UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ___)*
GENSIA SICOR INC.
- -----------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.01 par value per share
- -----------------------------------------------------------------------------
(Title of Class of Securities)
372450 10 6
----------------------------------------
(CUSIP Number)
Carlo Salvi
SICOR-Societa Italiana Corticosteroidi S.p.A.
Via Terrazzano 77
20017 Rho, Milan
Italy
011-39-2-930-3981
- -----------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
Copies to:
Alan Klein
Simpson Thacher & Bartlett
99 Bishopsgate
London EC2M 3YH, England
011-44-171-422-4000
February 28, 1997
- -----------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box /_/.
Check the following box if a fee is being paid with the statement /_/. (A
fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, see the
Notes).
Exhibit Index begins on Page 14
<PAGE>
CUSIP No. 372450 10 6 13D
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RAKEPOLL FINANCE N.V.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
JOINT FILING (a) /_/
(b) /_/
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
/_/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NETHERLANDS ANTILLES
7 SOLE VOTING POWER
NUMBER OF
SHARES 29,500,000
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING NONE
PERSON
WITH 9 SOLE DISPOSITIVE POWER
29,500,000
10 SHARED DISPOSITIVE POWER
NONE
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
29,500,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
/_/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
42.1%
14 TYPE OF REPORTING PERSON
CO
<PAGE>
CUSIP No. 372450 10 6 13D
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
KARBONA INDUSTRIES LTD.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
JOINT FILING (a) /_/
(b) /_/
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
/_/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
BAHAMAS
7 SOLE VOTING POWER
NUMBER OF
SHARES 29,500,000
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING NONE
PERSON
WITH 9 SOLE DISPOSITIVE POWER
29,500,000
10 SHARED DISPOSITIVE POWER
NONE
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
29,500,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
/_/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
42.1%
14 TYPE OF REPORTING PERSON
HC
<PAGE>
CUSIP No. 372450 10 6 13D
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CARLO SALVI
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
JOINT FILING (a)/_/
(b)/_/
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
/_/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
SWITZERLAND
7 SOLE VOTING POWER
NUMBER OF
SHARES 29,990,000
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING NONE
PERSON
WITH 9 SOLE DISPOSITIVE POWER
29,990,000
10 SHARED DISPOSITIVE POWER
NONE
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
29,990,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
/_/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
42.8%
14 TYPE OF REPORTING PERSON
IN
<PAGE>
STATEMENT PURSUANT TO RULE 13d-1
OF THE
GENERAL RULES AND REGULATIONS
UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
Item 1. Security and Issuer.
This statement on Schedule 13D (this "Schedule 13D") relates to the
common stock, $.01 par value per share ("Common Stock") of Gensia Sicor,
Inc., a Delaware corporation (the "Company"). The Company's principal
executive offices are located at 9360 Towne Center Drive, San Diego,
California, 92121, U.S.A.
Item 2. Identity and Background.
(a) - (c), (f) This Schedule 13D is being filed jointly by
Rakepoll Finance N.V., a company organized under the laws of the Netherlands
Antilles ("Rakepoll Finance"), Karbona Industries Ltd., a company organized
under the laws of the Bahamas ("Karbona"), and Carlo Salvi, a citizen of
Switzerland ("Salvi"; together with Rakepoll Finance and Karbona, the
"Reporting Persons").
Rakepoll Finance is a holding company which is a majority-owned
direct subsidiary of Karbona, a holding company which is wholly-owned by
Salvi. The principal business and principal office addresses of Rakepoll
Finance and Karbona are as follows:
Rakepoll Finance N.V.
14 J.B. Gorsiraweg
Curacao, Netherlands Antilles
and
Karbona Industries Ltd.
IBM House
4th Floor
East Bay Street
Nassau, Bahamas
Salvi is a director of both Rakepoll Finance and Karbona. The
name, business address, present principal occupation or employment and the
name, principal business and address of any corporation or other organization
in which such employment is conducted and the citizenship of each executive
officer and director of Rakepoll Finance, including Salvi, are set forth on
Schedule I hereto and are incorporated herein by reference. Karbona has no
officers, executive or otherwise, and Salvi is its sole director.
(d) - (e) None of the Reporting Persons has during the last
five years (i) been convicted in a criminal proceeding (excluding traffic
<PAGE>
violations or similar misdemeanours) or (ii) been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and
as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, Federal or State securities laws or finding any
violation with respect to such laws. In addition, none of the Reporting
Persons has any knowledge that any executive officer or director of Rakepoll
Finance or Karbona has during the last five years (i) been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanours)
or (ii) been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to, Federal or State
securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
All of the shares of Common Stock beneficially owned by the
Reporting Persons (other than 490,000 shares beneficially owned by Salvi)
were acquired by Rakepoll Finance in a stock exchange with the Company (the
"Stock Exchange") consummated on February 28, 1997 (the "Closing Date").
The Stock Exchange was consummated pursuant to the terms of the Stock
Exchange Agreement, dated November 12, 1997, as amended on December 16, 1996
(the "Stock Exchange Agreement"), between the Company and Rakepoll Finance.
Pursuant to such terms, on the Closing Date, Rakepoll Finance (i) exchanged
all of the capital stock of Rakepoll Holding B.V., a company organized under
the laws of the Netherlands ("Rakepoll Holding") and (prior to such Stock
Exchange) a wholly-owned subsidiary of Rakepoll Finance, in consideration for
29,500,000 shares of Common Stock and $100,000 in cash and (ii) caused
certain intercompany debt to be converted into equity and contributed to
Rakepoll Holding. In addition, on the Closing Date, pursuant to a Deed of
Assignment of Claims and Contract among Rakepoll Finance, Rakepoll Holding
and Gensia, and in lieu conversion and contribution as provided for in the
Stock Exchange Agreement, Rakepoll Finance assigned to Gensia certain other
intercompany debt, consisting of claims of Rakepoll Finance against Rakepoll
Holding.
Item 4. Purpose of Transaction.
In connection with the Stock Exchange Agreement, the Company and
Rakepoll Finance entered into a Shareholder's Agreement, dated as of November
12, 1996, as amended December 21, 1996 and February 28, 1997 (the "Share-
holder's Agreement"), which sets forth certain terms governing Rakepoll
Finance's investment in the Company, including, among other things,
(i) Rakepoll Finance's representation on the Company's Board of Directors
(the "Board"), (ii) certain changes in Company management, (iii) the
establishment and composition of a Company executive operating committee,
(iii) special approvals required for certain Board actions and (iv)
certain restrictions and rights with respect to Rakepoll Finance's ability
to purchase or dispose of Company securities. Rakepoll Finance intends to
influence and participate in the management and policies of the Company
to the fullest extent permitted by Delaware General Corporation Law and
by the Shareholder's Agreement, as described below.
Pursuant to the terms of the Shareholder's Agreement, the Company
is presently obligated to have ten members on the Board and to use its best
<PAGE>
efforts to cause the Board to consist of (i) two directors who are executive
officers of the Company and not affiliated with Rakepoll Finance ("Management
Directors"), (ii) three directors designated by Rakepoll Finance ("Investor
Directors") and (iii) five independent directors to be designated jointly by
the Management Directors and the Investor Directors ("Independent
Directors"); provided, however, that the number of Investor Directors and
Independent Directors which Rakepoll Finance is entitled to designate,
jointly or otherwise, shall be reduced in proportion to certain reductions in
Rakepoll Finance's percentage equity interest in the Company; and provided,
further, that Rakepoll Finance's right so to designate any Investor Director
or Independent Director shall terminate in the event that Rakepoll Finance's
percentage equity interest in the Company is less than 10% of its percentage
equity interest in the Company on and as of the Closing Date (its "Initial
Interest"). Further, if, under certain circumstances, the holders of certain
Company preferred stock become entitled to appoint two directors to the Board
(the "Preferred Directors"), then for so long as such holders are entitled to
designate the Preferred Directors, the Board shall be increased from ten to
12 directors and Rakepoll Finance shall thereafter be entitled to designate
an additional Investor Director and one Management Director shall resign.
On February 28, in connection with the consummation of the Stock
Exchange and in furtherance of the foregoing, the following individuals were
elected to the Board: (i) Carlo Salvi, Chairman of the Board of Rakepoll
Finance, (ii) Michael D. Cannon, Executive Vice-President of the Company and
an officer and director of SICOR-Societa Italiana Corticosteriodi S.p.A., a
indirect wholly-owned subsidiary of the Company, (iii) Patrick D. Walsh,
President and Chief Operating Officer of Gensia Laboratories, Ltd., and (iv)
Donald E. Panoz, executive Chairman of the Board of Fountainhead Holdings
Ltd. and of Fountainhead Development Corp. and non-executive Chairman of the
Board of Warner Chilcott plc.
The Shareholder's Agreement also requires that all necessary action
be taken to cause (i) the designation of an Independent Director to serve as
non-executive Chairman of the Board upon the mutual agreement of the Investor
Directors and Management Directors, (ii) the appointment of David F. Hale as
President and Chief Executive Officer of the Company, and (iii) the
appointment of Michael D. Cannon to serve as Executive Vice-President of the
Company.
On February 28, 1997, in connection with the consummation of the
Stock Exchange and in furtherance of the foregoing, the Board elected Donald
Panoz to serve as Chairman of the Board. On the same date, the Board also
appointed David F. Hale and Michael D. Cannon to the offices of the Company
described in the foregoing paragraph.
The Shareholder's Agreement further obligates the Company to
establish an Executive Operating Committee, which shall be a management
committee and not a committee of the Board, consisting of Carlo Salvi (who
shall serve as Chairman of such committee), the President and Chief Executive
Officer of the Company, the President of Gensia Laboratories, Ltd. and the
Executive Vice-President of the Company.
In connection with the consummation of the Stock Exchange and in
furtherance of the foregoing, the Company has formed an Executive
Operating Committee comprised of the following individuals: Carlo
Salvi, David F. Hale, Patrick D. Walsh and Michael D. Cannon.
<PAGE>
The Shareholder's Agreement further provides that, as long as
Rakepoll Finance's percentage equity interest in the Company is 50% or
greater than its Initial Interest, the approval of the Investor Directors
will be required in order for the Company to take certain corporate actions,
including (i) the entry of the Company or any of its subsidiaries into any
merger or consolidation, or the acquisition by any thereof of any business or
assets which would constitute a substantial part of the business or assets of
the Company, (ii) the disposition by the Company or any of its subsidiaries
of all or substantially all of the business or assets of the Company, (iii)
certain actions related to dissolution, liquidation or bankruptcy, (iv) the
payment of an extraordinary dividend by the Company, (v) the issuance of any
debt or equity securities of the Company in excess of a certain amount and
(vi) the issuance of any debt or equity securities or other capital stock of
any Company subsidiaries, except certain issuances pursuant to certain
benefit or other plans approved by the Board or pursuant to the terms of
certain Company securities outstanding on the Closing Date.
For a period of twelve months after the Closing Date, under the
terms of the Shareholder's Agreement, Rakepoll Finance and its affiliates are
prohibited from acquiring or offering to acquire any Company securities,
except (i) with the consent of a majority of the Independent Directors, (ii)
in the event of any issuance by the Company of any equity securities not
contemplated by the funding plan previously agreed to by Rakepoll Finance and
the Company or (iii) under certain circumstances, following (a) 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, (b) a
bona fide proposal to acquire all or substantially all of the assets of the
Company, (c) a bona fide proposal to enter into any other similar business
combination with the Company or (d) a definitive agreement, or an agreement
contemplating a definitive agreement, for any of the transactions described
in clauses (iii)(a)-(c) above.
Rakepoll Finance is also prohibited by the Shareholder's Agreement,
for a period of twelve months after the Closing Date, from (i) disposing of
any shares of Common Stock (and from permitting any affiliate thereof to do
so) and (ii) disposing of any shares of the capital stock of any subsidiary
thereof that owns shares of Common Stock, except to an affiliate of Rakepoll
Finance that agrees in writing to be bound by the terms of the Shareholder's
Agreement. The foregoing restrictions do 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 either recommends acceptance of, expresses no opinion and remains
neutral towards, or is unable to take a position with respect to.
In addition, the Shareholder's Agreement grants Rakepoll Finance
certain anti-dilution privileges pursuant to which Rakepoll Finance, may,
upon the authorization by the Board of the issuance of certain equity
securities, acquire in the open market such number of shares of Common Stock
so that Rakepoll Finance's percentage equity interest in the Company after
such issuance is equal to but not greater than its Initial Interest.
Finally, the Shareholder's Agreement provides that, at any time on
or after the first anniversary of the Closing Date, the holders of Common
Stock subject to the Shareholder's Agreement constituting at least 5% of the
aggregate Common Stock outstanding immediately upon consummation of the Stock
Exchange (the "Initiating Holders") may request that the Company file a
registration statement under the Securities Act of 1933, as amended (the
<PAGE>
"Act"), covering the registration of the Registrable Securities (generally
defined in the Shareholder's Agreement to include Common Stock and other
securities convertible into such stock, acquired by Rakepoll Finance in
accordance with the Stock Exchange and Shareholder's Agreements). The
Company is thereupon obligated to use its best efforts to cause the
registration under the Act of all Registrable Securities requested by the
Initiating Holders and certain other holders of Common Stock which elect to
participate in such registration; provided, that the Company shall not be
obligated to cause the filing of more than two effective registration
statements per year up to a maximum of five effective registration
statements.
In addition, under the terms of the Stock Exchange Agreement,
Rakepoll Finance and the Company have also agreed that they presently intend
that certain medical device products and research activities of the Company
shall be transferred to other companies. The Company shall contribute to
Automedics Development, Inc., a subsidiary of the Company, the assets,
licenses, contracts, intellectual property and other associated rights
related to certain existing Company medical device products and any medical
device products in-licensed by the Company between the date of the Stock
Exchange Agreement and the Closing Date. Rakepoll Finance and the Company
have also agreed that, subsequent to the Closing Date, they will use their
best efforts to present to the Board a plan to effectuate the spin-off of the
Company's research activities into an independent company, so long as such
spin-off is reasonably feasible.
In connection with the consummation of the Stock Exchange, the
Company was obligated to make certain amendments to the form of its
certificate of incorporation and by-laws on or prior to the Closing Date.
Amendments to the Company's certificate of incorporation (the "Certificate of
Incorporation") included (i) a name change from "Gensia, Inc." to "Gensia
Sicor Inc.", (ii) an increase in the number of authorized shares of Common
Stock from 75,000,000 to 125,000,000 and (iii) an increase in the number of
authorized shares of the Company's Series I Participating Preferred Stock,
$.01 par value per share, from 100,000 to 125,000. The Company's by-laws
(the "By-laws") were amended to implement certain provisions of the
Shareholder's Agreement, including provisions with respect to board
composition and special director approvals as described in this Item 4.
A copy of each of the Shareholder's Agreement, Stock Exchange
Agreement, Certificate of Incorporation and By-laws is attached as an exhibit
to this Schedule 13D and the descriptions of the terms of each of such
agreements contained in this Item 4 are qualified in their entirety by
reference to such exhibits.
Except as discussed in this Schedule 13D, none of the Reporting
Persons has any present plans or proposals that relate to or that could
result in any of the actions specified in clauses (a) through (j) of Item 4
of Schedule 13D. Each of the Reporting Persons reserves the right, either
individually or in any combination thereof or together with one or more other
shareholders of the Company, at any time, to reconsider and change its plans
or proposals relating to the foregoing depending upon the circumstances
prevailing at such time.
<PAGE>
Item 5. Interest in Securities of the Issuer.
According to the Company, upon the consummation of the Stock
Exchange, there were 70,108,045 shares of Common Stock outstanding on
the Closing Date. The Common Stock ownership percentages set forth below are
based on that number of shares of Common Stock outstanding.
(a) Under the definition of "beneficial ownership" set forth in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as at February 28, 1997, by virtue of the consummation of
the Stock Exchange, each of the Reporting Persons may be deemed to
beneficially own, either directly or indirectly, 29,500,000 shares of Common
Stock, representing approximately 42.1% of Common Stock outstanding. Further,
certain other companies which are wholly-owned by Salvi have acquired a total
of 490,000 additional shares of Common Stock in prior transactions. As a
result, under the definition of "beneficial ownership" set forth in Rule 13d-
3 under the Exchange Act, Salvi may be deemed to indirectly beneficially own
an additional 490,000 shares of Common Stock. Taking account of such
additional shares of Common Stock, Salvi may be deemed to beneficially own a
total of 29,990,000 shares of Common Stock, representing approximately 42.8%
of Common Stock outstanding.
(b) Each of Rakepoll Finance and Karbona may be deemed to have
sole voting and dispositive power with respect to 29,500,000 shares of Common
Stock. There are no shares of Common Stock with respect to which either
Rakepoll Finance or Karbona shares voting or dispositive power. Salvi may be
deemed to have sole voting and dispositive power with respect to 29,990,000
shares of Common Stock. There are no shares of Common Stock with respect to
which Salvi shares voting or dispositive power.
(c) Except as set forth elsewhere herein, none of the Reporting
Persons and, to the best knowledge of the Reporting Persons, no other person
described in Item 2 of this Schedule 13D has engaged in any transaction
during the past 60 days in any Common Stock.
(d) None of the Reporting Persons knows of any other person who has
the right to receive or the power to direct the receipt of dividends from, or
the proceeds from the sale of, the Common Stock beneficially owned by the
Reporting Persons.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
The information set forth in Item 4 above is incorporated herein by
reference. Other than as set forth in this Item 6, none of the Reporting
Persons has any knowledge of any contracts, arrangements, understandings or
relationships (legal or otherwise) among the persons named in Item 2 of this
Schedule 13D and between such persons and any person with respect to any
securities of the Company.
<PAGE>
Item 7. Material to Be Filed as Exhibits.
Exhibit 1 Stock Exchange Agreement, dated as of November 12, 1996,
as amended December 16, 1996, between Gensia Sicor, Inc.
and Rakepoll Finance N.V.
Exhibit 2 Shareholder's Agreement, dated as of November 12, 1996,
as amended December 21, 1996 and February 28, 1997,
between Gensia Sicor, Inc. and Rakepoll Finance N.V.
Exhibit 3 Restated Certificate of Incorporation of Gensia Sicor,
Inc.
Exhibit 4 By-laws of Gensia Sicor, Inc.
Exhibit 5 Joint Filing Agreement dated as of March 7, 1997
among Rakepoll Finance N.V., Karbona Industries Ltd. and
Carlo Salvi.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
RAKEPOLL FINANCE N.V.
By: /s/ Carlo Salvi
----------------------------
Name: Carlo Salvi
Title: Chairman of the Board
DATED: March 7, 1997
<PAGE>
SCHEDULE I
DIRECTORS OF RAKEPOLL FINANCE N.V.
Set forth below is the name, business address, present principal
occupation or employment and the name, principal business and address of any
corporation or other organization in which such employment is conducted and
citizenship of each executive officer and director of Rakepoll Finance N.V.
Name, Principal
Business and
Address of
Corporation or
Name, Citizenship Organization
and Position with Present Principal in Which Such
Rakepoll Finance Occupation or Employment Employment is Conducted
- ------------------ --------------------------- -----------------------
Carlo Salvi (Swiss), Chairman of the Board, SICOR-Societa Italiana
President and Director SICOR-Societa Italiana Corticosteriodi S.p.A.
Corticosteriodi S.p.A. Via Terrazzano 77
20017 Rho, Milan
Italy
Jerome A. van Zuylen Managing Director, MeesPierson Trust
(Dutch), Managing MeesPierson Trust (Curacao) N.V.
Director (Curacao) N.V. 14 J.B. Gorsiraweg
Curacao, Netherlands
Antilles
Reginald D. Schotborgh Senior Account Manager, MeesPierson Trust
(Dutch), Managing MeesPierson Trust (Curacao) N.V.
Director (Curacao) N.V. 14 J.B. Gorsiraweg
Curacao, Netherlands
Antilles<PAGE>
INDEX OF EXHIBITS
Exhibit Number Description
- -------------- -----------
1. Stock Exchange Agreement, dated as of
November 12, 1996, as amended December
16, 1996, between Gensia Sicor, Inc.
and Rakepoll Finance N.V.
2. Shareholder's Agreement, dated as of
November 12, 1996, as amended December
21, 1996 and February 28, 1997,
between Gensia Sicor, Inc.
and Rakepoll Finance N.V.
3. Restated Certificate of Incorporation
of Gensia Sicor, Inc.
4. By-laws of Gensia Sicor, Inc.
5. Joint Filing Agreement dated as of
March 7, 1997 among Rakepoll
Finance N.V., Karbona Industries Ltd.
and Carlo Salvi.
EXHIBIT 1
STOCK EXCHANGE AGREEMENT
BETWEEN
GENSIA, INC.
("GENSIA"),
and
RAKEPOLL FINANCE N.V.
("RAKEPOLL FINANCE")
November 12, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . 4
1.1 Closing Date . . . . . . . . . . . . . . . . . . . . . . . 4
1.2 Exchange of Shares and Additional Consideration . . . . . . 4
1.3 Delivery of Shares and Additional Consideration at Closing 5
1.4 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF GENSIA . . . . . . . . . 5
2.1 Organization and Standing . . . . . . . . . . . . . . . . . 5
2.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Corporate Power and Authority . . . . . . . . . . . . . . . 6
2.4 Capitalization of Gensia . . . . . . . . . . . . . . . . . 6
2.5 Conflicts, Consents and Approval . . . . . . . . . . . . . 7
2.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.7 Intellectual Property Rights . . . . . . . . . . . . . . . 9
2.8 Title to and Condition of Properties . . . . . . . . . . . 10
2.9 Brokerage and Finder's Fees; Expenses . . . . . . . . . . . 10
2.10 Gensia SEC Documents . . . . . . . . . . . . . . . . . . . 10
2.11 [This Section intentionally left blank.] . . . . . . . . . 11
2.12 Compliance with Law . . . . . . . . . . . . . . . . . . . . 11
2.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 11
2.14 Employee Benefit Plans . . . . . . . . . . . . . . . . . . 12
2.15 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.16 Accounts Receivable . . . . . . . . . . . . . . . . . . . . 15
2.17 Labor Relations . . . . . . . . . . . . . . . . . . . . . . 15
2.18 No Material Adverse Change . . . . . . . . . . . . . . . . 15
2.19 Operation of Gensia's Business; Relationships . . . . . . . 15
2.20 Permits; Compliance . . . . . . . . . . . . . . . . . . . . 16
2.21 Product Warranties and Liabilities . . . . . . . . . . . . 16
2.22 Environmental Matters . . . . . . . . . . . . . . . . . . . 17
2.23 Opinion of Financial Advisor . . . . . . . . . . . . . . . 18
2.24 Board Recommendation . . . . . . . . . . . . . . . . . . . 18
2.25 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . 18
2.26 Gensia Rights Agreement . . . . . . . . . . . . . . . . . . 19
2.27 Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF RAKEPOLL FINANCE . . . . 19
3.1 Organization and Standing . . . . . . . . . . . . . . . . . 19
3.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 20
3.3 Corporate Power and Authority . . . . . . . . . . . . . . . 20
3.4 Capitalization of Rakepoll Holding . . . . . . . . . . . . 21
3.5 Conflicts; Consents and Approvals . . . . . . . . . . . . . 21
3.6 Certain Rakepoll Holding Documents . . . . . . . . . . . . 22
3.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.8 Compliance with Law . . . . . . . . . . . . . . . . . . . . 24
3.9 Intellectual Property Rights . . . . . . . . . . . . . . . 24
3.10 Title to and Condition of Properties . . . . . . . . . . . 25
3.11 [This Section intentionally left blank.] . . . . . . . . . 25
3.12 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 25
3.13 Brokerage and Finder's Fees; Expenses . . . . . . . . . . . 26
3.14 Employee Matters . . . . . . . . . . . . . . . . . . . . . 26
3.15 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.16 Accounts Receivable . . . . . . . . . . . . . . . . . . . . 28
3.17 Labor Relations . . . . . . . . . . . . . . . . . . . . . . 28
<PAGE>
3.18 No Material Adverse Change . . . . . . . . . . . . . . . . 28
3.19 Operation of Rakepoll Holding's Business; Relationships . . 29
3.20 Permits; Compliance . . . . . . . . . . . . . . . . . . . . 29
3.21 Product Warranties and Liabilities . . . . . . . . . . . . 30
3.22 Environmental Matters . . . . . . . . . . . . . . . . . . . 30
3.23 [This section intentionally left blank.] . . . . . . . . . 31
3.24 Board Recommendation . . . . . . . . . . . . . . . . . . . 31
3.25 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . 31
3.26 Ownership of Rakepoll Holding Shares . . . . . . . . . . . 31
3.27 Exchange Entirely for Own Account . . . . . . . . . . . . . 31
3.28 Restricted Securities. . . . . . . . . . . . . . . . . . . 32
3.29 Legends . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.30 Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . 32
3.31 Authorization of Rakepoll Holding Subsidiaries . . . . . . 32
ARTICLE 4 COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . 32
4.1 Mutual Covenants . . . . . . . . . . . . . . . . . . . . . 33
4.2 Covenants of Gensia . . . . . . . . . . . . . . . . . . . . 37
4.3 Covenants of Rakepoll Finance . . . . . . . . . . . . . . . 39
ARTICLE 5 CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . 41
5.1 Mutual Conditions . . . . . . . . . . . . . . . . . . . . . 41
5.2 Conditions to Obligations of Rakepoll Finance . . . . . . . 41
5.3 Conditions to Obligations of Gensia . . . . . . . . . . . . 42
ARTICLE 6 TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . 43
6.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 43
6.2 Effect of Termination . . . . . . . . . . . . . . . . . . . 44
6.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 7 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 45
7.1 Survival of Representations and Warranties . . . . . . . . 45
7.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . 46
7.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 47
7.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 47
7.6 Governing Law; Consent to Jurisdiction . . . . . . . . . . 47
7.7 Specific Performance . . . . . . . . . . . . . . . . . . . 47
7.8 Assignment . . . . . . . . . . . . . . . . . . . . . . . . 48
7.9 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 48
Exhibit A - Form of Opinion of Counsel to Gensia
Exhibit B - Form of Opinions of Counsel to Rakepoll Finance
<PAGE>
STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT (this "Agreement") is made and
entered into as of the 12th day of November, 1996, by and between GENSIA,
INC., a Delaware corporation ("Gensia"), and RAKEPOLL FINANCE N.V., a
corporation organized under the laws of the Netherlands Antilles ("Rakepoll
Finance").
PRELIMINARY STATEMENTS
A. Gensia and Rakepoll Holding B.V., a company organized under the
laws of the Netherlands ("Rakepoll Holding"), desire to combine their
respective businesses. In order to effectuate this combination, all of the
outstanding shares of Rakepoll Holding Common Stock (as defined in Section
3.4) outstanding at the Closing Date (as defined in Section 1.1) will be
exchanged (the "Stock Exchange") for Gensia Common Shares (as defined in
Section 2.4) and additional consideration, as more fully provided herein.
B. The respective Boards of Directors of Gensia and Rakepoll
Finance have determined the Stock Exchange in the manner contemplated herein
to be desirable and in the best interests of their respective stockholders
and, by resolutions duly adopted, have approved and adopted this Agreement.
The shareholders of Rakepoll Finance (the "Rakepoll Finance Shareholders")
have approved this Agreement and the Stock Exchange.
C. Concurrently with the execution and delivery of this Agreement,
and as a condition and inducement to Gensia's and Rakepoll Finance's
willingness to enter into this Agreement, Gensia and the Rakepoll Finance
Shareholders have entered into the Shareholder's Agreement, dated as of the
date hereof (the "Shareholder's Agreement").
AGREEMENT
NOW, THEREFORE, in consideration of these premises and the mutual
and dependent promises hereinafter set forth, the parties hereto agree as
follows:
ARTICLE 1
EXCHANGE OF SHARES
1.1 Closing Date. The date on which the Closing is held shall be
referred to as the "Closing Date." Subject to the satisfaction of the
conditions to closing set forth in Article 5, the closing of the exchange of
shares contemplated hereby (the "Closing") shall be held at the offices of
Pillsbury Madison & Sutro LLP, 235 Montgomery Street, San Francisco,
California, at 10:00 A.M. California time on a date specified by the parties,
which date shall be as soon as practicable, but in any event within two
business days following the date upon which all conditions set forth in
Article 5 hereof have been satisfied or waived, or at such other time and
place as the parties mutually may agree.
1.2 Exchange of Shares and Additional Consideration. On the terms
and subject to the satisfaction or waiver of the conditions set forth herein,
<PAGE>
at the Closing, (a) Rakepoll Finance shall sell, transfer, convey and assign
all of the outstanding shares of Rakepoll Holding Common Stock to Gensia,
(b) and shall receive in exchange for such shares of Rakepoll Holding Common
Stock 29,500,000 newly issued shares of Gensia Common Shares and U.S.
$100,000 in cash.
1.3 Delivery of Shares and Additional Consideration at Closing.
At the Closing, Rakepoll Finance shall deliver to Gensia certificates
evidencing the Rakepoll Holding Common Stock which are duly endorsed for
transfer thereon or by means of duly executed stock powers attached thereto
against delivery by Gensia of that number of shares of Gensia Common Shares
provided in Section 1.2 in the name of Rakepoll Finance and U.S.$100,000 by
check or wire transfer.
1.4 Tax Treatment. The parties intend that the purchase and sale
of the Shares will not qualify as a "plan of reorganization" under
Section 368 of the United States Internal Revenue Code of 1986, as amended
(the "Code"), within the meaning of the regulations promulgated under
Section 368 of the Code. The parties intend that the purchase of the shares
of Rakepoll Holding Common Stock by Gensia will qualify as a "purchase"
within the meaning of section 338 of the Code and that Gensia will be
permitted, if it elects, to make a section 338 election with respect to
Rakepoll Holding in accordance with the Code.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF GENSIA
In order to induce Rakepoll Finance to enter into this Agreement,
Gensia hereby represents and warrants to Rakepoll Finance that the statements
contained in this Article 2 are true, correct and complete.
2.1 Organization and Standing. Gensia and each of its
subsidiaries listed in Section 2.1 to the disclosure schedule (the "Gensia
Subsidiaries" or individually a "Gensia Subsidiary"), delivered by Gensia to
Rakepoll Finance and dated the date hereof (the "Gensia Disclosure Schedule")
is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation with full corporate power
and authority to own, lease, use and operate its properties and to conduct
its business as and where now owned, leased, used, operated and conducted.
Gensia and each Gensia Subsidiary is duly qualified to do business and in
good standing in each jurisdiction listed in Section 2.1 to the Gensia
Disclosure Schedule, is not qualified to do business in any other jurisdic-
tion and neither the nature of the business conducted by it nor the property
it owns, leases or operates requires it to qualify to do business as a
foreign corporation in any jurisdiction where it is not so qualified, except
where the failure to be so qualified or in good standing in such jurisdiction
would not have a material adverse effect on the assets, liabilities, results
of operations or financial condition (a "material adverse effect") on Gensia
and the Gensia Subsidiaries taken as a whole. Gensia and each Gensia
Subsidiary is not in default in the performance, observance or fulfillment of
any provision of its articles or certificate of incorporation or
incorporation deed or bylaws or other charter documents or corporate
organizational documents ("Charter Documents").
<PAGE>
2.2 Subsidiaries. Gensia does not own, directly or indirectly,
any equity or other ownership interest in any corporation, partnership, joint
venture or other entity or enterprise, except as set forth in Section 2.2 to
the Gensia Disclosure Schedule. Except as set forth in Section 2.2 to the
Gensia Disclosure Schedule, Gensia is not subject to any obligation or
requirement to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any such entity. Gensia owns
directly or indirectly each of the outstanding shares of capital stock (or
other ownership interests having by their terms ordinary voting power to
elect a majority of directors or others performing similar functions with
respect to such Gensia Subsidiary) of each Gensia Subsidiary. Each of the
outstanding shares of capital stock of each Gensia Subsidiary is duly
authorized, validly issued, fully paid and nonassessable, and, is owned,
directly or indirectly, by Gensia free and clear of all liens, pledges,
security interests, claims or other encumbrances. The following information
for each Gensia Subsidiary is set forth in Section 2.2 to the Gensia
Disclosure Schedule, as applicable: (i) its name and jurisdiction of
incorporation or organization; (ii) its authorized capital stock or share
capital; and (iii) the number of issued and outstanding shares of capital
stock or share capital and the record owner(s) thereof. Other than as set
forth in Section 2.2 to the Gensia Disclosure Schedule, there are no
outstanding subscriptions, options, warrants, puts, calls, agreements, under-
standings, claims or other commitments or rights of any type relating to the
issuance, sale or transfer of any securities of any Gensia Subsidiary, nor
are there outstanding any securities which are convertible into or
exchangeable for any shares of capital stock of any Gensia Subsidiary; and no
Gensia Subsidiary has any obligation of any kind to issue any additional
securities or to pay for securities of any Gensia Subsidiary or any prede-
cessor thereof.
2.3 Corporate Power and Authority. Gensia has all requisite
corporate power and authority to enter into this Agreement and, subject to
authorization of the issuance of Gensia Common Shares issuable in the Stock
Exchange and the transactions contemplated hereby by the stockholders of
Gensia (the "Gensia Stockholders"), to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Gensia, subject
to authorization of the issuance of Gensia Common Shares issuable in the
Stock Exchange and the transactions contemplated hereby by Gensia Stock-
holders. This Agreement has been duly executed and delivered by Gensia and
constitutes the legal, valid and binding obligation of Gensia enforceable
against it in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.
2.4 Capitalization of Gensia. As of September 30, 1996, Gensia's
authorized capital stock consisted solely of (a) 75,000,000 common shares,
$.01 par value ("Gensia Common Shares"), of which (i) 36,950,792 shares were
issued and outstanding and (ii) 12,503,294 shares were reserved for issuance
upon the exercise or conversion of options, warrants or contingent value
rights granted or issuable by Gensia or pursuant to Gensia's Employee Stock
Purchase Plan, (b) 5,000,000 preferred shares, $.01 par value ("Gensia
Preferred Stock"), of which (i) 1,894,000 shares have been designated as
$3.75 Convertible Exchangeable Preferred Stock of which 1,600,000 shares were
<PAGE>
issued and outstanding or reserved for issuance, and (ii) 100,000 shares have
been designated as Series I Participating Preferred Stock, none of which were
issued or outstanding, all of which were reserved for issuance under the
Gensia Preferred Stock Purchase Rights. Each outstanding share of Gensia
capital stock is, and all Gensia Common Shares to be issued in connection
with the Stock Exchange will be, duly authorized and validly issued, fully
paid and nonassessable, and each outstanding share of Gensia capital stock
has not been, and all Gensia Common Shares to be issued in connection with
the Stock Exchange will not be, issued in violation of any preemptive or
similar rights. As of the date hereof, other than as set forth in the first
sentence hereof or in Section 2.4 to the Gensia Disclosure Schedule there are
no outstanding subscriptions, options, warrants, puts, calls, agreements,
understandings, claims or other commitments or rights of any type relating to
the issuance, sale or transfer by Gensia of any equity securities of Gensia,
nor are there outstanding any securities which are convertible into or
exchangeable for any shares of capital stock of Gensia. Except as set forth
in Section 2.4 to the Gensia Disclosure Schedule, all dividends on all series
of Gensia Preferred Stock have been paid in full. Except as set forth in
Section 2.4 to the Gensia Disclosure Schedule, Gensia has not agreed to
register any securities under the Securities Act of 1933, as amended (the
"Securities Act"), or under any state securities law or granted registration
rights to any person or entity. Except for the Shareholder's Agreement or as
set forth in Section 2.4 to the Gensia Disclosure Schedule, there are no
voting trusts, stockholders agreements, proxies or other similar agreements
or understandings in effect with respect to the voting or transfer of any of
the shares of Gensia Common Shares.
2.5 Conflicts, Consents and Approval. Other than as set forth in
Section 2.5 of the Gensia Disclosure Schedule neither the execution and
delivery of this Agreement by Gensia nor the consummation of the transactions
contemplated hereby will:
(a) violate, conflict with, or result in a breach of any provision
of the Charter Documents of Gensia or of any Gensia Subsidiary;
(b) violate, conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with the giving of notice,
the passage of time or otherwise, would constitute a default) under, require
any consent under, or entitle any party (with the giving of notice, the
passage of time or otherwise) to terminate, accelerate, modify or call a
default under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties, shares of Gensia Common
Shares or assets of Gensia or any Gensia Subsidiary under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, contract, undertaking, agreement, lease or other instrument
or obligation to which Gensia or any Gensia Subsidiary is a party;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation, applicable to Gensia or any Gensia Subsidiary or any of their
respective business, properties or assets; or
(d) require any action or consent or approval of, or review by, or
registration or filing by Gensia or any Gensia Subsidiary or any of their
respective affiliates with any third party or any court, arbitral tribunal,
administrative agency or commission or other governmental or regulatory
body, agency, instrumentality or authority (a "Governmental Authority"),
other than (i) authorization of the issuance of Gensia Common Shares
<PAGE>
issuable in the Stock Exchange and the transactions contemplated hereby by
Gensia Stockholders, (ii) authorization for trading and quotation of the
Gensia Common Shares to be issued in the Stock Exchange and the transactions
contemplated hereby on the Nasdaq National Market ("Nasdaq"), subject to
official notice of issuance, (iii) actions required by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regula-
tions promulgated thereunder (the "HSR Act"), the voluntary notification to
be made pursuant to section 721 of the Defense Production Act of 1950, as
amended (the "Exon-Florio Amendment"), and any necessary Mexican approvals,
and (iv) registrations or other actions required under applicable securities
laws as are contemplated by this Agreement;
except in the case of (b), (c) and (d) for any of the foregoing that would
not, individually or in the aggregate, have a material adverse effect on
Gensia and the Gensia Subsidiaries taken as a whole or on its ability to
consummate the transactions contemplated by this Agreement.
2.6 Taxes. Except for matters that would not have a material
adverse effect on Gensia and the Gensia Subsidiaries taken as a whole (i) all
tax returns (including, without limitation, income, profit, franchise, sales
and use, excise, severance, occupation, property, gross receipts, payroll and
withholding tax returns and information returns), deposits and reports (all
such returns, deposits and reports herein referred to collectively as "Tax
Returns" or singularly as a "Tax Return") of or relating to any federal,
state, local or foreign or other governmental tax (all together with any
penalties, additions to tax, fines and interest thereon or related thereto,
herein referred to collectively as "Taxes" or singularly as a "Tax") that are
required to be filed or deposited for, by, on behalf of or with respect to
Gensia and the Gensia Subsidiaries, including, but not limited to, those
relating to the income, business, operations or property of Gensia and the
Gensia Subsidiaries and those which include or should include Gensia and the
Gensia Subsidiaries have been filed or deposited duly and on a timely basis
and all Taxes and filing fees shown to be due and payable on such Tax Returns
have been paid in full and all installments, assessments and charges of which
Gensia or any Gensia Subsidiary is aware or has received notice and which are
due and payable by Gensia or any Gensia Subsidiary have been paid in full;
(ii) to the knowledge of Gensia or any Gensia Subsidiary, no such Tax Return
contains any material misstatement or omits any material statement that
should have been included; (iii) all Taxes imposed on Gensia or any Gensia
Subsidiary (or for which Gensia or any Gensia Subsidiary is or could be
liable, whether to any Governmental Authority or to other persons (as, for
example, under tax allocation agreements)), for all periods up to the Closing
Date which are due and payable on or before the Closing Date, have been paid
or will be paid when due; (iv) none of such Tax Returns are now under audit
or examination by any federal, state, local or foreign or other Governmental
Authority and there are no agreements, waivers or other arrangements
providing for an extension of time with respect to the assessment or
collection of any Tax or deficiency of any nature against Gensia or any
Gensia Subsidiary or with respect to any such Tax Return or any suits or
other judicial or administrative actions, proceedings, investigations or
claims now pending or, to the knowledge of Gensia or any Gensia Subsidiary,
threatened against Gensia or any Gensia Subsidiary with respect to any Tax,
governmental charge or assessment; (v) the latest balance sheet included in
the Gensia Documents reflects and includes adequate provisions for the
payment in full of any and all Taxes imposed on Gensia or any Gensia
Subsidiary and not yet due for any and all periods up to and including the
date of such balance sheet; (vi) all Taxes for which Gensia or any Gensia
<PAGE>
Subsidiary is liable for periods through the Closing Date (whether or not the
period ends for tax purposes on the Closing Date) have been or will be, paid
when due or adequately reserved against on the books of the Gensia or any
Gensia Subsidiary on or prior to the Closing Date; (vii) Gensia and the
Gensia Subsidiaries have withheld and remitted all amounts required to be
withheld and have paid such amounts due to the appropriate authority on a
timely basis and in the form required under the appropriate legislation;
(viii) Gensia and the Gensia Subsidiaries have not been and are currently not
required to file a Tax Return in any jurisdiction other than the United
States, Germany and the United Kingdom; and (ix) Gensia and the Gensia
Subsidiaries have not acquired property from or disposed of property for
proceeds less than the fair market value thereof to any person who is
considered a related party to Gensia or the Gensia Subsidiaries under the
transfer pricing rules of the applicable jurisdiction. The Gensia balance
sheets at December 31, 1995 and June 30, 1996 contain adequate reserves
against any liability for Taxes for which Gensia or any Gensia Subsidiaries
could be liable in respect of any audit or examination set forth on the
Gensia Disclosure Schedule. There is no Tax lien, whether imposed by any
federal, state, county, local or foreign taxing authority, outstanding
against the assets, properties or business of Gensia or any Gensia Subsidiary
other than liens for current Taxes not yet due for which adequate reserves
have been provided for. All material elections and consents with respect to
any Tax (or the computation thereof) affecting Gensia and the Gensia
Subsidiaries as of the date hereof are obvious from the Tax Returns or are
set forth on the Gensia Disclosure Schedule. After the date hereof, no
election or consent with respect to any Tax (or the computation thereof)
affecting Gensia and the Gensia Subsidiaries will be made without the written
consent of Rakepoll Finance. Gensia and the Gensia Subsidiaries have not
agreed to make and are not required to make any adjustment under Section
481(a) of the Code, by reason of a change in accounting method or otherwise.
Gensia and the Gensia Subsidiaries are not a party to any agreement,
contract, arrangement or plan that has resulted, or as a consequence of the
transactions contemplated hereby will result, separately or in the aggregate,
in the payment of any excess parachute payments within the meaning of Section
280G of the Code. Gensia and the Gensia Subsidiaries have not filed a
consent under Section 341(f) concerning collapsible corporations. Gensia is
not, and was not at any time during the previous 5 years, a United States
real property holding corporation, as defined in Section 897 of the Code.
2.7 Intellectual Property Rights. Except as disclosed in
Section 2.7 to the Gensia Disclosure Schedule:
(a) To Gensia's knowledge and except as set forth in Section
2.7(a) to the Gensia Disclosure Schedule, Gensia or a Gensia Subsidiary owns
or has a license to use all patents and patent applications, trademark
registrations and applications and copyright registrations and applications,
and all other material intangible property and technology ("Intellectual
Property") which are used by Gensia or any Gensia Subsidiary free and clear
of all mortgages, liens, loans and encumbrances, except such encumbrances and
liens which arise in the ordinary course of business and do not materially
impair such ownership or use of such Intellectual Property or materially
detract from the value thereof. With respect to such Intellectual Property
licensed by Gensia or any Gensia Subsidiary, to Gensia's knowledge such
licenses are in full force and effect, Gensia or such Gensia Subsidiary is in
compliance with the terms and provisions thereof, and no event has occurred
which, with notice or lapse of time or both, would constitute a breach or
violation thereof which could have a material adverse effect on Gensia and
<PAGE>
the Gensia Subsidiaries taken as a whole, and Gensia or such Gensia
Subsidiary holds a valid license to use such Intellectual Property, free of
any liens, claims or encumbrances except those liens, claims or encumbrances
which do not and will not, individually or in the aggregate, have a material
adverse effect on Gensia and the Gensia Subsidiaries taken as a whole.
(b) To Gensia's knowledge, Gensia and the Gensia Subsidiaries have
the right and authority to use such Intellectual Property in connection with
the conduct of the business of Gensia and the Gensia Subsidiaries in the
manner and to the extent such business is presently conducted, and neither
Gensia nor any Gensia Subsidiary has been notified of any claim that such use
conflicts with, infringes upon or violates any rights of any other person or
entity, except to the extent that such conflict, infringement or violation
does not and will not, individually or in the aggregate, have a material
adverse effect on Gensia and the Gensia Subsidiaries taken as a whole.
2.8 Title to and Condition of Properties. Gensia and each Gensia
Subsidiary owns or holds under valid leases all real property, plants,
machinery and equipment necessary for the conduct of the business of Gensia
and each Gensia Subsidiary, respectively, as presently conducted, except
where the failure to own or hold such property, plants, machinery and equip-
ment would not have a material adverse effect on Gensia and the Gensia
Subsidiaries taken as a whole. Section 2.8 to the Gensia Disclosure Schedule
lists, and Gensia and each Gensia Subsidiary have furnished or made available
to Rakepoll Finance, copies of all third party environmental or other reports
prepared by or for Gensia or any Gensia Subsidiary with respect to the real
property owned, leased or used by Gensia or any Gensia Subsidiary.
2.9 Brokerage and Finder's Fees; Expenses. Except as disclosed on
Schedule 2.9 to the Gensia Disclosure Schedule, and except for Gensia's
obligations to CS First Boston ("First Boston") (a copy of the written agree-
ment, as amended, relating to such obligations having previously been
provided to Rakepoll Finance), neither Gensia nor any Gensia Subsidiary, nor
any stockholder, director, officer or employee of Gensia or any Gensia
Subsidiary thereof, has incurred or will incur on behalf of Gensia or any
Gensia Subsidiary, any brokerage, finder's or similar fee in connection with
the transactions contemplated by this Agreement. Section 2.9 to the Gensia
Disclosure Schedule discloses a bona fide estimate of the aggregate amount of
all fees and expenses (including, without limitation, fees and expenses
payable to all banks, investment banking firms and other financial
institutions and their respective agents and counsel for arranging or
providing financial advice with respect to the Stock Exchange and all
reasonable fees and expenses of counsel, accountants, experts and consultants
to Gensia) expected to be paid by Gensia and each Gensia Subsidiary up to and
including the Closing Date to all attorneys, accountants and investment
bankers in connection with the Stock Exchange ("Gensia Stock Exchange Fees").
2.10 Gensia SEC Documents. Gensia has timely filed with the
Securities and Exchange Commission ("Commission") all forms, reports,
schedules, statements and other documents required to be filed by it since
December 31, 1992 under the Securities Exchange Act of 1934, as amended
(together with the rules and regulations thereunder, the "Exchange Act") or
the Securities Act, including, without limitation, any financial statements
or schedules included therein (such documents, as supplemented and amended
since the time of filing, collectively, the "Gensia SEC Documents"). The
Gensia SEC Documents at the time filed (and, in the case of registration
statements and proxy statements, on the dates of effectiveness and the dates
<PAGE>
of mailing, respectively) (a) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the circum-
stances under which they were made, not misleading, and (b) complied as to
form in all material respects with the applicable requirements of the
Exchange Act and the Securities Act, as the case may be. The financial
statements of Gensia included in the Gensia SEC Documents (including the
notes and schedules relating thereto) at the time filed (and, in the case of
registration statements and proxy statements, on the date of effectiveness
and the date of mailing, respectively) complied as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the Commission with respect thereto, were prepared in
accordance with United States generally accepted accounting principles stated
in United States Dollars applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q of the Commission), include
all adjustments (consisting of any normal recurring accruals) that are
necessary for a fair presentation of the consolidated financial condition of
Gensia and the Gensia Subsidiaries and the results of operations of Gensia
and the Gensia Subsidiaries, and fairly present (subject in the case of
unaudited statements to normal, recurring audit adjustments) the consolidated
financial condition of Gensia and its consolidated subsidiaries as at the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended.
2.11 [This Section intentionally left blank.]
2.12 Compliance with Law. To the knowledge of Gensia, Gensia and
each Gensia Subsidiary is in material compliance with, and at all times since
December 31, 1992 has been in material compliance with, all applicable laws,
statutes, orders, rules, regulations, policies or guidelines promulgated, or
judgments, decisions or orders entered by any Governmental Authority (collec-
tively, "Applicable Laws") relating to Gensia or any Gensia Subsidiary or
their respective business or properties, including, without limitation, laws
regarding the provision of insurance, third party administration and primary
health care services, the Prescription Drug Marketing Act, the Federal
Controlled Substances Act of 1970, the Food, Drug and Cosmetic Act, any
federal or state Pharmacy Practice Acts, Controlled Substance Acts, Dangerous
Drugs Acts and Food, Drug and Cosmetic Acts, the Occupational Safety and
Health Act and the regulations promulgated thereunder ("OSHA") and all rules
of professional conduct applicable to Gensia or any Gensia Subsidiary by
which any of its properties are bound or subject, except where the failure to
be in compliance therewith could not reasonably be expected to have a mate-
rial adverse effect on Gensia and the Gensia Subsidiaries taken as a whole.
2.13 Litigation. Except as set forth in Section 2.13 to the
Gensia Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation (an "Action") pending or, to the knowledge of Gensia, threat-
ened against Gensia or any Gensia Subsidiary which, individually or in the
aggregate, could reasonably be expected to have a material adverse effect on
Gensia and the Gensia Subsidiaries taken as a whole or a material adverse
effect on the ability of Gensia to consummate the transactions contemplated
hereby. None of Gensia and the Gensia Subsidiaries is subject to any
outstanding order, writ, injunction or decree which, individually or in the
aggregate, insofar as can be reasonably foreseen, could have a material
adverse effect on Gensia and the Gensia Subsidiaries taken as a whole or a
material adverse effect on the ability of Gensia to consummate the transac-
<PAGE>
tions contemplated hereby. Except as set forth in Section 2.13 to the Gensia
Disclosure Schedule, since December 31, 1992, Gensia and each Gensia
Subsidiary have not been subject to any outstanding order, writ, injunction
or decree relating to Gensia's or any Gensia Subsidiary's method of doing
business or its relationship with past, existing or future users or
purchasers of any goods or services of Gensia or any Gensia Subsidiary.
2.14 Employee Benefit Plans.
(a) For purposes of this Section 2.14, the following terms have
the definitions given below:
"Controlled Group Liability" means any and all liabilities under
(i) Title IV of ERISA, (ii) section 302 of ERISA, (iii) sections 412 and
4971 of the Code, (iv) the continuation coverage requirements of section 601
et seq. of ERISA and section 4980B of the Code, and (v) corresponding or
similar provisions of foreign laws or regulations, in each case other than
pursuant to the Gensia Plans.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the regulations thereunder and corresponding or similar
provisions of foreign laws or regulations.
"ERISA Affiliate" means, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes the first entity, trade or business, or
that is a member of the same "controlled group" as the first entity, trade
or business pursuant to Section 4001(a)(14) of ERISA.
"Gensia Plans" means all employee benefit plans, programs,
policies, practices, and other arrangements providing benefits to any
employee or former employee or beneficiary or dependent thereof, whether or
not written, and whether covering one person or more than one person,
sponsored or maintained by Gensia and each Gensia Subsidiary or to which
Gensia or any Gensia Subsidiary contributes or is obligated to contribute.
Without limiting the generality of the foregoing, the term "Gensia Plans"
includes all employee welfare benefit plans within the meaning of Section
3(1) of ERISA and all employee pension benefit plans within the meaning of
Section 3(2) of ERISA.
(b) Section 2.14(b) to the Gensia Disclosure Schedule lists all
Gensia Plans. With respect to each Gensia Plan, Gensia and each Gensia
Subsidiary have made available to Rakepoll Holding a true, correct and
complete copy of: (i) each writing constituting a part of such Gensia Plan,
including without limitation all plan documents, benefit schedules, trust
agreements, and insurance contracts and other funding vehicles; (ii) the most
recent Annual Report (Form 5500 Series) and accompanying schedule, if any;
(iii) the current summary plan description, if any; (iv) the most recent
annual financial report, if any; and (v) the most recent determination letter
from the IRS, if any.
(c) The Internal Revenue Service has issued a favorable
determination letter with respect to each Gensia Plan that is intended to be
a "qualified plan" within the meaning of Section 401(a) of the Code (a
"Qualified Plan") and there are no existing circumstances nor any events that
<PAGE>
have occurred that could adversely affect the qualified status of any
Qualified Plan or the related trust.
(d) All contributions required to be made to any Gensia Plan by
Applicable Laws or by any plan document or other contractual undertaking, and
all premiums due or payable with respect to insurance policies funding any
Gensia Plan, for any period through the date hereof have been timely made or
paid in full and through the Closing Date will be timely made or paid in full
or, to the extent not required to be made or paid on or before the date
hereof or the Closing Date, as applicable, have been or will be fully
reflected in the Gensia SEC Documents filed or to be filed with the
Commission.
(e) Gensia and all Gensia Subsidiaries have complied, and are now
in compliance, in all material respects, with all provisions of ERISA, the
Code and all laws and regulations applicable to the Gensia Plans. There is
not now, and there are no existing circumstances that could give rise to, any
requirement for the posting of security with respect to a Gensia Plan or the
imposition of any lien on the assets of Gensia or any Gensia Subsidiary under
ERISA or the Code.
(f) No Gensia Plan is subject to Title IV or Section 302 of ERISA
or Section 412 or 4971 of the Code. No Gensia Plan is a "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA (a "Multiemployer Plan") or
a plan that has two or more contributing sponsors at least two of whom are
not under common control, within the meaning of Section 4063 of ERISA (a
"Multiple Employer Plan"), nor has Gensia or any Gensia Subsidiary or any of
their respective ERISA Affiliates, at any time within five years before the
date hereof, contributed to or been obligated to contribute to any
Multiemployer Plan or Multiple Employer Plan.
(g) There does not now exist, and there are no existing circum-
stances that could result in, any Controlled Group Liability that would be a
liability of Gensia or any Gensia Subsidiary following the Closing. Without
limiting the generality of the foregoing, neither Gensia nor any Gensia
Subsidiary nor any of their respective ERISA Affiliates has engaged in any
transaction described in Section 4069 or Section 4204 of ERISA.
(h) Except for health continuation coverage as required by Section
4980B of the Code or Part 6 of Title I of ERISA, neither Gensia nor any
Gensia Subsidiary has any liability for life, health, medical or other
welfare benefits to former employees or beneficiaries or dependents thereof.
(i) Except as set forth in Section 2.14(i) to the Gensia
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will result in,
cause the accelerated vesting or delivery of, or increase the amount or value
of, any payment or benefit to any employee of Gensia or any Gensia
Subsidiary. Without limiting the generality of the foregoing and except as
set forth in Section 2.14(i) to the Gensia Disclosure Schedule, no amount
paid or payable by Gensia or any Gensia Subsidiary in connection with the
transactions contemplated hereby will be an "excess parachute payment" within
the meaning of Section 280G of the Code.
(j) There are no pending or threatened claims (other than claims
for benefits in the ordinary course), lawsuits or arbitrations which have
been asserted or instituted against the Employee Plans, any fiduciaries
<PAGE>
thereof with respect to their duties to the Employee Plans or the assets of
any of the trusts under any of the Employee Plans which could reasonably be
expected to result in any material liability of Gensia or any Gensia
Subsidiary to the Pension Benefit Guaranty Corporation, the Department of
Treasury, the Department of Labor or any multiemployer plan.
(k) Section 2.14(k) to the Gensia Disclosure Schedule sets forth
the names of all directors and officers of Gensia and each Gensia Subsidiary,
the total salary, bonus, fringe benefits and perquisites each received in the
fiscal year ended December 31, 1995, and any changes to the foregoing which
have occurred subsequent to December 31, 1995; Section 2.14(k) to the Gensia
Disclosure Schedule also lists and describes the current compensation of any
other employee of Gensia or any Gensia Subsidiary whose salary and bonus in
1995 exceeded U.S. $150,000. Except as disclosed in Section 2.14(k) to the
Gensia Disclosure Schedule or in the Gensia SEC Documents, there are no other
material forms of compensation paid to any such director, officer or employee
of Gensia or any Gensia Subsidiary. Except as set forth in Section 2.14(k)
to the Gensia Disclosure Schedule, no officer, director, or employee of
Gensia or any other affiliate of Gensia, or any immediate family member of
any of the foregoing, provides or causes to be provided to Gensia or any
Gensia Subsidiary any material assets, services or facilities and Gensia and
each Gensia Subsidiary does not provide or cause to be provided to any such
officer, director, employee or affiliate, or any immediate family member of
any of the foregoing, any material assets, services or facilities.
2.15 Contracts. Section 2.15 to the Gensia Disclosure Schedule
lists all written or oral contracts, agreements, guarantees, leases and
executory commitments (each a "Contract") to which Gensia or any Gensia
Subsidiary is a party and which fall within any of the following categories:
(a) Contracts valued at over U.S. $250,000 obligating any party to pay or
receive money, goods or services, (b) joint venture, partnership and similar
agreements, (c) Contracts which are service contracts or equipment leases
involving payments by Gensia or any Gensia Subsidiary of more than U.S.
$100,000 per year, (d) Contracts containing covenants purporting to limit the
freedom of Gensia or any Gensia Subsidiary to compete in any line of business
in any geographic area or to hire any individual or group of individuals,
(e) Contracts which after the Closing Date would have the effect of limiting
the freedom of Rakepoll Holding or the Rakepoll Holding Subsidiaries (other
than Gensia and each Gensia Subsidiary) to compete in any line of business in
any geographic area or to hire any individual or group of individuals,
(f) Contracts which contain minimum purchase conditions or requirements or
other terms that restrict or limit the purchasing relationships of Gensia or
any Gensia Subsidiary, (g) Contracts relating to any outstanding commitment
for capital expenditures in excess of U.S. $250,000, (h) Contracts relating
to the lease or sublease of or sale or purchase of real or personal property
involving any annual expense or price in excess of U.S. $100,000 and not
cancelable by Gensia or any Gensia Subsidiary (without premium or penalty)
within one month, (i) Contracts with any labor organization, (j) indentures,
mortgages, promissory notes, loan agreements, guarantees of amounts in excess
of U.S. $100,000, letters of credit or other agreements or instruments of
Gensia or any Gensia Subsidiary or commitments for the borrowing or the
lending of amounts in excess of U.S. $100,000 or by Gensia or any Gensia
Subsidiary or providing for the creation of any charge, security interest,
encumbrance or lien upon any of the assets of Gensia or any Gensia
Subsidiary, (k) Contracts involving annual revenues or expenditures to the
business of Gensia or any Gensia Subsidiary in excess of 5.0% of Gensia's
annual revenues and (l) Contracts with or for the benefit of any officer,
<PAGE>
director or affiliate of Gensia or any Gensia Subsidiary or immediate family
member thereof. All such Contracts are valid and binding obligations of
Gensia or the Gensia Subsidiary, as the case may be, and, to the knowledge of
Gensia and each Gensia Subsidiary, are the valid and binding obligation of
each other party thereto except such Contracts which if not so valid and
binding would not, individually or in the aggregate, have a material adverse
effect on Gensia and the Gensia Subsidiaries taken as a whole. Neither
Gensia or any Gensia Subsidiary nor, to the knowledge of Gensia or any Gensia
Subsidiary, any other party thereto is in violation of or in default in
respect of, nor has there occurred an event or condition which with the
passage of time or giving of notice (or both) would constitute a default
under, any such Contract except such violations or defaults under such
Contracts which, individually or in the aggregate, would not have a material
adverse effect on Gensia and each Gensia Subsidiary.
2.16 Accounts Receivable. Except as disclosed in Section 2.16 to
the Gensia Disclosure Schedule, all accounts and notes receivable (including
lease and finance notes receivable) and accrued interest receivable of Gensia
and each Gensia Subsidiary have arisen in the ordinary course of business and
the accounts receivable reserves reflected on the balance sheet as of
September 30, 1996 are as of such date established in accordance with United
States generally accepted accounting principles consistently applied and to
the best knowledge of Gensia and each Gensia Subsidiary will be collectible
in the ordinary course of business in an amount not less than the amounts
thereof carried on the balance sheet as of such date included in the Gensia
Documents, net of any reserves included thereon, as applicable, except for
any uncollectible amount which, individually or in the aggregate, would not
have a material adverse effect on Gensia and each Gensia Subsidiary.
2.17 Labor Relations. There is no unfair labor practice complaint
against Gensia or any Gensia Subsidiary pending and there is no labor strike,
dispute, slowdown or stoppage, or any union organizing campaign, actually
pending or, to the knowledge of Gensia or any Gensia Subsidiary, threatened
against or involving Gensia or any Gensia Subsidiary.
2.18 No Material Adverse Change. Except as set forth in Section
2.18 to the Gensia Disclosure Schedule, since December 31, 1995, Gensia and
each Gensia Subsidiary have conducted their respective business in the
ordinary course, consistent with past practice, and there has been no
(i) material adverse change in the assets, liabilities, results of operations
or financial condition of Gensia and the Gensia Subsidiaries taken as a whole
except for (1) operating losses in the ordinary course of business not
exceeding $60 million for 1996 and $15 million per quarter thereafter until
the Closing Date in the aggregate, (2) any failure to receive regulatory
approval of the GenESA System and (3) any failure to receive regulatory
approval of pending Abbreviated New Drug Applications of Gensia or any Gensia
Subsidiary or (ii) material adverse effect on the ability of Gensia to
consummate the transactions contemplated hereby.
2.19 Operation of Gensia's Business; Relationships.
(a) Since December 31, 1995, Gensia and each Gensia Subsidiary
have not engaged in any transaction which, if entered into and/or consummated
after execution of this Agreement, would violate Section 4.1(h) hereof except
as described or reflected in the Gensia SEC Documents or as set forth in
Section 2.19 to the Gensia Disclosure Schedule. Section 2.19 to the Gensia
Disclosure Schedule describes each termination or nonrenewal that has
<PAGE>
occurred with respect to any Contract with any lessee or licensee of Intel-
lectual Property, from December 31, 1995 to the date hereof.
(b) Except as set forth in Section 2.19(b) of the Gensia
Disclosure Schedule, the relationships of Gensia and each Gensia Subsidiary
with its customers and suppliers are satisfactory and the execution of this
Agreement, the Stock Exchange and the transactions contemplated hereby will
not materially adversely affect the relationships of Gensia or any Gensia
Subsidiary with such customers or suppliers.
(c) Except as disclosed in Section 2.19(c) of the Gensia
Disclosure Schedule, no product produced by Gensia or any Gensia Subsidiary
or produced for Gensia or any Gensia Subsidiary by a third party and bearing
a Gensia or any Gensia Subsidiary trademark or other Proprietary Right of
Gensia or any Gensia Subsidiary, has been recalled voluntarily or
involuntarily since December 31, 1992, no such recall is being considered by
Gensia, and, to the knowledge of Gensia and each Gensia Subsidiary, no such
recall is being considered by or has been requested or ordered by any Govern-
mental Authority or consumer group.
2.20 Permits; Compliance. Gensia and each Gensia Subsidiary are
in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and
orders necessary to own, lease and operate their respective properties and to
carry on their respective business as it is now being conducted other than
those which are immaterial (collectively, the "Gensia Permits"), and there is
no Action pending or, to the knowledge of Gensia and each Gensia Subsidiary,
threatened regarding suspension or cancellation of any of the Gensia Permits,
except for any such Action which, if determined adversely, could not
reasonably be expected, individually or in the aggregate, to have a material
adverse effect on Gensia. Gensia and each Gensia Subsidiary is not in
conflict with, or in default or violation of, any of the Gensia Permits,
except for any such conflicts, defaults or violations which, individually or
in the aggregate, could not reasonably be expected to have a material adverse
effect on Gensia and the Gensia Subsidiaries taken as a whole. Since
December 31, 1992, Gensia and each Gensia Subsidiary have not received any
notification with respect to possible conflicts, defaults or violations of
Applicable Laws, except for notices relating to possible conflicts, defaults
or violations, which conflicts, defaults or violations could not reasonably
be expected to have a material adverse effect on Gensia and the Gensia
Subsidiaries taken as a whole.
2.21 Product Warranties and Liabilities. Except as set forth in
Section 2.21 to the Gensia Disclosure Schedule, Gensia and each Gensia
Subsidiary have no forms of warranties or guarantees of its products and
services that are in effect or proposed to be used by it. Section 2.21 to
the Gensia Disclosure Schedule sets forth a description, which is true and
correct in all material respects, of each pending or, to the knowledge of
Gensia, threatened material Action under any warranty or guaranty against
Gensia and each Gensia Subsidiary. Gensia and each Gensia Subsidiary have
not incurred, nor does Gensia or any Gensia Subsidiary know or have any
reason to believe there is any basis for alleging, any material liability,
damage, loss, cost or expense as a result of any material defect or other
deficiency (whether of design, materials, workmanship, labeling instructions
or otherwise) ("Product Liability") with respect to any product sold or
services rendered by or on behalf of Gensia or any Gensia Subsidiary
(including any lessee thereof) prior to the Closing Date, whether such
<PAGE>
Product Liability is incurred by reason of any express or implied warranty
(including, without limitation, any warranty of merchantability or fitness),
any doctrine of common law (tort, contract or other), any statutory provision
or otherwise and irrespective of whether such Product Liability is covered by
insurance.
2.22 Environmental Matters.
(a) As used in this Agreement, the term "Mexican Environmental
Laws" means all federal, state, local or foreign laws, including common law
and Mexican Civil Law, relating to pollution or protection of human health or
the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without
limitation, laws relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants, contaminants, or industrial, toxic or
hazardous substances or wastes (collectively, "Hazardous Materials") into the
environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands
or demand letters, injunctions, judgments, licenses, notices or notice
letters, orders, permits, plans or regulations issued, entered, promulgated
or approved thereunder.
In specific reference to the Mexican component of this Agreement:
"Environment" means soil, surface waters, groundwaters, stream
sediments, surface or subsurface strata, ambient air and any environmental
media.
"Environmental Authorizations" means any permit, license, manifest,
consent agreement, acknowledgment, report, log or approval related to
environmental, health and safety compliance established in the Environmental
Laws or required by any federal, state or local Mexican government agency.
"Mexican Environmental Laws" means any of the following laws of
Mexico: the General Environmental Law for Ecological Equilibrium and
Environmental Protection, the Environmental Law for the Federal District, the
Environmental Law for the State of Mexico, the Regulations on Air Emissions,
Hazardous Waste, Environmental Impact and Noise, the National Water Law and
its Regulation, the Regulation for the Land Transportation of Hazardous
Material and Waste, the federal and state Civil and Criminal Codes, and all
civil, administrative and criminal jurisprudence, decrees, agreements,
guidelines, ordinances and Official Mexican Standards (NOMs), at the federal,
state or local level, pertaining to the environment, health or safety in
effect at any time up to the date of closing or during the period of post-
closing occupancy of the properties.
"Mexican Hazardous Materials" means any material or waste in any
physical form, which is either corrosive, reactive, explosive, toxic,
flammable or biologically infectious, in accordance with the General
Environmental Law for Ecological Equilibrium and Environmental Protection,
its Hazardous Waste Regulation, Official Mexican Standard NOM-052-ECOL-1993
which defines the criteria for hazardous classification and contains a list
of hazardous waste regulated under Mexican Law, the Regulation for the Land
Transportation of Hazardous Material and Waste, the General Health Law, the
Federal Labor Law, the National Water Law or any other material or waste
<PAGE>
classified by its characteristics or in official lists as hazardous to human
health or the environment by Mexican legislation or authorities.
Except as listed in Section 2.22 to the Gensia Disclosure Schedule:
(b) There are, with respect to Gensia and each Gensia Subsidiary,
or any predecessor of the foregoing, no past or present material violations
of Environmental Laws, nor actions, activities, circumstances, conditions,
events, incidents, or contractual obligations which may give rise to any
liability pursuant to any Environmental Law and none of Gensia or any Gensia
Subsidiary has received any notice with respect to any of the foregoing, nor
is any Action pending or threatened in connection with any of the foregoing.
(c) No Hazardous Materials are present on or about any real
property currently owned, leased or used by Gensia or any Gensia Subsidiary
and no Hazardous Materials were present on or about any real property
previously owned, leased or used by Gensia or any Gensia Subsidiary during
the period the property was owned, leased or used by Gensia or any Gensia
Subsidiary, except in the normal course of Gensia's or any Gensia
Subsidiary's business.
(d) No Hazardous Materials have been released on or about, or
where they may pose a threat of migration to, any real property currently
owned, leased or used by Gensia or any Gensia Subsidiary and no Hazardous
Materials were released on or about any real property previously owned,
leased or used by Gensia or any Gensia Subsidiary during the period the
property was owned, leased or used by Gensia or any Gensia Subsidiary, except
as may be required in the normal course of business and in compliance with
applicable Environmental Laws in all material respects.
(e) No asbestos-containing materials or polychlorinated biphenyls
("PCBs") are present on or about any property currently owned, leased or used
by Gensia or any Gensia Subsidiary.
(f) There are not now nor have there ever been any underground
storage tanks or similar facilities of any kind on or under any real property
currently or previously owned, leased or used by Gensia or any Gensia
Subsidiary.
2.23 Opinion of Financial Advisor. Gensia has received the
written opinion of First Boston, its financial advisor, to the effect that,
as of November 12, 1996, the Stock Exchange is fair to Gensia from a
financial point of view, Gensia has heretofore provided a copy of such
opinion to Rakepoll Finance and such opinion has not been withdrawn, revoked
or modified.
2.24 Board Recommendation. The Board of Directors of Gensia, at a
meeting duly called and held, has (i) determined that this Agreement and the
transactions contemplated hereby, including the Stock Exchange, are fair to
and in the best interests of the Gensia Stockholders, and (ii) resolved to
recommend that the Gensia Stockholders approve and authorize the issuance of
Gensia Common Shares in the Stock Exchange and the transactions contemplated
hereby.
2.25 Undisclosed Liabilities. Except (i) as and to the extent
disclosed or reserved against on the consolidated balance sheet of Gensia as
of June 30, 1996 included in the Gensia SEC Documents, (ii) as incurred after
<PAGE>
June 30, 1996 in the ordinary course of business consistent with prior prac-
tice and not prohibited by this Agreement or (iii) as set forth in Section
2.25 to the Gensia Disclosure Schedule, Gensia and the Gensia Subsidiaries do
not have any liabilities or obligations of any nature, whether known or
unknown, absolute, accrued, contingent or otherwise and whether due or to
become due, that, individually or in the aggregate, have or could reasonably
be expected to have a material adverse effect on Gensia and the Gensia
Subsidiaries taken as a whole. All payments by or for the benefit of Gensia
and the Gensia Subsidiaries to agents, consultants and others have been in
payment of bona fide fees and commissions and not as bribes or illegal or
improper payments. Gensia and the Gensia Subsidiaries have complied with the
Foreign Corrupt Practices Act of 1977 and the rules and regulations
thereunder and, in each case, have not made any payment to or on behalf of
any person with respect to which a deduction could be disallowed under
Section 162(c) of the Code. Neither the Internal Revenue Service nor any
other federal, state, local or foreign government agency or entity has
initiated or threatened any investigation of any payment made by Gensia or
any Gensia Subsidiary of, or alleged to be of, the type described in this
Section 2.25.
2.26 Gensia Rights Agreement. The Stockholder Rights Agreement
dated as of March 16, 1992, between Gensia and ChaseMellon Shareholder
Services, L.L.C., as successor in interest to First Interstate Bank (the
"Rights Agreement"), has been amended, and will remain amended (and no
replacement plan will be adopted), so as to provide that none of Rakepoll
Finance and its affiliates will become an "Acquiring Person" and that no
"Stock Acquisition Date" or "Distribution Date" (as such terms are defined in
the Rights Agreement) will occur as a result of the execution of this
Agreement or the consummation of the Stock Exchange pursuant to this
Agreement.
2.27 Takeover Laws. Prior to the date hereof, the Board of
Directors of Gensia has taken all action necessary to approve for purposes
of, or to exempt under, or make not subject to any takeover law or law that
purports to limit or restrict business combinations or the ability to acquire
or vote shares, including without limitation, Section 203 of the Delaware
General Corporation Law: (i) the execution of this Agreement, (ii) the Stock
Exchange and (iii) the transactions contemplated hereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF RAKEPOLL FINANCE
In order to induce Gensia to enter into this Agreement, Rakepoll
Finance hereby represents and warrants to Gensia that the statements
contained in this Article 3 are true, correct and complete.
3.1 Organization and Standing. Rakepoll Finance, Rakepoll Holding
and each of the Rakepoll Holding subsidiaries listed in Section 3.1 of the
disclosure schedule (the "Rakepoll Holding Subsidiaries" or individually a
"Rakepoll Holding Subsidiary") delivered by Rakepoll Finance to Gensia and
dated the date hereof (the "Rakepoll Holding Disclosure Schedule") is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation with full corporate power and
authority to own, lease, use and operate its properties and to conduct its
business as and where now owned, leased, used, operated and conducted.
<PAGE>
Rakepoll Finance, Rakepoll Holding and each Rakepoll Holding Subsidiary is
duly qualified to do business and in good standing in each jurisdiction
listed in Section 3.1 to the Rakepoll Holding Disclosure Schedule, is not
qualified to do business in any other jurisdiction and neither the nature of
the business conducted by it nor the property it owns, leases or operates
requires it to qualify to do business as a foreign corporation in any
jurisdiction where it is not so qualified, except where the failure to be so
qualified or in good standing in such jurisdiction would not have a material
adverse effect on Rakepoll Holding and the Rakepoll Holding Subsidiaries
taken as a whole. Rakepoll Holding and each Rakepoll Holding Subsidiary is
not in default in the performance, observance or fulfillment of any provision
of its Charter Documents.
3.2 Subsidiaries. Rakepoll Holding does not own, directly or
indirectly, any equity or other ownership interest in any corporation,
partnership, joint venture or other entity or enterprise, except as set forth
in Section 3.2 to the Rakepoll Holding Disclosure Schedule. Except as set
forth in Section 3.2 to the Rakepoll Holding Disclosure Schedule, Rakepoll
Holding is not subject to any obligation or requirement to provide funds to
or make any investment (in the form of a loan, capital contribution or
otherwise) in any such entity. Rakepoll Holding owns directly or indirectly
each of the outstanding shares of capital stock (or other ownership interests
having by their terms ordinary voting power to elect a majority of directors
or others performing similar functions with respect to such Rakepoll Holding
Subsidiary) of each Rakepoll Holding Subsidiary. Each of the outstanding
shares of capital stock of each Rakepoll Holding Subsidiary is duly
authorized, validly issued, fully paid and nonassessable, and, is owned,
directly or indirectly, by Rakepoll Holding free and clear of all voting
trust arrangements, liens, pledges, security interests, restrictions, claims
or other encumbrances. The following information for each Rakepoll Holding
Subsidiary is set forth in Section 3.2 to the Rakepoll Holding Disclosure
Schedule, as applicable: (i) its name and jurisdiction of incorporation or
organization; (ii) its authorized capital stock or share capital; and
(iii) the number of issued and outstanding shares of capital stock or share
capital and the record owner(s) thereof. Other than as set forth in Section
3.2 to the Rakepoll Holding Disclosure Schedule, there are no outstanding
subscriptions, options, warrants, puts, calls, agreements, understandings,
claims or other commitments or rights of any type relating to the issuance,
sale or transfer of any securities of any Rakepoll Holding Subsidiary, nor
are there outstanding any securities which are convertible into or
exchangeable for any shares of capital stock of any Rakepoll Holding
Subsidiary; and no Rakepoll Holding Subsidiary has any obligation of any kind
to issue any additional securities or to pay for securities of any Rakepoll
Holding Subsidiary or any predecessor thereof.
3.3 Corporate Power and Authority. Rakepoll Finance has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Rakepoll Finance. This Agreement has been duly
executed and delivered by Rakepoll Finance and constitutes the legal, valid
and binding obligation of Rakepoll Finance enforceable against it in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
<PAGE>
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
3.4 Capitalization of Rakepoll Holding. As of September 30, 1996,
Rakepoll Holding's authorized capital stock consisted solely of 40 shares of
common stock, Dfl.1,000 par value per share ("Rakepoll Holding Common
Stock"), of which (i) 40 shares were issued and outstanding and (ii) no
shares were issued and held in treasury. Each outstanding share of Rakepoll
Holding capital stock is duly authorized and validly issued, fully paid and
nonassessable, and has not been issued in violation of any preemptive or
similar rights. Other than as set forth in the first sentence hereof or in
Section 3.4 to the Rakepoll Holding Disclosure Schedule, there are no
outstanding subscriptions, options, warrants, puts, calls, agreements, under-
standings, claims or other commitments or rights of any type relating to the
issuance, sale or transfer of any securities of Rakepoll Holding, nor are
there outstanding any securities which are convertible into or exchangeable
for any shares of capital stock of Rakepoll Holding; and Rakepoll Holding has
no obligation of any kind to issue any additional securities or to pay for
securities of Rakepoll Holding or any predecessor. The issuance and sale of
all of the shares of capital stock described in this Section 3.4 have been in
compliance with all applicable securities laws. Except as set forth in
Section 3.4 to the Rakepoll Holding Disclosure Schedule, Rakepoll Holding has
not agreed to register any securities under any applicable securities law or
granted registration rights to any person or entity.
3.5 Conflicts; Consents and Approvals. Other than as set
forth in Section 3.5 of the Rakepoll Holding Disclosure Schedule neither the
execution and delivery of this Agreement by Rakepoll Finance, nor the
consummation of the transactions contemplated hereby will:
(a) violate, conflict with, or result in a breach of any provision
of the Charter Documents of Rakepoll Finance, Rakepoll Holding or any
Rakepoll Holding Subsidiary;
(b) violate, conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with the giving of notice,
the passage of time or otherwise, would constitute a default) under, require
any consent under, or entitle any party (with the giving of notice, the
passage of time or otherwise) to terminate, accelerate, modify or call a
default under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties, shares of Rakepoll Holding
Common Stock or assets of Rakepoll Finance, Rakepoll Holding or any Rakepoll
Holding subsidiary under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, contract, under-
taking, agreement, lease or other instrument or obligation to which Rakepoll
Finance, Rakepoll Holding or any Rakepoll Holding Subsidiary is a party;
(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Rakepoll Finance, Rakepoll Holding or any Rakepoll
Holding Subsidiary or any of their respective business, properties or
assets; or
(d) require any action or consent or approval of, or review by, or
registration or filing by Rakepoll Finance, Rakepoll Holding or any Rakepoll
Holding Subsidiary or any of their respective affiliates with any third
party or any Governmental Authority, other than (i) authorization of the
Stock Exchange and the transactions contemplated hereby by Rakepoll Finance
<PAGE>
Shareholders, which authorization has been obtained, (ii) actions required
by the HSR Act, the voluntary notification to be made pursuant to the Exon-
Florio Amendment, and any necessary Mexican approvals, (iii) registrations
or other actions required under any applicable securities laws as are contem-
plated by this Agreement and (iv) consents or approvals of any Governmental
Authority set forth in Section 3.5 to the Rakepoll Holding Disclosure
Schedule;
except in the case of (b), (c) and (d) for any of the foregoing that would
not, individually or in the aggregate, have a material adverse effect on
Rakepoll Finance or Rakepoll Holding and the Rakepoll Holding Subsidiaries
taken as a whole or on its ability to consummate the transactions
contemplated by this Agreement.
3.6 Certain Rakepoll Holding Documents. Rakepoll Holding has
delivered to Gensia consolidated/combined statements of operations,
statements of cash flow and statements of stockholders equity of Rakepoll
Holding and the Rakepoll Holding Subsidiaries for the years ended
December 31, 1993, 1994 and 1995 (audited) and the six month periods ended
June 30, 1995 and 1996 (unaudited) and consolidated balance sheets at
December 31, 1994 and 1995 (audited) and at June 30, 1995 and 1996
(unaudited) and the notes thereto, including, without limitation, any
financial statements, notes or schedules included therein (collectively, the
"Rakepoll Holding Documents"). The Rakepoll Holding Documents comply as to
form in all material respects with the applicable requirements of applicable
law. The financial statements of Rakepoll Holding included in the Rakepoll
Holding Documents (including the notes and schedules relating thereto) comply
as to form in all material respects with applicable accounting requirements
and with the published rules and regulations of applicable governmental
authorities with respect thereto, were prepared in accordance with United
States generally accepted accounting principles stated in United States
Dollars applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto), include all adjustments (consisting
only of normal recurring accruals) that are necessary for a fair presentation
of the consolidated financial condition of Rakepoll Holding and the Rakepoll
Holding Subsidiaries and the result of operations of Rakepoll Holding and the
Rakepoll Holding Subsidiaries, and fairly present (subject in the case of
unaudited statements to normal, recurring audit adjustments) the consolidated
financial condition of Rakepoll Holding as at the dates thereof and the
consolidated results of its operations and cash flows for the periods then
ended.
3.7 Taxes. Except for items that are disclosed in Section 3.7 to
the Rakepoll Holding Disclosure Schedule or for matters that would not have a
material adverse effect on Rakepoll Holding and the Rakepoll Holding Subsidi-
aries taken as a whole (i) all Tax Returns of or relating to any Tax that are
required to be filed or deposited for, by, on behalf of or with respect to
Rakepoll Holding and the Rakepoll Holding Subsidiaries, including, but not
limited to, those relating to the income, business, operations or property of
Rakepoll Holding and the Rakepoll Holding Subsidiaries and those which
include or should include Rakepoll Holding and the Rakepoll Holding
Subsidiaries have been filed or deposited duly and on a timely basis and all
Taxes and filing fees shown to be due and payable on such Tax Returns have
been paid in full and all installments, assessments and charges of which
Rakepoll Finance, Rakepoll Holding or any Rakepoll Holding Subsidiary is
aware or has received notice and which are due and payable by Rakepoll
Holding or any Rakepoll Holding Subsidiary have been paid in full;
<PAGE>
(ii) Rakepoll Holding and the Rakepoll Holding Subsidiaries have complied
with all fiscal and monetary statutory regulations; (iii) to the knowledge of
Rakepoll Finance, Rakepoll Holding or any Rakepoll Holding Subsidiary, no
such Tax Return contains any material misstatement or omits any material
statement that should have been included; (iv) all Taxes imposed on Rakepoll
Holding or any Rakepoll Holding Subsidiary (or for which Rakepoll Holding or
any Rakepoll Holding Subsidiary is liable) for all periods up to the Closing
Date which are due and payable on or before the Closing Date have been paid
or will be paid when due; (v) none of such Tax Returns are now under audit or
examination by any federal, state, local or foreign or other Governmental
Authority and there are no agreements, waivers or other arrangements
providing for an extension of time with respect to the assessment or
collection of any Tax or deficiency of any nature against Rakepoll Holding or
any Rakepoll Holding Subsidiary or with respect to any such Tax Return or any
suits or other judicial or administrative actions, proceedings,
investigations or claims now pending or, to the knowledge of Rakepoll
Finance, Rakepoll Holding or any Rakepoll Holding Subsidiary, threatened
against Rakepoll Holding or any Rakepoll Holding Subsidiary with respect to
any Tax, governmental charge or assessment; (vi) the latest balance sheet
included in the Rakepoll Holding Documents reflects and includes adequate
provisions for the payment in full of any and all Taxes imposed on Rakepoll
Holding or any Rakepoll Holding Subsidiary and not yet due for any and all
periods up to and including the date of such balance sheet; (vii) all Taxes
for which Rakepoll Holding or any Rakepoll Holding Subsidiary is liable for
periods through the Closing Date (whether or not the period ends for tax
purposes on the Closing Date) have been or will be, paid when due or
adequately reserved against on the books of Rakepoll Holding or any Rakepoll
Holding Subsidiary on or prior to the Closing Date; (viii) Rakepoll Holding
and the Rakepoll Holding Subsidiaries have withheld and remitted all amounts
required to be withheld and have paid such amounts due to the appropriate
authority on a timely basis and in the form required under the appropriate
legislation; (ix) Rakepoll Holding and the Rakepoll Holding Subsidiaries have
not been and are currently not required to file a Tax Return in any
jurisdiction other than Italy, Mexico and the Netherlands; (x) Rakepoll
Holding and the Rakepoll Holding Subsidiaries have not acquired property from
or disposed of property for proceeds less than the fair market value thereof
to, any person who is considered a related party to Rakepoll Holding and the
Rakepoll Holding Subsidiaries under the transfer pricing rules of the
applicable jurisdiction; (xi) Rakepoll Holding and each Rakepoll Holding
Subsidiary, to the extent it was required to file tax returns in Italy, has
filed all appropriate documents and applications and paid all fees for the
settlement ("condono") of any "formal" violations of tax regulations for the
fiscal periods from 1991 to 1994; and (xii) Rakepoll Holding and each
Rakepoll Holding Subsidiary, to the extent it was required to file tax
returns in Italy, has filed all appropriate documents and applications and
paid all fees for the settlement ("condono") of any violations of income tax
regulations for fiscal periods up to 1990, such "condono" having the effect
of a settlement with respect to orders of payment issued by the income tax
department, as set forth in Section 3.7(xiii) to the Rakepoll Holding
Disclosure Schedule. The Rakepoll Holding balance sheets at December 31,
1995 and June 30, 1996 contain adequate reserves against any liability for
Taxes for which Rakepoll Holding or any Rakepoll Holding Subsidiaries could
be liable in respect of any audit or examination set forth on the Rakepoll
Holding Disclosure Schedule. There is no Tax lien, whether imposed by any
federal, state, county, local or foreign taxing authority, outstanding
against the assets, properties or business of Rakepoll Holding or any
Rakepoll Holding Subsidiary other than liens for current Taxes not yet due
<PAGE>
for which adequate reserves have been provided for. All material elections
and consents with respect to any Tax (or the computation thereof) affecting
Rakepoll Holding and the Rakepoll Holding Subsidiaries as of the date hereof
are obvious from the Tax Returns or are set forth on Section 3.7 to the
Rakepoll Holding Disclosure Schedule. After the date hereof, no election or
consent with respect to any Tax (or the computation thereof) affecting
Rakepoll Holding and the Rakepoll Holding Subsidiaries will be made without
the written consent of Gensia. Except as set forth in Section 3.7 to the
Rakepoll Holding Disclosure Schedule, Rakepoll Holding and the Rakepoll
Holding Subsidiaries are not a party to any Tax sharing or allocation
agreement. Neither Rakepoll Holding nor any Rakepoll Holding Subsidiary has
engaged in a trade or business in the United States nor had income
effectively connected with a trade or business in the United States. Neither
Rakepoll Holding nor any Rakepoll Holding Subsidiary has ever filed United
States Federal or State Tax returns or been required to do so, and no tax
elections have been filed with the Internal Revenue Service. Rakepoll
Holding and the Rakepoll Holding Subsidiaries have never been "controlled
foreign corporations" as defined in section 957 of the Code. Except as set
forth in Section 3.7 to the Rakepoll Holding Disclosure Schedule, Rakepoll
Holding and the Rakepoll Holding Subsidiaries have no U.S. persons as
shareholders.
3.8 Compliance with Law. To the knowledge of Rakepoll Finance,
each of Rakepoll Holding and each Rakepoll Holding Subsidiary is in material
compliance with, and at all times since December 31, 1992 has been in
material compliance with, all Applicable Laws relating to Rakepoll Holding
and each Rakepoll Holding Subsidiary or its respective business or properties
including, without limitation, social security laws, workers' protection
laws, laws regarding the provision of insurance, third party administration
and primary health care services, the Prescription Drug Marketing Act, the
Federal Controlled Substances Act of 1970, the Food, Drug, and Cosmetic Act,
any federal or state Pharmacy Practice Acts, Controlled Substance Acts,
Dangerous Drugs Acts and Food, Drug and Cosmetic Acts, OSHA and with all
consents, licenses, and permits granted by any Governmental Authority and all
rules of professional conduct applicable to Rakepoll Holding or any Rakepoll
Holding Subsidiary by which any of its properties are bound or subject,
except where the failure to be in compliance therewith could not reasonably
be expected to have a material adverse effect on Rakepoll Holding and the
Rakepoll Holding Subsidiaries taken as a whole.
3.9 Intellectual Property Rights. Except as disclosed in
Section 3.9 of the Rakepoll Holding Disclosure Schedule:
(a) To the knowledge of Rakepoll Finance, and except as disclosed
in the Rakepoll Holding Documents, Rakepoll Holding and the Rakepoll Holding
Subsidiaries own or have a license to the Intellectual Property which is used
by Rakepoll Holding or any Rakepoll Holding Subsidiaries free and clear of
all mortgages, liens, loans and encumbrances, except such encumbrances and
liens which arise in the ordinary course of business and do not materially
impair Rakepoll Holding's or any Rakepoll Holding Subsidiaries' ownership or
use of such Intellectual Property or materially detract from the value
thereof. With respect to such Intellectual Property licensed by Rakepoll
Holding or any Rakepoll Holding Subsidiary, such licenses are in full force
and effect, Rakepoll Holding or such Rakepoll Holding Subsidiary is in
compliance with the terms and provision thereof, and no event has occurred
which, with notice or lapse of time or both, would constitute a breach or
violation thereof which could have a material adverse effect on Rakepoll
<PAGE>
Holding and the Rakepoll Holding Subsidiaries taken as a whole and Rakepoll
Holding or such Rakepoll Holding Subsidiary holds a valid license free of any
liens, claims or encumbrances except those liens, claims or encumbrances
which do not and will not, individually or in the aggregate, have a material
adverse effect on Rakepoll Holding and the Rakepoll Holding Subsidiaries
taken as a whole.
(b) To the knowledge of Rakepoll Finance, Rakepoll Holding and the
Rakepoll Holding Subsidiaries have the right and authority to use such
Intellectual Property in connection with the conduct of the business of
Rakepoll Holding and the Rakepoll Holding Subsidiaries in the manner and to
the extent such business is presently conducted, and neither Rakepoll Finance
nor Rakepoll Holding nor any Rakepoll Holding Subsidiary has been notified of
any claim that such use conflicts with, infringes upon or violates any rights
of any other person or entity, except to the extent that such conflict,
infringement or violation does not and will not, individually or in the
aggregate, have a material adverse effect on Rakepoll Holding and the
Rakepoll Holding Subsidiaries taken as a whole.
3.10 Title to and Condition of Properties. Rakepoll Holding and
each Rakepoll Holding Subsidiary owns or holds under valid leases all real
property, plants, machinery and equipment necessary for the conduct of the
business of Rakepoll Holding and each Rakepoll Holding Subsidiary,
respectively, as presently conducted, except where the failure to own or hold
such property, plants, machinery and equipment would not have a material
adverse effect on Rakepoll Holding and the Rakepoll Holding Subsidiaries
taken as a whole. Section 3.10 to the Rakepoll Holding Disclosure Schedule
lists, and Rakepoll Holding and each Rakepoll Holding Subsidiary have
furnished or made available to Gensia, copies of all third party environ-
mental or other reports prepared by or for Rakepoll Holding or any Rakepoll
Holding Subsidiary with respect to the real property owned, leased or used by
Rakepoll Holding or any Rakepoll Holding Subsidiary.
3.11 [This Section intentionally left blank.]
3.12 Litigation. Except as set forth in Section 3.12 to the
Rakepoll Holding Disclosure Schedule, there is no Action pending or, to the
knowledge of Rakepoll Finance, threatened against Rakepoll Finance, Rakepoll
Holding or any Rakepoll Holding Subsidiary which, individually or in the
aggregate, could reasonably be expected to have a material adverse effect on
Rakepoll Holding and the Rakepoll Holding Subsidiaries taken as a whole or a
material adverse effect on the ability of Rakepoll Finance or Rakepoll
Holding or any Rakepoll Holding Subsidiary to consummate the transactions
contemplated hereby. None of Rakepoll Finance, Rakepoll Holding and each
Rakepoll Holding Subsidiary is subject to any outstanding order, writ,
injunction or decree which, individually or in the aggregate, insofar as can
be reasonably foreseen, could have a material adverse effect on Rakepoll
Holding and the Rakepoll Holding Subsidiaries taken as a whole or a material
adverse effect on the ability of Rakepoll Finance or Rakepoll Holding or any
Rakepoll Holding Subsidiary to consummate the transactions contemplated
hereby. Except as set forth in Section 3.12 to the Rakepoll Holding
Disclosure Schedule, since December 31, 1992, Rakepoll Finance, Rakepoll
Holding and each Rakepoll Holding Subsidiary have not been subject to any
outstanding order, writ, injunction or decree relating to Rakepoll Holding's
or any Rakepoll Holding Subsidiary's method of doing business or its
relationship with past, existing or future lessees, users, purchasers or
<PAGE>
licensees of any Intellectual Property, goods or services of Rakepoll Holding
or any Rakepoll Holding Subsidiary.
3.13 Brokerage and Finder's Fees; Expenses. Except for Rakepoll
Finance's obligations to Lehman Brothers International ("Lehman") (a copy of
the written agreement relating to such obligations having previously been
provided to Gensia), neither Rakepoll Finance nor Rakepoll Holding nor any
Rakepoll Holding Subsidiary, nor any stockholder, director, officer or
employee of Rakepoll Finance or Rakepoll Holding or any Rakepoll Holding
Subsidiary thereof, has incurred or will incur on behalf of Rakepoll Finance,
Rakepoll Holding or any Rakepoll Holding Subsidiary, any brokerage, finder's
or similar fee in connection with the transactions contemplated by this
Agreement. Section 3.13 to the Rakepoll Holding Disclosure Schedule
discloses a bona fide estimate of the aggregate amount of all out-of-pocket
fees and expenses (including, without limitation, fees and expenses payable
to all banks, investment banking firms and other financial institutions and
their respective agents and counsel for arranging or providing financial
advice with respect to the Stock Exchange and all reasonable fees and
expenses of counsel, accountants, experts and consultants to Rakepoll
Finance) expected to be paid by Rakepoll Finance, Rakepoll Holding and each
Rakepoll Holding Subsidiary up to and including the Closing Date to all
attorneys, accountants and investment bankers in connection with the Stock
Exchange ("Rakepoll Finance Stock Exchange Fees").
3.14 Employee Matters.
(a)(i) The official registers of employees and salaries of
Rakepoll Holding and the Rakepoll Holding Subsidiaries set forth the names of
all the employees of Rakepoll Holding and the Rakepoll Holding Subsidiaries,
including, with respect to each employee, such employee's actual function,
position, seniority and compensation; (ii) Section 3.14(a)(ii) of the
Rakepoll Holding Disclosure Schedule contains the name of each independent
contractor engaged by Rakepoll Holding or the Rakepoll Holding Subsidiaries.
(b) At all times since December 31, 1992, all employees of
Rakepoll Holding and each Rakepoll Holding Subsidiary have been fully compen-
sated in accordance with applicable regulation, and applicable collective
agreement or individual contract, as the case may be.
(c) The latest balance sheet included in the Rakepoll Holding
Documents reflects and includes adequate provision for the payment in full of
any and all compensation which has accrued with respect to each employee, but
which was not due as of the date of such balance sheet. All such accrued
compensation, and all such compensation which will accrue from the date
hereof to the Closing Date, has been or will be adequately reserved against
on the books of Rakepoll Holding or any Rakepoll Holding Subsidiary, as the
case may be, on or prior to the Closing Date.
(d) Rakepoll Holding and the Rakepoll Holding Subsidiaries have
withheld and remitted all amounts required to be withheld under all
applicable regulations, including concerning employees' social insurance,
employees' retirement pensions and employees' income taxes.
(e) With respect to Rakepoll Holding, and except as set forth in
Section 3.14(e) of the Rakepoll Holding Disclosure Schedule, all terms and
conditions of employment are those terms and conditions required by statutory
regulations and national collective agreements.
<PAGE>
(f) Other than any benefit required to be provided by applicable
law, and except as set forth in Section 3.14(f) of the Rakepoll Holding
Disclosure Schedule, no benefit has been granted to any employee of Rakepoll
Holding or the Rakepoll Holding Subsidiaries.
(g) Except as set forth in Section 3.14(i) to the Rakepoll Holding
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will result in or
cause the accelerated vesting or delivery of any payment or benefit to any
employee of Rakepoll Holding or any Rakepoll Holding Subsidiary.
(h) Section 3.14(h) to the Rakepoll Holding Disclosure Schedule
sets forth the names of all directors and officers of Rakepoll Holding and
each Rakepoll Holding Subsidiary, the total salary, bonus, fringe benefits
and perquisites each received in the fiscal year ended December 31, 1995, and
any changes to the foregoing which have occurred subsequent to December 31,
1995; Section 3.14(h) to the Rakepoll Holding Disclosure Schedule also lists
and describes the current compensation of any other employee of Rakepoll
Holding or any Rakepoll Holding Subsidiary whose salary and bonus in 1995
exceeded U.S.$150,000. Except as disclosed in Section 3.14(h) to the
Rakepoll Holding Disclosure Schedule or in the Rakepoll Holding Documents,
there are no other material forms of compensation paid to any such director,
officer or employee of Rakepoll Holding or any Rakepoll Holding Subsidiary.
Except as set forth in Section 3.14(h) to the Rakepoll Holding Disclosure
Schedule, no officer, director, or employee of Rakepoll Holding or any other
affiliate of Rakepoll Holding, or any immediate family member of any of the
foregoing, provides or causes to be provided to Rakepoll Holding or any
Rakepoll Holding Subsidiary any material assets, services or facilities and
Rakepoll Holding and each Rakepoll Holding Subsidiary does not provide or
cause to be provided to any such officer, director, employee or affiliate, or
any immediate family member of any of the foregoing, any material assets,
services or facilities.
3.15 Contracts. Section 3.15 to the Rakepoll Holding Disclosure
Schedule lists all Contracts to which Rakepoll Holding or any Rakepoll
Holding Subsidiary is a party and which fall within any of the following
categories: (a) Contracts valued at over U.S.$250,000 obligating any party to
pay or receive money, goods or services, (b) joint venture, partnership and
similar agreements, (c) Contracts which are service contracts or equipment
leases involving payments by Rakepoll Holding or any Rakepoll Holding
Subsidiary of more than U.S. $100,000 per year, (d) Contracts containing
covenants purporting to limit the freedom of Rakepoll Holding or any Rakepoll
Holding Subsidiary to compete in any line of business in any geographic area
or to hire any individual or group of individuals, (e) Contracts which after
the Closing Date would have the effect of limiting the freedom of Gensia or
the Gensia Subsidiaries (other than Rakepoll Holding and each Rakepoll
Holding Subsidiary) to compete in any line of business in any geographic area
or to hire any individual or group of individuals, (f) Contracts which
contain minimum purchase conditions or requirements or other terms that
restrict or limit the purchasing relationships of Rakepoll Holding or any
Rakepoll Holding Subsidiary, (g) Contracts relating to any outstanding
commitment for capital expenditures in excess of U.S. $250,000; (h) Contracts
relating to the lease or sublease of or sale or purchase of real or personal
property involving any annual expense or price in excess of U.S. $100,000 and
not cancelable by Rakepoll Holding or any Rakepoll Holding Subsidiary
(without premium or penalty) within one month, (i) Contracts with any labor
organization, (j) indentures, mortgages, promissory notes, loan agreements,
<PAGE>
guarantees of amounts in excess of U.S. $100,000, letters of credit or other
agreements or instruments of Rakepoll Holding or any Rakepoll Holding
Subsidiary or commitments for the borrowing or the lending of amounts in
excess of U.S. $100,000 or by Rakepoll Holding or any Rakepoll Holding
Subsidiary or providing for the creation of any charge, security interest,
encumbrance or lien upon any of the assets of Rakepoll Holding or any
Rakepoll Holding Subsidiary, (k) Contracts involving annual revenues or
expenditures to the business of Rakepoll Holding or any Rakepoll Holding
Subsidiary in excess of 5.0% of Rakepoll Holding's annual revenues and
(l) Contracts with or for the benefit of any officer, director or affiliate
of Rakepoll Holding or any Rakepoll Holding Subsidiary or immediate family
member thereof. All such Contracts are valid and binding obligations of
Rakepoll Holding or the Rakepoll Holding Subsidiary, as the case may be, and,
to the knowledge of Rakepoll Holding and each Rakepoll Holding Subsidiary,
are the valid and binding obligation of each other party thereto except such
Contracts which if not so valid and binding would not, individually or in the
aggregate, have a material adverse effect on Rakepoll Holding and the
Rakepoll Holding Subsidiaries taken as a whole. Neither Rakepoll Holding or
any Rakepoll Holding Subsidiary nor, to the knowledge of Rakepoll Holding or
any Rakepoll Holding Subsidiary, any other party thereto is in violation of
or in default in respect of, nor has there occurred an event or condition
which with the passage of time or giving of notice (or both) would constitute
a default under, any such Contract except such violations or defaults under
such Contracts which, individually or in the aggregate, would not have a
material adverse effect on Rakepoll Holding and each Rakepoll Holding
Subsidiary.
3.16 Accounts Receivable. All accounts and notes receivable
(including lease and finance notes receivable) and accrued interest
receivable of Rakepoll Holding and each Rakepoll Holding Subsidiary have
arisen in the ordinary course of business and the accounts receivable
reserves reflected on the balance sheet as of June 30, 1996 included in the
Rakepoll Holding Documents are as of such date established in accordance with
United States generally accepted accounting principles consistently applied
and to the best knowledge of Rakepoll Holding and each Rakepoll Holding
Subsidiary will be collectible in the ordinary course of business in an
amount not less than the amounts thereof carried on the balance sheet as of
such date included in the Rakepoll Holding Documents, net of any reserves
included thereon, as applicable, except for any uncollectible amount which,
individually or in the aggregate, would not have a material adverse effect on
Rakepoll Holding and each Rakepoll Holding Subsidiary.
3.17 Labor Relations. There is no unfair labor practice complaint
against Rakepoll Holding or any Rakepoll Holding Subsidiary pending and there
is no labor strike, dispute, slowdown or stoppage, or any union organizing
campaign, actually pending or, to the knowledge of Rakepoll Holding or any
Rakepoll Holding Subsidiary, threatened against or involving Rakepoll Holding
or any Rakepoll Holding Subsidiary. Except as disclosed in Section 3.17 to
the Rakepoll Holding Disclosure Schedule, there is no Union Agreement in
effect with respect to any Rakepoll Holding Subsidiary which operates in
Mexico.
3.18 No Material Adverse Change. Except as set forth in Section
3.18 to the Rakepoll Holding Disclosure Schedule, since December 31, 1995,
each of Rakepoll Finance, Rakepoll Holding and each Rakepoll Holding
Subsidiary has conducted its business in the ordinary course, consistent with
past practice, and there has been no (i) material adverse change in the
<PAGE>
assets, liabilities, results of operations, business or financial condition
of Rakepoll Holding and the Rakepoll Holding Subsidiaries taken as a whole or
(ii) material adverse effect on the ability of Rakepoll Finance to consummate
the transactions contemplated hereby.
3.19 Operation of Rakepoll Holding's Business; Relationships.
(a) Since December 31, 1995, each of Rakepoll Holding and each
Rakepoll Holding Subsidiary has not engaged in any transaction which, if
entered into and/or consummated after execution of this Agreement, would
violate Section 4.1(h) hereof except as described or reflected in the
Rakepoll Holding Documents or as set forth in Section 3.19 to the Rakepoll
Holding Disclosure Schedule. Section 3.19 to the Rakepoll Holding Disclosure
Schedule describes each termination or nonrenewal that has occurred with
respect to any Contract with any lessee or licensee of Intellectual Property,
from December 31, 1995 to the date hereof.
(b) Except as set forth in Section 3.19(b) of the Rakepoll Holding
Disclosure Schedule, the relationships of Rakepoll Holding and each Rakepoll
Holding Subsidiary with its customers and suppliers are satisfactory and the
execution of this Agreement, the Stock Exchange and the transactions
contemplated hereby will not materially adversely affect the relationships of
Rakepoll Holding or any Rakepoll Holding Subsidiary with such customers or
suppliers.
(c) Except as disclosed in Section 3.19(c) of the Rakepoll Holding
Disclosure Schedule no product produced by Rakepoll Holding or any Rakepoll
Holding Subsidiary or produced for Rakepoll Holding or any Rakepoll Holding
Subsidiary by a third party and bearing a Rakepoll Holding or any Rakepoll
Holding Subsidiary trademark or other Proprietary Right of Rakepoll Holding
or any Rakepoll Holding Subsidiary, has been recalled voluntarily or
involuntarily since December 31, 1992, no such recall is being considered by
Rakepoll Holding, and, to the knowledge of Rakepoll Holding and each Rakepoll
Holding Subsidiary, no such recall is being considered by or has been
requested or ordered by any Governmental Authority or consumer group.
3.20 Permits; Compliance. Each of Rakepoll Finance, Rakepoll
Holding and each Rakepoll Holding Subsidiary is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary to own,
lease and operate its properties and to carry on its business as it is now
being conducted other than those which are immaterial (collectively, the
"Rakepoll Holding Permits"), and there is no Action pending or, to the
knowledge of Rakepoll Holding and each Rakepoll Holding Subsidiary,
threatened regarding suspension or cancellation of any of the Rakepoll
Holding Permits, except for any such Action which, if determined adversely,
could not reasonably be expected, individually or in the aggregate, to have a
material adverse effect on Rakepoll Holding. Rakepoll Holding and each
Rakepoll Holding Subsidiary is not in conflict with, or in default or
violation of, any of the Rakepoll Holding Permits, except for any such
conflicts, defaults or violations which, individually or in the aggregate,
could not reasonably be expected to have a material adverse effect on
Rakepoll Holding and the Rakepoll Holding Subsidiaries taken as a whole.
Since December 31, 1992, Rakepoll Holding and each Rakepoll Holding
Subsidiary have not received any notification with respect to possible
conflicts, defaults or violations of Applicable Laws, except for notices
relating to possible conflicts, defaults or violations, which conflicts,
<PAGE>
defaults or violations could not reasonably be expected to have a material
adverse effect on Rakepoll Holding and the Rakepoll Holding Subsidiaries
taken as a whole.
3.21 Product Warranties and Liabilities. Except as listed in
Section 3.21 to the Rakepoll Holding Disclosure Schedule, Rakepoll Holding
and each Rakepoll Holding Subsidiary have no forms of warranties or
guarantees of its products and services that are in effect or proposed to be
used by it. Section 3.21 to the Rakepoll Holding Disclosure Schedule sets
forth a description, which is true and correct in all material respects, of
each pending or, to the knowledge of Rakepoll Finance, threatened material
Action under any warranty or guaranty against Rakepoll Holding and each
Rakepoll Holding Subsidiary. Rakepoll Holding and each Rakepoll Holding
Subsidiary have not incurred, nor does Rakepoll Finance, Rakepoll Holding or
any Rakepoll Holding Subsidiary know or have any reason to believe there is
any basis for alleging, any Product Liability with respect to any product
sold or services rendered by or on behalf of Rakepoll Holding or any Rakepoll
Holding Subsidiary (including any lessee thereof) prior to the Closing Date,
whether such Product Liability is incurred by reason of any express or
implied warranty (including, without limitation, any warranty of merchant-
ability or fitness), any doctrine of common law (tort, contract or other),
any statutory provision or otherwise and irrespective of whether such Product
Liability is covered by insurance.
3.22 Environmental Matters. Except as listed in Section 3.22 to
the Rakepoll Holding Disclosure Schedule:
(a) There are, with respect to Rakepoll Holding and each Rakepoll
Holding Subsidiary, or any predecessor of the foregoing, no past or present
material violations of Environmental Laws or Mexican Environmental Laws, nor
actions, activities, circumstances, conditions, events, incidents, or
contractual obligations which may give rise to any liability pursuant to any
Environmental Law and none of Rakepoll Holding and each Rakepoll Holding
Subsidiary has received any notice with respect to any of the foregoing, nor
is any Action pending or threatened in connection with any of the foregoing.
(b) No Hazardous Materials or Mexican Hazardous Materials are
present on or about any real property currently owned, leased or used by
Rakepoll Holding or any Rakepoll Holding Subsidiary and no Hazardous
Materials or Mexican Hazardous Materials were present on or about any real
property previously owned, leased or used by Rakepoll Holding or any Rakepoll
Holding Subsidiary during the period the property was owned, leased or used
by Rakepoll Holding or any Rakepoll Holding Subsidiary, except in the normal
course of Rakepoll Holding's or any Rakepoll Holding Subsidiary's business.
(c) No Hazardous Materials or Mexican Hazardous Materials have
been released on or about, or where they may pose a threat of migration to,
any real property currently owned, leased or used by Rakepoll Holding or any
Rakepoll Holding Subsidiary and no Hazardous Materials or Mexican Hazardous
Materials were released on or about any real property previously owned,
leased or used by Rakepoll Holding or any Rakepoll Holding Subsidiary during
the period the property was owned, leased or used by Rakepoll Holding or any
Rakepoll Holding Subsidiary, except as may be required in the normal course
of business and in compliance with applicable Environmental Laws in all
material respects.
<PAGE>
(d) No asbestos-containing materials or PCBs are present on or
about any property currently owned, leased or used by Rakepoll Holding or any
Rakepoll Holding Subsidiary.
(e) There are not now nor have there ever been any underground
storage tanks or similar facilities of any kind on or under any real property
currently or previously owned, leased or used by Rakepoll Holding or any
Rakepoll Holding Subsidiary.
3.23 [This section intentionally left blank.]
3.24 Board Recommendation. The Board of Directors of Rakepoll
Finance, at a meeting duly called and held, has (i) determined that this
Agreement and the transactions contemplated hereby, including the Stock
Exchange, are fair to and in the best interests of the Rakepoll Finance
Shareholders, and (ii) resolved to recommend that the Rakepoll Finance
Shareholders approve this Agreement and the transactions contemplated herein,
including the Stock Exchange, and (iii) such Rakepoll Finance Shareholders
have approved this Agreement, the Stock Exchange and the transactions
contemplated hereby.
3.25 Undisclosed Liabilities. Except (i) as and to the extent
disclosed or reserved against on the consolidated balance sheet of Rakepoll
Holding as of June 30, 1996 included in the Rakepoll Holding Documents,
(ii) as incurred after June 30, 1996, in the ordinary course of business
consistent with prior practice and not prohibited by this Agreement or
(iii) as set forth in Section 3.25 to the Rakepoll Holding Disclosure
Schedule, Rakepoll Holding and the Rakepoll Holding Subsidiaries do not have
any liabilities or obligations of any nature, whether known or unknown,
absolute, accrued, contingent or otherwise and whether due or to become due,
that, individually or in the aggregate, have or could reasonably be expected
to have a material adverse effect on Rakepoll Holding and the Rakepoll
Holding Subsidiaries taken as a whole. All payments by or for the benefit of
Rakepoll Holding and the Rakepoll Holding Subsidiaries to agents, consultants
and others have been in payment of bona fide fees and commissions and not as
bribes or illegal or improper payments. Rakepoll Holding and the Rakepoll
Holding Subsidiaries have complied with the Foreign Corrupt Practices Act of
1977 and the rules and regulations thereunder and, in each case, have not
made any payment to or on behalf of any person with respect to which a
deduction could be disallowed under Section 162(c) of the Code. Neither the
Internal Revenue Service nor any other federal, state, local or foreign
government agency or entity has initiated or threatened any investigation of
any payment made by Rakepoll Holding or any Rakepoll Holding Subsidiary of,
or alleged to be of, the type described in this Section 3.25.
3.26 Ownership of Rakepoll Holding Shares. Rakepoll Finance owns
all of the issued and outstanding capital stock of Rakepoll Holding and
through Rakepoll Holding owns all of the issued and outstanding capital stock
of the Rakepoll Holding Subsidiaries. Upon delivery of and in exchange for
such shares under this Agreement pursuant to the Stock Exchange, Gensia will
acquire good and valid title to all of the issued and outstanding capital
stock of Rakepoll Holding, free and clear of all voting trust arrangements,
liens, encumbrances, security interests, restrictions and claims whatsoever.
3.27 Exchange Entirely for Own Account. The Rakepoll Holding
Common Stock to be received by Rakepoll Finance under this Agreement will be
acquired for investment for Rakepoll Finance's own account, not as a nominee
<PAGE>
or agent, and not with a view to the resale or distribution of any part
thereof. Rakepoll Finance has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, Rakepoll Finance further represents that it does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of such Gensia Common Shares and further that it will not
transfer, sell or exchange any of the shares of Gensia Common Shares which it
receives pursuant to the terms of this Agreement for a period of 12 months
following the Closing Date. Rakepoll Finance is not a "U.S. person" as such
term is used in Regulation S under the Securities Act.
3.28 Restricted Securities. Rakepoll Finance understands that the
Gensia Common Shares to be received hereunder may not be sold, transferred or
otherwise disposed of without registration under the Securities Act or an
exemption therefrom, and that in the absence of an effective registration
statement covering such Gensia Common Shares or an available exemption from
registration under the Securities Act, the Gensia Common Shares must be held
indefinitely. In particular, Rakepoll Finance is aware that the Gensia
Common Shares may not be sold pursuant to Rule 144 promulgated under the
Securities Act unless all of the conditions of that Rule are met.
3.29 Legends. It is understood that the certificates evidencing
the Gensia Common Shares may bear one or all of the following legends:
(a) "These securities have not been registered under the
Securities Act of 1933. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with
respect to the securities under such Act or an opinion of counsel satis-
factory to Gensia that such registration is not required or unless sold
pursuant to Rule 144 of such Act or another applicable exemption."
(b) Any legend required by the laws of the State of California
or other jurisdiction or by the Shareholder's Agreement dated as of the date
hereof between the parties hereto.
3.30 Takeover Laws. Prior to the date hereof, the Board of
Directors of Rakepoll Finance has taken all action necessary to approve for
purposes of, or exempt under or make not subject to any takeover law or law
that purports to limit or restrict business combinations or the ability to
acquire or vote shares: (i) the execution of this Agreement, (ii) the Stock
Exchange and (iii) the transactions contemplated hereby.
3.31 Authorization of Rakepoll Holding Subsidiaries. Prior to the
date hereof, to the extent required by law, regulation or their respective
Charter Documents, each Rakepoll Holding Subsidiary shall have granted
Rakepoll Finance the necessary power and authority to make the
representations and warranties contained herein applicable to such Rakepoll
Holding Subsidiary.
ARTICLE 4
COVENANTS OF THE PARTIES
The parties hereto agree as follows with respect to the period from
and after the execution of this Agreement.
<PAGE>
4.1 Mutual Covenants.
(a) General. Each of the parties shall use its reasonable efforts
to take all action and to do all things necessary, proper or advisable to
consummate the Stock Exchange and the transactions contemplated by this
Agreement (including, without limitation, using its reasonable efforts to
cause the conditions set forth in Article 5 for which they are responsible to
be satisfied as soon as reasonably practicable and to prepare, execute and
deliver such further instruments and take or cause to be taken such other and
further action as any other party hereto shall reasonably request).
(b) HSR Act. As soon as practicable, and in any event no later
than ten (10) business days after the date hereof, each of the parties hereto
will file any Notification and Report Forms and related material required to
be filed by it with the Federal Trade Commission and the Antitrust Division
of the United States Department of Justice under the HSR Act with respect to
the Stock Exchange, will use its reasonable efforts to obtain an early
termination of the applicable waiting period, and shall promptly make any
further filings pursuant thereto that may be necessary, proper or advisable;
provided, however, that neither Gensia nor any of the Gensia Subsidiaries
shall be required hereunder to divest or hold separate any portion of their
business or assets.
(c) Automedics. The parties intend that Gensia shall contribute
to its Subsidiary, Automedics Development, Inc. ("Automedics"), the assets
(tangible and intangible), licenses, contracts, intellectual property and
other associated rights related to the Laryngeal Mask Airway products, the
Brevibloc product, the distribution rights related to the GenESA System, the
Heparin closed loop drug delivery system and any medical device products in-
licensed by Gensia between the date hereof and the Closing Date. Gensia
shall endeavor to obtain all necessary consents to permit such asset
contributions to Automedics. Gensia, after consultation with Rakepoll
Finance, shall be permitted to sell or grant equity interests in Automedics
to facilitate obtaining the necessary consents to permit such asset
contributions and to obtain financing for Automedics. Gensia, after
consultation with Rakepoll Finance, shall determine who is to staff and
operate Automedics. Any actions taken by Gensia in consultation with
Rakepoll Finance pursuant to the provisions of this Section 4.1(c) shall not
be breaches of the representations and warranties or the covenants of Gensia
contained in this Agreement.
(d) Other Governmental Matters. Each of the parties shall use its
reasonable efforts to take any additional action that may be necessary,
proper or advisable in connection with any other notices to, filings with,
and authorizations, consents and approvals of any Governmental Authority that
it may be required to give, make or obtain.
(e) Tax Treatment. Each of the parties shall use its reasonable
efforts so as to ensure that the Stock Exchange does not constitute a tax-
free reorganization under the Code and instead is a "purchase" within the
meaning of section 338 of the Code so that Gensia will be permitted to cause
a section 338 election to be made with respect to Rakepoll Holding.
(f) Public Announcements. Unless otherwise required by Applicable
Laws or requirements of the National Association of Securities Dealers, as
advised by outside counsel (and in that event only if time does not permit),
at all times prior to the earlier of the Closing Date or termination of this
<PAGE>
Agreement pursuant to Section 6.1, Gensia and Rakepoll Finance shall consult
with each other before issuing any press release with respect to the Stock
Exchange or the transaction contemplated hereby and shall not issue any such
press release prior to such consultation.
(g) Access. From and after the date of this Agreement until the
Closing Date (or the termination of this Agreement), upon the reasonable
request of the other party, Gensia and Rakepoll Finance (including Rakepoll
Holding and all Rakepoll Holding Subsidiaries and Alco Chemical Ltd.
("ALCO")) shall permit representatives of the other to have appropriate
access at all reasonable times to the other's premises, properties, books,
records, contracts, tax records, documents, customers and suppliers
("Information"), in the case of ALCO, only to the extent such information is
necessary to the consummation of the transactions contemplated by this
Agreement. Information obtained by Gensia, Rakepoll Finance, Rakepoll
Holding and the Rakepoll Holding Subsidiaries and ALCO pursuant to this
Section 4.1(g) shall be subject to the provisions of the confidentiality
agreement between them dated March 5, 1996 (the "Confidentiality Agreement"),
which agreement remains in full force and effect until the Closing Date;
provided, however, that the Confidentiality Agreement shall continue in full
force and effect with respect to Information provided by ALCO.
(h) Conduct of Operations. During the period from the date of
this Agreement to the Closing Date, Gensia and each Gensia Subsidiary on the
one hand and Rakepoll Holding and each Rakepoll Holding Subsidiary, on the
other hand, shall conduct its operations in the ordinary course consistent
with past practice except with the prior written consent of the other party
or as expressly contemplated by this Agreement and the transactions contem-
plated hereby and shall use its reasonable efforts to maintain and preserve
its business organization and its material rights and franchises and to
retain the services of its officers and key employees and maintain
relationships with customers, suppliers, lessees, licensees and other third
parties to the end that their goodwill and ongoing business shall not be
impaired in any material respect. Without limiting the generality of the
foregoing, during the period from the date of this Agreement to the Closing
Date, neither party to this Agreement shall, except with the prior written
consent of the other party or as otherwise expressly contemplated by this
Agreement and the transactions contemplated hereby, by the Shareholder's
Agreement or the Business Plan:
(i) (A) adjust, split, combine or reclassify its capital stock,
(B) make, declare or pay any dividend except for the payment of dividends on
outstanding shares of the $3.75 Convertible Exchangeable Preferred Stock of
Gensia and except for the spinout of Gensia research assets as contemplated
by this Agreement or distribution on, or directly or indirectly redeem,
purchase or otherwise acquire, any shares of capital stock or any securities
or obligations convertible into or exchangeable for any shares of capital
stock, (C) grant any person any right or option to acquire any shares of
capital stock except pursuant to Gensia Stock Plans existing on the date of
this Agreement consistent with past practice, (D) issue, deliver or sell or
agree to issue, deliver or sell any additional shares of capital stock or
any securities or obligations convertible into or exchangeable or
exercisable for any shares of its capital stock or such securities except
pursuant to Preferred Stock, options, warrants or other agreements or
instruments outstanding on the date hereof, or (E) enter into any agreement,
understanding or arrangement with respect to the sale or voting of capital
stock;
<PAGE>
(ii) sell, transfer, lease, pledge, mortgage, encumber or
otherwise dispose of any property or assets of Gensia or any Gensia
Subsidiary on the one hand and Rakepoll Holding or any Rakepoll Holding
Subsidiary, on the other hand other than sales or leases of inventory or
licensing of Intellectual Property of Gensia or a Gensia Subsidiary on the
one hand and Rakepoll Holding or any Rakepoll Holding Subsidiary, on the
other hand made in the ordinary course of business consistent with past
practice;
(iii) make or propose any changes in the Charter Documents of
Gensia or any Gensia Subsidiary on the one hand or of Rakepoll Holding or
any Rakepoll Holding Subsidiary, on the other hand;
(iv) merge or consolidate with any other person or acquire a
material amount of assets or capital stock of any other person;
(v) incur, create, assume or otherwise become liable for
indebtedness in excess of U.S. $250,000 for borrowed money or assume,
guarantee, endorse or otherwise as an accommodation become responsible or
liable for obligations in excess of U.S. $250,000 of any other individual,
corporation or other entity;
(vi) create any subsidiaries (other than Automedics and to
facilitate the spin out of the Gensia research assets);
(vii) enter into or modify any employment, severance, termination
or similar agreements or arrangements with, or grant or announce any
bonuses, salary increases, severance or termination pay to, any officer or
director or employee of Gensia or any Gensia Subsidiary on the one hand, or
Rakepoll Holding or any Rakepoll Holding Subsidiary on the other hand, other
than salary, stock or option grants, bonuses and benefits, increases granted
in the ordinary course of business consistent with past practices and
established plans made known to the other party prior to the date hereof, or
otherwise increase the compensation or benefits provided to any officer or
director except as may be required by Applicable Law or a binding written
contract in effect on the date of this Agreement or enter into any new
consulting agreements with a duration of greater than twelve months or
compensation of greater than U.S. $100,000;
(viii) change any method or principle of accounting in a manner
that is inconsistent with past practice except as may be required to meet
the requirements of United States securities laws and United States GAAP;
(ix) settle any Actions, whether now pending or hereafter made or
brought involving an amount in excess of U.S. $200,000 affecting Gensia or
any Gensia Subsidiary, on the one hand, or Rakepoll Holding or any Rakepoll
Holding Subsidiary, on the other hand;
(x) modify, amend or terminate, or waive, release or assign any
material rights or claims with respect to, any Contract set forth in Section
2.15 to the Gensia Disclosure Schedule or Section 3.15 to the Rakepoll
Holding Disclosure Schedule, as applicable, or any other material Contract
to which Gensia or any Gensia Subsidiary, on the one hand, or Rakepoll
Holding or any Rakepoll Holding Subsidiary, on the other hand, is a party if
such modification, amendment, termination, waiver, release or assignment
would have a material adverse effect on Gensia and the Gensia Subsidiaries
<PAGE>
taken as a whole or on Rakepoll Holding and the Rakepoll Holding
Subsidiaries taken as a whole, as applicable;
(xi) incur or commit to any capital expenditures, obligations or
liabilities in respect thereof which in the aggregate exceed or would exceed
U.S. $250,000 unless otherwise disclosed on the Gensia Disclosure Schedule
or the Rakepoll Holding Disclosure Schedule, as applicable;
(xii) pay (or agree to become obligated to pay) any Gensia Stock
Exchange Fees on the one hand, or Rakepoll Finance Stock Exchange Fees on
the other hand, in excess of the amount set forth in Section 2.9 to the
Gensia Disclosure Schedule or Section 3.13 of the Rakepoll Holding
Disclosure Schedule, as applicable, other than any excess amounts which are
immaterial in the aggregate incurred in connection with and in furtherance
of consummation of the transactions contemplated hereby;
(xiii) take any action to exempt or make not subject to any take-
over law or law that purports to limit or restrict business combinations or
the ability to acquire or vote shares by any person or entity (other than as
contemplated herein) or any action taken thereby, which person, entity or
action would have otherwise been subject to the restrictive provisions
thereof and not exempt therefrom;
(xiv) take any action that could reasonably be expected to result
in the representations and warranties set forth in Article 2 or Article 3,
as applicable, becoming false or inaccurate;
(xv) permit or cause any subsidiary or affiliate to do any of the
foregoing or agree or commit to do any of the foregoing; or
(xvi) agree in writing or otherwise to take any of the foregoing
actions.
None of the information provided by Gensia and Rakepoll Finance,
respectively, for inclusion in the proxy statement and form of proxies to be
filed with the Commission by Gensia under the Exchange Act relating to the
vote of the Gensia Stockholders with respect to the Stock Exchange (collec-
tively and as amended, supplemented or modified, the "Proxy Statement") at
the date of mailing the Proxy Statement will contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(i) Indemnification and Insurance. Gensia and Rakepoll Finance
shall cause (i) Gensia to maintain and perform in the same manner as prior to
the date hereof Gensia's existing indemnification provisions with respect to
present and former directors and officers of Gensia for all losses, claims,
damages, expenses or liabilities arising out of actions or omissions or
alleged actions or omissions occurring at or prior to the Closing Date to the
extent permitted or required under applicable law and Gensia's Restated
Certificate of Incorporation and By-Laws in effect at the date hereof (to the
extent consistent with applicable law), (ii) Gensia to provide, maintain and
perform in the same manner as prior to the date hereof Gensia's existing
indemnification provisions with respect to present and future directors and
officers of Gensia for all losses, claims, damages, expenses or liabilities
arising out of actions or omissions or alleged actions or omissions
occurring after the Closing Date to the extent permitted or required under
<PAGE>
applicable law and Gensia's Restated Certificate of Incorporation and By-Laws
in effect at the date hereof (to the extent consistent with applicable law);
and (iii) Gensia to maintain, for a period of no less than three (3) years
after the Closing Date, Directors and Officers Liability coverage, with
limits, terms and conditions no less advantageous than in effect on the date
hereof. Said coverage will be maintained with the current insurance carriers
or insurance carriers of financial strength equal to or greater than the
financial strength of the current insurance carriers. Evidence of such
coverage will be provided to the individual officers and directors upon
request. Any new directors or officers of Gensia will be added to such
policies.
4.2 Covenants of Gensia.
(a) Gensia Stockholders Meeting. Gensia shall take all action in
accordance with the federal securities laws, the NASD Rules, the Delaware
General Corporation Law including, without limitation, Section 203 thereof
and the Gensia Certificate and Bylaws, as amended and restated, necessary to
obtain the consent and approval of Gensia Stockholders with respect to the
authorization of the issuance of Gensia Common Shares in the Stock Exchange
and the transactions contemplated hereby.
Without limiting the generality of the foregoing, Gensia, acting
through its Board of Directors, shall, subject to and in accordance with
applicable law and its Certificate of Incorporation and By-Laws, promptly and
duly call, give notice of, convene and hold as soon as practicable following
the date upon which the Proxy Statement is mailed a meeting of the holders of
Gensia Common Shares for the purpose of voting to approve and adopt this
Agreement and the transactions contemplated hereby, and, subject to its
fiduciary duties under applicable law as determined in good faith by a
majority of the Board of Directors of Gensia based on, among other things,
the advice of outside legal counsel to Gensia (A) recommend that the Gensia
stockholders approve and adopt this Agreement and the transactions
contemplated hereby, (B) include in the Proxy Statement such recommendation
and the written opinion of CS First Boston that the consideration to be
received by the Company in the transaction is fair to the Company from a
financial point of view and (C) take all reasonable and lawful action to
solicit and obtain such approval.
(b) Preparation of Proxy Statement. Gensia shall, as soon as is
reasonably practicable, prepare and file the Proxy Statement with the
Commission on a confidential basis. Gensia shall use all reasonable efforts
to mail at the earliest practicable date to Gensia Stockholders the Proxy
Statement, which shall include all information required under Applicable Law
to be furnished to Gensia Stockholders in connection with the Stock Exchange
and the transactions contemplated thereby. If at any time prior to the
Closing Date, any information pertaining to Gensia or any Gensia Subsidiary
contained in or omitted from the Proxy Statement makes such statements
contained in the Proxy Statement false or misleading, Gensia shall promptly
inform Rakepoll Finance and take such action necessary to make such
statements contained in the Proxy Statement not false and misleading. Gensia
also shall take such other reasonable actions (other than qualifying to do
business in any jurisdiction in which it is not so qualified) required to be
taken under any applicable state securities laws in connection with the
issuance of Gensia Common Shares in the Stock Exchange.
<PAGE>
(c) Intellectual Property Matters. Gensia and each Gensia
Subsidiary shall use reasonable commercial efforts to preserve Gensia's and
the Gensia Subsidiaries' ownership rights to their Intellectual Property free
and clear of any liens, claims or encumbrances and shall use reasonable
commercial efforts to assert, contest and prosecute any infringement of any
issued foreign or domestic patent, trademark, service mark, trade name or
copyright that forms a part of such Intellectual Property or any
misappropriation or disclosure of any trade secret, confidential information
or know-how that forms a part of such Intellectual Property consistent with
past practices of Gensia and each Gensia Subsidiary.
(d) No Solicitation. Gensia agrees that, during the term of this
Agreement, it shall not, and shall not authorize or permit any Gensia
Subsidiary or affiliate or any of its or their respective directors,
officers, employees, agents or representatives, directly or indirectly, to
solicit, initiate, encourage, facilitate, or accept or furnish or disclose
non-public information in furtherance of, any inquiries or the making of any
proposal with respect to any recapitalization, merger, consolidation or other
business combination involving Gensia or any Gensia Subsidiary, or
acquisition of any capital stock or any material portion of the assets
(except for acquisition of assets in the ordinary course of business
consistent with past practice) of Gensia or any Gensia Subsidiary, or any
combination of the foregoing (a "Competing Transaction"), or negotiate,
explore or otherwise engage in discussions with any person (other than
Rakepoll Finance, or its directors, officers, employees, agents and
representatives) with respect to any Competing Transaction or enter into any
agreement, arrangement or understanding requiring it to abandon, terminate or
fail to consummate the Stock Exchange or any other transactions contemplated
by this Agreement; provided that Gensia may furnish information to, and
negotiate or otherwise engage in discussions (i) in connection with
financings contemplated by this Agreement and associated documents provided,
that prior to the furnishing to prospective investors of any such information
in respect of such financing, the identities of such prospective investors
are made available to Rakepoll Finance and the prior written consent of
Rakepoll Finance is obtained, which consent shall not be unreasonably
withheld, as to the furnishing of such information to each such prospective
investor, and (ii) with any bona fide party who delivers an unsolicited
written proposal for a Competing Transaction if and so long as (x) the Board
of Directors of Gensia determines in good faith by a majority vote of its
disinterested directors that failing to take such action would constitute a
breach of the fiduciary duties of the Board and (y) such a proposal is, based
upon the advice of First Boston, more favorable to Gensia's Stockholders from
a financial point of view than the Stock Exchange. In the case of any
proposal meeting the requirements of clauses (d)(ii), (x) and (y), the Board
of Directors of Gensia may withdraw its recommendation of this Agreement and
the Stock Exchange. Gensia and each Gensia Subsidiary will immediately cease
all existing activities, discussions and negotiations with any parties
conducted heretofore with respect to any of the foregoing and except for
financings contemplated by this Agreement and associated documents. From and
after the execution of this Agreement, Gensia and each Gensia Subsidiary and
affiliates shall promptly advise Rakepoll Finance in writing of the receipt,
directly or indirectly, of any inquiries, discussions, negotiations, or
proposals relating to a Competing Transaction (including the specific terms
thereof) and promptly furnish to Rakepoll Finance a copy of any such proposal
or inquiry in addition to any information provided to or by any third party
relating thereto, and shall state in such notice whether Gensia has
determined that it is required to take any action with respect thereto in
<PAGE>
accordance with the proviso contained in this paragraph. The Board shall
keep Rakepoll Finance promptly advised of all developments which could
reasonably be expected to culminate in the Board of Directors withdrawing,
modifying or amending its recommendation of the Stock Exchange and the
transactions contemplated by this Agreement.
(e) Employee Benefits. Gensia covenants and agrees that (i) it
will cause Rakepoll Holding to provide benefits to employees of Rakepoll
Holding in accordance with the applicable laws of the jurisdictions in which
such employees are employed and (ii) it will provide for the participation of
the employees of Rakepoll Holding set forth on Schedule 4.2(e) hereto in the
Gensia stock option plan as of the Closing Date on substantially the same
terms and conditions as similarly situated employees of Gensia.
(f) Notification of Certain Matters. Gensia shall give prompt
notice to Rakepoll Finance of (i) the occurrence or non-occurrence of any
event the occurrence or non-occurrence of which would cause any Gensia
representation or warranty contained in this Agreement to be untrue or
inaccurate at or prior to the Closing Date and (ii) any material failure of
Gensia or any Gensia Subsidiary to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section
4.2(f) shall not limit or otherwise affect the remedies available hereunder
to Rakepoll Finance.
(g) Contribution of Intercompany Debt to Equity. Rakepoll
Finance shall cause all intercompany and affiliate debt between and among
Rakepoll Finance, Rakepoll Holding, and the Rakepoll Holding Subsidiaries and
affiliates thereof to be converted and contributed into equity of Rakepoll
Holding prior to the Closing Date.
Gensia will use reasonable efforts to maintain the availability of
Rule 144 to Rakepoll Finance, provided that failure to maintain such
availability because of a failure of Rakepoll Holding or any Rakepoll Holding
Subsidiary to deliver appropriate information to Gensia shall not be deemed a
breach of this covenant.
4.3 Covenants of Rakepoll Finance.
(a) Information for the Preparation of Proxy Statement. Rakepoll
Finance shall as soon as reasonably practicable furnish Gensia with all
information concerning it as may be required for inclusion in the Proxy
Statement. Rakepoll Finance shall cooperate with Gensia in the preparation
of the Proxy Statement in a timely fashion and shall use all reasonable
efforts to assist Gensia in having the Proxy Statement cleared by the
Commission as promptly as practicable. If at any time prior to the Closing
Date, any information pertaining to Rakepoll Finance or Rakepoll Holding or
any Rakepoll Holding Subsidiary contained in or omitted from the Proxy
Statement makes such statements contained in the Proxy Statement false or
misleading, Rakepoll Finance shall promptly so inform Gensia and provide
Gensia with the information necessary to make statements contained therein
not false and misleading. Rakepoll Finance shall use all reasonable efforts
to cooperate with Gensia in the preparation and filing of the Proxy Statement
with the Commission on a confidential basis.
(b) Intellectual Property Matters. Rakepoll Finance, Rakepoll
Holding and each Rakepoll Holding Subsidiary shall use reasonable commercial
<PAGE>
efforts to preserve Rakepoll Holding's and the Rakepoll Holding Subsidiaries'
ownership rights to their Intellectual Property free and clear of any liens,
claims or encumbrances and shall use reasonable commercial efforts to assert,
contest and prosecute any infringement of any issued foreign or domestic
patent, trademark, service mark, trade name or copyright that forms a part of
such Intellectual Property or any misappropriation or disclosure of any trade
secret, confidential information or know-how that forms a part of such
Intellectual Property consistent with past practices of each of Rakepoll
Finance, Rakepoll Holding and each Rakepoll Holding Subsidiary.
(c) No Solicitation. Rakepoll Finance agrees that, during the
term of this Agreement, it shall not, and shall not authorize or permit
Rakepoll Holding or any Rakepoll Holding Subsidiary or affiliate or any of
its or their respective directors, officers, employees, agents or representa-
tives, directly or indirectly, to solicit, initiate, encourage, facilitate,
or accept or furnish or disclose non-public information in furtherance of,
any inquiries or the making of any proposal with respect to any recapitali-
zation, merger, consolidation or other business combination involving
Rakepoll Holding or any Rakepoll Holding Subsidiary, or acquisition of any
capital stock or any material portion of the assets (except for acquisition
of assets in the ordinary course of business consistent with past practice)
of Rakepoll Holding or any Rakepoll Holding Subsidiary, or any combination of
the foregoing (a "Competing Transaction"), or negotiate, explore or otherwise
engage in discussions with any person (other than Gensia, or its directors,
officers, employees, agents and representatives) with respect to any
Competing Transaction or enter into any agreement, arrangement or
understanding requiring it to abandon, terminate or fail to consummate the
Stock Exchange or any other transactions contemplated by this Agreement.
Rakepoll Finance, Rakepoll Holding and each Rakepoll Holding Subsidiary will
immediately cease all existing activities, discussions and negotiations with
any parties conducted heretofore with respect to any of the foregoing except
for financings contemplated by this Agreement and association documents.
From and after the execution of this Agreement, Rakepoll Finance, Rakepoll
Holding and each Rakepoll Holding Subsidiary and affiliates shall promptly
advise Gensia in writing of the receipt, directly or indirectly, of any
inquiries, discussions, negotiations, or proposals relating to a Competing
Transaction (including the specific terms thereof) and promptly furnish to
Gensia a copy of any such proposal or inquiry in addition to any information
provided to or by any third party relating thereto.
(d) Notification of Certain Matters. Rakepoll Finance shall give
prompt notice to Gensia of (i) the occurrence or non-occurrence of any event
the occurrence or non-occurrence of which would cause any Rakepoll Finance
representation or warranty contained in this Agreement to be untrue or
inaccurate at or prior to the Closing Date and (ii) any material failure of
Rakepoll Finance or Rakepoll Holding or any Rakepoll Holding Subsidiary to
comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of
any notice pursuant to this Section 4.3(d) shall not limit or otherwise
affect the remedies available hereunder to Gensia.
<PAGE>
ARTICLE 5
CONDITIONS
5.1 Mutual Conditions. The obligations of the parties hereto to
consummate the Stock Exchange shall be subject to satisfaction or waiver on
or prior to the Closing Date of the following conditions:
(a) No temporary restraining order, preliminary or permanent
injunction or other order or decree which prevents the consummation of the
Stock Exchange shall have been issued and remain in effect, and no statute,
rule or regulation shall have been enacted by any Governmental Authority
which prevents the consummation of the Stock Exchange; provided, however,
that the parties shall use their reasonable best efforts to cause any such
decree, ruling, injunction or other order to be vacated or lifted.
(b) All waiting periods (and any extensions thereof) applicable to
the consummation of the Stock Exchange under the HSR Act and applicable
Mexican law shall have expired or been terminated and the consummation of
the transactions contemplated hereby shall be permitted thereunder.
(c) [This paragraph intentionally left blank.]
(d) The issuance of the Gensia Common Shares to be issued in the
Stock Exchange and the other transactions contemplated hereby shall have
been approved by the Gensia Stockholders in the manner required by any
Applicable Law.
(e) The Commission shall have approved the Gensia Proxy Statement.
On the Closing Date, no stop order or similar restraining order shall have
been threatened by the Commission or entered by the Commission or any state
securities administrator prohibiting the Stock Exchange.
(f) No Action shall be instituted by any Governmental Authority,
including under the HSR Act or the Exon-Florio Amendment, which seeks to
prevent consummation of the Stock Exchange or seeking material damages in
connection with the transactions contemplated hereby which continues to be
outstanding; provided, however, that the parties shall use their reasonable
best efforts to cause any such decree, ruling, injunction or other order to
be vacated or lifted.
Should the consent of the competent antitrust authorities not be
granted on or before the Closing Date, the parties shall meet in order to
review the situation and establish a new Closing Date without any undue
delay.
(g) The Shareholder's Agreement shall be in full force and
effect and the appointment of directors contemplated therein shall have been
made in accordance therewith.
5.2 Conditions to Obligations of Rakepoll Finance. The obliga-
tions of Rakepoll Finance to consummate the Stock Exchange and the trans-
actions contemplated hereby shall be subject to the satisfaction or waiver on
or prior to the Closing Date of the following conditions unless waived by
Rakepoll Finance:
<PAGE>
(a) The representations and warranties of Gensia set forth in
Article 2 shall be true and correct in all material respects on the date
hereof and on and as of the Closing Date as though made on and as of the
Closing Date (except for representations and warranties made as of a
specified date, which need be true and correct only as of the specified
date), except for such inaccuracies which have not had and would not
reasonably be expected to have in the reasonably foreseeable future a
material adverse effect on Gensia and the Gensia Subsidiaries taken as a
whole.
(b) Gensia shall have performed in all material respects each
obligation and agreement and shall have complied in all material respects
with each covenant to be performed and complied with by it hereunder at or
prior to the Closing Date.
(c) Gensia shall have furnished Rakepoll Finance with a
certificate dated the Closing Date signed on behalf of it by the Chairman,
President or any Vice President to the effect that the conditions set forth
in Sections 5.1(g), 5.2(a), (b), (f) (g) and (h) have been satisfied.
(d) Rakepoll Finance shall have received the legal opinion, dated
the Closing Date, of Pillsbury Madison & Sutro LLP counsel to Gensia,
substantially in the form of Exhibit A hereto.
(e) The Gensia Common Shares to be issued in the Stock Exchange
and the transactions contemplated hereby shall have been authorized for
inclusion on Nasdaq, subject to official notice of issuance.
(f) Gensia shall have paid, or caused to be paid, all dividends
owing in connection with any Gensia Preferred Stock, commencing with the
dividend payment due as of September 1, 1996.
(g) Gensia shall have filed, or caused to be filed, all amendments
to its Certificate of Incorporation and Bylaws as contemplated by, and
necessary to effectuate, this Agreement and the Shareholder's Agreement.
(h) Gensia shall have eliminated research expenses (other than
ongoing property lease related expenses), which may include, prior to the
Closing Date, a spinout of the Gensia research business to Gensia
stockholders and a concurrent cash contribution to the spun out entity as
contemplated by the funding plan agreed to by the parties hereto. Any
actions taken by Gensia pursuant to the provisions of this Section 5.2(h)
shall not be breaches of the representations and warranties or the covenants
of Gensia contained in this Agreement.
5.3 Conditions to Obligations of Gensia. The obligations of
Gensia to consummate the Stock Exchange and the other transactions
contemplated hereby shall be subject to the satisfaction or waiver on or
prior to the Closing Date of the following conditions:
(a) The representations and warranties of Rakepoll Finance set
forth in Article 3 shall be true and correct in all material respects on
the date hereof and on and as of the Closing Date as though made on and as
of the Closing Date (except for representations and warranties made as of a
specified date, which need be true and correct only as of the specified
date), except for such inaccuracies which have not had and would not
reasonably be expected to have in the reasonably foreseeable future a
<PAGE>
material adverse effect on Rakepoll Holding and the Rakepoll Holding
Subsidiaries, taken as a whole.
(b) Rakepoll Finance shall have performed in all material respects
each obligation and agreement and shall have complied in all material
respects with each covenant to be performed and complied with by it
hereunder at or prior to the Closing Date.
(c) Rakepoll Finance shall have furnished Gensia with a
certificate dated the Closing Date signed on its behalf by its Chairman,
President or any Vice President to the effect that the conditions set forth
in Sections 5.1(g), 5.3(a) and (b) have been satisfied.
(d) Gensia shall have received the legal opinions, dated the
Closing Date, of Simpson Thacher & Bartlett, Santamarina Y Steta, Studio
Legale Nodari, Saletti & Associati and Nauta Dutilh, counsel to Rakepoll
Finance, and a legal opinion concerning Kew Investments Limited, in
substantially the forms attached hereto as Exhibit B.
ARTICLE 6
TERMINATION AND AMENDMENT
6.1 Termination. This Agreement may be terminated at any time
prior to the Closing Date, whether before or after approval and adoption of
this Agreement by Gensia Stockholders:
(a) by mutual consent of Gensia and Rakepoll Finance;
(b) by either Gensia or Rakepoll Finance if any permanent
injunction or other order, decree or ruling of a court of competent
jurisdiction or other competent Governmental Authority preventing the
consummation of the Stock Exchange shall have become final and
nonappealable;
(c) by either Gensia or Rakepoll Finance if the Stock Exchange
shall not have been consummated before June 30, 1997, unless extended by the
Boards of Directors of both Gensia and Rakepoll Finance (provided that the
right to terminate this Agreement under this Section 6.1(c) shall not be
available to any party whose failure or whose affiliate's failure to perform
any material covenant or obligation under this Agreement has been the cause
of or resulted in the failure of the Stock Exchange to occur on or before
such date);
(d) by Gensia or Rakepoll Finance if the authorization of the
Gensia Stockholders with respect to the issuance of Gensia Common Shares in
the Stock Exchange shall not have been obtained by reason of the failure to
obtain the required vote at a meeting held for such purpose and any
adjournment thereof;
(e) by Rakepoll Finance if prior to the Closing Date (i) any
representation or warranty on the part of Gensia or any Gensia Subsidiary
contained in this Agreement is incorrect in any material respect and which
has a material adverse effect or which materially adversely affects the
ability of the parties to consummate the transactions contemplated hereby,
<PAGE>
(ii) there shall have been a breach of any covenant or agreement on the part
of Gensia or any Gensia Subsidiary contained in this Agreement which has
material adverse effect or which materially adversely affects the ability of
the parties to consummate the transactions contemplated hereby, which
breach, in the case of clauses (i) and (ii), shall not have been cured prior
to 30 days following notice thereof, (iii) Gensia's Board of Directors shall
have withdrawn or modified (including by amendment of or supplement to the
Proxy Statement) in a manner adverse to Rakepoll Finance its approval or
recommendation of this Agreement or the transactions contemplated hereby or
shall have recommended a Third Party Acquisition (as defined below), or
shall have resolved to effect any of the foregoing or (iv) any person other
than Rakepoll Finance or any of its affiliates shall have become the
beneficial owner of more than 15% of the shares of Gensia Common Shares; and
(f) by Gensia if prior to the Closing Date (i) any representation
or warranty on the part of Rakepoll Finance or any Rakepoll Finance
Subsidiary contained in this Agreement is incorrect in any material respect
and which has a material adverse effect or which materially adversely
affects the ability of the parties to consummate the transactions
contemplated hereby or, (ii) there shall have been a breach of any covenant
or agreement on the part of Rakepoll Finance or any Rakepoll Finance
Subsidiary contained in this Agreement which has a material adverse effect
or which materially adversely affects the ability of the parties to
consummate the transactions contemplated hereby, which breach, in the case
of clauses (i) and (ii), shall not have been cured prior to 30 days
following notice thereof.
6.2 Effect of Termination.
(a) In the event of the termination of this Agreement pursuant to
Section 6.1, this Agreement, except for the provisions of Sections 6.2 and
7.9, shall become void and have no effect, without any liability on the part
of any party or its directors, officers or stockholders. Notwithstanding the
foregoing, nothing in this Section 6.2 shall relieve any party to this
Agreement of liability for a material breach of any provision of this Agree-
ment.
(b) If (i) Rakepoll Finance terminates this Agreement pursuant to
Section 6.1(d) or (ii) Rakepoll Finance terminates this Agreement pursuant to
Section 6.1(c) or clause (i), (ii) or (iv) of Section 6.1(e) hereof and,
within twenty-four months thereafter, Gensia enters into an agreement with
respect to a Third Party Acquisition, or a Third Party Acquisition occurs,
then Gensia shall pay to Rakepoll Finance (A) within one business day
following any occurrence contemplated in clause (ii) hereof or simultaneously
with any termination contemplated by clause (i) hereof, a fee, in cash, of $5
million, provided, however, that Gensia shall in no event be obligated to pay
more than one such fee with respect to all such occurrences and such
termination, and (B) within one business day after being requested by
Rakepoll Finance (accompanied by reasonably detailed documentation to the
extent reasonably requested by Gensia) from time to time, all of the Rakepoll
Finance Stock Exchange Fees.
(c) If (i) Gensia terminates this Agreement pursuant to Section
6.1(d) or (ii) Gensia terminates this Agreement pursuant to Section 6.1(c) or
clause (i) or (ii) of Section 6.1(f) hereof and, within twenty-four months
thereafter, Rakepoll Finance enters into an agreement with respect to a Third
Party Acquisition, or a Third Party Acquisition occurs, then Rakepoll Finance
<PAGE>
shall pay to Gensia (A) within one business day following any occurrence
contemplated in clause (ii) hereof or simultaneously with any termination
contemplated by clause (i) hereof, a fee, in cash, of $5 million, provided,
however, that Gensia shall in no event be obligated to pay more than one such
fee with respect to all such occurrences and such termination, and (B) within
one business day after being requested by Gensia (accompanied by reasonably
detailed documentation to the extent reasonably requested by Rakepoll
Finance) from time to time, all of the Gensia Stock Exchange Fees.
For purposes of this Agreement, "Third Party Acquisition" means any
of the following events: (i) the acquisition of Gensia by merger, tender
offer or otherwise by any person other than Parent, Sub or any affiliate
thereof (a "Third Party"); (ii) the acquisition by a Third Party of 30% or
more of the assets of the Company and its subsidiaries, taken as a whole;
(iii) the acquisition by a Third Party of 15% or more of the outstanding
shares of Gensia Common Shares, directly or indirectly; (iv) the adoption by
the Company of a plan of liquidation or the declaration or payment of an
extraordinary dividend; (v) the repurchase by the Company or any of its
subsidiaries of 15% or more of the outstanding shares of Company Common Stock
or (vi) the acquisition by Gensia of a Third Party resulting in the issuance
to such Third Party or its affiliates, directly or indirectly, of 15% or more
of the outstanding shares of Gensia Common Shares.
6.3 Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after adoption of this Agreement by Rakepoll
Finance Shareholders or authorization of issuance of Gensia Common Shares in
the Stock Exchange by Gensia Stockholders, but after such approval or
authorization, no amendment shall be made which by law requires further
approval or authorization by the Rakepoll Finance Shareholders or Gensia
Stockholders, as the case may be, without such further approval or
authorization. Notwithstanding the foregoing, this Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
6.4 Extension; Waiver. At any time prior to the Closing Date,
Gensia (with respect to Rakepoll Finance) and Rakepoll Finance (with respect
to Gensia) by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of such party, (b) waive
any inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto and (c) waive compliance with any of
the agreements or conditions contained herein. Any agreement on the part of
a party hereto to any such extension or waiver shall be valid only if set
forth in a written instrument signed on behalf of such party.
ARTICLE 7
MISCELLANEOUS
7.1 Survival of Representations and Warranties. The
representations and warranties made herein by the parties hereto shall
survive until the second anniversary of the Closing Date, except that the
representations and warranties set forth in Sections 2.6 and 3.7, shall
survive until the earlier to occur of the expiration of the applicable
statute of limitations period or the sixth anniversary of the Closing Date.
<PAGE>
7.2 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or dispatched by a nationally/internationally recognized
overnight courier service to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to Gensia:
Gensia, Inc.
9360 Towne Centre Drive
San Diego, CA 92121
Attention: David Hale
Telecopy No.: (619) 453-0095
with a copy to
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, California 94104
United States of America
Attention: Thomas E. Sparks, Jr.
Telecopy No.: (415) 983-1200
(b) if to Rakepoll Finance:
Rakepoll Finance N.V.
14JB Gorsiraweg
Curacao, Netherlands Antilles
Attention: Carlo Salvi
Telecopy No.: (41)(91)994-9777
with a copy to:
Carlo Salvi
Via San Salvatore, 7
Ch 6902 Lugano
Switzerland
with a copy to
Simpson Thacher & Bartlett
99 Bishopsgate
London, England EC2M 3YH
Attention: Alan M. Klein
Telecopy No.: 011-44-171-422-4022
7.3 Interpretation. When a reference is made in this Agreement to
an Article or Section, such reference shall be to an Article or Section of
this Agreement unless otherwise indicated. The headings and the table of
contents contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
When a reference is made in this Agreement to Rakepoll Finance, such
reference shall be deemed to include any and all subsidiaries of Rakepoll
Finance, individually and in the aggregate, including Rakepoll Finance. When
a reference is made in this Agreement to Gensia, such reference shall be
deemed to include any and all subsidiaries of Gensia, individually and in the
aggregate, including Gensia. When a reference is made in this Agreement to
<PAGE>
Gensia Common Shares or shares thereof, such reference shall be deemed to
include the preferred share purchase rights issued pursuant to the Rights
Agreement that trade together with the Gensia Common Shares.
7.4 Counterparts. This Agreement may be executed in counterparts,
which together shall constitute one and the same Agreement. The parties may
execute more than one copy of the Agreement, each of which shall constitute
an original.
7.5 Entire Agreement. This Agreement (including the documents and
the instruments referred to herein), and the Confidentiality Agreement
constitute the entire agreement among the parties and supersede all prior
agreements and understandings, agreements or representations by or among the
parties, written and oral, with respect to the subject matter hereof and
thereof.
7.6 Governing Law; Consent to Jurisdiction. This Agreement shall
be governed and construed in accordance with the laws of the State of New
York without regard to principles of conflicts of law.
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 Finance hereby appoints CT Corporation, located at 1633 Broadway,
New York, New York 10019 as its authorized agent (the "Rakepoll Finance
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 Finance agrees to take any and all action, including
the filing of any and all documents and instruments, that may be necessary to
continue such appointment in full force and effect as aforesaid. Service of
process upon the Rakepoll Finance Authorized Agent and written notice of such
service to Rakepoll Holding shall be deemed, in every respect, effective
service of process upon Rakepoll Finance.
7.7 Specific Performance. The transactions contemplated by this
Agreement are unique. Accordingly, each of the
<PAGE>
parties acknowledges and agrees that, in addition to all other remedies to
which it may be entitled, each of the parties hereto is entitled to a decree
of specific performance, provided such party is not in material default
hereunder.
7.8 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.
7.9 Expenses. Subject to the provisions of Section 6.2, Gensia
shall pay all costs and expenses owed at closing associated with the
transactions contemplated by this Agreement, including, without limitation,
the Rakepoll Finance Stock Exchange Fees.
IN WITNESS WHEREOF, Gensia and Rakepoll Finance have signed this
Agreement as of the date first written above.
GENSIA, INC.
By /s/ David F. Hale
---------------------------------
Chairman of the Board
RAKEPOLL FINANCE N.V.
By /s/ Carlo Salvi
---------------------------------
Chairman of the Board
<PAGE>
AMENDMENT NO. 1 TO STOCK EXCHANGE AGREEMENT
-------------------------------------------
AMENDMENT NO. 1 (the "Amendment"), dated as of December 16, 1996 to
the Stock Exchange Agreement dated as of November 12, 1996 (the "Agreement")
between GENSIA, INC., a Delaware corporation (the "Company"), and RAKEPOLL
FINANCE N.V., a corporation organized under the laws of the Netherlands
Antilles ("Rakepoll Finance").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Amendment of the Agreement. Pursuant to Section 6.3 of the
Agreement, Section 5.2(h) of the Agreement is hereby amended and restated to
read in its entirety as follows:
"(h) Gensia shall have eliminated its net use of cash for ongoing
research activities (other than ongoing property lease related expenses)
either (i) as a result of Gensia having obtained cash or contractually
committed payments for such research activities from third parties in
the form of research collaborations or otherwise, or (ii) by the
termination of such research activities; provided, however, that in any
event, Gensia shall be permitted to expend such amounts on research as
are required for Gensia to fulfill its obligations under its agreement
with Pfizer Inc., dated as of May 1, 1996. It is further understood by
Gensia and Rakepoll Finance that Gensia will not borrow money in order
to eliminate the net use of cash as described in subclause (i) above.
In the event that such net use of cash has been eliminated pursuant to
subclause (i) above, it is the intent of the parties hereto that,
subsequent to the Closing Date, they will use their best efforts to
present to the Board of Directors of Gensia a plan to effectuate the
spinoff of the research activities of Gensia into an independent
company, so long as such spinoff is reasonably feasible. Such spinoff
plan shall include as assets of the company to be spunoff the five
million dollar ($5,000,000) cash contribution contemplated by the
funding plan agreed to by the parties hereto and other cash payments
received (and unspent) or to be received under research collaborations
between third parties and Gensia. If there has been no such spinoff
within six months after the Closing Date, any such research activities
not fully paid for by third parties will be terminated, so that no such
research activities will produce losses."
2. 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.
3. Definitions; References. All terms used, but not defined in
this Amendment shall have the respective meanings set forth in the Agreement.
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.
<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
-----------------------------
Chairman of the Board
RAKEPOLL FINANCE N.V.
By /s/ Carlo Salvi
-----------------------------
Chairman of the Board
Exhibit 2
---------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
SHAREHOLDER'S AGREEMENT
Between
RAKEPOLL FINANCE N.V.
and
GENSIA, INC.
Dated as of November 12, 1996
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
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
<PAGE>
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
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
<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
<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.
<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
<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.
<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
<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
<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
<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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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;
<PAGE>
(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;
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
(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.
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<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.
<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
<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"
<PAGE>
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.
<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
Exhibit 3
---------
RESTATED CERTIFICATE OF INCORPORATION
OF
GENSIA SICOR INC.
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 245 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.
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
<PAGE>
(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 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 out-
<PAGE>
standing 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 Par-
ticipating Preferred Stock unless the date of issue of such 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
<PAGE>
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 occurrence 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 thereupon 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
<PAGE>
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 Direc-
tors 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.
(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.
(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
<PAGE>
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 liqui-
dation, 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.
(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 Sec-
tion 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
<PAGE>
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 appropri-
ately 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.
(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) com-
bine 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.
<PAGE>
8. Redemption. The shares of Series I Participating Preferred Stock
shall not be redeemable.
9. Ranking. The Series I Participating Preferred Stock shall rank
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 divi-
dends, 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 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
<PAGE>
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).
"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
<PAGE>
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 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
<PAGE>
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 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 $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
<PAGE>
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 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.
<PAGE>
(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) the date fixed for
redemption, whether or not earned or declared:
Year Price
---- -----
1996 $52.50
1997 $52.08
1998 $51.67
1999 $51.25
2000 $50.83
2001 $50.42
2002 and thereafter $50.00
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.
<PAGE>
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 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.
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
<PAGE>
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 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
<PAGE>
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 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.
<PAGE>
(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 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 securities and property receivable <PAGE>
(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.
(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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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
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 Corporation is the continuing
corporation and that does not result in any reclassification
or change in the Common Stock outstanding) or a sale, lease
<PAGE>
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") 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.
<PAGE>
(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 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);
<PAGE>
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.
(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
<PAGE>
such stock shall be Common Stock or if the holder of $3.75
Convertible Exchangeable Preferred Stock shall be entitled
to 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 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
<PAGE>
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 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
<PAGE>
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 Stock or the 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
<PAGE>
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 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 pursu-
ant 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) 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
<PAGE>
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 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.
<PAGE>
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 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
<PAGE>
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.
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, offi-
cer, 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 per-
mitted 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 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
<PAGE>
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the Corpora-
tion 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 determina-
tion 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.
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
<PAGE>
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 out-
standing 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 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
Exhibit 4
---------
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 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.
<PAGE>
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.
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.
<PAGE>
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 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.
<PAGE>
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, 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
<PAGE>
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 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.
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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.
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
<PAGE>
the Corporation 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 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 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
<PAGE>
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
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.
<PAGE>
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 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.
<PAGE>
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 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-
<PAGE>
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 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.
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.
<PAGE>
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 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.
<PAGE>
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 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.
<PAGE>
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.
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.
<PAGE>
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 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.
Exhibit 5
---------
JOINT FILING AGREEMENT
Each of the undersigned hereby agrees and consents that the
statement on Schedule 13D filed herewith (the "Schedule 13D") by Rakepoll
Finance N.V. ("Rakepoll Finance") is filed on behalf of each of them pursuant
to the authorization of each of them to Rakepoll Finance to make such filing
and that such Schedule 13D is filed jointly on behalf of each of them,
pursuant to the Securities Exchange Act of 1934, as amended, and the rules
promulgated thereunder. Each of these persons is not responsible for the
completeness or accuracy of the information concerning the other persons
making this filing unless such person knows or has reason to believe that
such information is inaccurate. This agreement may be signed in
counterparts.
RAKEPOLL FINANCE N.V.
By:/s/ Carlo Salvi
------------------------------
Name: Carlo Salvi
Title: Chairman of the Board
KARBONA INDUSTRIES LTD.
By:/s/ Carlo Salvi
------------------------------
Name: Carlo Salvi
Title: Director
CARLO SALVI
/s/ Carlo Salvi
-------------------------------
Dated: March 7, 1997
