of $3.75 Convertible Exchangeable Preferred Stock at the
close of business on a Dividend Payment Record Date will be entitled to receive
the dividend payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion thereof or the Corporation's default on payment
of the dividend due on such Dividend Payment Date. However, shares of $3.75
Convertible Exchangeable Preferred Stock surrendered for conversion during the
period from the close of business on any Dividend Payment Record Date to the
opening of business on the corresponding Dividend Payment Date (except shares
called for redemption on a redemption date during such period) must be
accompanied by payment of an amount equal to the dividend payable on such shares
on such Dividend Payment Date. A holder of shares of $3.75 Convertible
Exchangeable Preferred Stock on a Dividend Payment Record Date who (or whose
transferee) converts shares of $3.75 Convertible Exchangeable Preferred Stock on
a dividend payment date will receive the dividend payable on such shares of
$3.75 Convertible Exchangeable Preferred Stock by the Corporation on such date,
and the converting holder need not include payment in the amount of such
dividend upon surrender of shares of $3.75 Convertible Exchangeable Preferred
Stock for conversion. Except as provided above, no payment or adjustment will be
made on account of accrued or unpaid dividends upon conversion of shares of
$3.75 Convertible Exchangeable Preferred Stock.
As promptly as practicable after the surrender of certificates for shares
of $3.75 Convertible Exchangeable Preferred Stock as aforesaid, the Corporation
shall issue and shall deliver at such office to such holder, or on his or her
written order, a certificate or certificates for the number of shares of Common
Stock issuable upon the conversion of such shares in accordance with the
provisions of this Section C7, and any fractional interest in respect of a share
of Common Stock arising upon such conversion shall be settled as provided in
paragraph (c) of this Section C7.
Each conversion shall be deemed to have been effected immediately prior to
the close of business on the date on which the certificates for shares of $3.75
Convertible Exchangeable Preferred Stock shall have been surrendered and
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<PAGE>
such notice received by the Corporation as aforesaid, and the person or persons
in whose name or names any certificate of certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares represented thereby at such time on
such date and such conversion shall be at the Conversion Price in effect at such
time as such date, unless the stock transfer books of the Corporation shall be
closed on that date, in which event such person or persons shall be deemed to
have become such holder or holders of record at the close of business on the
next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date upon which
such shares shall have been surrendered and such notice received by the
Corporation. All shares of Common Stock delivered upon conversion of the $3.75
Convertible Exchangeable Preferred Stock will, upon delivery, be duly
authorized, validly issued and fully paid and nonassessable.
(c) In connection with the conversion of any shares of $3.75 Convertible
Exchangeable Preferred Stock, fractions of such shares may be converted;
however, no fractional shares or securities representing fractions of shares of
Common Stock shall be issued upon conversion of the $3.75 Convertible
Exchangeable Preferred Stock. Instead of any fractional interest in a share of
Common Stock which would otherwise be delivered upon the conversion of a shares
of $3.75 Convertible Exchangeable Preferred Stock (or fractions thereof), the
Corporation shall pay to the holder of such shares an amount in cash (computed
to the nearest cent) equal to the Current Market Price of Common Stock on the
Trading Date immediately preceding the date of conversion multiplied by the
fraction of a share of Common Stock represented by such fractional interest. If
more than one share (or fraction thereof) shall be surrendered for conversion at
one time by the same holder, the number of full shares of Common Stock issuable
upon conversion thereof shall be computed on the basis of the aggregate number
of shares of $3.75 Convertible Exchangeable Preferred Stock so surrendered.
(d) The Conversion Price shall be adjusted from time to time as follows:
(i) Stock Dividends and Stock Splits. If at any time after the Issue
--------------------------------
Date, (A) the Corporation shall fix a record date for the issuance of any
dividend payable in shares of Common Stock or (B) the number of shares of
Common Stock shall have been increased by a subdivision or split-up of
shares of Common Stock, then, on the record date fixed for the
determination of holders of Common Stock entitled to receive such dividend
or
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<PAGE>
immediately after the effective date of such subdivision or split-up, as
the case may be, the number of shares to be delivered upon surrender of any
share of $3.75 Convertible Exchangeable Preferred Stock for conversion will
be appropriately increased so that each holder of $3.75 Convertible
Exchangeable Preferred Stock thereafter will be entitled to receive the
number of shares of Common Stock that such holder would have owned
immediately following such action had such share been surrendered for
conversion immediately prior thereto, and the Conversion Price will be
appropriately adjusted. The time of occurrence of an event giving rise to
an adjustment made pursuant to this paragraph (d)(i) shall, in the case of
subdivision or split-up, be the effective date thereof and shall, in the
case of a stock dividend, be the record date thereof.
(ii) Combination of Stock. If the number of shares of Common Stock
--------------------
outstanding at any time after the Issue Date shall have been decreased by a
combination of the outstanding shares of Common Stock, then, immediately
after the effective date of such combination, the number of shares to be
delivered upon surrender of any shares of $3.75 Convertible Exchangeable
Preferred Stock for conversion will be appropriately decreased so that each
holder thereafter will be entitled to receive the number of shares of
Common Stock that such holder would have owned immediately following such
action had such shares been surrendered for conversion immediately prior
thereto, and the Conversion Price will be appropriately adjusted.
(iii) Reorganization. If any capital reorganization of the
--------------
Corporation, or any reclassification of the Common Stock, or any
consolidation of the Corporation with or merger of the Corporation with or
into any other corporation or any sale, lease or other transfer of all or
substantially all of the assets of the Corporation to any other person
(including any individual, partnership, joint venture, corporation, trust
or group thereof) shall be effected in such a way that the Common Stock
shall be converted into the right to receive stock, securities or other
property (including cash or any combination thereof), then, upon surrender
of the $3.75 Convertible Exchangeable Preferred Stock for conversion in
accordance with the term of this Section C7, each holder shall have the
right to receive the kind and holder shall have the right to receive the
kind and amount of stock and other
-22-
<PAGE>
securities and property receivable (including cash or any combination
thereof) upon such reorganization, reclassification, consolidation, merger
or sale, lease or other transfer by a holder of the number of shares of
Common Stock that such holder of the $3.75 Convertible Exchangeable
Preferred Stock would have been entitled to receive upon surrender of the
$3.75 Convertible Exchangeable Preferred Stock for conversion pursuant to
this Section C7 had the $3.75 Convertible Exchangeable Preferred Stock been
surrendered for conversion immediately prior to such merger or sale, lease
or other transfer.
(iv) Special Dividends. If (other than in a dissolution or
-----------------
liquidation) securities of the Corporation (other than shares of Common
Stock or rights, options or warrants referred to in subparagraph (v)
hereof) or evidence of its indebtedness or assets (other than cash
dividends payable (a) out of retained earnings or (b) out of any earnings
or surplus not in excess of 10% of the average Closing Price of the Common
Stock for the thirty (30) trading days prior to the fifth trading day
before the date of declaration multiplied by the number of shares of Common
Stock outstanding during such period), are issued by way of a dividend on
outstanding shares of Common Stock, then the number of shares to be
delivered upon surrender of the $3.75 Convertible Exchangeable Preferred
Stock shall be appropriately increased so that immediately after the date
fixed by the Corporation as the record date in respect of such issuance,
each holder will be entitled to receive the number of shares of Common
Stock determined by multiplying the number of shares such holder would have
been entitled to receive immediately before the record date for the
determination of the stockholders entitled to receive such dividend by a
fraction, the denominator of which shall be the Closing Price of the Common
Stock on such record date less the then fair market value as determined by
the Board of Directors, whose determination if made in good faith shall be
conclusive, of the portion of the securities or evidence of indebtedness or
assets distributed applicable to one share of Common Stock and the
numerator of which shall be such Closing Price; and the Conversion Price
shall be appropriately adjusted. Such adjustment shall become effective
immediately prior to the opening of business on the day following such
record date.
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<PAGE>
(v) Rights Offering. If the Corporation at any time after the Issue
---------------
Date shall issue or sell or fix a record date for the issuance of rights,
options or warrants to all holders of Common Stock entitling the holders
thereof to subscribe for or purchase or otherwise acquire Common Stock (of
securities convertible or exchangeable for Common Stock), in any such case,
at a price per share (or having a conversion price or exchange value per
share) that, together with the value (if for consideration other than cash,
as determined in good faith by the Board of Directors) of any consideration
paid for any such rights, options or warrants is less than the Closing
Price of the Common Stock on the date of such issuance or sale or on such
record date then, immediately after such record date, the number of shares
to be delivered upon surrender of the $3.75 Convertible Exchangeable
Preferred Stock for conversion shall be appropriately increased so that
each holder thereafter will be entitled to receive the number of shares of
Common Stock determined by multiplying the number of shares such holder
would have been entitled to receive immediately before the date of such
issuance or sale on such record date by a fraction, the numerator of which
will be the number of shares of Common Stock outstanding on such date plus
the number of additional shares of Common Stock offered for subscription or
purchase (or into which the convertible securities so offered are initially
convertible) and the denominator of which will be the number of shares of
Common Stock outstanding on such date plus the number of shares of Common
Stock that the aggregate offering price of the total number of shares so
offered for subscription or purchase would purchase at such Closing Price,
and the Conversion Price shall be appropriately adjusted. Notwithstanding
the foregoing, rights issued by the Corporation to all holders of its
Common Stock entitling the holders thereof to subscribe for or purchase
securities of the Corporation, which rights (i) are deemed to be
transferred with such shares of Common Stock, (ii) are not exercisable, and
(iii) are also issued in respect of future issuances of Common Stock
pursuant to the Corporation's Rights Agreement, dated as of March 16, 1992,
between the Corporation and First Interstate Bank, Ltd. (the "Rights Plan")
or any future or successor plan substantially similar to the Rights Plan,
in each case in clauses (i) through (iii) until the occurrence of a
specified event or events, shall for purposes of this paragraph (d) of this
Section C7 not be deemed
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issued until the occurrence of the earliest such specified event.
(vi) No Adjustments to Exercise Price. No adjustment in the
--------------------------------
Conversion Price in accordance with the provisions of paragraphs (i), (ii),
(iii), (iv) or (v) above need be made if such adjustment would amount to a
change in such Conversion Price of less than $.05; provided, however, that
-------- -------
the amount by which any adjustment is not made by reason of the provisions
of this section shall be carried forward and taken into account at the time
of any subsequent adjustment in the Conversion Price; and provided further,
that adjustment shall be required and made in accordance with the
provisions of this Section C7 not later than such time as may be required
in order to preserve the tax free nature of a distribution to the holder of
any share of Common Stock. Anything in this Section C7 to the contrary
notwithstanding, the Corporation shall be entitled to the extent permitted
by law to make such reductions in the Conversion Price, in addition to
those required by this Section C7, as it in its sole discretion shall
determine to be advisable in order to avoid or diminish any income tax to
any holder of Common Stock resulting from any dividend or distribution of
capital stock or rights or warrants to purchase capital stock or from any
event treated as such for income tax purposes of for any other reasons.
(vii) Readjustments, etc. If an adjustment is made under paragraphs
-------------------
(i), (ii), (iii), (iv) or (v) above, and the event to which the adjustment
relates does not occur, then any adjustment in the Conversion Price or
shares of Common Stock to be delivered upon surrender of the $3.75
Convertible Exchangeable Preferred Stock for conversion that were made in
accordance with such paragraphs shall be adjusted back to the Conversion
Price and the number of shares of Common Stock to be delivered upon
surrender of the $3.75 Convertible Exchangeable Preferred Stock for
conversion that were in effect immediately prior to the record date for
such event.
(e) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly file in the custody of its Secretary or an Assistant
Secretary at its principal office and with the Transfer Agent an officers'
certificate setting forth the adjusted number of shares of Common Stock to be
delivered upon surrender of the $3.75 Convertible Exchangeable Preferred Stock
for conversion and
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<PAGE>
the Conversion Price after such adjustment, the method of calculating thereof
and setting forth a brief statement of the facts requiring such adjustment and
upon which such adjustments are based. Promptly after each such adjustment, the
Corporation shall cause a copy of such certificate to be mailed to the holder of
each share of $3.75 Convertible Exchangeable Preferred Stock at his or her last
address as shown on the stock books of the Corporation. Each such officers'
certificate shall be made available at all reasonable times for inspection by
each holder of $3.75 Convertible Exchangeable Preferred Stock.
(f) In any case in which paragraph (d) of this Section C7 provides that an
adjustment shall become effective immediately after a record date for an event
and the date fixed for conversion pursuant to Section C7 occurs after such
record date but before the occurrence of such event, the Corporation may defer
until the actual occurrence of such event (A) issuing to the holder of any share
of $3.75 Convertible Exchangeable Preferred Stock surrendered for conversion the
additional shares of Common Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the Common Stock issuable upon
such conversion before giving effect to such adjustment and (B) paying to such
holder any amount in cash in lieu of any fraction pursuant to paragraph (c) of
this Section C7.
(g) The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Common Stock or its issued shares of Common Stock held in
its treasury, or both, sufficient shares of Common Stock to provide for
conversion of the $3.75 Convertible Exchangeable Preferred Stock from time to
time as such; $3.75 Convertible Exchangeable Preferred Stock is presented for
conversion.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the $3.75 Convertible Exchangeable Preferred Stock,
the Corporation will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue shares of Common Stock at such adjusted Conversion Price which shares
shall be fully-paid and nonassessable and free from all taxes, liens and charges
with respect to the issue thereof.
Prior to the delivery of any securities which the Corporation shall be
obligated to deliver upon conversion of the $3.75 Convertible Exchangeable
Preferred Stock, the Corporation will endeavor in good faith and as
expeditiously as possible to comply with all federal and state laws and
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regulations thereunder requiring the registration of such securities with, or
any approval of or consent to the delivery thereof by, any governmental
authority.
(h) The Corporation will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of the
shares of $3.75 Convertible Exchangeable Preferred Stock (or any other
securities issued on account of the $3.75 Convertible Exchangeable Preferred
Stock pursuant hereto) or shares pursuant hereto; provided, however, that the
-------- -------
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issue or delivery of shares of $3.75 Convertible
Exchangeable Preferred Stock (or any other securities issued on account of the
$3.75 Convertible Exchangeable Preferred Stock pursuant hereto) or shares of
Common Stock in a name other than the name in which the shares of $3.75
Convertible Exchangeable Preferred Stock with respect to which such shares of
Common Stock are issued were registered and the Corporation shall not be
required to make any issue or delivery unless and until the person requesting
such issue or delivery has paid to the Corporation the amount of any such tax or
has established, to the reasonable satisfaction of the Corporation, that such
tax has been paid or is not required to be paid.
(i) If:
(i) the Corporation shall authorize the issuance to all holders of
the Common Stock of rights or warrants to subscribe for or purchase shares
of Common Stock or any other subscription rights or warrants; or
(ii) the Corporation shall authorize the distribution to all holders
of the Common Stock of evidences of its indebtedness or assets (other than
cash dividends payable out of retained earnings, distributions excluded
from the operation of subparagraph (d)(iv) of this Section C7, stock
dividends or securities issued pursuant to any stockholder rights plan or
any similar plan of the Corporation); or
(iii) there shall be any capital reorganization or reclassification of
the Common Stock (other than a subdivision or combination of the
outstanding Common Stock, an increase in the authorized capital stock of
the Corporation not involving the issuance of any shares thereof, or a
change in par value of the Common Stock), or any other consolidation or
merger to which the Corporation is a party (other than a consolidation or
merger with a subsidiary in which the
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<PAGE>
Corporation is the continuing corporation and that does not result in any
reclassification or change in the Common Stock outstanding) or a sale,
lease or transfer of all or substantially all of the assets of the
Corporation; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Corporation; or
(v) there shall be any other event that would result in an
adjustment pursuant to paragraph (d) of this Section C7 of the Conversion
Price or the number of shares of Common Stock that may be purchased upon
the conversion of the $3.75 Convertible Exchangeable Preferred Stock;
then the Corporation will cause to be filed with the Transfer Agent and to be
mailed to each holder of $3.75 Convertible Exchangeable Preferred Stock by first
class mail addressed to such holder at the address appearing in the stock
records of the Corporation, at least twenty (20) days (or ten (10) days in any
case specified in clauses (i) or (ii) above) before the applicable record or
effective date hereinafter specified, a notice stating (A) the date as of which
the holders of Common Stock of record entitled to receive any such rights,
warrants or distributions are to be determined or (B) the date on which any such
consolidation, merger, sale, lease, transfer, dissolution, liquidation or
winding-up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record will be entitled to exchange
their shares of Common Stock for securities or other property, if any,
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, lease, transfer, dissolution, liquidation or winding-up. Such notice
shall also state whether such transaction will result in any adjustment in the
Conversion Price and, if so, shall state what the adjusted Conversion Price will
be and when it will become effective. The failure to give such notice or any
defect therein shall not affect the legality or validity of any distribution
right, warrant, consolidation, merger, sale, lease, transfer, dissolution,
liquidation or winding-up or the vote upon any such action.
8. Redemption at Option of Holder Upon a Fundamental Change. (a) If a
--------------------------------------------------------
Fundamental Change (as defined in paragraph (c) of this Section C8) occurs, each
holder of $3.75 Convertible Exchangeable Preferred Stock shall have the right,
at the holder's option, to require the Corporation to repurchase all of such
holder's $3.75 Convertible Exchangeable Preferred Stock, or any portion thereof
that has an aggregate liquidation value that is a multiple of $50.00, on the
date (the "Repurchase Date")
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<PAGE>
selected by the Corporation that is not less than 10 nor more than 20 days after
the Final Surrender Date (as defined in paragraph (b) of this Section C8), a
price per share equal to $50.00, plus accrued and unpaid dividends to the
Repurchase Date. The Corporation may, at its option, pay all or any portion of
the repurchase price upon a Fundamental Change in shares of common stock of the
Corporation or any successor corporation. For purposes of calculating the
number of shares of Common Stock issuable upon such redemption, the value of any
Closing Prices of such common stock for the five Trading Dates ending on the
third Trading Date immediately preceding the Repurchase Date. Payment may not
be made in shares of common stock unless such shares (i) have been, or will be
registered on or prior to the Final Surrender Date (as defined in paragraph (b)
of this Section C8 under the Securities Act of 1933, as amended, or are freely
tradable pursuant to an exemption thereunder and (ii) are listed on a United
States national securities exchange or quoted on the Nasdaq National Market at
the time of payment.
(b) Within 30 days after the occurrence of a Fundamental Change, the
Corporation must mail to all holders of record of the $3.75 Convertible
Exchangeable Preferred Stock a Corporation Notice containing the information set
out in paragraph (b) of Section C5, of this Article, except that, for purposes
of this Section C8 only, instead of stating that such redemption is at the
option of the Corporation, the Corporation Notice shall describe the occurrence
of such Fundamental Change and of the repurchase right arising as a result
thereof. The Corporation must cause a copy of such notice to be published in a
newspaper of general circulation in the borough of Manhattan, the City of New
York. At least two Business Days prior to the Repurchase Date, the Corporation
must publish a similar notice stating whether and to what extent the repurchase
price will be paid in cash or shares of Common Stock. To exercise the
repurchase right, a holder of $3.75 Convertible Exchangeable Preferred Stock
must surrender, on or before the date which is, subject to any contrary
requirements of applicable law, 60 days after the date of mailing of the
Corporation Notice (the "Final Surrender Date"), the certificates representing
the $3.75 Convertible Exchangeable Preferred Stock with respect to which the
right is being exercised, duly endorsed for transfer to the Corporation,
together with a written notice of election.
(c) The term "Fundamental Change" shall mean any of the following:
(i) a "person" or "Group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) becoming, in one transaction or a
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<PAGE>
series of related transactions, the "beneficial owner" (as defined in Rule
13d-2 under the Exchange Act) of Voting Shares (as defined in this
paragraph (c)) of the Corporation entitled to exercise more than 60% of the
total voting power of all outstanding Voting Shares of the Corporation
(including any Voting Shares that are not then outstanding of which such
person or Group is deemed the beneficial owner); or
(ii) any consolidation of the Corporation with, or merger of the
Corporation into, any other person, any merger of another person into the
corporation, or any sale, lease or transfer of all or substantially all of
the assets of the Corporation to another person (other than a merger, (a)
which results in the holders of Common Stock of the Corporation immediately
prior to giving effect to such transaction owning shares of capital stock
of the surviving corporation in such transaction representing in excess of
40% of the total voting power of all shares of capital stock of such
surviving corporation entitled to vote generally in the election of
directors and (b) in which the shares of the surviving corporation held by
such holders are, or immediately upon issuance will be, listed on a
national securities exchange or quoted on the Nasdaq National Market and
are not subject to any right of repurchase by the issuer thereof or any
third party and are not otherwise subject to any encumbrance as a result of
such transaction, provided, that the surviving corporation amends its
charter or certificate of incorporation to include the $3.75 Convertible
Exchangeable Preferred Stock and its terms as set forth herein);
provided, however, that a Fundamental Change shall not occur if either (i) for
- -------- -------
any five Trading Dates during the 10 Trading Dates immediately preceding either
the public announcement by the Corporation of such transaction or the
consummation of such transaction, the Closing Price of the Common Stock is at
least equal to 105% of the Conversion Price in effect on such trading days or
(ii) at least 90% of the consideration (excluding cash payments for fractional
shares) in such transaction or transactions to the holders of Common Stock
consists of shares of common stock that are, or immediately upon issuance will
be, listed on a national securities exchange or quoted on the Nasdaq National
Market, and as a result of such transaction or transactions, the $3.75
Convertible Exchangeable Preferred Stock becomes convertible into such common
stock.
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<PAGE>
(d) An election by a holder of $3.75 Convertible Exchangeable Preferred
Stock to have the Corporation redeem shares of $3.75 Convertible Exchangeable
Preferred Stock pursuant to subsection C8(a) shall become irrevocable at the
close of business on the relevant redemption date.
(e) The Corporation agrees that it will not complete any Fundamental
Change described in subsection C8(c) unless proper provision has been made to
satisfy its obligations under this Section C8.
For purposes of this Section C8, "Voting Shares" is defined to mean all
outstanding shares of any class or classes (however designated) of capital stock
entitled to vote generally in the election of members of the Board of Directors.
9. Ranking. Any class or classes of stock of the Corporation shall be
-------
deemed to rank:
(i) prior to the $3.75 Convertible Exchangeable Preferred Stock, as
to dividends or as to distribution of assets upon liquidation, dissolution
or winding up, if the holders of such class shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in preference or priority to
the holders of $3.75 Convertible Exchangeable Preferred Stock.
(ii) on a parity with the $3.75 Convertible Exchangeable Preferred
Stock, as to dividends or as to distribution as assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend
payment dates or redemption or liquidation prices per share thereof be
different from those of the $3.75 Convertible Exchangeable Preferred Stock,
if the holders of such class of stock and the $3.75 Convertible
Exchangeable Preferred Stock shall be entitled to the receipt of dividends
or of amounts distributable upon liquidation, dissolution or winding up, as
the case may be, in proportion to their respective amounts of accrued and
unpaid dividends per share or liquidation prices, without preference or
priority of one over the other; and
(iii) junior to the $3.75 Convertible Exchangeable Preferred Stock,
as to dividends or as to the distribution of assets upon liquidation,
dissolution or winding up, if such stock shall be Common Stock or if the
holder of $3.75 Convertible Exchangeable Preferred Stock shall be entitled
to
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<PAGE>
receipt of dividends or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in preference or priority to
the holders of shares of such stock.
10. Voting. (a) Except as herein provided or as otherwise from time to
------
time required by law, holders of $3.75 Convertible Exchangeable Preferred Stock
shall have no voting rights. Whenever, at any times or times, dividends payable
on the shares of $3.75 Convertible Exchangeable Preferred Stock at the time
outstanding shall be cumulatively in arrears for such number of Dividend Periods
(whether or not consecutive) which shall in the aggregate contain not less than
540 days, the holders of $3.75 Convertible Exchangeable Preferred Stock shall
have the exclusive right, voting separately as a class with holders of shares of
any one or more other series of Preferred Stock ranking on a parity with the
$3.75 Convertible Exchangeable Preferred Stock as to dividends or on the
distribution of assets upon liquidation, dissolution or winding up and upon
which like voting rights have been conferred and are exercisable (the $3.75
Convertible Exchangeable Preferred Stock and any such other Preferred Stock,
collectively for purposes of this Section C10, the "Defaulted Preferred Stock"),
to elect two directors of the Corporation at the Corporation's next annual
meeting of stockholders and at each subsequent annual meeting of stockholders;
provided, however, that if such voting rights shall become vested more than 90
- -------- -------
days or less than 20 days before the date prescribed for the annual meeting of
stockholders, thereupon the holders of the shares of Defaulted Preferred Stock
shall be entitled to exercise their voting rights at a special meeting of the
holders of shares of Defaulted Preferred Stock as set forth in paragraphs (b)
and (c) of this Section C10. At elections for such directors, each holder of
$3.75 Convertible Exchangeable Preferred Stock shall be entitled to one vote for
each share held (the holders of shares of any other series of Defaulted
Preferred Stock ranking on such a parity being entitled to such number of votes,
if any, for each share of stock held as may be granted to them). Upon the
vesting of such right of the holders of Defaulted Preferred Stock, the maximum
authorized number of members of the Board of Directors shall automatically be
increased by two and the two vacancies so created shall be filled by vote of the
holders of outstanding Defaulted Preferred Stock as hereinafter set forth. The
right of holders of Defaulted Preferred Stock, voting separately as a class, to
elect members of the Board of Directors as aforesaid shall continue until such
time as all dividends accumulated on Defaulted Preferred Stock shall have been
paid or declared and funds set aside for payment in full, at which time such
right shall terminate, except as herein or by law expressly provided, subject to
revesting in the event
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of each and every subsequent default of the character above mentioned.
(b) Whenever such voting right shall have vested, such right may be
exercised initially either at a special meeting of the holders of shares of
Defaulted Preferred Stock called as hereinafter provided, or at any annual
meeting of stockholders held for the purpose of electing directors, and
thereafter at such meeting or by the written consent of such holders pursuant to
Section 228 of the General Corporation Law of the State of Delaware.
(c) At any time when such voting right shall have vested in the holders of
shares of Defaulted Preferred Stock entitled to vote thereon, and if such right
shall not already have been initially exercised, an officer of the Corporation
shall, upon the written request of 10% of the holders of record of shares of
such Defaulted Preferred Stock than outstanding, addressed to the Secretary of
the Corporation, call a special meeting of holders of shares of such Defaulted
Preferred Stock. Such meeting shall be held at the earliest practicable date
upon the notice required for annual meetings of stockholders at the place for
holding annual meetings of stockholders of the Corporation or, if none, at a
place designated by the Treasurer of the Corporation. If such meeting shall not
be called by the proper officers of the Corporation within 30 days after the
personal service of such written request upon the Treasurer of the Corporation,
or within 30 days after mailing the same within the United States, by registered
mail, addressed to the Secretary of the Corporation at its principal office
(such mailing to be evidenced by the registry receipt issued by the postal
authorities), then the holders of record of 10% of the shares of Defaulted
Preferred Stock then outstanding may designate in writing any person to call
such meeting at the expense of the Corporation, and such meeting may be called
by such person so designated upon the notice required for annual meetings of
stockholders and shall be held at the same place as is elsewhere provided in
this paragraph. Any holder of shares of Defaulted Preferred Stock than
outstanding that would be entitled to vote at such meeting shall have access to
the stock books of the Corporation for the purpose of causing a meeting of
stockholders to be called pursuant to the provisions of this paragraph.
Notwithstanding the provisions of this paragraph, however, no such special
meeting shall be called or held during a period within 45 days immediately
preceding the date fixed for the next annual meeting of stockholders.
(d) The directors elected pursuant to this Section shall serve until the
next annual meeting or until their respective successors shall be elected and
shall qualify; any director elected by the holders of Defaulted Preferred Stock
may be removed by, and shall not be removed otherwise
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than by, the vote of the holders of a majority of the outstanding shares of the
Defaulted Preferred Stock who were entitled to participate in such election of
directors, voting as a separate class, at a meeting called for such purpose or
by written consent as permitted by law, this Restated Certificate of
Incorporation and the By-laws of the Corporation. If the office of any director
elected by the holders of Defaulted Preferred Stock, voting as a class, becomes
vacant by reason of death, resignation, retirement, disqualification or removal
from office or otherwise, the remaining director elected by the holders of
Defaulted Preferred Stock, voting as a class, may choose a successor who shall
hold office for the unexpired term in respect of which such vacancy occurred.
Upon any termination of the right of the holders of Defaulted Preferred Stock to
vote for directors as herein provided, the term of office of all directors then
in office elected by the holders of Defaulted Preferred Stock, voting as a
class, shall terminate immediately. Whenever the terms of office of the
directors elected by the holders of Defaulted Preferred Stock, voting as a
class, shall so terminate and the special voting powers vested in the holders of
Defaulted Preferred Stock shall have expired, the number of directors shall be
such number as may be provided for in the By-laws irrespective of any increase
made pursuant to the provisions of this Section C10.
(e) So long as any shares of the $3.75 Convertible Exchangeable Preferred
Stock remain outstanding, the consent of the holders of at least a majority of
the shares of $3.75 Convertible Exchangeable Preferred Stock outstanding at the
time given in person or by proxy either in writing (as permitted by law, this
Restated Certificate of Incorporation and the By-laws of the Corporation) or at
any special or annual meeting, shall be necessary to permit, effect or validate
any one or more of the following:
(i) the authorization, creation or issuance, or any increase in the
authorized or issued amount, of any class or series of stock ranking prior
to the $3.75 Convertible Exchangeable Preferred Stock as to dividends or
the distribution of assets upon liquidation, dissolution or winding up;
(ii) the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of this Restated
Certificate of Incorporation of the Corporation which would adversely
affect any right, preference, privilege or voting power of the $3.75
Convertible Exchangeable Preferred Stock or of the holders thereof;
provided, however, that any increase in the amount of authorized Preferred
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Stock or the
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creation and issuance of other series of Preferred Stock, or any increase
in the amount of authorized shares of such series or of any other series of
Preferred Stock, in each case ranking on a parity with or junior to the
$3.75 Convertible Exchangeable Preferred Stock with respect to the payment
of dividends and the distribution of assets upon liquidation, dissolution
or winding up, shall not be deemed to adversely affect such rights,
preferences or voting powers; or
(iii) the authorization of any reclassification of the $3.75
Convertible Exchangeable Preferred Stock.
11. Exchange. (a) The $3.75 Convertible Exchangeable Preferred Stock
--------
shall be exchangeable in whole, but not in part, at the option of the
Corporation on any dividend payment date beginning March 1, 1994, for the
Debentures. Holders of outstanding shares of $3.75 Convertible Exchangeable
Preferred Stock will be entitled to receive $50.00 principal amount of
Debentures in exchange for each share of $3.75 Convertible Exchangeable
Preferred Stock held by them at the time of exchange; provided that the
--------
Debentures will be issuable in denominations of $1,000 and integral multiples
thereof. If the exchange results in an amount of Debentures that is not an
integral multiple of $1,000, the amount in excess of the closest integral
multiple of $1,000 will be paid in cash by the Corporation.
(b) The Corporation will mail to each record holder of the $3.75
Convertible Exchangeable Preferred Stock written notice of its intention to
exchange the $3.75 Convertible Exchangeable Preferred Stock for the Debentures
no less than 30 nor more than 60 days prior to the date of the exchange (the
"Exchange Date"). The notice shall specify the effective date of the exchange
and the place where certificates for shares of $3.75 Convertible Exchangeable
Preferred Stock are to be surrendered for Debentures and shall state that
dividends on $3.75 Convertible Exchangeable Preferred Stock will cease to accrue
on the Exchange Date.
Prior to giving notice of intention to exchange, the Corporation shall have
executed and delivered to a bank or trust company selected by the Corporation to
act as Trustee with respect to the Debentures, which Trustee shall meet the
eligibility requirements of Section 310(a) of the Trust Indenture Act of 1939 as
then in effect, and which Trustee shall have executed and delivered to the
Corporation, an Indenture substantially in the form attached to the Placement
Agreement dated February 19, 1993, between the Corporation and Alex. Brown &
Sons Incorporated, Montgomery Securities and PaineWebber Incorporated with such
changes as may be required by law, stock exchange rule, Nasdaq National
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Market rule or customary usage (including, without limitation, such changes as
are requested by the Trustee with respect to its rights and obligations
thereunder, provided that any such changes do not adversely affect the rights of
holders of the Debentures thereunder).
(c) If the Corporation has caused the Debentures to be authenticated on or
prior to the Exchange Date and has complied with the other provisions of this
Section C11, then, notwithstanding that any certificate for shares of $3.75
Convertible Exchangeable Preferred Stock have not been surrendered for exchange,
on the Exchange Date dividends shall cease to accrue on the $3.75 Convertible
Exchangeable Preferred Stock and at the close of business on the Exchange Date
the holders of the $3.75 Convertible Exchangeable Preferred Stock shall cease to
be stockholders with respect to the $3.75 Convertible Exchangeable Preferred
Stock and shall have no interest in or other claims against the Corporation by
virtue thereof and shall have no voting or other rights with respect to the
$3.75 Convertible Exchangeable Preferred Stock, except the right to receive the
Debentures issuable upon such exchange and the right to accumulated and unpaid
dividends, without interest thereon, upon surrender (and endorsement, if
required by the Corporation) of their certificates, and the shares evidenced
thereby shall no longer be deemed outstanding for any purpose.
The Corporation will cause the Debentures to be authenticated on or before
the Exchange Date.
(d) Notwithstanding the foregoing, if notice or exchange has been given
pursuant to this Section C11 and any holder of shares of $3.75 Convertible
Exchangeable Preferred Stock shall, prior to the close of business on the
Exchange Date, give written notice to the Corporation pursuant to Section C7 of
this Article of the conversion of any or all of the shares held by the holder
(accompanied by a certificate or certificates for such shares, duly endorsed or
assigned to the Corporation), then the exchange shall not become effective as to
the shares to be converted and the conversion shall become effective as provided
in such Section C7.
(e) The Debentures will be delivered to the persons entitled thereto upon
surrender to the Corporation or its agent appointed for that purpose of the
certificates for the shares of $3.75 Convertible Exchangeable Preferred Stock
being exchanged therefor.
(f) Notwithstanding the other provisions of this Section C11, if on the
Exchange Date the Corporation has not paid full cumulative dividends on the
$3.75 Convertible Exchangeable Preferred Stock (or set aside a sum therefor)
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the Corporation may not exchange the $3.75 Convertible Exchangeable Preferred
Stock for the Debentures and any notice previously given pursuant to this
Section C11 shall be of no effect.
(g) Prior to the Exchange Date, the Corporation will comply with any
applicable securities and blue sky laws with respect to the exchange of the
$3.75 Convertible Exchangeable Preferred Stock for the Debentures.
12. Record Holders. The Corporation and the Transfer Agent may deem and
--------------
treat the record holder of any shares of $3.75 Convertible Exchangeable
Preferred Stock as the true and lawful owner thereof for all purposes, and
neither the Corporation nor the Transfer Agent shall be affected by any notice
to the contrary.
13. Notice. Except as may otherwise be provided for herein, all notices
------
referred to herein shall be in writing, and all notices hereunder shall be
deemed to have been given upon receipt, in the case of a notice of conversion
given to the Corporation as contemplated in Section C7(b) of this Article, or,
in all other cases, upon the earlier of receipt of such notice or three Business
Days after the mailing of such notice if sent by registered mail (unless first-
class mail shall be specifically permitted for such notice under the terms of
this Section C of this Article) with postage prepaid, addressed: if to the
Corporation, to its offices at 9360 Towne Centre Drive, San Diego, California
92121 (Attention: Investor Relations Department) or to an agent of the
Corporation designated as permitted by this Certificate, or, if to any holder of
the $3.75 Convertible Exchangeable Preferred Stock, to such holder at the
address of such holder of the $3.75 Convertible Exchangeable Preferred Stock as
listed in the stock record books of the Corporation (which may include the
records of any transfer agent for the $3.75 Convertible Exchangeable Preferred
Stock); or to such other address as the Corporation or holder, as the case may
be, shall have designated by notice similarly given.
D. Common Stock.
------------
1. Relative Rights of Preferred Stock and Common Stock. All preferences,
---------------------------------------------------
voting powers, relative, participating, optional or other special rights and
privileges, and qualifications, limitations or restrictions of the Common Stock
are expressly made subject and subordinate to those that may be fixed with
respect to any shares of the Preferred Stock.
2. Voting Rights. Except as otherwise required by law or this Restated
-------------
Certificate of Incorporation, each holder of Common Stock shall have one vote in
respect of
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each share of stock held by such holder of record on the books of the
Corporation for the election of directors and on all matters submitted to a vote
of stockholders of the Corporation.
3. Dividends. Subject to the preferential rights of the Preferred Stock,
---------
the holders of shares of Common Stock shall be entitled to receive, when and if
declared by the Board of Directors, out of the assets of the Corporation which
are by law available therefor, dividends payable either in cash, in property or
in shares of capital stock.
4. Dissolution, Liquidation or Winding Up. In the event of any
--------------------------------------
dissolution, liquidation or winding up of the affairs of the Corporation, after
distribution in full of the preferential amounts, if any, to be distributed to
the holders of shares of the Preferred Stock, holders of Common Stock shall be
entitled, unless otherwise provided by law or this Restated Certificate of
Incorporation, to receive all of the remaining assets of the Corporation of
whatever kind available for distribution to stockholders ratably in proportion
to the number of shares of Common Stock held by them respectively.
ARTICLE V
No action required or permitted to be taken at any annual or special
meeting of the stockholders may be taken without a meeting and the power of
stockholders to consent in writing, without a meeting, to the taking of any
action is specifically denied. Special meetings of the stockholders of the
Corporation may be called only by the Chairman of the Board or the President of
the Corporation or by a resolution adopted by the affirmative vote of a majority
of the Board of Directors.
ARTICLE VI
Except as otherwise provided for in Article IV, the Board of Directors
shall be divided into three classes, designated Class I, Class II and Class III,
as nearly equal in number as possible, and the term of office of Directors of
one class shall expire at each annual meeting of stockholders, and in all cases
as to each Director until his successor shall be elected and shall qualify or
until his earlier resignation, removal from office, death or incapacity. Except
as otherwise provided for in Article IV, additional directorships resulting from
an increase in number of Directors shall be apportioned among the classes as
equally as possible. The initial term of office of Directors of Class I shall
expire at the annual meeting of stockholders in 1993; that of Class II shall
expire at the
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annual meeting in 1994; and that of Class III shall expire at the annual meeting
in 1995; and in all cases as to each Director until his successor shall be
elected and shall qualify or until his earlier resignation, removal from office,
death or incapacity. At each annual meeting of stockholders the number of
Directors equal to the number of Directors of the class whose term expires at
the time of such meeting (or, if less, the number of Directors properly
nominated and qualified for election) shall be elected to hold office until the
third succeeding annual meeting of stockholders after their election. A
Director or the entire Board of Directors may be removed, with or without cause,
by the holders of a majority of shares then entitled to vote at an election of
Directors, unless otherwise specified by law or this Restated Certificate of
Incorporation.
ARTICLE VII
Election of directors need not be by written ballot unless the By-laws so
provide.
ARTICLE VIII
Whenever a compromise or arrangement is proposed between the Corporation
and its creditors or any class of them and/or between the Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of the
Corporation or of any creditor or stockholder thereof or on the application of
any receivers appointed for the Corporation under the provisions of section 291
of Title 8 of the Delaware Code or on the application of trustees in dissolution
or of any receiver or receivers appointed for the Corporation under the
provisions of section 279 of Title 8 of the Delaware Code order a meeting of the
creditors or class of creditors, and/or the stockholders or class of
stockholders of the Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority, in number representing three-
fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall if sanctioned by the
court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
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<PAGE>
ARTICLE IX
A. No Personal Liability. A director of the Corporation shall not be
---------------------
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (1) for any
breach of the director's duty of loyalty to the Corporation and its
stockholders; (2) for acts or omissions not in good faith or which involve
intentional misconduct or knowing violations of law; (3) under section 174 of
the Delaware General Corporation law; or (4) for any transaction from which the
director derived an improper personal benefit.
B. Indemnification. Each person who is or is made a party or is
---------------
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall incur to the benefit of
his or her heirs, executors and administrators; provided, however, that, except
as provided in the second paragraph hereof, the Corporation shall indemnify any
such person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this section shall be a contract right and shall
include the right to be paid by the Corporation any expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the Delaware General Corporation Law requires, the payment of
such expenses incurred by a director or officer
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<PAGE>
in his or her capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this section or
otherwise. The Corporation may, by action of its Board of Directors, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
If a claim under the first paragraph of this section is not paid in full by
the Corporation within thirty (30) days after a written claim has been received
by the Corporation, the claimant may at any time thereafter bring suit against
the Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the Delaware
General Corporation Law for the Corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
section shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Restated Certificate of
Incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
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<PAGE>
The Corporation may maintain insurance, at its expense, to protect itself
and any director, officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise against any
such expense, liability or loss, whether or not the Corporation would have the
power to indemnify such person against such expense, liability or loss under the
Delaware General Corporation Law.
ARTICLE X
The Board of Directors is expressly empowered to adopt, amend or repeal By-
Laws of the Corporation, provided, however, that any adoption, amendment or
repeal of By-Laws of the Corporation by the Board of Directors shall require the
approval of at least sixty-six and two-thirds percent (66 2/3%) of the total
number of authorized directors (whether or not there exist any vacancies in
previously authorized directorships at the time any resolution providing for
adoption, amendment or repeal is presented to the Board). The stockholders shall
also have power to adopt, amend or repeal By-Laws of the Corporation, provided,
however, that in addition to any vote of the holders of any class or series of
stock of this Corporation required by law or by this Restated Certificate of
Incorporation the affirmative vote of the holders of at least sixty-six and two-
thirds percent (66 2/3%) of the voting power of all of the then outstanding
shares of the stock of the Corporation entitled to vote generally in the
election of directors, voting together as a single class, shall be required for
such adoption, amendment or repeal by the stockholders of any provisions of the
By-Laws of the Corporation.
ARTICLE XI
Notwithstanding any other provision of this Restated Certificate of
Incorporation, the affirmative vote of the holders of at least sixty-six and
two-thirds percent (66 2/3%) of the voting power of all of the then outstanding
shares of the stock of the Corporation entitled to vote generally in the
election of Directors, voting together as a
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<PAGE>
single class, shall be required to amend in any respect or repeal this Article
XI, or Articles V, VI, IX and X.
IN WITNESS WHEREOF, said Gensia, Inc. has caused its corporate seal to
be hereunto affixed and this certificate to be signed by its President and Chief
Executive Officer, David F. Hale, and its Secretary, Wesley N. Fach, this 26th
day of February, 1997.
By /s/ David F. Hale
--------------------------------------
David F. Hale, President and
Chief Executive Officer
Attest:
By /s/ Wesley N. Fach
------------------------
Wesley N. Fach
Secretary
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<PAGE>
EXHIBIT 3(ii)
GENSIA SICOR INC.
BY-LAWS
As Amended through February 28, 1997
<PAGE>
Amended as of February 28, 1997
BY-LAWS
OF
GENSIA SICOR INC.
ARTICLE 1
Definitions
-----------
1.1 "Affiliate" and "Associate" each have the same meaning as in Rule
12b-2 promulgated under the Exchange Act.
1.2 "Closing Date" has the meaning set forth in the Stock Exchange
Agreement.
1.3 "Common Stock" means the common stock, par value $.01 per share,
of the Corporation.
1.4 "Competitor" has the meaning set forth in the Shareholder's
Agreement.
1.5 "Equity Security" means (i) any Common Stock, (ii) securities of
the Corporation convertible into or exchangeable for Common Stock, and (iii)
options, rights, warrants and similar securities issued by the Corporation to
acquire Common Stock.
1.6 "Exchange Act" means the United States Securities Exchange Act of
1934, and the rules and regulations promulgated thereunder, as amended.
1.7 "Fair Market Value" has the same meaning as set forth in the
Shareholder's Agreement.
1.8 "Independent Director" means a director of the Corporation (i)
who is not and has never been an officer or employee of the Corporation, any
Affiliate or Associate of the Corporation or an entity that derived 10% or more
of its revenues or earnings in its most recent fiscal year from transactions
involving the Corporation or any Affiliate or Associate of the Corporation, (ii)
who is not and has never been an officer, employee or director of Rakepoll, any
Affiliate or Associate of Rakepoll or an entity that derived more than 10% of
its revenues or earnings in its most recent fiscal year from transactions
involving Rakepoll or any Affiliate or Associate of Rakepoll, (iii) who is not
and has never been a professional advisor, including without limitation,
attorneys, accountants and financial advisors, to any of the Corporation,
Rakepoll or any Affiliate or Associate of either of them, and (iv) who was
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<PAGE>
on the Closing Date deemed to be, or on or after the Closing Date was designated
as, an Independent Director in accordance with Section 4.1 of the Shareholder's
Agreement.
1.9 "Investor Directors" means Directors who are designated for such
position by Rakepoll in accordance with Section 4.1 of the Shareholder's
Agreement.
1.10 "Management Directors" means, at the Closing Date, Directors who
were deemed to be Management Directors in accordance with Section 4.1(b) of the
Shareholder's Agreement and, after the Closing Date, Directors who are
designated for such position in accordance with Section 4.1 of the Shareholder's
Agreement.
1.11 "Preferred Directors" has the meaning set forth in Section 4.1
of these By-laws.
1.12 "Preferred Stock" means the Corporation's $3.75 Convertible
Exchangeable Preferred Stock.
1.13 "Rakepoll" means Rakepoll Finance N.V., a corporation organized
under the laws of the Netherlands Antilles.
1.14 "Rakepoll Initial Interest" means the number of shares of
outstanding Common Stock that is controlled directly or indirectly by Rakepoll
and Rakepoll's Affiliates upon consummation of the transactions contemplated by
the Stock Exchange Agreement.
1.15 "Rakepoll Interest" means, at any time, the number of shares of
outstanding Common Stock that is controlled directly or indirectly by Rakepoll
and Rakepoll's Affiliates.
1.16 "Shareholder's Agreement" means the Shareholder's Agreement
between Rakepoll and the Corporation dated as of November 12, 1996.
1.17 "Stock Exchange Agreement" means the Stock Exchange Agreement
between Rakepoll and the Corporation dated as of November 12, 1996.
1.18 "Subsidiary" has the same meaning as in Rule 12b-2 promulgated
under the Exchange Act.
1.19 "Substantial Part" of the Corporation means more than 33 1/3% of
the Fair Market Value of the total assets of the Corporation and its
Subsidiaries as of the end of the most recent fiscal quarter ending prior to the
time the determination is made.
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<PAGE>
ARTICLE 2
Offices
-------
Section 2.1 Registered Office. The registered office of the
-----------------
Corporation within the State of Delaware is located at 1209 Orange Street in the
City of Wilmington, County of New Castle, in the State of Delaware and
Corporation Trust Company is the registered agent.
Section 2.2 Other Offices. The Corporation may also have other
-------------
offices, either within or without the State of Delaware, at such place or places
as the Board of Directors may from time to time appoint or the business of the
Corporation may require.
ARTICLE 3
Meetings of Stockholders
------------------------
Section 3.1 Annual Meetings. Annual meetings of stockholders shall
---------------
be held at such date and time as shall be designated from time to time by the
Board of Directors and stated in the notice of meeting. At the annual meeting
the stockholders shall elect by a plurality vote the number of Directors equal
to the number of Directors of the class whose term expires at such meetings (or,
if fewer, the number of Directors properly nominated and qualified for election)
to hold office until the third succeeding annual meeting of stockholders after
their election.
At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the Board of Directors, otherwise properly brought before the meeting by or at
the direction of the Board of Directors, or otherwise properly brought before
the meeting by a stockholder. In addition to any other applicable requirements,
for business to be properly brought before an annual meeting by a stockholder,
the stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation, not less than fifty (50) days nor more than seventy-five (75) days
prior to the meeting; provided, however, that in the event that less than sixty-
five (65) days' notice or prior public disclosure of the date of the meeting is
given or made to stockholders, notice by the stockholder to be timely must be so
received not later than the close of business on the 15th day following the day
on which such notice of the date of the annual meeting was mailed or such public
disclosure was made. A stockholder's notice to the Secretary shall set forth
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as to each matter the stockholder proposes to bring before the annual meeting
(i) a brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (ii)
the name and record address of the stockholder proposing such business, (iii)
the class and number of shares of the Corporation which are beneficially owned
by the stockholder, (iv) any material interest of the stockholder in such
business.
Notwithstanding anything in the By-Laws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Section 3.1 by any stockholder of any business
properly brought before the annual meeting in accordance with said procedure.
The Chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section, and if he
should so determine, he shall so declare to the meeting and any such business
not properly brought before the meeting shall not be transacted.
Section 3.2 Special Meetings. Special meetings of the stockholders
----------------
for any proper purpose or purposes may be called only by the Chairman of the
Board, or by the President of the Corporation or by a resolution adopted by the
affirmative vote of a majority of the Board of Directors.
Section 3.3 Notice of Meeting. Notice, signed by the Chairman of the
-----------------
Board, the President, any Vice President, the Secretary or an Assistant
Secretary, of every annual or special meeting of stockholders stating the
purpose or purposes for which the meeting is called, and the date and time when,
and the place where it is to be held, shall be prepared in writing and
personally delivered or mailed, postage prepaid by first class mail, to each
stockholder entitled to vote at such meeting not less than ten (10) nor more
than sixty (60) days before the meeting, except as otherwise provided by
statute. If mailed, such notice shall be directed to a stockholder at his
address as it shall appear on the stock record book of the Corporation, unless
the stockholder shall have filed with the Secretary a written request that
notices intended for him or her be mailed to some other address, in which case
it shall be mailed to the address designated in such request. Notice shall be
deemed given when personally delivered or five days after deposited to the
United States mail, as the case may be; provided, however, that such notice may
also be given by telegram, cablegram, facsimile or other means of electronically
transmitted written copy and in such case shall be deemed given when ordered or,
if delayed delivery is ordered, as of such delayed delivery time, or when
transmitted, as the case may be.
Section 3.4 List of Stockholders. A complete list of the
--------------------
stockholders entitled to vote at each meeting of stockholders,
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<PAGE>
arranged in alphabetical order and showing the address of each such stockholder
and the number of shares registered in the name of each such stockholder, shall
be open to the examination of any stockholder, for any purpose germane to such
meeting, during ordinary business hours, for a period of at least ten (10) days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of such meeting, or, if
not so specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting and during the
whole time thereof, and may be inspected by any stockholder who is present.
Section 3.5 Quorum. The presence at any meeting, in person or by
------
proxy, of the holders of record of a majority of the shares then issued and
outstanding and entitled to vote shall be necessary and sufficient to constitute
a quorum for the transaction of business, except where otherwise provided by
statute.
Section 3.6 Adjournments. In the absence of a quorum, stockholders
------------
representing a majority of the shares then issued and outstanding and entitled
to vote, present in person or by proxy, or, if no stockholder entitled to vote
is present in person or by proxy, any officer entitled to preside at or act as
secretary of such meeting, may adjourn the meeting from time to time without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting at which a quorum shall be present or represented, any business may
be transacted which might have been transacted at the meeting originally
noticed. If the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 3.7 Voting. When a quorum is present at any meeting, the
------
holders of a majority of the shares of the Corporation, present in person or by
proxy, shall decide any question brought before the meeting, unless the question
is one upon which by express provision of the statutes or of the certificate of
incorporation a different vote is required in which case such express provision
shall govern and control the decision of such question.
Section 3.8 Proxies. Any stockholders entitled to vote may vote by
-------
proxy, provided that the instrument authorizing such proxy to act shall have
been executed in writing (which shall include telegraphing, cabling or other
means of electronically transmitted written copy) by the stockholder himself or
herself or by his or her duly authorized attorney-in-fact. No proxy
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<PAGE>
shall be voted or acted upon after three years from its date, unless the proxy
provides for a longer period.
Section 3.9 Judges of Election. The Board of Directors may appoint
------------------
judges of election to serve at any election of Directors and at balloting on any
other matter that may properly come before a meeting of stockholders. If no
such appointment shall be made, or if any of the judges so appointed shall fail
to attend, or refuse or be unable to serve, then such appointment may be made by
the presiding officer of the meeting at the meeting.
Section 3.10 Written Consent. No action required or permitted to be
---------------
taken at any annual or special meeting of the stockholders of the Corporation
may be taken without a meeting, and the power of the stockholders to consent in
writing, without a meeting, to the taking of any action is specifically denied.
Section 3.11 Waiver of Notice. Notice of any meeting need not be
----------------
given to any stockholder who shall attend such meeting in person or shall waive
notice thereof, before or after such meeting, in writing or by telegram,
facsimile, cablegram or other means of electronically transmitted written copy.
ARTICLE 4
Board of Directors
------------------
Section 4.1 Number and Qualification. (a) The number of directors
------------------------
which shall constitute the whole Board of Directors shall be ten (10) (of whom
at least two shall be independent directors as required by the rules of the
- --------
Nasdaq National Market and who shall be deemed to be Independent Directors).
Thereafter, the number of directors which shall constitute the whole Board of
Directors shall be fixed from time to time by resolution of the Board of
Directors or stockholders at the annual meeting or any special meeting called
for that purpose. Notwithstanding the foregoing, in the event that the holders
of the Preferred Stock (other than Rakepoll and its Affiliates) become entitled
to appoint two (2) directors (the "Preferred Directors") to the Board of
Directors in accordance with the terms of the Preferred Stock, then, until such
right to appoint the Preferred Directors terminates, the Board of Directors
shall be increased from ten (10) to twelve (12) Directors as soon as possible
after such event and the composition of the Board of Directors shall be adjusted
in accordance with Section 4.5(b) hereto.
(b) No individual who is an officer, director, partner or principal
stockholder of any "competitor" of the Corporation or of any of its Subsidiaries
(other than Rakepoll and its Affiliates) shall serve as a Director.
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Section 4.2 Election and Term of Office. Directors shall be elected
---------------------------
at the annual meeting of the stockholders except as provided in Section 4.4 of
this Article. Each Director (whether elected at an annual meeting or to fill a
vacancy or otherwise) shall continue in office until a successor shall have been
elected and qualified or until his or her death, resignation or removal in the
manner hereinafter provided, whichever shall first occur.
Section 4.3 Nominations. Subject to the rights of holders of any
-----------
class or series of stock having a preference over the common stock as to
dividends or upon liquidation, nominations for election to the Board of
Directors of the Corporation at a meeting of stockholders may be made on behalf
of the Board by the Nominating Committee appointed by the Board, or by any
stockholder of the Corporation entitled to vote for the election of Directors at
such meeting. Such nominations, other than those made by the Nominating
Committee on behalf of the Board, shall be made by notice in writing delivered
or mailed by first class United States mail, postage prepaid, to the Secretary
or Assistant Secretary of the Corporation, and received by him not less than one
hundred twenty (120) days prior to any meeting of stockholders called for the
election of directors; provided, however, that if less than one hundred (100)
-----------------
days' notice of the meeting is given to stockholders, such nomination shall have
been mailed or delivered to the Secretary or the Assistant Secretary of the
Corporation not later than the close of business on the seventh (7th) day
following the day on which the notice of meeting was mailed. Such notice shall
set forth as to each proposed nominee who is not an incumbent director (i) the
name, age, business address and, if known, residence address of each nominee
proposed in such notice; (ii) the principal occupation or employment of each
such nominee; (iii) the number of shares of stock of the Corporation which are
beneficially owned by each such nominee and by the nominating stockholder; and
(iv) any other information concerning the nominee that must be disclosed of
nominees in proxy solicitations regulated by Regulation 14A of the Securities
Exchange Act of 1934.
The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare the
meeting and the defective nomination shall be disregarded.
Section 4.4 Vacancies and Additional Directorships. If any vacancy
--------------------------------------
shall occur among the Directors by reason of death, resignation or removal, or
as the result of an increase in the number of Directorships, the Directors then
in office shall continue to act and may fill any such vacancy by a vote of the
majority of Directors then in office, though less than a quorum; provided,
---------
however, that (a) subject to Section 4.5, Rakepoll shall have the right to
- -------
designate any replacement for any Investor Director designated thereby in
accordance with
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<PAGE>
Section 4.1 of the Shareholder's Agreement at the termination of such Director's
term or upon death, resignation, retirement, disqualification, removal from
office or other cause and (b) the Management Directors shall have the right to
designate any replacement for any Management Director designated in accordance
with Section 4.1 of the Shareholder's Agreement at the termination of such
Director's term or upon death, resignation, retirement, disqualification,
removal from office or other cause, except that, if at any time there are no
-----------
Management Directors remaining on the Board of Directors, then the Independent
Directors shall designate a member of the senior management of the Corporation
who is not an affiliate of Rakepoll (other than by virtue of being a senior
manager of the Corporation) as a replacement for such Management Director. Each
Director so chosen shall hold office until the next annual election at which the
term of the class to which he or she has been elected expires and until his or
her successor shall be duly elected and shall qualify, or until his or her
earlier death, resignation or removal.
Section 4.5 Reduction of Certain Rakepoll Rights. (a)
------------------------------------
Notwithstanding anything to the contrary contained in these By-laws:
(i) for long as Rakepoll's Interest is equal to or greater than 50%
of Rakepoll's Initial Interest, then (A) Rakepoll shall be entitled to designate
three (3) Investor Directors for nomination and approval, (B) the Management
Directors shall be entitled to designate two (2) Management Directors for
nomination and approval and (C) the Management Directors and Investor Directors
shall be entitled to jointly designate five (5) Independent Directors for
nomination and approval.
(ii) from and after the date that Rakepoll's Interest is equal to or
greater than 25% but less than 50% of Rakepoll's Initial Interest, then (A) at
the request of a majority of the Independent Directors, one Investor Director
shall immediately resign from the Board of Directors and the rights of Rakepoll
and the Investor Directors under Section 4.4 hereof with respect to the
replacement of such Investor Director shall terminate, (B) Rakepoll shall
thereafter be entitled to designate two (2) Investor Directors for nomination
and approval and (C) the Management Directors and remaining Investor Directors
shall thereafter be entitled to jointly designate four (4) Independent Directors
for nomination and approval.
(iii) from and after the date that Rakepoll's Interest is equal to or
greater than 10% but less than 25% of Rakepoll's Initial Interest, then (A) at
the request of a majority of the Independent Directors, such number of Investor
Directors shall immediately resign from the Board of Directors such that only
one (1) Investor Director remains and the rights of Rakepoll and the Investor
Directors under Section 4.4 hereof
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<PAGE>
with respect to the replacement of such Investor Directors shall terminate, (B)
Rakepoll shall thereafter be entitled to designate one (1) Investor Director for
nomination and approval and (C) the Management Directors and remaining Investor
Director shall thereafter be entitled to jointly designate three (3) Independent
Directors for nomination and approval.
(iv) from and after the date that Rakepoll's Interest is less than
10% of Rakepoll's Initial Interest, then (A) at the request of a majority of the
Independent Directors, all Investor Directors shall immediately resign from the
Board of Directors and the rights of Rakepoll under Section 4.4 hereof with
respect to the replacement of such Investor Directors shall terminate, (B)
Rakepoll shall neither be entitled to designate any Investor Directors nor
jointly, with the Management Directors, designate any Independent Directors for
nomination and approval and (C) the Management Directors shall neither be
entitled to designate any Management Directors nor jointly, with Rakepoll,
designate any Independent Directors for nomination and approval.
(b) In the event that the holders of the Preferred Stock become
entitled to appoint the Preferred Directors, for so long as such holders are
entitled to appoint the Preferred Directors, (i) the number of Investor
Directors which Rakepoll shall be entitled to designate pursuant to Sections
4.5(a)(i)(A), 4.5(a)(ii)(B) and 4.5(a)(iii)(B) above shall be increased to four
(4), three (3) and two (2), respectively, and (ii) the number of Independent
Directors which the Investor Directors and Management Directors shall be
entitled to jointly designate pursuant to Sections 4.5(a)(i)(C), 4.5(a)(ii)(C)
and 4.5(a)(iii)(C) above shall be decreased to four (4), three (3) and two (2),
respectively.
Section 4.6 Powers. The business of the Corporation shall be managed
------
by its Board of Directors, which may exercise all powers of the Corporation and
do all lawful acts and things as are not by law or by the Certificate of
Incorporation or these By-Laws reserved to the stockholders.
Section 4.7 Resignation of Directors. Any Director may resign at any
------------------------
time by giving written notice of such resignation to the Board of Directors, the
Chairman of the Board, the President, any Vice President or the Secretary. Any
such resignation shall take effect at the time specified therein or, if no time
be specified, upon receipt thereof by the Board of Directors or one of the above
named officers; and, unless specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 4.8 Compensation of Directors. Directors shall receive such
-------------------------
reasonable compensation for their services as such, whether in the form of
salary or a fixed fee for attendance at meetings, with expenses, if any, as the
Board of Directors may from time to time determine. Nothing herein contained
shall be
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<PAGE>
construed to preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor.
ARTICLE 5
Meeting of the Board of Directors
---------------------------------
Section 5.1 Place. The Board of Directors of the Corporation may
-----
hold meetings, both regular and special, either within or without the State of
Delaware.
Section 5.2 Regular Meetings. The Board of Directors by resolution
----------------
may provide for the holding of regular meetings and may fix the times and places
at which such meetings shall be held. Notice of regular meetings shall not be
required to be given, provided that whenever the time or place of regular
meetings shall be fixed or changed, notice of such action shall be mailed
promptly to each Director who shall not have been present at the meeting at
which such action was taken, addressed to him or her at his or her residence or
usual place of business, unless he or she shall have filed with the Secretary a
written request that notices intended for him or her be mailed to some other
address, in which case it shall be mailed to the address designated in such
request.
Section 5.3 Special Meetings. Special meetings of the Board of
----------------
Directors may be called by the Chairman of the Board, the President or a Vice
President, and shall be called by the President or Secretary at the written
request of any one Director. Except as otherwise required by statute, notice of
each special meeting shall be given to each Director, if by mail, when addressed
to him or her at his or her residence or usual place of business, unless he or
she shall have filed with the Secretary a written request that notices intended
for him or her be mailed to some other address, in which case it shall be mailed
to the address designated in such request, on at least two (2) days' notice
prior to the time of the meeting, or shall be sent to him or her at such place
by telegram, facsimile or cablegram, or other electronic means, or delivered to
him or her personally, not later than four (4) hours before the time the meeting
is to be held. Such notice shall state the time and place of such meeting, but
need not state the purposes thereof, unless otherwise required by statute, the
Certificate of Incorporation of the Corporation or these By-laws.
Section 5.4 Quorum. At any meeting of the Board of Directors a
------
majority of the whole Board of Directors shall constitute a quorum for the
transaction of business, and the act of the majority of those present at any
meeting at which a quorum is present shall be sufficient for the act of the
Board of Directors, except as may be otherwise specifically provided by law, the
Certificate of Incorporation and these By-laws.
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<PAGE>
Section 5.5 Investor Director Approval. Notwithstanding anything to
--------------------------
the contrary contained in these By-laws, at all such times that Rakepoll's
Interest is greater than or equal to 50% of Rakepoll's Initial Interest, the
Board of Directors shall not take, approve or otherwise ratify at a meeting or
in writing any of the following actions except with the consent of the Investor
Directors:
(a) the entry by the Corporation or any of its Subsidiaries into any
merger or consolidation, or the acquisition by the Corporation or any of its
Subsidiaries of any business or assets that would constitute a Substantial Part
of the business or assets of the Corporation, whether such acquisition be by
merger or consolidation or the purchase or sale of stock or assets or otherwise;
(b) the sale, lease, pledge, grant of security interest in, license,
transfer or other disposal by the Corporation or any of its Subsidiaries of all
or substantially all of the business or assets of the Corporation;
(c) the dissolution of the Corporation; the adoption of a plan of
liquidation of the Corporation; any action by the Corporation or any Significant
Subsidiary (as such term is defined in Rule 12b-2 promulgated under the Exchange
Act) thereof to commence any suit, case, proceeding or other action (i) under
any existing or future law of any jurisdiction relating to bankruptcy,
insolvency, reorganization or relief of debtors seeking to have an order for
relief entered with respect to the Corporation or any Significant Subsidiary
thereof, or seeking to adjudicate the Corporation or any Significant Subsidiary
thereof a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to the Corporation or any Significant Subsidiary thereof, or (ii)
seeking appointment of a receiver, trustee, custodian or other similar official
for the Corporation or any Significant Subsidiary thereof, or for all or any
Substantial Part of the assets of the Corporation or any Significant Subsidiary
thereof, or making a general assignment for the benefit of the creditors of the
Corporation or any Significant Subsidiary thereof;
(d) the payment of any extraordinary dividend by the Corporation;
(e) the issuance of (i) debt securities by the Corporation such that
the principal amount of such debt securities outstanding subsequent to such
issuance is equal to or greater than one hundred and ten percent (110%) of the
aggregate principal amount of debt securities contemplated to be outstanding at
such time under the Funding Plan, (ii) Equity Securities by the Corporation such
that the number of shares of such Equity Securities outstanding subsequent to
such issuance
-11-
<PAGE>
is equal to or greater than one hundred and ten percent (110%) of the aggregate
number of Equity Securities contemplated to be outstanding at such time under
the Funding Plan, or (iii) any debt or equity securities or other capital stock
of any of its Subsidiaries, except the issuance of shares of capital stock of
the Corporation or options to purchase such shares pursuant to any employee
compensation or benefit plan approved by the Board of Directors or pursuant to
the terms of securities outstanding on the Closing Date, as set forth in
Schedule 2.1 to the Shareholder's Agreement; and
(f) any material amendment, modification or restatement of this
Section.
Section 5.6 Adjourned Meetings. If a quorum shall not be present at
------------------
a meeting of the Board of Directors, the Directors present thereat may adjourn
the meeting from time to time, until a quorum shall be present. Four (4) hours'
notice of any such adjournment shall be given personally to each Director who
was not present at the meeting at which such adjournment was taken and, unless
announced at the meeting, to the other Directors; provided, that two (2) days'
--------
notice shall be given if notice is given by mail.
Section 5.7 Written Consent. Unless otherwise restricted by the
---------------
Certificate of Incorporation or these By-laws, including, without limitation,
Section 5.5 hereof, any action required or permitted to be taken at any meeting
of the Board of Directors may be taken without a meeting if all the members of
the Board consent thereto in writing, and the writing or writings are filed with
the minutes of the proceedings of the Board of Directors.
Section 5.8 Communications Equipment. Any one or more members of the
------------------------
Board of Directors may participate in any meeting of the Board by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation by
such means shall constitute presence in person at such meeting.
Section 5.9 Waiver of Notice. Notice of any meeting need not be
----------------
given to any Director who shall attend such meeting in person or shall waive
notice thereof, before or after such meeting, in writing or by telegram,
facsimile or cablegram or other means of electronically transmitted written
copy.
ARTICLE 6
Committees of the Board
-----------------------
Section 6.1 Designation, Power, Alternate Members and Term of Office.
--------------------------------------------------------
The Board of Directors may, by resolution passed by
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<PAGE>
a majority of the whole Board of Directors, designate one (1) or more
committees. Each such committee shall consist of one (1) or more of the
Directors of the Corporation. Any such committee, to the extent provided in
such resolution, shall have and may exercise the power of the Board of Directors
in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it. The Board of Directors may designate one (1) or more Directors as
alternate members of any committee who, in the order specified by the Board of
Directors, may replace any absent or disqualified member at any meeting of the
committee. The term of office of the members of each committee shall be as
fixed from time to time by the Board, subject to the term of office of the
Directors and these By-Laws; provided, however, that any committee member who
--------
ceases to be a member of the Board of Directors shall ipso facto cease to be a
----------
committee member. Each committee shall appoint a secretary, who may be the
Secretary or an Assistant Secretary of the Corporation.
Section 6.2 Meetings, Notices and Records. Each committee may
-----------------------------
provide for the holding of regular meetings, with or without notice, and a
majority of the members of any such committee may fix the time, place and
procedure for any such meeting. Special meetings of each committee shall be
held upon call by or at the direction of its chairman or, if there be no
chairman, by or at the direction of any one (1) of its members, at the time and
place specified in the respective notices or waivers of notice thereof. Notice
of each special meeting of a committee shall be mailed to each member of such
committee, addressed to him or her at his or her residence or usual place of
business, unless he or she shall have filed with the Secretary a written request
that notices intended for him or her be mailed to some other address, in which
case it shall be mailed to the address designated in such request, at least two
(2) days before the day on which the meeting is to be held, or shall be sent by
telegram, facsimile or cablegram, or other means of electronically transmitted
written copy, addressed to him or her at such place, or telephoned or delivered
to him or her personally, not later than four (4) hours before the time the
meeting is to be held. Notice of any meeting of a committee need not be given
to any member thereof who shall attend the meeting in person or who shall waive
notice thereof by telegram, facsimile, cablegram or other means of
electronically transmitted written copy. Notice of any adjourned meeting need
not be given. Each committee shall keep a record of its proceedings.
Each committee may meet and transact any and all business delegated to
that committee by the Board of Directors by means of a conference telephone or
similar communications equipment, provided that all persons participating in the
meeting are able to hear and communicate with each other. Participation in a
meeting by means of conference telephone or similar
-13-
<PAGE>
communication shall constitute presence in person at such meeting.
Section 6.3 Quorum and Manner of Acting. At each meeting of any
---------------------------
committee the presence of a majority of its members then in office shall be
necessary and sufficient to constitute a quorum for the transaction of business,
and the act of a majority of the members present at any meeting at which a
quorum is present shall be the act of such committee; in the absence of a
quorum, a majority of the members present at the time and place of any meeting
may adjourn the meeting from time to time until a quorum shall be present.
Subject to the foregoing and other provisions of these By-Laws and except as
otherwise determined by the Board of Directors, each committee may make rules
for the conduct of its business. Any determination made in writing and signed
by all the members of such committee shall be as effective as if made by such
committee at a meeting.
Section 6.4 Resignations. Any member of a committee may resign at
------------
any time by giving written notice of such resignation to the Board of Directors,
the Chairman of the Board, the President, any Vice President or the Secretary of
the Corporation. Unless otherwise specified in such notice, such resignation
shall take effect upon receipt thereof by the Board of Directors or any such
officer.
Section 6.5 Removal. Any member of any committee may be removed at
-------
any time by the affirmative vote of a majority of the whole Board of Directors
with or without cause.
Section 6.6 Vacancies. If any vacancy shall occur in any committee
---------
by reason of death, resignation, disqualification, removal or otherwise, the
remaining members of such committee, though less than a quorum, shall continue
to act until such vacancy is filled by the Board of Directors.
Section 6.7 Compensation. Committee members shall receive such
------------
reasonable compensation for their services as such, whether in the form of
salary or a fixed fee for attendance at meetings, with reasonable expenses, if
any, as the Board of Directors may from time to time determine. Nothing herein
contained shall be construed to preclude any committee member from serving the
Corporation in any other capacity and receiving compensation therefor.
ARTICLE 7
Officers
--------
SECTION 7.1 Officers. The officers of the Corporation shall be a
--------
President, a Treasurer and a Secretary, and may also include a Chairman of the
Board, one or more Vice-Chairmen, one or more Vice Presidents, Assistant
Secretaries or Assistant
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<PAGE>
Treasurers, each of whom shall be elected by the Directors, and shall hold
office until his or her successor is duly elected and qualified or until his or
her earlier resignation or removal. None of the officers of the Corporation
except the Chairman or any Vice-Chairman of the Board need be Directors. Any
number of offices may be held by the same person.
SECTION 7.2 Duties. All officers, as between themselves and the
------
Corporation, shall have such authority and perform such duties in the management
of the Corporation as may be provided in these By-Laws, or, to the extent not so
provided, as may be provided by resolution of the Board of Directors or, as to
all other officers except the Chairman of the Board, by the President.
SECTION 7.3 Resignations. Any officer may resign at any time by
------------
giving written notice of such resignation to the Board of Directors, the
Chairman of the Board, the President, a Vice President or the Secretary. Unless
otherwise specified in such written notice, such resignation shall take effect
upon receipt thereof by the Board of Directors or any such officer.
SECTION 7.4 Removal. Any officer may be removed at any time, either
-------
with or without cause, by the vote of a majority of all the Directors then in
office.
SECTION 7.5 Vacancies. A vacancy in any office by reason of death,
---------
resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed by these By-Laws for
regular election or appointment to such office.
SECTION 7.6 Chairman of the Board. The Chairman of the Board of
---------------------
Directors, if there be one, shall perform such duties as from time to time may
be assigned to him by the Board of Directors.
SECTION 7.7 President. The President shall be the chief executive
---------
officer of the Corporation. Subject to the direction of the Board of Directors,
he or she shall supervise and direct the daily management of the business,
affairs and property of the Corporation. In the absence or disability of the
Chairman of the Board, or if there be none, the President shall preside at all
meetings of the stockholders. The Chairman of the Board, if any, and the
President shall each be charged with seeing that all orders and resolutions of
the Board of Directors are carried into effect. The President may sign, with
any other officer thereunder duly authorized, certificates of stock of the
Corporation the issuance of which shall have been duly authorized (the signature
to which may be facsimile signature) and may sign and execute in the name of the
Corporation, deeds, mortgages, bonds, contracts, agreements, and other
instruments. From time to time he shall report to the Board of Directors all
matters within his knowledge which the interests of the
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<PAGE>
Corporation may require to be brought to its attention. The President shall
also perform such other duties as are assigned by these By-Laws or as from time
to time may be assigned to him by the Board of Directors.
SECTION 7.8 Vice President. In the absence or disability of the
--------------
President, the Vice President, or if there be more than one, the Vice Presidents
in the order of priority determined by the Board of Directors, shall perform all
the duties of the President and, when so acting, shall have all the powers of
and be subject to all restrictions upon the President. Any Vice President may
also sign, with any other officer thereunto duly authorized, certificates of
stock of the Corporation the issuance of which shall have been duly authorized
(the signature to which may be a facsimile signature), and may sign and execute
in the name of the Corporation deeds, mortgages, bond and other instruments,
except in cases where the signing and execution thereof shall be expressly
delegated by the Board of Directors to some other officer or agent. Each Vice
President shall perform such other duties as are assigned by these By-Laws or as
from time to time may be assigned by the Board of Directors, the Chairman of the
Board or the President.
SECTION 7.9 Secretary. The Secretary shall: (i) record all the
---------
proceedings of the meetings of the stockholders, the Board of Directors, and all
committees of the Board of Directors in a book or books to be kept for that
purpose; (ii) cause all notices to be duly given in accordance with the
provisions of these By-Laws as required by statute; (iii) whenever any committee
shall be appointed in pursuance of a resolution of the Board of Directors,
furnish the chairman of such committee with a copy of such resolution; (iv) be
custodian of the records and of the seal of the Corporation, and cause such seal
to be affixed to all certificates representing capital stock of the Corporation
prior to the issuance thereof and to all instruments the execution of which on
behalf of the Corporation under its seal shall have been duly authorized; (v)
see that the lists, books, reports, statements, certificates and other documents
and records required by statute are properly kept and filed; (vi) have charge of
the stock record and stock transfer books of the Corporation, and exhibit such
stock books at all reasonable times to such persons as are entitled by statute
to have access thereto; (vii) sign (unless the Treasurer or an Assistant
Secretary or an Assistant Treasurer shall sign) certificates representing
capital stock of the Corporation the issuance of which shall have been duly
authorized (the signature to which may be a facsimile signature); and (viii) in
general, perform all duties incident to the office of Secretary and such other
duties as are given to him or her by these By-Laws or as from time to time may
be assigned to him or her by the Board of Directors, the Chairman of the Board
or the President.
SECTION 7.10 Assistant Secretaries. At the request of the Secretary
---------------------
or in his or her absence or disability, the Assistant
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<PAGE>
Secretary designated by him or her (or in the absence of such designation, the
Assistant Secretary designated by the Board of Directors or the President) shall
perform all the duties of the Secretary, and, when so acting, shall have all the
powers of and be subject to all restrictions upon the Secretary. The Assistant
Secretaries shall perform such other duties as from time to time may be assigned
to them by the Board of Directors, the Chairman of the Board, the President or
the Secretary.
SECTION 7.11 Treasurer. The Treasurer shall: (i) have charge of and
---------
supervision over and be responsible for the funds, securities, receipts and
disbursements of the Corporation; (ii) cause the securities and other valuable
effects of the Corporation to be deposited in the name and to the credit of the
Corporation in such banks or trust companies or with such bankers or other
depositaries as shall be selected in accordance with Section 9.2 of these By-
Laws or to be otherwise dealt with in such manner as the Board of Directors may
direct; (iii) cause the funds of the Corporation to be disbursed by checks or
drafts upon the authorized depositaries of the Corporation, and cause to be
taken and preserved proper vouchers for all monies disbursed; (iv) render to the
Board of Directors or the President, whenever required, a statement of the
financial condition of the Corporation and of all his or her transactions as
Treasurer; (v) cause to be kept at the Corporation's principal office correct
books of account of all its business and transactions and such duplicate books
of account as he or she shall determine and upon application cause such books or
duplicates thereof to be exhibited to any Director; (vi) be empowered, from time
to time, to require from the officers or agents of the Corporation reports or
statements giving such information as he or she may desire with respect to any
and all financial transactions of the Corporation; (vii) sign (unless the
Secretary or an Assistant Secretary or Assistant Treasurer shall sign)
certificates representing stock of the Corporation the issuance of which shall
have been duly authorized (the signature to which may be a facsimile signature);
and (viii) in general, perform all duties incident to the office of Treasurer
and such other duties as are given to him or her by these By-Laws or as from
time to time may be assigned to him or her by the Board of Directors, the
Chairman of the Board or the President.
SECTION 7.12 Assistant Treasurers. At the request of the Treasurer
--------------------
or in his or her absence or disability, the Assistant Treasurer designated by
him or her (or in the absence of such designation, the Assistant Treasurer
designated by the Board of Directors or the President) shall perform all the
duties of the Treasurer, and, when so acting, shall have all the powers of and
be subject to all restrictions upon the Treasurer. The Assistant Treasurers
shall perform such other duties as from time to time may be assigned by the
Board of Directors, the Chairman of the Board, the President or the Treasurer.
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<PAGE>
SECTION 7.13 Salaries. The salaries of the officers of the
--------
Corporation shall be fixed from time to time by the Board of Directors. No
officer shall be prevented from receiving such salary by reason of the fact that
he or she is also a Director of the Corporation.
ARTICLE 8
Certificates of Stock
---------------------
SECTION 8.1 Stock Certificates. Every holder of capital stock of the
------------------
Corporation shall be entitled to have a certificate or certificates in such form
as shall be approved by the Board of Directors, certifying the number of shares
of capital stock of the Corporation owned by him or her. The certificates
representing shares of capital stock shall be signed in the name of the
Corporation by the Chairman of the Board or the President or any Vice President,
and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant
Treasurer (which signatures may be facsimiles) and sealed with the seal of the
Corporation (which seal may be a facsimile). In case any officer, transfer
agent or registrar who shall have signed or whose facsimile signature has been
placed upon such certificate shall have ceased to be such officer, transfer
agent or registrar before such certificates are issued, they may nevertheless be
issued by the Corporation with the same effect as if such officer, transfer
agent, or registrar were still such at the date of their issue.
SECTION 8.2 Books of Account and Record of Stockholders. The books
-------------------------------------------
and records of the Corporation may be kept at such places, within or without the
State of Delaware, as the Board of Directors may from time to time determine.
The stock record books and the blank stock certificate books shall be kept by
the Secretary or by any other officer or by the transfer agent or registrar, if
any, designated by the Board of Directors. There shall be entered on the stock
books of the Corporation the number of each certificate issued, the number of
shares represented thereby, the name of the person to whom such certificate was
issued and the date of issuance thereof.
SECTION 8.3 Transfers of Shares. Transfers of shares of capital
-------------------
stock of the Corporation shall be made on the stock records of the Corporation
only upon authorization by the registered holder thereof, or by his attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary or with the transfer agent, and on surrender of the certificate or
certificates for such shares properly endorsed or accompanied by a duly executed
stock transfer power and the payment of all taxes thereon, if any. Except as
otherwise provided by law, the Corporation shall be entitled to recognize the
exclusive right of a person in whose name any share or shares stand on the
record of stockholders as the owner of such
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<PAGE>
share or shares for all purposes, including, without limitation, the rights to
receive dividends or other distributions, and to vote as such owner, and the
Corporation shall not be bound to recognize any equitable or legal claim to or
interest in any such share or shares on the part of any other person whether or
not the Corporation shall have express or other notice thereof.
SECTION 8.4 Regulations. The Board of Directors may make such
-----------
additional rules and regulations, not inconsistent with these By-Laws, as it may
deem expedient concerning the issue, transfer and registration of certificates
for shares of the capital stock of the Corporation. It may appoint, or
authorize any officer or officers to appoint, one or more transfer agents or one
or more registrars and may further provide that no stock certificate shall be
valid until countersigned by one of such transfer agents and registered by one
of such registrars. Nothing herein shall be construed to prohibit the
Corporation from acting as its own transfer agent or registrar.
SECTION 8.5 Lost, Stolen or Destroyed Certificates. The holder of
--------------------------------------
any certificate representing any share or shares of the capital stock of the
Corporation shall immediately notify the Corporation of any loss, theft, or
destruction of such certificate. The Board of Directors may direct that a new
certificate or certificates be issued in the place of any certificate or
certificates theretofore issued by it which the owner thereof shall allege to
have been lost, stolen or destroyed upon the furnishing to the Corporation of an
affidavit to that effect by the person claiming that the certificate has been
lost, stolen or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion, require such owner
or his or her legal representatives to give to the Corporation and its transfer
agent(s) and registrar(s) a bond in such sum, limited or unlimited, and in such
form and with such surety or sureties as the Board of Directors in its absolute
discretion shall determine, sufficient to indemnify the Corporation against any
claim that may be made against it on account of the alleged loss, theft or
destruction of any such certificate, or the issuance of a new certificate.
SECTION 8.6 Stockholder's Right of Inspection. Any stockholder of
---------------------------------
record of the Corporation, in person or by attorney or other agent, shall upon
written demand under oath stating the purpose thereof, have the right during the
usual hours for business to inspect for any proper purpose the Corporation's
stock ledger, a list of its stockholders, and its other books and records, and
to make copies or extracts therefrom. A proper purpose shall mean a purpose
reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent shall be the person who seeks the
right to inspection, the demand under oath shall be accompanied by a power of
attorney or such other writing which authorized the attorney or other agent to
so act on behalf
-19-
<PAGE>
of the stockholder. The demand under oath shall be directed to the Corporation
at its registered office in Delaware or at its principal place of business.
ARTICLE 9
Deposit of Corporate Funds
--------------------------
SECTION 9.1 Borrowing. No loans or advances shall be obtained or
---------
contracted for, by or on behalf of the Corporation and no negotiable paper shall
be issued in its name, unless and except as authorized by the Board of
Directors. Such authorization may be general or confined to specific instances.
SECTION 9.2 Deposits. All funds of the Corporation not otherwise
--------
employed shall be deposited from time to time to its credit in such banks or
trust companies or with such bankers or other depositaries as the Board of
Directors may select, or as may be selected by any officer or officers or agent
or agents authorized to do so by the Board of Directors.
SECTION 9.3 Check, Drafts, etc. All checks, drafts or other orders
-------------------
for the payment of money, and all negotiable and non-negotiable notes or other
negotiable or non-negotiable evidences of indebtedness issued in the name of the
Corporation, shall be signed by such officer or officers or agent or agents of
the Corporation, and in such manner, as from time to time shall be determined by
the Board of Directors.
ARTICLE 10
Record Dates
------------
SECTION 10.1 In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting, nor more than sixty (60) days prior to any other action.
Only those stockholders of record on the date so fixed shall be entitled to any
of the foregoing rights, notwithstanding the transfer of any such stock on the
books of the Corporation after any such record date fixed by the Board of
Directors.
-20-
<PAGE>
ARTICLE 11
Dividends
---------
SECTION 11.1 Dividends. Subject to any agreement to which the
---------
Corporation is a party or by which it is bound, the Board of Directors may
declare to be payable, in cash, in other property or in stock of the Corporation
of any class or series, such dividends in respect of outstanding stock of the
Corporation of any class or series as the Board of Directors may at any time
deem to be advisable. Before declaring any such dividend, the Board of
Directors may cause to be set aside any funds or other property or assets of the
Corporation legally available for the payment of dividends.
ARTICLE 12
Fiscal Year
-----------
SECTION 12.1 Fiscal Year. The fiscal year of the Corporation shall
-----------
be determined by resolution of the Board of Directors.
ARTICLE 13
Corporate Seal
--------------
SECTION 13.1 The Corporate Seal shall be circular in form and shall
bear the name of the Corporation and the words and figures denoting its
organization under the laws of the State of Delaware and year thereof and
otherwise shall be in such form as shall be approved from time to time by the
Board of Directors.
ARTICLE 14
Amendments
----------
SECTION 14.1 The Board of Directors is expressly empowered to adopt,
amend or repeal By-Laws of the Corporation, provided, however, that any
--------
adoption, amendment or repeal of By-Laws of the Corporation by the Board of
Directors shall require the approval of at least sixty-six and two-thirds
percent (66 2/3%) of the total number of authorized Directors (whether or not
there exist any vacancies in previously authorized directorships at the time any
resolution providing for adoption, amendment or repeal is presented to the
Board). The stockholders shall also have the power to adopt, amend or repeal
By-Laws of the Corporation, provided, however, that in addition to any vote of
--------
the holders of any class or series of stock of this Corporation required by law
or by the Restated Certificate of Incorporation of the Corporation, the
affirmative vote of the holders of at
-21-
<PAGE>
least sixty-six and two-thirds percent (66 2/3%) of the voting power of all of
the then outstanding shares of the stock of the Corporation entitled to vote
generally in the election of Directors, voting together as a single class, shall
be required for such adoption, amendment or repeal by the stockholders of any
provisions of the By-Laws of the Corporation.
Notwithstanding the foregoing, so long as Rakepoll is entitled to
designate an Investor Director to serve as a member of the Board of Directors,
Sections 4.1, 4.4, 4.5, 5.5, 5.7, Article 6 and this Article 14 shall not be
materially altered, amended or repealed by (i) the Board of Directors without
the consent of the Investor Directors or (ii) the stockholders unless such
alteration, amendment or repeal shall have been approved by Rakepoll.
-22-
<PAGE>
Exhibit 4.1
-----------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
SHAREHOLDER'S AGREEMENT
Between
RAKEPOLL FINANCE N.V.
and
GENSIA, INC.
Dated as of November 12, 1996
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
1
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
ARTICLE I
DEFINITIONS.............................. 4
SECTION 1.1. Definitions...................................... 4
ARTICLE II
ANTI-DILUTION RIGHTS.......................... 7
SECTION 2.1. Anti-Dilution Rights of Rakepoll................. 7
ARTICLE III
PURCHASE OF COMMON STOCK........................ 8
SECTION 3.1. Purchase of Common Stock by Rakepoll............. 8
ARTICLE IV
CORPORATE GOVERNANCE.......................... 8
SECTION 4.1. Composition of the Board of Directors............ 8
SECTION 4.2. Solicitation and Voting of Shares................ 10
SECTION 4.3. Management of the Company........................ 11
SECTION 4.4. Approval of Investor Directors Required
for Certain Actions..................... 11
SECTION 4.5. Certificate of Incorporation and By-Laws........ 12
SECTION 4.6. Funding Plan.................................... 12
SECTION 4.7. Issuance of Equity Securities During
Standstill Period....................... 12
SECTION 4.8. Management of the Subsidiaries.................. 12
SECTION 4.9. Failure to Comply with this Article IV.......... 13
ARTICLE V
TRANSFER OF COMMON STOCK....................... 13
SECTION 5.1. Transfer of Common Stock........................ 13
ARTICLE VI
REGISTRATION RIGHTS......................... 14
SECTION 6.1. Request for Registration........................ 14
SECTION 6.2. Incidental Registration......................... 16
SECTION 6.3. Registration on Form S-3........................ 17
SECTION 6.4. Obligations of the Company...................... 18
SECTION 6.5. Furnish Information............................. 22
SECTION 6.6. Expenses of Registration........................ 22
SECTION 6.7. Underwriting Requirements....................... 23
SECTION 6.8. Rule 144 and Rule 144A Information.............. 23
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 6.9. Delay of Registration........................... 23
SECTION 6.10. Indemnification................................. 23
SECTION 6.11. Lock-up in connection with a Registration
of Securities........................... 26
SECTION 6.12. Transfer of Registration Rights................. 27
SECTION 6.13. Selection of Counsel............................ 27
ARTICLE VII
REPRESENTATIONS AND WARRANTIES.................... 27
SECTION 7.1. Representations of the Company.................. 27
SECTION 7.2. Representations of Rakepoll..................... 28
ARTICLE VIII
MISCELLANEOUS............................ 29
SECTION 8.1. Notices......................................... 29
SECTION 8.2. Amendments; No Waivers.......................... 30
SECTION 8.3. Severability.................................... 30
SECTION 8.4. Entire Agreement; Assignment.................... 31
SECTION 8.5. Parties in Interest............................. 31
SECTION 8.6. Specific Performance............................ 31
SECTION 8.7. Governing Law; Consent to Jurisdiction.......... 31
SECTION 8.8. Headings........................................ 32
SECTION 8.9. Counterparts.................................... 32
SECTION 8.10. Effectiveness; Termination...................... 32
SECTION 8.11. Waiver of Jury Trial............................ 32
</TABLE>
SCHEDULES
- ---------
Schedule 2.1 - Securities Outstanding on Closing Date
Schedule 4.1(b) - Directors to Resign
EXHIBITS
- --------
Exhibit A - Composition of the Board of Directors
Exhibit B - Form of Amended and Restated Certificate of
Incorporation
Exhibit C - Form of Amended By-Laws
Exhibit D - Composition of Boards of Directors and Senior
Management of Subsidiaries
3
<PAGE>
SHAREHOLDER'S AGREEMENT, dated as of November 12, 1996, between
Rakepoll Finance N.V., a corporation organized under the laws of the Netherlands
Antilles ("Rakepoll"), and Gensia, Inc., a corporation organized under the laws
of the state of Delaware (the "Company").
W I T N E S S E T H
WHEREAS, concurrently herewith, Rakepoll and the Company are entering
into a Stock Exchange Agreement of even date herewith (the "Stock Exchange
Agreement"); and
WHEREAS, the Boards of Directors of Rakepoll and the Company have each
determined to engage in the transactions contemplated by the Stock Exchange
Agreement, pursuant to which the Company will purchase from the stock of
Rakepoll Holding B.V. a corporation organized under the laws of the Netherlands
in consideration for shares of Common Stock and certain additional consideration
(as defined herein); and
WHEREAS, Rakepoll and the Company desire to establish in this
Agreement certain terms and conditions concerning the corporate governance of
the Company after the Closing Date (as defined in the Stock Exchange Agreement)
and certain terms and conditions concerning the acquisition and disposition of
securities of the Company by Rakepoll and its Affiliates.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and agreements contained herein, Rakepoll and the Company hereby agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. As used in this
Agreement, the following terms have the following meanings:
(a) "Affiliate" has the same meaning as in Rule 12b-2 promulgated
under the Exchange Act.
(b) "Associate" has the same meaning as in Rule 12b-2 promulgated
under the Exchange Act.
(c) "Beneficial owner" and to "beneficially own" has the same meaning
as in Rule 13d-3 promulgated under the Exchange Act.
(d) "Board of Directors" means the Board of Directors of the
Company.
(e) "Common Stock" means the common stock, par value $.01 per
share, of the Company.
(f) "Director" means a member of the Board of Directors.
(g) "Equity Security" means any (i) Common Stock, (ii) securities
of the Company convertible into or exchangeable for Common Stock, and
4
<PAGE>
(iii) options, rights, warrants and similar securities issued by the
Company to acquire Common Stock.
(h) "Exchange Act" means the United States Securities Exchange Act
of 1934, and the rules and regulations promulgated thereunder, as
amended.
(i) "Exon-Florio" means Section 5021 of the United States Omnibus
Trade and Competitiveness Act of 1988, as amended, and the rules and
regulations thereunder.
(j) "Fair Market Value" means: (i) in the case of a security, the
average of the closing sale prices during the thirty day period immediately
preceding the date in question of such security on the Composite Tape of
the New York Stock Exchange ("NYSE") or, if such security is not quoted on
the Composite Tape, on the NYSE or, if such security is not listed on the
NYSE, on the principal United States securities exchange registered under
the Exchange Act on which such security is listed or, if such Security is
not listed on any such exchange, the average of the closing sale prices or
the average of the closing bid and the asking quotations of such security
during the thirty day period preceding the date of determination on the
Nasdaq National Market or any system then in use or, if no such quotations
are available, the fair market value on the date in question of such
security as determined by a majority of Independent Directors in good
faith; and (ii) in the case of property other than cash or a security, the
fair market value of such property on the date in question as determined by
a majority of Independent Directors in good faith.
(k) "Holder" shall mean any holder of Registrable Securities.
(l) "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder.
(m) "Independent Director" means a director of the Company (i) who is
not and has never been an officer or employee of the Company, any Affiliate
or Associate of the Company or an entity that derived 10% or more of its
revenues or earnings in its most recent fiscal year from transactions
involving the Company or any Affiliate or Associate of the Company, (ii)
who is not and has never been an officer, employee or director of Rakepoll
any Affiliate or Associate of Rakepoll or an entity that derived more than
10% of its revenues or earnings in its most recent fiscal year from
transactions involving Rakepoll or any Affiliate or Associate of Rakepoll,
(iii) who is not and has never been a professional advisor, including
without limitation, attorneys, accountants and financial advisors, to any
of the Company, Rakepoll or any Affiliate or Associate of either of them,
and (iv) who was on the Closing Date deemed to be, or on or after the
Closing Date was designated as, an Independent Director in accordance with
Section 4.1.
(n) "Investor Directors" means Directors who are designated for such
position by Rakepoll in accordance with Section 4.1.
(o) "Lock-up Period" means the period of time commencing at the
Closing Date and terminating on the date which is 12 months after the
Closing Date.
5
<PAGE>
(p) "Management Directors" means, at the Closing Date, Directors who
were deemed to be Management Directors in accordance with Section 4.1(b)
and, after the Closing Date, Directors who are designated for
such position in accordance with Section 4.1.
(q) "Preferred Stock" means the Company's $3.75 Convertible
Exchangeable Preferred Stock.
(r) "Rakepoll's Initial Interest" means the number of shares of
outstanding Common Stock that is controlled directly or indirectly by
Rakepoll and the Rakepoll Affiliates immediately upon consummation of the
transactions contemplated by the Stock Exchange Agreement.
(s) "Rakepoll's Interest" means, at any time, the number of shares of
outstanding Common Stock that is controlled directly or indirectly by
Rakepoll and the Rakepoll Affiliates.
(t) "Rakepoll's Initial Percentage Interest" means the percentage of
outstanding Common Stock that is controlled directly or indirectly by
Rakepoll and the Rakepoll Affiliates immediately upon consummation of the
transactions contemplated by the Stock Exchange Agreement.
(u) "Rakepoll's Percentage Interest" means, at any time, the
percentage of outstanding Common Stock that is controlled directly or
indirectly by Rakepoll and the Rakepoll Affiliates.
(v) "Register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act and the declaration
or ordering of effectiveness of such registration statement or document.
(w) "Registrable Securities" shall mean (i) any Equity Security held
by Rakepoll that was issued to Rakepoll by the Company pursuant to, or
otherwise acquired by Rakepoll in accordance with, the terms of this
Agreement or the Stock Exchange Agreement, (ii) any common stock issued as
(or issuable upon the conversion or exercise of any warrant, right, option
or other convertible security which is issued as) a dividend or other
distribution with respect to, or in exchange for, or in replacement of,
such Equity Security, and (iii) any common stock issued by way of a stock
split of the Equity Security referred to in clauses (i) or (ii) above. For
purposes of this Agreement, any Registrable Securities shall cease to be
Registrable Securities when (A) a registration statement covering such
Registrable Securities has been declared effective and such Registrable
Securities have been disposed of pursuant to such effective registration
statement, (B) such Registrable Securities shall have been distributed
pursuant to Rule 144 (or any similar provision then in effect) under the
Securities Act, (C) such Registrable Securities are sold by a person in a
transaction in which the rights under the provisions of this Agreement are
not assigned, or (D) such Registrable Securities shall cease to be
outstanding.
(x) "Registration Expenses" shall mean any and all expenses incident
to performance of or compliance with this Agreement, including, without
limitation, (i) all SEC and securities exchange or National Association of
Securities Dealers, Inc. registration and filing fees, (ii) all fees and
expenses of complying with securities or blue sky laws
6
<PAGE>
(including fees and disbursements of counsel for the underwriters in
connection with blue sky qualifications of the Registrable Securities),
(iii) all printing, messenger and delivery expenses, (iv) all fees and
expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange pursuant to Section 6.4(h), (v) the
fees and disbursements of counsel for the Company and of its independent
public accountants, including the expenses of any special audits and/or
"cold comfort" letters required by or incident to such performance and
compliance, (vi) the reasonable fees and disbursements of one counsel,
other than the Company's counsel, selected by the Holders of a majority of
the Registrable Securities being registered to represent all Holders of the
Registrable Securities being registered in connection with each such
registration (it being understood that any Holder may, at its own expense,
retain separate counsel to represent it in connection with such
registration), and (vii) any fees and disbursements of underwriters
customarily paid by the issuers or sellers of securities, and the
reasonable fees and expenses of any special experts retained in connection
with the requested registration, but excluding underwriting discounts and
commissions and transfer taxes, if any.
(y) "SEC" means the United States Securities and Exchange
Commission.
(z) "Securities Act" means the United States Securities Act of 1933,
and the rules and regulations promulgated thereunder, as amended.
(aa) "Standstill Period" means the period of time commencing at the
Closing Date and terminating on the date which is 12 months after the
Closing Date.
(ab) "Subsidiary" has the same meaning as in Rule 12b-2 promulgated
under the Exchange Act.
(ac) A "Substantial Part" of the Company means more than 33 1/3% of
the Fair Market Value of the total assets of the Company and its
Subsidiaries as of the end of its most recent fiscal quarter ending prior
to the time the determination is made.
ARTICLE II
ANTI-DILUTION RIGHTS
SECTION 2.1. Anti-Dilution Rights of Rakepoll. Subject to Section 3.1
of this Agreement, if at any time the Board of Directors shall authorize the
issuance of Equity Securities (other than the issuance of securities to
officers, employees or directors of the Company or its Subsidiaries pursuant to
any employee compensation or benefit plan approved by the Board of Directors or
pursuant to the terms of securities outstanding on the Closing Date, as set
forth on Schedule 2.1 hereto), then Rakepoll shall have the right to acquire, in
the open market, as permitted by applicable law, up to that number of shares of
Common Stock so that Rakepoll's Percentage Interest after such issuance of
Equity Securities is equal to, but not greater than, Rakepoll's Initial
Percentage Interest.
7
<PAGE>
ARTICLE III
PURCHASE OF COMMON STOCK
SECTION 3.1. Purchase of Common Stock by Rakepoll. (a) During the
Standstill Period, Rakepoll and the Rakepoll Affiliates shall not directly or
indirectly purchase or otherwise acquire, or propose or offer to purchase or
otherwise acquire, any Common Stock or other securities of the Company, whether
by tender offer, market purchase, privately negotiated purchase, business
combination or otherwise, except (i) with the consent of a majority of the
Independent Directors or (ii) as set forth in subsection (b) below.
(b) The prohibitions contained in Section 3.1(a) shall not apply (i)
in the event of any issuance by the Company of any Equity Securities not
contemplated by the business plan previously agreed to by the parties hereto
(the "Business Plan"), or (ii) following (X) the commencement by any third party
of (1) a bona fide tender or exchange offer to purchase in excess of 20% of the
outstanding shares of Common Stock that the Board of Directors either recommends
acceptance of, expresses no opinion and remains neutral toward or is unable to
take a position with respect to, (2) a bona fide proposal to acquire all or
substantially all of the assets of the Company that the Board of Directors is
actively entertaining and the consummation of which would require approval by
the Stockholders of the Company pursuant to Delaware law or (3) a bona fide
proposal to enter into any other similar business combination transaction with
the Company that the Board of Directors is actively entertaining, in the case of
each of clauses (1)-(3), which shall not have been approved in advance by the
Company or the Board of Directors, or (Y) the Company entering into (or
announcing its intention to do so) a definitive agreement, or an agreement
contemplating a definitive agreement, for any of the transactions described in
clauses (1)-(3) above.
ARTICLE IV
CORPORATE GOVERNANCE
SECTION 4.1. Composition of the Board of Directors. (a) Except as
otherwise provided herein, the Board of Directors shall consist of ten Directors
(of whom at least two shall be independent directors as required by the rules of
the Nasdaq National Market System and who shall be deemed to be Independent
Directors hereunder).
(b) Effective as of the Closing Date, the Company shall cause those of
the current Directors set forth in Schedule 4.1(b) to resign from the Board of
Directors. The Company will cause the Board of Directors to take all necessary
action so that at the Closing Date, the Board of Directors shall consist of (i)
two Directors who are executive officers of the Company (not affiliated with
Rakepoll), who shall be Management Directors hereunder; (ii) three Investor
Directors designated by Rakepoll and (iii) five Independent Directors designated
jointly by the Management Directors and Investor Directors; provided, however,
that in the event that on or prior to the Closing Date the holders of the
Preferred Stock of the Company (other than Rakepoll and its Affiliates) become
entitled to appoint 2 directors (the "Preferred Directors") to the Board of
Directors in accordance with the terms of the Preferred Stock, then (x) the
Board of Directors shall be increased from 10 to 12 Directors and (y) Rakepoll
shall thereafter be entitled to designate an additional Investor Director and
one Independent Director shall
8
<PAGE>
resign so that up to 4 of the 12 Directors will be Investor Directors. The names
of the members of the Board of Directors at the Closing Date shall be as set
forth in Part 1 of Exhibit A hereto. After the Closing, the composition of the
Board of Directors shall be determined in compliance with Section 4.1(c).
Management Directors, Investor Directors and Independent Directors shall be
apportioned, to the extent possible, equally among the three classes of
Directors.
(c) At all times during the term of this Agreement that Rakepoll's
Interest is:
(i) 50% or above of Rakepoll's Initial Interest, Rakepoll shall
have the right to designate for nomination and approval three Investor
Directors; the Management Directors shall have the right to designate
for nomination and approval two Management Directors; and the five
Independent Directors shall be designated for nomination and approval
jointly by the Management Directors and the Investor Directors;
(ii) 25% or above but less than 50% of Rakepoll's Initial
Interest, Rakepoll shall have the right to designate for nomination
and approval two Investor Directors; and there shall be four
Independent Directors who shall be designated for nomination and
approval jointly by the Management Directors and the Investor
Directors;
(iii) 10% or above but less than 25% of Rakepoll's Initial
Interest, Rakepoll shall have the right to designate for nomination
and approval one Investor Director; and there shall be three
Independent Directors who shall be designated for nomination and
approval jointly by the Management Director and the Investor Director;
and
(iv) below 10% of Rakepoll's Initial Interest, Vermouth shall have
no right to designate any Investor Directors or Independent Directors,
and the Management Directors shall have no right to designate any
Management Directors or Independent Directors;
in each case as set forth in Part 2 of Exhibit A hereto. Either (A) at any time
prior to the Closing or (B) after the Closing, if the Investor Directors have
voted for the payment of the dividend owed on the Preferred Stock, in the event
that the holders of the Preferred Stock become entitled to appoint the Preferred
Directors, for so long as such holders are entitled to appoint the Preferred
Directors, the composition of the Board of Directors in the case of each of
(i)-(iv) above shall be as set forth in Part 3 of Exhibit A hereto.
If at any time the Rakepoll Interest should be reduced with the result that, in
accordance with paragraphs (i) through (iv) above, the number of directors which
Rakepoll is entitled to designate is reduced, then such entitlement reduction
shall extinguish any right Rakepoll may have hereunder to designate a greater
number of directors, notwithstanding any increase in the Rakepoll Interest which
may occur after such entitlement reduction.
Vacancies on the Board of Directors which result from a reduction in Rakepoll's
and the Management Directors' entitlement to designate directors in accordance
with the foregoing shall be filled by election by the
9
<PAGE>
stockholders at large of the Company, in accordance with applicable law, the
Company's Certificate of Incorporation and its Bylaws.
(d) If at any time the number of Investor Directors or Management
Directors on the Board of Directors exceeds the number of such Directors that
Rakepoll or the Management Directors, as the case may be, has the right to
designate in accordance with this Section 4.1, then Rakepoll or the Management
Directors, as appropriate, shall promptly cause to resign, and take all other
action reasonably necessary to cause the prompt removal of, such number of
Investor Directors or Management Directors, as appropriate, necessary to cause
the composition of the Board of Directors to conform to the provisions of
Section 4.1(c). In the event that additional Investor Directors or Management
Directors are required to be designated so that the composition of the Board of
Directors conforms hereto, then the Investor Directors or the Management
Directors, as appropriate, shall designate replacement directors in accordance
with Section 4.1(c).
(e) Subject to Section 4.1(d), Rakepoll and the Management Directors,
respectively, shall have the right to designate any replacement for any Investor
Director or Management Director, as applicable, designated in accordance with
Section 4.1 by Rakepoll or the Management Directors, respectively, at the
termination of such director's term or upon death, resignation, retirement,
disqualification, removal from office or other cause; provided, however, that if
at any time there are no Management Directors remaining on the Board of
Directors, then the Independent Directors shall designate a member of the senior
management of the Company who is not an affiliate of Rakepoll (other than by
virtue of being a senior manager of the Company) as a replacement(s) for such
Management Director.
(f) No individual who is an officer, director, partner or principal
stockholder of any "competitor" of the Company or any of its Subsidiaries (other
than Rakepoll, its Affiliates or officers, directors, partners or principal
stockholders thereof) shall serve as a Director.
For purposes hereof, an entity shall be deemed to be a "competitor" of the
Company if such entity (i) is engaged in the production of injectable generic
pharmaceuticals or fine chemical finished products, or (ii) actually
manufactures any product which is substantially similar in use or purpose to any
product manufactured by the Company, in development by the Company, or in the
funding plan agreed to by the parties hereto (the ("Funding Plan") for
development by the Company or (iii) engaged in the field of oncology or (iv) is
engaged in a business such that the reasonable inference is that such entity is
engaged in substantially the same business as the Company.
SECTION 4.2. Solicitation and Voting of Shares. (a) The Company shall
use its best efforts to solicit from the stockholders of the Company eligible to
vote for the election of Directors proxies in favor of the nominees designated
in accordance with Section 4.1.
(b) In any election of Directors or any meeting of the stockholders of
the Company called expressly for the removal of Directors, Rakepoll and its
Affiliates will vote all of their shares of Common Stock (i) in favor of any
Director or nominee as provided in Section 4.1, (ii) in favor of the removal of
any Director as provided in Section 4.1(d), and (iii) otherwise against the
removal of any director designated under Section 4.1, provided that no director
shall be required to breach his fiduciary duties as a result of this clause
(iii). In addition Rakepoll shall, and shall use its
10
<PAGE>
best efforts to cause its Affiliates to, take such actions as are necessary as
stockholders of the Company to give effect to the provisions of this Agreement.
Subject to Section 4.8, in all other matters submitted to a vote of the Company
stockholders, Rakepoll and its Affiliates may vote any or all of their shares in
their sole discretion.
SECTION 4.3. Management of the Company. (a) At the Closing Date, (i)
An Independent Director shall serve as the non-executive Chairman of the Board
of Directors upon the mutual agreement of the Investor Directors and the
Management Directors; (ii) David F. Hale shall serve as President and Chief
Executive Officer of the Company; and (iii) Michael D. Cannon shall serve as
Executive Vice President of the Company. Each of the Chairman of the Board,
David F. Hale and Michael D. Cannon shall serve in accordance with the
Certificate of Incorporation and By-laws of the Company.
(b) All necessary action to give effect to Section 4.3(a), including
the resignation of David F. Hale as Chairman of the Board of Directors effective
as of the Closing, shall be taken, or caused to be taken, by the Company.
(c) At the Closing Date, an Executive Operating Committee, which
shall be a management committee and not a committee of the Board of
Directors, shall be established, consisting of Carlo Salvi, the President and
Chief Executive Officer, the President of Gensia Laboratories, Inc. and the
Executive Vice President. Carlo Salvi shall serve as Chairman of the
Executive Operating Committee.
SECTION 4.4. Approval of Investor Directors Required for Certain
Actions. At all such times that Rakepoll's Interest is greater than or equal to
50% of Rakepoll's Initial Interest, the approval of the Investor Directors shall
be required for the Board of Directors to approve and authorize any of
the following:
(a) the entry by the Company or any of its Subsidiaries into any
merger or consolidation, or the acquisition by the Company or any of its
Subsidiaries of any business or assets that would constitute a Substantial
Part of the business or assets of the Company, whether such acquisition be
by merger or consolidation or the purchase or sale of stock or assets or
otherwise;
(b) the sale, lease, pledge, grant of security interest in, license,
transfer or other disposal by the Company or any of its Subsidiaries of all
or substantially all of the business or assets of the Company;
(c) the dissolution of the Company; the adoption of a plan of
liquidation of the Company; any action by the Company or any Significant
Subsidiary (as such term is defined in Rule 12b-2 promulgated under the
Exchange Act) thereof to commence any suit, case, proceeding or other
action (A) under any existing or future law of any jurisdiction relating to
bankruptcy, insolvency, reorganization or relief of debtors seeking to have
an order for relief entered with respect to the Company or any Significant
Subsidiary thereof, or seeking to adjudicate the Company or any Significant
Subsidiary thereof a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to the Company or any Significant Subsidiary
thereof, or (B) seeking appointment of a
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receiver, trustee, custodian or other similar official for the Company or
any Significant Subsidiary thereof, or for all or any Substantial Part of
the assets of the Company or any Significant Subsidiary thereof, or making
a general assignment for the benefit of the creditors of the Company or any
Significant Subsidiary thereof;
(d) the payment of any extraordinary dividend by the Company;
(e) the issuance of debt securities by the Company such that the
principal amount of such debt securities outstanding subsequent to such
issuance is equal to or greater than one hundred and ten percent (110%) of
the aggregate principal amount of debt securities contemplated to be
outstanding at such time under the Business Plan;
(f) the issuance of Equity Securities by the Company such that the
number of shares of such Equity Securities outstanding subsequent to such
issuance is equal to or greater than one hundred and ten percent (110%) of
the aggregate number of Equity Securities contemplated to be outstanding at
such time under the Business Plan; and
(g) the issuance of any debt or equity securities or other capital
stock of any of its Subsidiaries, except the issuance of shares of capital
stock of the Company or options to purchase such shares pursuant to any
employee compensation or benefit plan approved by the Board of Directors or
pursuant to the terms of securities outstanding on the Closing Date, as set
forth in Schedule 2.1 hereto.
If the Company enters into governance arrangements with respect to Automedics
Development, Inc. ("Automedics") which are acceptable to the Investor Directors,
then Automedics will not constitute a Subsidiary for purposes of
this Section 4.4.
SECTION 4.5. Certificate of Incorporation and By-Laws. The Company
shall take or cause to be taken all lawful action necessary to ensure at all
times that the Company's Certificate of Incorporation and By-Laws are not, at
any time, inconsistent with the provisions of this Agreement. In furtherance of
the foregoing, at the special stockholders meeting called to approve the Stock
Exchange Agreement and the transactions set forth therein, the Company agrees to
submit to its stockholders, certain amendments to the Company's Certificate of
Incorporation and By-Laws substantially in the form of Exhibits B and C hereto.
SECTION 4.6. Funding Plan. The Funding Plan sets forth the funding
plan for the Company for the 3-year period beginning on the date hereof. The
Funding Plan shall be a rolling funding plan and shall be reviewed at least once
a year by the Board of Directors so as to ensure a rolling three-year business
plan. The Funding Plan may be modified only with the approval of the Board of
Directors.
SECTION 4.7. Issuance of Equity Securities During Standstill Period.
No issuance of Equity Securities shall take place during the Standstill Period
except (i) in accordance with the Funding Plan or (ii) with the approval of the
Investor Directors pursuant to Section 4.4(d).
SECTION 4.8. Management of the Subsidiaries. (a) (i) Rakepoll
shall initially have the right to designate a majority of the directors and
the senior managers of each of SICOR S.p.A., Sintesis Lerma S.A. de C.V. and
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Lermery S.A. de C.V. and (ii) the Management Directors shall be entitled to
designate the balance of the directors and senior managers of each such company,
each of whom shall serve at the pleasure of the Board of Directors of the
Company. The Investor Directors shall have the right to nominate for the
consideration of the Board of Directors replacements for all the directors and
senior managers designated by Rakepoll in accordance with the previous sentence.
The composition at the Closing Date of the board of directors and senior
management of each such company is set forth in Part 1 of Exhibit D hereto.
(b) With respect to Gensia Laboratories, Inc., Rakepoll shall have the
right to designate one director. The composition at the Closing Date of the
board of directors of Gensia Laboratories, Inc. is set forth in Part 2 of
Exhibit D hereto.
SECTION 4.9. Failure to Comply with this Article IV. In addition to
any other remedy at law or in equity which Rakepoll may have, in the event that
any action is taken or omitted to be taken in violation of this Article IV which
results in the failure to nominate or solicit proxies for the election of the
Investor Directors or the failure to elect Investor Directors, in each case as
set forth herein, the taking of any action specified in Section 4.4(a), or
Section 4.4(b) without the required approvals specified therein, or the failure
to comply with Sections 4.1(d) and 4.1(e) hereof, the provisions of Section
4.2(b) and Articles III and V hereof shall as of the date of such occurrence or
omission be of no further force or effect.
ARTICLE V
TRANSFER OF COMMON STOCK
SECTION 5.1. Transfer of Common Stock. (a) During the Lock-Up
Period, Rakepoll will not, and will not permit any Rakepoll Affiliate,
directly or indirectly, to sell, transfer or otherwise dispose of any shares
of Common Stock.
(b) During the Lock-Up Period, Rakepoll shall not sell, transfer or
otherwise dispose of any of the capital stock of any Subsidiary of Rakepoll that
owns shares of Common Stock, except to an Affiliate of Rakepoll; provided that
such Affiliate agrees in writing to be bound by the terms and conditions of this
Agreement.
(c) The prohibitions in Sections 5.1(a) and 5.1(b) shall not apply
following the commencement by any third party of a bona fide tender or exchange
offer to purchase in excess of 20% of the outstanding shares of Common Stock
that the Board of Directors either recommends acceptance of, expresses no
opinion and remains neutral towards, or is unable to take a position with
respect to.
(d) Rakepoll and its Affiliates may not sell, transfer or otherwise
convey to any single third party or single group acting in concert all of
Rakepoll's Initial Interest without obtaining the approval of at least a
majority of the Independent Directors of such sale to such single third party or
group, such approval not to be unreasonably withheld and such determination of
the Independent Directors to be given to Rakepoll within 10
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days of notification to the Board of Directors by Rakepoll of such
contemplated sale.
(e) Proposed transfers of shares of Common Stock that are not in
compliance with this Article V shall be of no force or effect and the Company
shall not be required to register on its stock records any such transfer.
ARTICLE VI
REGISTRATION RIGHTS
SECTION 6.1. Request for Registration. (a) At any time and from time
to time on and after the first anniversary of the Closing Date, the Holders of
Common Stock that are subject to this Agreement (the "Initiating Holders") may
request in a written notice that the Company file a registration statement under
the Securities Act (or a similar document pursuant to any other statute then in
effect corresponding to the Securities Act) covering the registration of
Registrable Securities held by such Initiating Holders (constituting in the
aggregate at least 5% of the aggregate Common Stock outstanding immediately upon
consummation of the transaction contemplated by the Stock Exchange Agreement);
such notice shall specify whether the Initiating Holders require the Registrable
Securities to be distributed by means of an underwriting. Following receipt of
any notice under this Section 6.1, the Company shall (x) within ten days notify
all other Holders of such request in writing and (y) thereupon as expeditiously
as possible, use its best efforts to cause to be registered under the Securities
Act all Registrable Securities that the Initiating Holders and such other
Holders have, within ten days after the Company has given such notice, requested
be registered in accordance with the manner of disposition specified in such
notice by the Initiating Holders; provided, that the Company shall not be
obligated to file a registration statement relating to any registration request
under this Section 6.1, (i) if two registration statements relating to
registration requests under this Section 6.1 have previously been filed and
declared effective by the SEC in the calendar year in which such registration
request is made or, (ii) if five registration statements relating to
registration requests under this Section 6.1 have previously been filed and
declared effective by the SEC.
(b) If the Initiating Holders intend to have the Registrable
Securities distributed by means of an underwritten offering, the Company shall
include such information in the written notice referred to in clause (x) of
Section 6.1(a) above. In such event, the right of any Holder to include its
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwritten offering and the inclusion of such
Holder's Registrable Securities in the underwritten offering (unless otherwise
mutually agreed by a majority in interest of the Initiating Holders and such
Holder) to the extent provided below. All Holders proposing to distribute
Registrable Securities through such underwritten offering shall enter (together
with the Company, as provided in Subsection 6.4(j)) into an underwriting
agreement in customary form with the underwriter or underwriters. No Holder
shall be required to make any representations or warranties to or agreements
with the Company or the underwriters other than representations, warranties or
agreements regarding such Holder, the Registrable Securities of such Holder and
such Holder's intended method of distribution and any other representations
required by law
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or reasonably required by the underwriter. If any Holder of Registrable
Securities disapproves of the terms of the underwriting, such Holder may elect
to withdraw all its Registrable Securities by written notice to the Company, the
managing underwriter and the Initiating Holders. The securities so withdrawn
also shall be withdrawn from registration.
(c) A registration requested pursuant to this section 6.1 shall not be
deemed to have been effected pursuant this Section 6.1 for purposes of Section
6.6 unless (i) it has been declared effective by the SEC, (ii) it has remained
effective for the period set forth in Section 6.4(a), and (iii) the offering of
Registrable Securities pursuant to such registration is not subject to any stop
order, injunction or other order or requirement of the SEC (other than any such
stop order, injunction, or other requirement of the SEC prompted by any act or
omission of Holders of Registrable Securities).
(d) Selection of Underwriters. If a requested registration pursuant to
this Section 6.1 involves an underwritten offering, the Company shall have the
right to select the investment banker or bankers and managers to administer the
offering; provided, however, that such investment banker or bankers and managers
shall be reasonably satisfactory to Holders of a majority of the Registrable
Securities which the Company has been requested to register.
(e) Subject to the following sentence, if a requested registration
pursuant to this Section 6.1 involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the number of
securities requested to be included in such registration (including securities
of the Company which are not Registrable Securities) exceeds the number that can
be sold in such offering at a price reasonably related to the then current
market value of such securities, the Company will include in such registration
only the Registrable Securities requested to be included in such registration.
In the event that the number of Registrable Securities requested to be included
in such registration exceeds the number which, in the opinion of such managing
underwriter, may be sold at a price reasonably related to the then current
market value of such securities, the number of such Registrable Securities to be
included in such registration shall be allocated pro rata among all requesting
Holders on the basis of the relative number of shares of Registrable Securities
then held by each such Holder (provided that any shares hereby allocated to any
such Holder that exceed such Holder's request shall be reallocated among the
remaining requesting Holders in like manner). In the event that the number of
Registrable Securities requested to be included in such registration is less
than the number which, in the opinion of the managing underwriter, may be sold
at a price reasonably related to the then current market value of such
securities, the Company may include in such registration the securities the
Company proposes to sell up to the number of securities that, in the opinion of
the managing underwriter, may be sold at a price reasonably related to the then
current market value of such securities. The Company will not include in any
requested registration pursuant to this Section 6.1 any securities which are not
Registrable Securities (other than securities of the Company) without the prior
written consent of the Holders of at least a majority of the Registrable
Securities included in such registration.
(f) If the Board of Directors of the Company, in its good faith
judgment, determines that any registration of Registrable Securities should not
be made or continued due to a valid need not to disclose confidential
information or because it would materially interfere with any material
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financing, acquisition, corporate reorganization or merger or other transaction
involving the Company (collectively, a "Valid Business Reason"), the Company may
postpone filing a registration statement relating to a request for registration
under this Section 6.1 for a period of up to 90 days from the date of the Delay
Notice (as defined herein). If any such registration statement has been filed,
the Company may, with respect to a registration effected pursuant to this
Section 6.1 or Section 6.3, postpone amending or supplementing such registration
statement for a period of up to 90 days from the date of the Delay Notice. If
the Company decides to postpone filing a registration statement or an amendment
or supplement thereto, then the Company shall give prompt written notice (a
"Delay Notice") to any holder of Registrable Securities included or to be
included in any such registration statement of its determination to postpone a
registration statement. To be valid, a Delay Notice shall include in reasonable
detail the nature of the Valid Business Reasons occasioning such postponement.
In addition, if prior to the end of the 90-day delay period the Valid Business
Reason should cease to exist, then the Company shall give prompt written notice
to those parties to whom a Delay Notice was delivered stating that the Valid
Business Reason for such postponement no longer exists. Notwithstanding the
foregoing, and without regard to whether the Valid Business Reason continues or
not, at the end of the 90-day period from the delivery of a Delay Notice, the
Company shall cause such registration statement, amendment or supplement, to be
filed with the SEC. Notwithstanding the foregoing the Company shall be entitled
to serve only one Delay Notice within any 12 month period.
SECTION 6.2. Incidental Registration. Subject to Section 6.7, if at
any time after the first anniversary of the Closing Date the Company proposes to
file a registration statement under the Securities Act (other than a
registration statement on a Form S-4 or S-8 or any successor or similar forms)
on any form that would permit the registration of the Registrable Securities,
whether or not such filing is to be on its behalf, each such time the Company
shall give to each Holder prompt written notice of such determination setting
forth the date on which the Company proposes to file such registration
statement, which date shall be no earlier than twenty-one days from the date of
such notice, and advising each Holder of its right under this Section 6.2 to
have Registrable Securities included in such registration. Upon the written
request of any Holder received by the Company no later than thirty days after
the date of the Company's notice (which request shall specify the Registrable
Securities intended to be included in such registration by such Holder), the
Company shall use its best efforts to cause to be registered under the
Securities Act all of the Registrable Securities that each such Holder has so
requested to be registered; provided that if, at any time after giving written
notice of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such registration,
the Company shall determine for any reason not to proceed with the proposed
registration of the securities to be sold by it, the Company may, at its
election, give written notice of such determination to each Holder of
Registrable Securities and, thereupon, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of any Holder to request
such registration to be effected as a registration under Section 6.1. If a
proposed registration pursuant to this Section 6.2 involves an underwritten
public offering, any Holders making a request under this Section 6.2 in
connection with such registration may elect in writing, prior to the effective
date of the registration statement filed
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in connection with such registration, to withdraw such request and not to have
such securities registered in connection with such registration. If, in the
written opinion of the managing underwriter (or, in the case of a
non-underwritten offering, in the written opinion of the Company), the total
amount of such securities to be so registered, including such Registrable
Securities, will exceed the maximum amount of the Company's securities that can
be marketed at a price reasonably related to the then current market value of
such securities, then the Company shall include in such registration (i) first,
all the securities the Company proposes to sell for its own account or is
required to register on behalf of any third party exercising rights similar to
those granted in Section 6.1(a) and without having the adverse effect referred
to above, and (ii) second, to the extent that the number of securities which the
Company proposes to sell for its own account pursuant to this Section 6.2, or is
required to register on behalf of any third party exercising rights similar to
those granted in Section 6.1(a), is less than the number of equity securities
which the Company has been advised can be sold in such offering without having
the adverse effect referred to above, all Registrable Securities requested to be
included in such registration by the Holders pursuant to this Section 6.2 and
all shares of Common Stock requested to be included by third parties exercising
the rights similar to those granted in this Section 6.2; provided that if the
number of Registrable Securities and other shares of Common Stock requested to
be included in such registration by the Holders pursuant to this Section 6.2 and
third parties exercising rights similar to those granted in this Section 6.2,
together with the number of securities to be included in such registration
pursuant to clause (i) of this Section 6.2, exceeds the number which the Company
has been advised can be sold in such offering without having the adverse effect
referred to above, the number of such Registerable Securities requested to be
included in such registration by the Holders pursuant to this Section 6.2 shall
be limited to such extent and shall be allocated pro rata among all such
requesting Holders and third parties exercising rights similar to those granted
in this Section 6.2 on the basis of the relative number of Registrable
Securities each such Holder has requested to be included in such registration
and the number of shares of Common Stock requested to be included in such
registration by such third parties.
SECTION 6.3. Registration on Form S-3. If at any time after the first
anniversary of the Closing Date (a) any Holder requests in writing that the
Company file a registration statement on Form S-3 or any successor thereto for a
public offering of all or any portion of the Registrable Securities held by such
requesting Holder and (b) the Company is a registrant entitled to use Form S-3
or any successor thereto, then the Company shall use its best efforts to
register under the Securities Act on Form S-3 or any successor thereto, for
public sale in accordance with the method of disposition specified in such
request, including, without limitation, pursuant to Rule 415 under the
Securities Act, the Registrable Securities specified in such request. Whenever
the Company is required by this Section 6.3 to use its best efforts to effect
the registration of Registrable Securities, each of the limitations, procedures
and requirements of Section 6.1(b), (e) and (f) (including but not limited to
the requirement that the Company notify all Holders from whom a request has not
been received and provide them with the opportunity to participate in the
offering) shall apply to such registration. Notwithstanding the foregoing, the
Company shall not be obligated to effect any such registration, qualification or
compliance pursuant to this Section 6.3: (i) if the Holders, together with the
holders of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other
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securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $10,000,000; (ii) if the
Company has, within the twelve-month period preceding the date of such request,
already effected two registration on Form S-3 on behalf of the Holders; (iii) in
any jurisdiction in which the Company would be required to qualify to do
business or to execute a general consent to service of process in effecting such
registration qualification or compliance;
SECTION 6.4. Obligations of the Company. Whenever required under
Section 6.1 or Section 6.3 to use its best efforts to effect the registration of
any Registrable Securities, the Company shall, as expeditiously as possible:
(a) prepare and, in any event with 45 days after, (i) the end of the
period specified in section 6.2 or, (ii) receipt by the Company of a
request under Section 6.1 or 6.3, as the case may be, file with the SEC a
registration statement with respect to such Registrable Securities on any
form for which the Company then qualifies or which counsel for the Company
shall deem appropriate, and which form shall be available for the sale of
the Registrable Securities in accordance with the intended methods of
distribution thereof, and use its best efforts to cause such registration
statement to become and remain effective for the period of the distribution
contemplated thereby determined as provided in subsection 6.4(b) below;
provided, however, that the Company may discontinue any registration of its
securities which is being effected pursuant to Section 6.2 at any time
prior to the effective date of the registration statement relating thereto;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for a
period of 180 days or such lesser period of time as the Company or any
Holder may be required under the Securities Act to deliver a prospectus in
connection with any sale of Registrable Securities, and to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement, and furnish
to each Holder of such Registrable Securities and one counsel acting on
behalf of the Holders, such number of copies of any such amendments and
supplements in conformity with the requirements of the Securities Act prior
to their being used or filed with the SEC, which documents will be subject
to the review of such counsel;
(c) furnish to each Holder and the managing underwriter, if any, such
number of copies of the registration statement and the prospectus included
therein (including each preliminary prospectus and any amendments or
supplements thereto) in conformity with the requirements of the Securities
Act and such other documents and information as they may reasonably request
and make available for inspection by the parties referred to in Section
6.4(d) below such financial and other information and books and records of
the Company, and cause the officers, directors, employees, counsel and
independent certified public accountants of the Company to respond to such
inquiries, as shall be reasonably necessary, in the judgment of the
respective counsel referred to in such Section, to conduct a reasonable
investigation within the meaning of Section 11 of the Securities Act;
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(d) provide (i) the Holders of the Registrable Securities to be
included in such registration statement, (ii) the underwriters (which term,
for purposes of this Agreement, shall include a person deemed to be an
underwriter within the meaning of Section 2(11) of the Securities Act), if
any, thereof, (iii) the sales or placement agent, if any, therefor, (iv)
counsel for such underwriters or agent, and (v) not more than one counsel
for all the Holders of such Registrable Securities the opportunity to
participate in the preparation of such registration statement, each
prospectus included therein or filed with the SEC, and each amendment or
supplement thereto;
(e) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each Holder shall
reasonably request to keep such registration or qualification in effect for
so long as such registration statement remains in effect, and do any and
all other acts and things which may be reasonably necessary or advisable to
enable such Holder to consummate the disposition in such jurisdictions of
the Registrable Securities owned by such Holder; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business in or to file a general consent to
service of process in any jurisdiction wherein it would not, but for the
requirements of this paragraph (e), be obligated to do so; and provided
further that the Company shall not be required to qualify such Registrable
Securities in any jurisdiction in which the securities regulatory authority
requires that any Holder submit its Registrable Securities to the terms,
provisions and restrictions of any escrow, lockup or similar agreement(s)
for consent to sell Registrable Securities in such jurisdiction unless such
Holder agrees to do so;
(f) promptly notify counsel for each of the selling Holders of
Registrable Securities, the sales or placement agent, if any, therefor and
the managing underwriter or underwriters, if any, thereof and confirm such
advice in writing, (i) when such registration statement or the prospectus
included therein or any prospectus amendment or supplement or
post-effective amendment has been filed, and, with respect to such
registration statement or any post-effective amendment, when the same has
become effective, (ii) of any comments by the SEC or by any Blue Sky or
securities commissioner or regulator of any state with respect thereto or
any request by the SEC for amendments or supplements to such registration
statement or prospectus or for additional information, (iii) of the
issuance by the SEC of any stop order suspending the effectiveness of such
registration statement or the initiation or threatening of any proceedings
for that purpose, (iv) if at any time the representations and warranties of
the Company contained in any underwriting agreement or other customary
agreement cease to be true and correct in all material respects or (v) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for
such purpose;
(g) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of such registration statement or any
post-effective amendment thereto, or the lifting of any suspension of the
qualification of any of the registered Common Stock for sale in any
jurisdiction at the earliest possible date;
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(h) promptly notify each Holder for whom such Registrable Securities
are covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of
the happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make, in light of the circumstances
under which they were made, the statements therein not misleading, and at
the request of any such Holder promptly prepare and furnish to such Holder
a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make, in light of the circumstances under
which they were made, the statements therein not misleading;
(i) furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to Section 6.1 or Section 6.3, if the
method of distribution is by means of an underwriting, on the date that the
Registrable Securities are delivered to the underwriters for sale pursuant
to such registration, or if such Registrable Securities are not being sold
through underwriters, on the date that the registration statement with
respect to such Registrable Securities becomes effective, (1) a signed
opinion, dated such date, of the independent legal counsel representing the
Company for the purpose of such registration, addressed to the
underwriters, if any, and if such Registrable Securities are not being sold
through underwriters, then to the Holders making such request, as to such
matters as such underwriters or the Holders holding a majority of the
Registrable Securities included in such registration, as the case may be,
may reasonably request and as would be customary in such a transaction; and
(2) letters dated such date and the date the offering is priced from the
independent certified public accountants of the Company, addressed to the
underwriters, if any, and if such Registrable Securities are not being sold
through underwriters, then to the Holders making such request and, if such
accountants refuse to deliver such letters to such Holders, then to the
Company (i) stating that they are independent certified public accountants
within the meaning of the Securities Act and that, in the opinion of such
accountants, the financial statements and other financial data of the
Company included in the registration statement or the prospectus, or any
amendment or supplement thereto, comply as to form in all material respects
with the applicable accounting requirements of the Securities Act and (ii)
covering such other financial matters (including information as to the
period ending not more than five business days prior to the date of such
letters) with respect to the registration in respect of which such letter
is being given as such underwriters or the Holders holding a majority of
the Registrable Securities included in such registration, as the case may
be, may reasonably request and as would be customary in such a transaction;
(j) enter into customary agreements (including if the method of
distribution is by means of an underwriting, an underwriting agreement in
customary form, including, without limitation, customary indemnification
provisions consistent with Section 6.11) and take such other actions as are
reasonably required in order to expedite or
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facilitate the disposition of the Registrable Securities to be so
included in the registration statement;
(k) use its best efforts to obtain the consent or approval of each
governmental agency or authority, whether federal, state or local, which
may be required to effect registration or the offering or sale in
connection therewith or to enable the selling Holder or Holders to offer,
or to consummate the disposition of, their Registrable Securities;
(l) cooperate with the Holders of the Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold,
which certificates shall be printed, lithographed or engraved, or produced
by any combination of such methods, steel engraved borders, if required,
and which shall not bear any restrictive legends; and, in the case of an
underwritten offering, enable such Registrable Securities to be in such
denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of the Registrable
Securities;
(m) otherwise comply with all applicable rules and regulations of the
SEC, and make available to its security holders, as soon as reasonably
practicable (but not later than eighteen months) after the effective date
of the registration statement, an earnings statement covering the period of
at least twelve months beginning with the first full month after the
effective date of such registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act;
(n) use its best efforts to cause all such Registrable Securities to
be listed on any securities exchange on which the Common Stock is then
listed, if such Registrable Securities are not already so listed and if
such listing is then permitted under the rules of such exchange, and to
provide a transfer agent and registrar for such Registrable Securities
covered by such registration statement no later than the effective date of
such registration statement;
(o) make available for inspection by one counsel on behalf of all the
Holders of the Registrable Securities covered by such registration
statement, by any underwriter participating in any disposition to be
effected pursuant to such registration statement and by any attorney,
accountant or other agent retained by such Holders or any such underwriter,
all pertinent financial and other records, pertinent corporate documents
and properties of the Company, and cause all of the Company's officers,
directors and employees to supply all information reasonably requested by
any such counsel, underwriter, attorney, accountant or agent in connection
with such registration statement; and
(p) use its best efforts to make available the executive officers of
the Company to participate with the Holders of Registrable Securities and
any underwriters in any "road shows" or other selling efforts that may be
reasonably requested by the Holders in connection with the methods of
distribution for the Registrable Securities.
For purposes of Sections 6.4(a) and 6.4(b), and with respect to (i) registration
required pursuant to Section 6.1, (A) the period of distribution
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of Registrable Securities in a firm commitment underwritten public offering
shall be deemed to extend until each underwriter has completed the distribution
of all securities purchased by it and (B) the period of distribution of
Registrable Securities in any other registration shall be deemed to extend until
the earlier of the sale of all Registrable Securities covered thereby and 180
days after the effective date thereof and (ii) registrations required pursuant
to Section 6.3, the period of distribution of Registrable Securities in any
registration (firm commitment underwritten or otherwise) shall be deemed to
extend until the earlier of the sale of all Registrable Securities covered
thereby and two years after the effective date thereof.
Each Holder of Registrable Securities agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 6.4(h), such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 6.4(h), and, if so
directed by the Company, such Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice; provided, however, that any
period of time during which a Holder must discontinue disposition of Registrable
Securities shall not be included in the determination of a period of
distribution for purposes of Sections 6.4(a) and 6.4(b).
SECTION 6.5. Furnish Information. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Agreement
that the Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities as the Company may from time to time reasonably
request in writing and as shall be required in connection with the action to be
taken by the Company.
SECTION 6.6. Expenses of Registration. All Registration Expenses in
connection with (i) each registration or attempted registration pursuant to
Section 6.2, (ii) the first five registrations effected pursuant to Section 6.1
or 6.3 and (iii) any attempted registration (or partial registration deemed not
to have been effected pursuant to Section 6.1 or 6.3 by operation of Sections
6.1(c) or (e)) occurring prior to the fifth registration effected pursuant to
Section 6.1 or 6.3 of this Agreement, excluding underwriters' discounts and
commissions, shall be paid by the Company; provided, however, that the Company
shall not be required to pay for any Registration Expenses of any registration
proceeding begun pursuant to Section 6.1 or 6.3 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all participating Holders
shall bear such expenses), unless the Holders of a majority of the Registrable
Securities agree to forfeit their right to one demand registration pursuant to
Section 6.1; provided further, however, that if at the time of such withdrawal,
the Holders have learned of a material adverse change in the condition, business
or prospects of the Company not actually known by the Holders at the time of
their request for registration, then the Holders shall not be required to pay
any of such expenses and shall retain in full their rights pursuant to Sections
6.1 and 6.3. The foregoing provisions with respect to expenses shall in no way
limit the rights of the Holders to request registration
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pursuant to Sections 6.1 and 6.3 or the number of registrations which may be
requested thereunder.
SECTION 6.7. Underwriting Requirements. In connection with any
underwritten offering, the Company shall not be required under Section 6.2 to
include Registrable Securities in such underwritten offering unless the Holders
of such Registrable Securities accept the terms of the underwriting of such
offering that have been reasonably agreed upon between the Company and the
underwriters selected by the Company; provided, that the Company shall not agree
to lock-up periods in excess of 120 days in connection with any such offerings.
SECTION 6.8. Rule 144 and Rule 144A Information. With a view to making
available the benefits of certain rules and regulations of the SEC which may at
any time permit the sale of the Registrable Securities to the public without
registration, at all times, the Company agrees to:
(i) make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities
Act;
(ii) use its best efforts to file with the SEC in a timely manner
all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(iii) furnish to each Holder of Registrable Securities forthwith
upon request a written statement by the Company as to its compliance
with the reporting requirements of such Rule 144 and of the Securities
Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents
so filed by the Company as such Holder may reasonably request in
availing itself of any rule or regulation of the SEC allowing such
Holder to sell any Registrable Securities without registration.
SECTION 6.9. Delay of Registration. No Holder, other than Rakepoll,
shall have any right to obtain or seek an injunction restraining or otherwise
delaying any such registration as the result of any controversy that might arise
with respect to the interpretation or implementation of this Article VI.
SECTION 6.10. Indemnification. In the event any Registrable
Securities are included in a registration statement under this Agreement:
(a) The Company shall indemnify and hold harmless each Holder, such
Holder's directors and officers, and each person, if any, who controls such
Holder or participating person within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection
with defending or investigating any such action or claim) to which they may
become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or proceedings in respect thereof)
arise out of or are based on any untrue or alleged untrue statement of a
material fact contained in such registration statement, preliminary
prospectus, final prospectus or amendments or supplements thereto or arise
out of or are
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based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the indemnity agreement
contained in this Section 6.10(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld); provided further that the Company
shall not be liable to any Holder, such Holder's directors and officers or
controlling person in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in connection with such registration statement, preliminary
prospectus, final prospectus or amendments or supplements thereto, in
reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder,
such Holder's directors and officers or controlling person; provided,
further, that as to any preliminary prospectus or any final prospectus this
indemnity agreement shall not inure to the benefit of any Holder, such
Holder's directors and officers or controlling persons on account of any
losses, claims, damages or liability arising from the sale of Common Stock
to any person by such Holder if such Holder or its representatives failed
to send or give a copy of the final prospectus or a prospectus supplement,
as the case may be (excluding documents incorporated by reference therein),
as the same may be amended or supplemented, to that person within the time
required by the Securities Act, and the untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact in such preliminary prospectus or final prospectus was
corrected in the final prospectus or such prospectus supplement, as the
case may be (excluding documents incorporated by reference therein), unless
such failure resulted from non-compliance by the Company with Section
6.4(c). Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of any such Holder, such Holder's
directors and officers, participating person or controlling person, and
shall survive the transfer of such securities by such Holder.
(b) Each Holder requesting or joining in a registration severally and
not jointly shall indemnify and hold harmless the Company, each of its
directors and officers and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent as the foregoing indemnity from the
Company to the Holders but only with reference to written information
relating to such Holder furnished to the Company expressly for use in
connection with such registration; provided, however, that the indemnity
agreement contained in this Section 6.10(b) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of such Holder (which consent
shall not be unreasonably withheld); and provided further that the
liability of each Holder hereunder shall be limited to the proportion of
any such loss, claim, damage, liability or expense that is equal to the
proportion that the net proceeds from the sale of the shares sold by such
Holder under such registration statement bears to the total net proceeds
from the sale of all securities sold thereunder, but not in any event to
exceed the net proceeds received by such Holder from the sale of
Registrable Securities covered by such registration statement.
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(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to either of the two preceding paragraphs, such person
(the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly notified, to assume the defense thereof with
counsel mutually satisfactory to the parties. The indemnifying party shall
pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the indemnifying party
and the indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceeding (including
any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests
between them. It is understood that the indemnifying party shall not, in
respect of the legal expenses of any indemnified party in connection with
any proceeding or related proceedings in the same jurisdiction, be liable
for the fees and expenses of more than one separate firm (in addition to
any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by the Holders, in the case of parties indemnified
pursuant to the second preceding paragraph, and by the Company, in the case
of parties indemnified pursuant to the first preceding paragraph. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or
if there be a final judgment for the plaintiff, the indemnifying party
agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees
and expenses of counsel as contemplated by the second and third sentences
of this paragraph, the indemnifying party agrees that it shall be liable
for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than thirty days after receipt
by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been
a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter
of such proceeding. The failure to deliver written notice to the
indemnifying party promptly following of the commencement of any such
action shall not relieve the indemnifying party of its obligations under
this Section 6.10, except to the extent that the failure so to deliver the
notice is prejudicial to the indemnifying party's ability to defend such
action.
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(d) If the indemnification provided for in Section 6.10(a) and/or (b)
is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified party in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of material fact or omission or alleged omission to state a
material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result of
the losses, claims, damages or liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred
by such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.10(d) were determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 6.10, no Holder
shall be required to contribute any amount in excess of the amount of net
proceeds received by such Holder from the sale of Registrable Securities
covered by such registration statement. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The remedies provided for in this
Section 6.10 are not exclusive and shall not limit any right or remedies
that may otherwise be available to any indemnified party at law or in
equity.
SECTION 6.11. Lock-up in connection with a Registration of Securities.
Each Holder shall, in connection with any registration of the Company's
securities, upon the request of the Company or the underwriters managing any
underwritten offering of such securities, agree in writing not to effect any
sale, disposition or distribution of any Registrable Securities (other than that
included in the registration) without the prior written consent of the managing
underwriter for such reasonable and customary period of time (not to exceed 120
days) from the effective date of such registration as the Company or the
underwriters may specify; provided, however, that all executive officers and
directors of the Company (other than executive officers and directors owning an
aggregate of less than 1% of the outstanding Common Stock as of the effective
date of such registration statement) shall also have agreed not to effect any
sale, disposition or distribution of any Registrable Securities under the
circumstances and pursuant to the terms set forth in this Section 6.11.
In order to enforce the foregoing covenant in this Section 6.11, the
Company may impose stop-transfer instructions with respect to the Registrable
Securities of each Holder (and the shares or securities of every
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other person subject to the foregoing restriction), which stop-transfer
instructions shall only be effective until the end of such reasonable and
customary period.
SECTION 6.12. Transfer of Registration Rights. The registration rights
of any Holder under this Agreement with respect to the Registrable Securities
may be transferred to any transferee of such Registrable Securities who acquires
any Registrable Securities of any Holder; provided that such registration rights
may not be transferred to a holder of less than 2.5% of the outstanding Common
Stock unless such transferee is a Rakepoll Affiliate (or a partner of a Rakepoll
Affiliate); provided, further, that (i) the transferring Holder shall give the
Company written notice at or prior to the time of such transfer stating the name
and address of the transferee and identifying the securities with respect to
which the rights under this Agreement are being transferred, (ii) such
transferee shall agree in writing, in form and substance reasonably satisfactory
to the Company, to be bound as a Holder by the provisions of this Article VI,
and (iii) immediately following such transfer the further disposition of such
securities by such transferee is restricted under the Securities Act.
SECTION 6.13. Selection of Counsel. In connection with any
registration of Registrable Securities pursuant to Sections 6.1, 6.2 and 6.3
hereof, the Holders of a majority of the Registrable Securities covered by any
such registration may select one counsel to represent all Holders of Registrable
Securities covered by such registration; provided, however, that in the event
that the counsel selected as provided above is also acting as counsel to the
Company in connection with such registration, the remaining Holders shall be
entitled to select one additional counsel to represent all such remaining
Holders.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations of the Company. As of the date hereof and
as of the Closing Date the Company represents and warrants as follows:
(a) Authority Relative to This Agreement. The Company has all
necessary power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby (the "Transactions"). The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
Transactions have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
Transactions. This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by Rakepoll, constitutes legal, valid and binding obligations of
the Company.
(b) No Conflict. The execution and delivery by the Company of this
Agreement do not, and the performance of this Agreement by the Company will
not, (i) conflict with or violate the Certificate of Incorporation or
By-Laws of the Company or any of its Subsidiaries, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
the Company or any of its Subsidiaries or by which
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any property or asset of the Company or any of its Subsidiaries is bound or
affected, or (iii) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration
or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of the Company or any of its
Subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any property or asset of
the Company or any of its Subsidiaries is bound or affected, except for any
such breaches, defaults or other occurrences which would not, individually
or in the aggregate, have a material adverse effect on the results of
operations, financial condition or business of the Company and its
Subsidiaries, taken as a whole.
(c) Required Filings and Consents. The execution and delivery by the
Company of this Agreement do not, and the performance of this Agreement by
the Company will not, require any consent, approval, authorization or
permit of, or filing by the Company with or notification to, any
governmental or regulatory authority, domestic or foreign, except (i) for
applicable requirements, if any, of the Securities Act, the Exchange Act,
state blue sky and takeover laws, (ii) the HSR Act, (iii) Exon-Florio, and
(iv) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or
delay the Company from performing its obligations under this Agreement and
would not, individually or in the aggregate, have a material adverse effect
on the results of operations, financial condition or business of the
Company and its Subsidiaries, taken as a whole.
SECTION 7.2. Representations of Rakepoll. As of the date hereof
and as of the Closing Date Rakepoll represents and warrants as follows:
(a) Authority Relative to This Agreement. Rakepoll has all necessary
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the Transactions. The execution and
delivery of this Agreement by Rakepoll and the consummation by Rakepoll of
the Transactions have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of Rakepoll
are necessary to authorize this Agreement or to consummate the
Transactions. This Agreement has been duly and validly executed and
delivered by Rakepoll and, assuming the due authorization, execution and
delivery by the Company constitutes legal, valid and binding obligations of
Rakepoll.
(b) No Conflict. The execution and delivery by Rakepoll of this
Agreement do not, and the performance of this Agreement by Rakepoll will
not, (i) conflict with or violate the Certificate of Incorporation or
By-Laws of Rakepoll or any of its Subsidiaries, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
Rakepoll or any of its Subsidiaries or by which any property or asset of
Rakepoll or any of its Subsidiaries is bound or affected, or (iii) result
in any breach of or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
right of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or other
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encumbrance on any property or asset of Rakepoll or any of its Subsidiaries
pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to
which Rakepoll or any of its Subsidiaries is a party or by which Rakepoll
or any of its Subsidiaries or any property or asset of Rakepoll or any of
its Subsidiaries is bound or affected, except for any such breaches,
defaults or other occurrences which would not, individually or in the
aggregate, have a material adverse effect on the results of operations,
financial condition or business of Rakepoll, taken as a whole.
(c) Required Filings and Consents. The execution and delivery by
Rakepoll of this Agreement do not, and the performance of this Agreement by
Rakepoll will not, require any consent, approval, authorization or permit
of, or filing by Rakepoll with or notification to, any governmental or
regulatory authority, domestic or foreign, except for (i) applicable
requirements, if any, of the Securities Act, the Exchange Act, state blue
sky and takeover laws, (ii) the HSR Act, (iii) Exon- Florio, and (iv) where
failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, would not prevent or delay Rakepoll
from performing its obligations under this Agreement and would not,
individually or in the aggregate, have a material adverse effect on the
results of operations, financial condition or business of Rakepoll, taken
as a whole.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, by mail
(registered or certified mail, postage prepaid, return receipt requested) or by
any courier service, such as Federal Express, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses, or to such other address as any party hereto may hereafter
notify to the other parties hereto:
if to Rakepoll, to:
Rakepoll Finance N.V.
14 JB Gorsiraweg
Curacao, Netherlands Antilles
Attention: Carlo Salvi
with a copy to:
Carlo Salvi
Via San Salvatore, 7
Ch 6902 Lugano
Switzerland
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with a copy to:
Simpson Thacher & Bartlett
21st Floor
99 Bishopsgate
London, EC2M 3YH
Attention: Alan M. Klein
if to the Company, to:
Gensia, Inc.
9360 Town Centre Drive
San Diego, California 92121
Attention:
with a copy to:
Pillsbury Madison & Sutro LLP
235 Montgomery Street,
San Francisco, CA 94104
Attention: Thomas E. Sparks, Jr.
If to a Transferee of Registrable Securities:
At the address set forth in the notice required to be delivered
pursuant to Section 6.11 hereof.
SECTION 8.2. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by Rakepoll and the Company,
or in the case of a waiver, by the party against whom the waiver is to be
effective; provided that following the Closing Date no such amendment or waiver
by the Company shall be effective without the approval of a majority of the
Independent Directors.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 8.3. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
Transactions be consummated as originally contemplated to the fullest extent
possible.
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SECTION 8.4. Entire Agreement; Assignment. This Agreement and the
Stock Exchange Agreement and the agreements contemplated hereby and thereby
constitute the entire agreement among the parties with respect to the subject
matter hereof and thereof and supersede, except as set forth in the Stock
Exchange Agreement, all prior agreements and undertakings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof. This Agreement shall not be assigned by operation of law or otherwise,
except that Rakepoll, other than with respect to Article IV hereof, may assign
all or any of its rights and obligations hereunder to any of its Affiliates in
connection with a transfer of Common Stock; provided that (a) no such assignment
shall relieve Rakepoll of its obligations hereunder and (b) Rakepoll may assign
its rights to the extent and as provided in Section 6.12.
SECTION 8.5. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
SECTION 8.6. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
SECTION 8.7. Governing Law; Consent to Jurisdiction. (a) This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York applicable to contracts executed in and to be performed in
the State of New York. All actions and proceedings arising out of or relating to
this Agreement shall be heard and determined in any New York state or federal
court thereof.
(b) The parties hereto unconditionally and irrevocably agree and
consent to the exclusive jurisdiction of, and service of process and value in,
the United States District Court for the Southern District of New York and the
courts of the State of New York located in the City of New York, and waive any
objection with respect thereto, for the purpose of any action, suit or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby and further agree not to commence any such action, suit or
proceeding except in any such court. Each party irrevocably waives any
objections or immunities to jurisdiction to which it may otherwise be entitled
or become entitled (including immunity to pre-judgment attachment, post-judgment
attachment and execution) in any legal suit, action or proceeding against it
arising out of or relating to this Agreement or the transactions contemplated
hereby which is instituted in any such court. Rakepoll hereby appoints CT
Corporation System, located at 1633 Broadway, New York, New York 10019, as its
authorized agent (the "Rakepoll Authorized Agent") upon whom process may be
served in any such action arising out of or relating to this agreement or the
transactions contemplated hereby which may be instituted in the United States
District Court for the Southern District of New York or the courts of the State
of New York located in the City of New York by any other party hereto. Such
appointment shall be irrevocable. Rakepoll agrees to take any and all action,
that may be necessary to continue such appointment in full force and effect as
aforesaid. Service of process upon the Authorized Agent and written notice of
such service to Olive shall be deemed, in every respect, effective service of
process upon Rakepoll.
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SECTION 8.8. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement.
SECTION 8.9. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 8.10. Effectiveness; Termination. This Agreement shall become
effective as of the Closing Date and shall terminate at such time as Rakepoll
and its Affiliates no longer own any such shares. Article IV hereof shall
terminate and have no further effect at such time as Rakepoll ceases to be
entitled to designate any Investor Directors in accordance with Section 4.1.
SECTION 8.11. Waiver of Jury Trial. Rakepoll and the Company each
hereby irrevocably waive all right to trial by jury in any action, proceeding or
counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to this Agreement or the actions of Rakepoll or the Company in the
negotiation, administration, performance and enforcement thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
GENSIA, INC.
By: /s/ David F. Hale
-----------------------------
Name: David F. Hale
Title: Chairman of the Board
RAKEPOLL FINANCE N.V.
By: /s/ Carlo Salvi
-----------------------------
Name: Carlo Salvi
Title: Chairman of the Board
33
<PAGE>
AMENDMENT NO. 1 TO SHAREHOLDER'S AGREEMENT
------------------------------------------
AMENDMENT NO. 1 (the "Amendment"), dated as of December 20, 1996, to
the Shareholder's Agreement, dated as of November 12, 1996 (the "Agreement"),
between Gensia, Inc., a corporation organized under the laws of Delaware (the
"Company"), and Rakepoll Finance N.V., a corporation organized under the laws of
the Netherlands Antilles ("Rakepoll Finance").
W I T N E S S E T H :
WHEREAS, the Company and Rakepoll Finance are parties to the
Agreement; and
WHEREAS, the Company and Rakepoll Finance wish to revise the
definition of "competitor" set forth in Section 4.1 of the Agreement; and
WHEREAS, Section 8.2(a) of the Agreement provides that the Agreement
may be amended in a writing signed by the Company and Rakepoll Finance;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Definitions; References. Capitalized terms used in this
Amendment but not defined herein shall have the meanings ascribed to them in
the Agreement.
2. Amendment of Section 4.1. Section 4.1 of the Agreement is hereby
amended by deleting in its entirety the last paragraph of Section 4.1 and
substituting in lieu thereof the following:
"For purposes hereof, an entity shall be deemed to be a "competitor"
of the Company if such entity (i) is engaged in the production of
active ingredients or finished dosage forms either in the oncological
field or for parenteral use, not currently produced by the Company or
any subsidiary of Rakepoll Holding B.V., or (ii) actually manufactures
any product which is substantially similar in use or purpose to any
product manufactured by the Company, in development by the Company, or
in the funding plan agreed to by the parties hereto (the ("Funding
Plan") for development by the Company or (iii) is engaged in a
business such that the reasonable inference is that such entity is
engaged in substantially the same business as the Company. For
purposes of this paragraph, the term "Company" shall refer to the
Company as constituted in accordance with the Stock Exchange Agreement
and this Agreement."
3. Full Force and Effect. Except as modified, amended or
supplemented above, all rights, terms and conditions of the Agreement shall
remain in full force and effect.
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<PAGE>
4. Governing Law. This Amendment shall be governed by and
construed under the laws of the State of New York (irrespective of its choice
of law principles).
5. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment to the
Agreement as of the date first written above.
GENSIA, INC.
By: /s/ David F. Hale
-------------------------
Name: David F. Hale
Title: Chairman of the Board
RAKEPOLL FINANCE N.V.
By: /s/ Carlo Salvi
-------------------------
Name: Carlo Salvi
Title: Chairman of the Board
35
<PAGE>
AMENDMENT NO. 2 TO SHAREHOLDER'S AGREEMENT
------------------------------------------
AMENDMENT NO. 2 (the "Amendment"), dated as of February 28, 1997, to
the Shareholder's Agreement, dated as of November 12, 1996, as amended by
Amendment No. 1 dated as of December 16, 1996 (the "Agreement"), between Gensia,
Inc., a corporation organized under the laws of Delaware (the "Company"), and
Rakepoll Finance N.V., a corporation organized under the laws
of the Netherlands Antilles ("Rakepoll Finance").
W I T N E S S E T H :
WHEREAS, the Company and Rakepoll Finance are parties to the
Agreement; and
WHEREAS, the Company and Rakepoll Finance wish to amend Exhibits A
and D to the Agreement; and
WHEREAS, Section 8.2(a) of the Agreement provides that the Agreement
may be amended in a writing signed by the Company and Rakepoll Finance;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Definitions; References. Capitalized terms used in this
Amendment but not defined herein shall have the meanings ascribed to them in
the Agreement.
2. Amendment of Exhibit A. Part 1 of Exhibit A to the Agreement
is hereby amended by:
(a) deleting from Part 2 thereof (Initial Investor Directors) the name
Frank Becker, and
(b) by adding to the end of Part 3 thereof (Initial Independent Directors)
the name "Donald Panoz".
3. Amendment of Exhibit D.
(a) Part 1 of Exhibit D to the Agreement is hereby amended by adding to the
end of Part 1.A thereof (Sicor S.p.A., Directors) the following name "Carlo
Salvi".
(b) Exhibit D is further hereby amended by adding to the end of Part 1
thereof a new Part 4.A which shall read in its entirety as follows:
"4. Rakepoll Holding B.V.
A. Directors:
Carlo Salvi
Michael Cannon
David Hale"
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4. Amendment of Section 4.1. Section 4.1 of the Agreement is hereby
amended by deleting in its entirety the second sentence of paragraph (b) thereof
and substituting in lieu thereof the following sentence:
"Notwithstanding anything to the contrary contained herein, at the
Closing Date, the names of the members of the Board of Directors shall
be as set forth in Part 1 of Exhibit A hereto; provided, however, that
to preserve the provisions of this Agreement, Rakepoll shall continue
to have the right to designate for nomination and approval three
Investor Directors as provided for in this Section 4.1; provided,
further, that the Company shall cause (i) at any time after the
Closing Date, upon the request of Carlo Salvi, the Board of Directors
to take all action necessary to promptly appoint to the Board of
Directors an Investor Director nominated by Rakepoll, and (ii) a
current Independent Director (other than Donald Panoz) to resign from
the Board of Directors by a date no later than March 10, 1997.
5. Full Force and Effect. Except as modified, amended or
supplemented above, all rights, terms and conditions of the Agreement shall
remain in full force and effect.
6. Governing Law. This Amendment shall be governed by and
construed under the laws of the State of New York (irrespective of its choice
of law principles).
7. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
37
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment to the
Agreement as of the date first written above.
GENSIA, INC.
By: /s/ David F. Hale
------------------------------------------
Name: David F. Hale
Title: Chairman of the Board
RAKEPOLL FINANCE N.V.
By: /s/ Carlo Salvi
------------------------------------------
Name: Carlo Salvi
Title: Chairman of the Board
38
<PAGE>
EXHIBIT 23.1
CONSENT OF KPMG ACCOUNTANTS N.V., INDEPENDENT AUDITORS
The Board of Directors
Rakepoll Holding B.V.
We consent to the inclusion of our report dated 15 October 1996, with respect
to the combined balance sheet of Rakepoll Holding B.V. and subsidiaries as of 31
December 1995 and 1994, and the related combined statements of operations,
stockholders' equity and cash flows for each of the years in the three year
period ended 31 December 1995, which report appears in the Form 8-K of Gensia
Sicor Inc. dated 28 February 1997.
Rotterdam, 14 March 1997
/s/ KPMG Accountants N.V.
- -------------------------
KPMG Accountants N.V.
