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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 30, 1996
GENSIA, INC.
(Exact name of registrant as specified in its charter)
Commission file number 0-18549
Delaware 33-0176647
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
9360 Towne Centre Drive, San Diego, CA 92121
(Address of principal executive offices)
(Zip Code)
(619) 546-8300
(Registrant's telephone number, including area code)
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GENSIA, INC.
FORM 8-K
CURRENT REPORT
TABLE OF CONTENTS
Page
Item 5. Other Events 3
Item 7. Financial Statements and Exhibits 3
Signature 4
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ITEM 5. Other Events
During the last week of December 1996 and in January 1997 Gensia,
Inc.("Gensia") sold in private placements 2,260,000 shares of its Common Stock
for net proceeds of approximately $9.0 million. The stock was sold directly
by Gensia primarily to existing institutional investors. As part of the
transactions, Gensia agreed to use its best efforts to file with the
Securities and Exchange Commission and have declared effective by March 31,
1997 a registration statement covering the resale of the 2,260,000 shares of
Common Stock.
ITEM 7. Financial Statements and Exhibits
(c) Exhibits
10.1 Stock Purchase Agreement, dated as of December 30, 1996,
between Gensia and Grace Brothers, Ltd., relating to the sale
and purchase of 500,000 shares of Gensia Common Stock.
10.2 Stock Purchase Agreement, dated as of December 30, 1996,
between Gensia and Grace Brothers, Ltd., relating to the sale
and purchase of 1,000,000 shares of Gensia Common Stock.
10.3 Stock Purchase Agreement, dated as of January 9, 1997,
between Gensia and Armen Partners, relating to the sale and
purchase of 140,000 shares of Gensia Common Stock.
10.4 Stock Purchase Agreement, dated as of January 9, 1997,
between Gensia and Armen Partners Offshore Fund, Ltd., relating
to the sale and purchase of 90,000 shares of Gensia Common
Stock.
10.5 Stock Purchase Agreement, dated as of January 9, 1997,
between Gensia and GHA Management Corp., relating to the sale
and purchase of 20,000 shares of Gensia Common Stock.
10.6 Stock Purchase Agreement, dated as of January 9, 1997,
between Gensia and Mark S. Berg, relating to the sale and
purchase of 187,500 shares of Gensia Common Stock.
10.7 Stock Purchase Agreement, dated as of January 9, 1997,
between Gensia and Hanover Associates LLC, relating to the sale
and purchase of 60,000 shares of Gensia Common Stock.
10.8 Stock Purchase Agreement, dated as of January 9, 1997,
between Gensia and M.S.B. Research Inc., relating to the sale
and purchase of 62,500 shares of Gensia Common Stock.
10.9 Stock Purchase Agreement, dated as of January 22, 1997,
between Gensia and Mark S. Berg, relating to the sale
and purchase of 200,000 shares of Gensia Common Stock.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
GENSIA, INC.
Date: February 19, 1997 /s/ Daniel D. Burgess
---------------------
Daniel D. Burgess
Vice President, Finance
and Chief Financial Officer
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EXHIBIT INDEX
Exhibit
Number Description
------- ------------------------------------------------------------
10.1 Stock Purchase Agreement, dated as of December 30, 1996,
between Gensia and Grace Brothers, Ltd., relating to the sale
and purchase of 500,000 shares of Gensia Common Stock.
10.2 Stock Purchase Agreement, dated as of December 30, 1996,
between Gensia and Grace Brothers, Ltd., relating to the sale
and purchase of 1,000,000 shares of Gensia Common Stock.
10.3 Stock Purchase Agreement, dated as of January 9, 1997,
between Gensia and Armen Partners, relating to the sale and
purchase of 140,000 shares of Gensia Common Stock.
10.4 Stock Purchase Agreement, dated as of January 9, 1997,
between Gensia and Armen Partners Offshore Fund, Ltd., relating
to the sale and purchase of 90,000 shares of Gensia Common
Stock.
10.5 Stock Purchase Agreement, dated as of January 9, 1997,
between Gensia and GHA Management Corp., relating to the sale
and purchase of 20,000 shares of Gensia Common Stock.
10.6 Stock Purchase Agreement, dated as of January 9, 1997,
between Gensia and Mark S. Berg, relating to the sale and
purchase of 187,500 shares of Gensia Common Stock.
10.7 Stock Purchase Agreement, dated as of January 9, 1997,
between Gensia and Hanover Associates LLC, relating to the sale
and purchase of 60,000 shares of Gensia Common Stock.
10.8 Stock Purchase Agreement, dated as of January 9, 1997,
between Gensia and M.S.B. Research Inc., relating to the sale
and purchase of 62,500 shares of Gensia Common Stock.
10.9 Stock Purchase Agreement, dated as of January 22, 1997,
between Gensia and Mark S. Berg, relating to the sale
and purchase of 200,000 shares of Gensia Common Stock.
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EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of the 30th day of December, 1996 by and between GENSIA,
INC., a Delaware corporation (the "Company"), and GRACE
BROTHERS, LTD., an Illinois limited partnership (the
"Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Common Stock. Subject to
the terms and conditions of this Agreement, Investor hereby
purchases and the Company hereby sells and issues to Investor
500,000 shares (the "Original Shares") of the Company's Common
Stock for the purchase price of $4.00 per share (such per share
purchase price is hereinafter referred to as the "Original Per
Share Purchase Price") for an aggregate price of $2,000,000
(the "Original Aggregate Purchase Price").
1.2 Closing. The purchase and sale of the Common
Stock shall take place at the offices of the Company, 9360 Towne
Centre Drive, San Diego, California, at 10 A.M., on the date
hereof, or at such other time and place as the Company and
Investor mutually agree upon, verbally or in writing (which time
and place are designated as the "Closing"). At the Closing the
Company shall deliver to Investor a certificate representing the
Common Stock which such Investor is purchasing against delivery
to the Company by such Investor of a bank wire in same day funds
in the amount of the Purchase Price therefor payable to the
Company's order.
1.3 Adjustment to Original Shares. If subsequent to
the date hereof and prior to the consummation or termination of
the Stock Exchange Agreement between the Company and Rakepoll
Finance N.V. dated as of November 12, 1996, as amended, (the
"Relevant Time Period"), the Company issues additional shares of
Common Stock at a per share price less than the Original Per
Share Purchase Price, or securities convertible into Common
Stock at a conversion price less than the Original Per Share
Purchase Price (other than pursuant to the exercise or
conversion of securities outstanding on the date hereof or
pursuant to the Company's existing stock plans) (such per share
price or conversion price being hereinafter referred to as the
"New Per Share Price"), then in connection with the first such
transaction the Company will issue to Investor an additional
number of shares of Common Stock (the "Additional Shares") equal
to (a) the Original Aggregate Purchase Price divided by the New
Per Share Price minus (b) the number of Original Shares. In the
event that after the issuance of Additional Shares, but before
the end of the Relevant Time Period, the Company issues Common
Stock at a per share price less than the New Per Share Price or
convertible securities at a conversion price less than the New
Per Share Price (other than pursuant to the exercise or
conversion of securities outstanding on the date hereof or
pursuant to the Company's stock plans), then a calculation shall
be made in accordance with the preceding sentence, substituting
the sum of the number of Original Shares plus the number of
Additional Shares in clause (b) above. Such number of shares
shall then be issued to Investor.
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1.4 Definitions.
(a) The following terms, as used herein, have the
following meanings:
"Closing Date" means the date of the Closing.
"Common Stock" means the Common Stock, par value $0.01
per share of the Company, together with the associated preferred
stock purchase rights established pursuant to the Rights
Agreement dated March 9, 1992 between the Company and
ChaseMellon Shareholder Services L.L.C. as rights agent (the
"Rights").
"Material Adverse Effect" means a material adverse
effect on the condition (financial or otherwise), business,
assets, results of operations of a corporation and its
subsidiaries taken as a whole.
"1934 Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated
thereunder.
"1933 Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Person" shall mean an individual, corporation,
partnership, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization, governmental authority or any other
form of entity not specifically listed herein.
"Purchased Shares" means the Original Shares and any
Additional Shares.
2. Representations and Warranties of the Company.
The Company hereby represents and warrants to Investor that:
2.1 Organization, Good Standing and Qualification.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and
has all requisite corporate power and authority to carry on its
business as now conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction
in which the failure so to qualify would have a Material Adverse
Effect.
2.2 Capitalization. The authorized capital of the
Company consists of:
(i) Preferred Stock. 5,000,000 shares of Preferred
Stock, of which 1,840,000 shares have been designated $3.75
Convertible Exchangeable Preferred Stock, par value $.01 per
share (the "Convertible Preferred Stock"), and 100,000 shares
have been designated Series I Participating Preferred Stock, par
value $.01 per share (the "Participating Preferred Stock").
There are 1,600,000 shares of Convertible Preferred Stock and no
shares of Participating Preferred Stock issued and outstanding.
(ii) Common Stock. 75,000,000 shares of Common
Stock, of which 36,950,792 shares were issued and outstanding as
of September 30, 1996. The Company has entered into a Stock
Exchange Agreement, dated as of November 12, 1996 (the "Stock
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Exchange Agreement"), with Rakepoll Finance N.V. which, among
other things, provides for the Company to issue 29,500,000
shares of Common Stock to Rakepoll Finance N.V. The
consummation of the transactions contemplated by the Stock
Exchange Agreement, including the issuance of shares of Common
Stock to Rakepoll Finance N.V., is subject to the satisfaction
of certain conditions, including shareholder and regulatory
approval.
2.3 Authorization. All corporate action on the part
of the Company, its officers, directors and stockholders
necessary for (i) the authorization, execution and delivery of
this Agreement, (ii) the performance of all obligations of the
Company hereunder and (iii) the authorization, issuance (or
reservation for issuance) and delivery of the Common Stock being
sold hereunder, to the extent that the foregoing requires
performance on or prior to the Closing, has been taken and this
Agreement constitutes the valid and legally binding obligation
of the Company, enforceable against the Company in accordance
with its terms.
2.4 Valid Issuance of Purchased Shares. The Original
Shares have been, and when and if issued the Additional Shares
will be, duly and validly issued and fully paid and non-
assessable and, based in part upon the representations of the
Investor in this Agreement, issued in compliance with all
applicable federal and state securities laws.
3. Representations and Warranties of Investor. This
Agreement is made with Investor in reliance upon the Investor's
representation and warranties to the Company, which by such
Investor's execution of this Agreement the Investor hereby
confirms, that:
3.1 Organization and Existence. Investor is a
limited partnership validly existing and in good standing under
the laws of Illinois and has all corporate powers and all
material governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now
conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not,
individually or in the aggregate, have a Material Adverse
Effect.
3.2 Corporate Authorization. This execution,
delivery and performance by Investor of this Agreement are
within the corporate powers of Investor and have been duly
authorized by all necessary partnership action on the part of
Investor. This Agreement constitutes the valid and legally
binding obligation of Investor, enforceable against Investor in
accordance with its terms.
3.3 Purchase Entirely for Own Account. All Purchased
Shares to be received by Investor will be acquired for
investment for Investor's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any
part thereof, and that Investor has no present intention of
selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, Investor
further represents that Investor does not have any contract, un-
dertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third
person, with respect to any of the Purchased Shares.
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3.4 Restricted Securities. Investor understands that
the Purchased Shares are characterized as "restricted securi-
ties" under the federal securities laws inasmuch as they are
being or will be acquired from the Company in a transaction not
involving a public offering and that under such laws and
applicable regulations such securities may only be resold
without registration under the 1933 Act in certain limited
circumstances. In this connection Investor represents that it
is familiar with Securities and Exchange Commission ("SEC") Rule
144, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act.
3.5 Legends. It is understood that the certificates
evidencing the Purchased 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 satisfactory to the Company that
such registration is not required or unless sold pursuant to
Rule 144 of such Act."
(b) If required by the authorities of any state in
connection with the issuance or sale of the Common Stock, the
legend required by such state authority.
4. Registration Rights. The Company covenants and
agrees as follows:
4.1 Certain Additional Definitions.
As used in this Agreement, the following capitalized
terms shall have the following meanings:
"Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering
of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such
prospectus.
"Register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration
statement or similar document in compliance with the 1933 Act,
and such registration statement or document becoming effective
under the 1933 Act.
"Registrable Securities" shall mean (i) the Purchased
Shares; (ii) any Common Stock issued as (or issuable upon the
conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with
respect to, or in exchange for or in replacement of, such
Purchased Shares; and (iii) any Common Stock issued pursuant to
Section 4.2(a).
"Registration Statement" shall mean any registration
statement of the Company that covers any of the Registrable
Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such
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Registration Statement, including post-effective amendments, all
exhibits and all material incorporated by reference in such
Registration Statement.
4.2 Registration. The Company will use its
reasonable best efforts to effect a registration to permit the
sale of the Registrable Securities as described below, and
pursuant thereto the Company will:
(a) prepare and file and use its reasonable best
efforts to have declared effective by March 31, 1997 by the SEC,
a Registration Statement on Form S-3 relating to resale of all
of the shares of the Registrable Securities and use its
reasonable best efforts to cause such Registration Statement to
remain continuously effective for a period which will terminate
when all Registrable Securities covered by such Registration
Statements, as amended from time to time, have been sold or when
the Registrable Securities may be sold under Rule 144(k) under
the 1933 Act. If such Registration Statement is not declared
effective by the SEC by March 31, 1997 then on the first
business day thereafter the Company shall issue to Investor
additional shares of Common Stock equal to 2% of the shares of
Common Stock previously issued to Investor hereunder. If such
Registration Statement has not been declared effective prior to
the end of any succeeding month then on the first business day
thereafter the Company shall issue to Investor shares of Common
Stock equal to 1.5% of the shares of Common Stock previously
issued to Investor hereunder.
(b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement and the
Prospectus as may be necessary to keep such Registration
Statement effective for the period specified in Section 4.2(a)
and to comply with the provisions of the 1933 Act and the 1934
Act with respect to the distribution of all Registrable
Securities;
(c) notify the Investor, promptly, and confirm such
notice in writing, (i) when the Prospectus or any supplement or
post-effective amendment has been filed, and, with respect to
the Registration Statement or any post-effective amendment, when
the same has become effective, (ii) of any request by the SEC
for amendments or supplements to the Registration Statement or
Prospectus or for additional information, (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for
that purpose, and (iv) 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;
(d) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible moment;
(e) furnish to the Investor, without charge, at least
one copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules,
all, upon a Investor's request, documents incorporated therein
by reference and all exhibits thereto (including those
incorporated by reference);
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(f) deliver to the Investor, without charge, as many
copies of the Prospectus (including each preliminary prospectus)
and any amendment or supplement thereto as Investor may
reasonably request in order to facilitate the disposition of the
Registrable Securities;
(g) cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange
or market on which similar securities issued by the Company are
then listed, and if the securities are not so listed to use its
reasonable best efforts promptly to cause all such securities to
be listed on either the New York Stock Exchange, the American
Stock Exchange or the Nasdaq Stock Market;
(h) use reasonable best efforts to qualify or
register the Registrable Securities for sale under (or obtain
exemptions from the application of) the Blue Sky laws of such
jurisdictions as are applicable. The Company shall not be
required to qualify as a foreign corporation or to file a
general consent to service of process in any such jurisdiction
where it is not presently qualified or where it would be subject
to general service of process or taxation as a foreign corpora-
tion in any jurisdiction where it is not now so subject.
(i) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC
under the 1933 Act and the 1934 Act and take such other actions
as may be reasonably necessary to facilitate the registration of
the Registrable Securities hereunder.
Investor shall furnish to the Company such information
regarding the distribution of such securities as the Company may
from time to time reasonably request in writing.
If the Company delivers a certificate in writing to
the Investor, to the effect that a delay in the sale of
Registrable Securities by the Investor under the Registration
Statement is necessary because a sale pursuant to such
Registration Statement in its then current form would reasonably
be expected to constitute a violation of the federal securities
laws then the Investor shall agree not to sell or otherwise
transfer such Registrable Securities for the period of time
specified by the Company in its certificate. In no event shall
such delay exceed ten (10) business days; provided, however,
that if, prior to the expiration of such ten (10) business day
period, the Company delivers a certificate in writing to the
Investor to the effect that a further delay in such sale beyond
such ten (10) business day period is necessary because a sale
pursuant to such Registration Statement in its then current form
would reasonably be expected to constitute a violation of the
federal securities laws, the Company may refuse to permit the
Investor to resell any Registrable Securities pursuant to such
Registration Statement for an additional period not to exceed
five (5) business days.
4.3 Registration Expenses. All expenses incident to
the Company's performance of or compliance with this Agreement,
including without limitation all registration and filing fees,
fees with respect to the filings required to be made with the
National Association of Securities Dealers, Inc., fees and
expenses of compliance with the securities or Blue Sky laws,
printing expenses, messenger, telephone and delivery expenses,
fees and disbursements of counsel for the Company, fees and
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disbursements of all independent certified public accountants of
the Company, fees and expenses incurred in connection with the
listing of the securities, rating agency fees and the fees and
expenses of any person, including special experts, retained by
the Company, will be borne by the Company, regardless of whether
the Registration Statement becomes effective; provided, however,
that the Company will not be required to pay discounts,
commissions or fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals relating
to the distribution of the Registrable Securities or fees or
disbursements of any counsel to the Investor (other than as
provided and subject to the limit stated in Section 5.7 hereof).
4.4 Rule 144.
The Company covenants that it will file the reports
required to be filed by it under the 1933 Act and the 1934 Act
and it will take such further action as the Investor may
reasonably request, all to the extent required to enable
Investor to sell Registrable Securities without registration
under the 1933 Act in reliance on the exemption provided by
Rule 144 or Rule 144A under the 1933 Act or any successor or
similar rules or statues. Upon the request of the Investor, the
Company will deliver to the Investor a written statement as to
whether the Company has complied with such information and
requirements.
4.5 Indemnification. In the event any Registrable
Securities are included in a registration statement under this
Section 4:
(a) To the extent permitted by law, the Company
will indemnify and hold harmless the Investor, any underwriter
(as defined in the Act) for the Investor, any officer, director,
partner or agent thereof, and each person, if any, who controls
the Investor or underwriter within the meaning of the 1933 Act
or the 1934 Act against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject
under the 1933 Act, the 1934 Act or other United States federal
or state securities law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act or other United States
federal or state securities law, or any rule or regulation
promulgated under the 1933 Act, the 1934 Act or other United
States federal or state securities law; and the Company will pay
to the Investor, underwriter or controlling person any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability, or action as incurred; provided, however, that the
indemnity agreement contained in this subsection 4.5(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), nor shall the Company be liable in any
<PAGE>8
such case for any such loss, claim, damage, liability, or action
to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by the Investor, underwriter or controlling person.
(b) To the extent permitted by law, the Investor
will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration
statement, each person, if any, who controls the Company within
the meaning of the 1933 Act, any underwriter, any officer,
director, partner or agent thereof and any controlling person of
any such underwriter, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing
persons may become subject, under the 1933 Act, the 1934 Act or
other United States federal or state securities law insofar as
such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation,
in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written
information furnished by the Investor expressly for use in
connection with such registration; and the Investor will pay any
legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this subsection 4.5(b),
in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 4.5(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 the Investor, which consent shall not be
unreasonably withheld; provided, that, in no event shall any
indemnity under this subsection 4.5(b) exceed the proceeds (net
of underwriting discounts and commissions) from the offering
received by the Investor.
(c) After receipt by an indemnified party under
this Section 4.5 of notice of the commencement of any action
(including any governmental action), such indemnified party
will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 4.5, deliver to the
indemnifying party a written notice of the commencement thereof
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 noticed, to
assume the defense thereof with counsel mutually satisfactory to
the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be
represented without conflict by one counsel) shall have the
right to retain one separate counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action,
if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the
indemnified party under this Section 4.5, but the omission so to
deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 4.5.
<PAGE>9
(d) If the indemnification provided for in this
Section 4.5 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss,
liability, claim, damage, or expense referred to therein, then
the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other
relevant equitable considerations; provided, however, that, in
any such case, (A) the Investor will not be required to
contribute any amount in excess of the proceeds (net of
underwriting discounts and commissions) received by the Investor
from all Registrable Securities offered and sold by the Investor
pursuant to the registration statement; and (B) no person or
entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled
to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation. The relative fault of the
indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the
Violation relates to information supplied by the indemnifying
party or by the indemnified party and the parties' relative
intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution
contained in the underwriting agreement entered into in
connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(f) The obligations of the Company and the
Investor under this Section 4.5 shall survive the completion of
any offering of Registrable Securities in a registration
statement under this Section 4, and otherwise.
4.6 Other Registration Participants. The Company
agrees that from and after January 22, 1997 it will not grant to
any person any piggyback or other participation rights in the
Registration Statement referenced in Section 4.2(a) hereof. The
foregoing shall not be deemed to prevent the Company from
granting such rights with respect to any registration statement
that does not cover the Registrable Securities.
5. Miscellaneous.
5.1 Successors and Assigns. The terms and conditions
of this Agreement shall inure to the benefit of and be binding
upon the respective permitted successors and assigns of the
parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
5.2 Governing Law. This Agreement shall be governed
by and construed under the laws of the State of California
(irrespective of its choice of law principles).
<PAGE>10
5.3 Counterparts. This Agreement 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.
5.4 Titles and Subtitles. The titles and subtitles
used in this Agreement are used for convenience only and are not
to be considered in construing or interpreting this Agreement.
5.5 Notices. Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in
writing and shall be deemed effective upon personal delivery to
the party to be notified, or if sent by telex or telecopier,
upon receipt of the correct answerback, or upon deposit with the
United States Post Office, by registered or certified mail, or
upon deposit with an overnight air courier, in each case postage
prepaid and addressed to the party to be notified at the address
as follows, or at such other address as such party may designate
by ten days' advance written notice to the other party:
If to the Company:
Gensia, Inc.
9360 Towne Centre Drive
San Diego, CA 92121-3030
Attn: Secretary
Fax: (619) 453-0095
with a copy to:
Pillsbury Madison & Sutro LLP
P.O. Box 7880
San Francisco, CA 94104
Attn: Thomas E. Sparks, Esq.
Fax: (415) 983-7396
If to the Investor:
Grace Brothers, Ltd.
1560 Sherman Avenue
Suite 900
Evanston, IL 60201
Attn: Brian Brookover
Fax: (847) 733-0339
5.6 Finders' Fee. Each party represents that it
neither is nor will be obligated for any finders' fee or com-
mission in connection with this transaction. Investor agrees to
indemnify and hold harmless the Company from any liability for
any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability
or asserted liability) for which the Investor or any of its
officers, partners, employees or representatives is responsible.
The Company agrees to indemnify and hold harmless
Investor from any liability for any commission or compensation
in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for
which the Company or any of its officers, employees or
representatives is responsible.
5.7 Expenses. The Company and the Investor shall pay
<PAGE>11
their respective costs and expenses incurred with respect to the
negotiation, execution, delivery and performance of this
Agreement; provided, however, that Gensia shall pay for the
reasonable fees and expenses of counsel to Investor with respect
to this transaction. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement,
the prevailing party shall be entitled to reasonable attorneys'
fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled.
5.8 Amendments and Waivers. Any term of this
Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with
the written consent of the Company and the Investor. Any
amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any securities purchased
under this Agreement at the time outstanding, each future holder
of all such securities, and the Company.
5.9 Severability. If any provision of this Agreement
is held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
5.10 Entire Agreement. This Agreement, and the
Confidentiality Agreement dated December , 1996 between the
parties hereto, constitute the entire agreement between the
parties with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, both oral
and written, between the parties with respect to the subject
matter hereof and thereof. No representation, inducement,
promise, understanding, condition or warranty not set forth
herein or therein has been made or relied upon by either party
hereto. Neither this Agreement nor any provision hereof is
intended to confer upon any Person other than the parties hereto
any rights or remedies hereunder.
<PAGE>12
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
GENSIA, INC.
By /s/ David F. Hale
--------------------------
Title Chairman of the Board,
President and Chief
Executive Officer
GRACE BROTHERS, LTD.
By /s/ Bradford T. Whitmore
--------------------------
Title General Partner
<PAGE>1
EXHIBIT 10.2
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of the 30th day of December, 1996 by and between GENSIA,
INC., a Delaware corporation (the "Company"), and GRACE
BROTHERS, LTD., an Illinois limited partnership (the
"Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Common Stock. Subject to
the terms and conditions of this Agreement, Investor hereby
purchases and the Company hereby sells and issues to Investor
1,000,000 shares (the "Original Shares") of the Company's Common
Stock for the purchase price of $4.00 per share (such per share
purchase price is hereinafter referred to as the "Original Per
Share Purchase Price") for an aggregate price of $4,000,000
(the "Original Aggregate Purchase Price").
1.2 Closing. The purchase and sale of the Common
Stock shall take place at the offices of the Company, 9360 Towne
Centre Drive, San Diego, California, at 10 A.M., on the date
hereof, or at such other time and place as the Company and
Investor mutually agree upon, verbally or in writing (which time
and place are designated as the "Closing"). At the Closing the
Company shall deliver to Investor a certificate representing the
Common Stock which such Investor is purchasing against delivery
to the Company by such Investor of a bank wire in same day funds
in the amount of the Purchase Price therefor payable to the
Company's order.
1.3 Adjustment to Original Shares. If subsequent to
the date hereof and prior to the consummation or termination of
the Stock Exchange Agreement between the Company and Rakepoll
Finance N.V. dated as of November 12, 1996, as amended, (the
"Relevant Time Period"), the Company issues additional shares of
Common Stock at a per share price less than the Original Per
Share Purchase Price, or securities convertible into Common
Stock at a conversion price less than the Original Per Share
Purchase Price (other than pursuant to the exercise or
conversion of securities outstanding on the date hereof or
pursuant to the Company's existing stock plans) (such per share
price or conversion price being hereinafter referred to as the
"New Per Share Price"), then in connection with the first such
transaction the Company will issue to Investor an additional
number of shares of Common Stock (the "Additional Shares") equal
to (a) the Original Aggregate Purchase Price divided by the New
Per Share Price minus (b) the number of Original Shares. In the
event that after the issuance of Additional Shares, but before
the end of the Relevant Time Period, the Company issues Common
Stock at a per share price less than the New Per Share Price or
convertible securities at a conversion price less than the New
Per Share Price (other than pursuant to the exercise or
conversion of securities outstanding on the date hereof or
pursuant to the Company's stock plans), then a calculation shall
be made in accordance with the preceding sentence, substituting
the sum of the number of Original Shares plus the number of
Additional Shares in clause (b) above. Such number of shares
shall then be issued to Investor.
<PAGE>2
1.4 Definitions.
(a) The following terms, as used herein, have the
following meanings:
"Closing Date" means the date of the Closing.
"Common Stock" means the Common Stock, par value $0.01
per share of the Company, together with the associated preferred
stock purchase rights established pursuant to the Rights
Agreement dated March 9, 1992 between the Company and
ChaseMellon Shareholder Services L.L.C. as rights agent (the
"Rights").
"Material Adverse Effect" means a material adverse
effect on the condition (financial or otherwise), business,
assets, results of operations of a corporation and its
subsidiaries taken as a whole.
"1934 Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated
thereunder.
"1933 Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Person" shall mean an individual, corporation,
partnership, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization, governmental authority or any other
form of entity not specifically listed herein.
"Purchased Shares" means the Original Shares and any
Additional Shares.
2. Representations and Warranties of the Company.
The Company hereby represents and warrants to Investor that:
2.1 Organization, Good Standing and Qualification.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and
has all requisite corporate power and authority to carry on its
business as now conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction
in which the failure so to qualify would have a Material Adverse
Effect.
2.2 Capitalization. The authorized capital of the
Company consists of:
(i) Preferred Stock. 5,000,000 shares of Preferred
Stock, of which 1,840,000 shares have been designated $3.75
Convertible Exchangeable Preferred Stock, par value $.01 per
share (the "Convertible Preferred Stock"), and 100,000 shares
have been designated Series I Participating Preferred Stock, par
value $.01 per share (the "Participating Preferred Stock").
There are 1,600,000 shares of Convertible Preferred Stock and no
shares of Participating Preferred Stock issued and outstanding.
(ii) Common Stock. 75,000,000 shares of Common
Stock, of which 36,950,792 shares were issued and outstanding as
of September 30, 1996. The Company has entered into a Stock
Exchange Agreement, dated as of November 12, 1996 (the "Stock
<PAGE>3
Exchange Agreement"), with Rakepoll Finance N.V. which, among
other things, provides for the Company to issue 29,500,000
shares of Common Stock to Rakepoll Finance N.V. The
consummation of the transactions contemplated by the Stock
Exchange Agreement, including the issuance of shares of Common
Stock to Rakepoll Finance N.V., is subject to the satisfaction
of certain conditions, including shareholder and regulatory
approval.
2.3 Authorization. All corporate action on the part
of the Company, its officers, directors and stockholders
necessary for (i) the authorization, execution and delivery of
this Agreement, (ii) the performance of all obligations of the
Company hereunder and (iii) the authorization, issuance (or
reservation for issuance) and delivery of the Common Stock being
sold hereunder, to the extent that the foregoing requires
performance on or prior to the Closing, has been taken and this
Agreement constitutes the valid and legally binding obligation
of the Company, enforceable against the Company in accordance
with its terms.
2.4 Valid Issuance of Purchased Shares. The Original
Shares have been, and when and if issued the Additional Shares
will be, duly and validly issued and fully paid and non-
assessable and, based in part upon the representations of the
Investor in this Agreement, issued in compliance with all
applicable federal and state securities laws.
3. Representations and Warranties of Investor. This
Agreement is made with Investor in reliance upon the Investor's
representation and warranties to the Company, which by such
Investor's execution of this Agreement the Investor hereby
confirms, that:
3.1 Organization and Existence. Investor is a
limited partnership validly existing and in good standing under
the laws of Illinois and has all corporate powers and all
material governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now
conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not,
individually or in the aggregate, have a Material Adverse
Effect.
3.2 Corporate Authorization. This execution,
delivery and performance by Investor of this Agreement are
within the corporate powers of Investor and have been duly
authorized by all necessary partnership action on the part of
Investor. This Agreement constitutes the valid and legally
binding obligation of Investor, enforceable against Investor in
accordance with its terms.
3.3 Purchase Entirely for Own Account. All Purchased
Shares to be received by Investor will be acquired for
investment for Investor's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any
part thereof, and that Investor has no present intention of
selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, Investor
further represents that Investor does not have any contract, un-
dertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third
person, with respect to any of the Purchased Shares.
<PAGE>4
3.4 Restricted Securities. Investor understands that
the Purchased Shares are characterized as "restricted securi-
ties" under the federal securities laws inasmuch as they are
being or will be acquired from the Company in a transaction not
involving a public offering and that under such laws and
applicable regulations such securities may only be resold
without registration under the 1933 Act in certain limited
circumstances. In this connection Investor represents that it
is familiar with Securities and Exchange Commission ("SEC") Rule
144, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act.
3.5 Legends. It is understood that the certificates
evidencing the Purchased 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 satisfactory to the Company that
such registration is not required or unless sold pursuant to
Rule 144 of such Act."
(b) If required by the authorities of any state in
connection with the issuance or sale of the Common Stock, the
legend required by such state authority.
4. Registration Rights. The Company covenants and
agrees as follows:
4.1 Certain Additional Definitions.
As used in this Agreement, the following capitalized
terms shall have the following meanings:
"Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering
of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such
prospectus.
"Register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration
statement or similar document in compliance with the 1933 Act,
and such registration statement or document becoming effective
under the 1933 Act.
"Registrable Securities" shall mean (i) the Purchased
Shares; (ii) any Common Stock issued as (or issuable upon the
conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with
respect to, or in exchange for or in replacement of, such
Purchased Shares; and (iii) any Common Stock issued pursuant to
Section 4.2(a).
"Registration Statement" shall mean any registration
statement of the Company that covers any of the Registrable
Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such
<PAGE>5
Registration Statement, including post-effective amendments, all
exhibits and all material incorporated by reference in such
Registration Statement.
4.2 Registration. The Company will use its
reasonable best efforts to effect a registration to permit the
sale of the Registrable Securities as described below, and
pursuant thereto the Company will:
(a) prepare and file and use its reasonable best
efforts to have declared effective by March 31, 1997 by the SEC,
a Registration Statement on Form S-3 relating to resale of all
of the shares of the Registrable Securities and use its
reasonable best efforts to cause such Registration Statement to
remain continuously effective for a period which will terminate
when all Registrable Securities covered by such Registration
Statements, as amended from time to time, have been sold or when
the Registrable Securities may be sold under Rule 144(k) under
the 1933 Act. If such Registration Statement is not declared
effective by the SEC by March 31, 1997 then on the first
business day thereafter the Company shall issue to Investor
additional shares of Common Stock equal to 2% of the shares of
Common Stock previously issued to Investor hereunder. If such
Registration Statement has not been declared effective prior to
the end of any succeeding month then on the first business day
thereafter the Company shall issue to Investor shares of Common
Stock equal to 1.5% of the shares of Common Stock previously
issued to Investor hereunder.
(b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement and the
Prospectus as may be necessary to keep such Registration
Statement effective for the period specified in Section 4.2(a)
and to comply with the provisions of the 1933 Act and the 1934
Act with respect to the distribution of all Registrable
Securities;
(c) notify the Investor, promptly, and confirm such
notice in writing, (i) when the Prospectus or any supplement or
post-effective amendment has been filed, and, with respect to
the Registration Statement or any post-effective amendment, when
the same has become effective, (ii) of any request by the SEC
for amendments or supplements to the Registration Statement or
Prospectus or for additional information, (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for
that purpose, and (iv) 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;
(d) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible moment;
(e) furnish to the Investor, without charge, at least
one copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules,
all, upon a Investor's request, documents incorporated therein
by reference and all exhibits thereto (including those
incorporated by reference);
<PAGE>6
(f) deliver to the Investor, without charge, as many
copies of the Prospectus (including each preliminary prospectus)
and any amendment or supplement thereto as Investor may
reasonably request in order to facilitate the disposition of the
Registrable Securities;
(g) cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange
or market on which similar securities issued by the Company are
then listed, and if the securities are not so listed to use its
reasonable best efforts promptly to cause all such securities to
be listed on either the New York Stock Exchange, the American
Stock Exchange or the Nasdaq Stock Market;
(h) use reasonable best efforts to qualify or
register the Registrable Securities for sale under (or obtain
exemptions from the application of) the Blue Sky laws of such
jurisdictions as are applicable. The Company shall not be
required to qualify as a foreign corporation or to file a
general consent to service of process in any such jurisdiction
where it is not presently qualified or where it would be subject
to general service of process or taxation as a foreign corpora-
tion in any jurisdiction where it is not now so subject.
(i) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC
under the 1933 Act and the 1934 Act and take such other actions
as may be reasonably necessary to facilitate the registration of
the Registrable Securities hereunder.
Investor shall furnish to the Company such information
regarding the distribution of such securities as the Company may
from time to time reasonably request in writing.
If the Company delivers a certificate in writing to
the Investor, to the effect that a delay in the sale of
Registrable Securities by the Investor under the Registration
Statement is necessary because a sale pursuant to such
Registration Statement in its then current form would reasonably
be expected to constitute a violation of the federal securities
laws then the Investor shall agree not to sell or otherwise
transfer such Registrable Securities for the period of time
specified by the Company in its certificate. In no event shall
such delay exceed ten (10) business days; provided, however,
that if, prior to the expiration of such ten (10) business day
period, the Company delivers a certificate in writing to the
Investor to the effect that a further delay in such sale beyond
such ten (10) business day period is necessary because a sale
pursuant to such Registration Statement in its then current form
would reasonably be expected to constitute a violation of the
federal securities laws, the Company may refuse to permit the
Investor to resell any Registrable Securities pursuant to such
Registration Statement for an additional period not to exceed
five (5) business days.
4.3 Registration Expenses. All expenses incident to
the Company's performance of or compliance with this Agreement,
including without limitation all registration and filing fees,
fees with respect to the filings required to be made with the
National Association of Securities Dealers, Inc., fees and
expenses of compliance with the securities or Blue Sky laws,
printing expenses, messenger, telephone and delivery expenses,
fees and disbursements of counsel for the Company, fees and
<PAGE>7
disbursements of all independent certified public accountants of
the Company, fees and expenses incurred in connection with the
listing of the securities, rating agency fees and the fees and
expenses of any person, including special experts, retained by
the Company, will be borne by the Company, regardless of whether
the Registration Statement becomes effective; provided, however,
that the Company will not be required to pay discounts,
commissions or fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals relating
to the distribution of the Registrable Securities or fees or
disbursements of any counsel to the Investor (other than as
provided and subject to the limit stated in Section 5.7 hereof).
4.4 Rule 144.
The Company covenants that it will file the reports
required to be filed by it under the 1933 Act and the 1934 Act
and it will take such further action as the Investor may
reasonably request, all to the extent required to enable
Investor to sell Registrable Securities without registration
under the 1933 Act in reliance on the exemption provided by
Rule 144 or Rule 144A under the 1933 Act or any successor or
similar rules or statues. Upon the request of the Investor, the
Company will deliver to the Investor a written statement as to
whether the Company has complied with such information and
requirements.
4.5 Indemnification. In the event any Registrable
Securities are included in a registration statement under this
Section 4:
(a) To the extent permitted by law, the Company
will indemnify and hold harmless the Investor, any underwriter
(as defined in the Act) for the Investor, any officer, director,
partner or agent thereof, and each person, if any, who controls
the Investor or underwriter within the meaning of the 1933 Act
or the 1934 Act against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject
under the 1933 Act, the 1934 Act or other United States federal
or state securities law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act or other United States
federal or state securities law, or any rule or regulation
promulgated under the 1933 Act, the 1934 Act or other United
States federal or state securities law; and the Company will pay
to the Investor, underwriter or controlling person any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability, or action as incurred; provided, however, that the
indemnity agreement contained in this subsection 4.5(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), nor shall the Company be liable in any
<PAGE>8
such case for any such loss, claim, damage, liability, or action
to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by the Investor, underwriter or controlling person.
(b) To the extent permitted by law, the Investor
will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration
statement, each person, if any, who controls the Company within
the meaning of the 1933 Act, any underwriter, any officer,
director, partner or agent thereof and any controlling person of
any such underwriter, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing
persons may become subject, under the 1933 Act, the 1934 Act or
other United States federal or state securities law insofar as
such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation,
in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written
information furnished by the Investor expressly for use in
connection with such registration; and the Investor will pay any
legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this subsection 4.5(b),
in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 4.5(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 the Investor, which consent shall not be
unreasonably withheld; provided, that, in no event shall any
indemnity under this subsection 4.5(b) exceed the proceeds (net
of underwriting discounts and commissions) from the offering
received by the Investor.
(c) After receipt by an indemnified party under
this Section 4.5 of notice of the commencement of any action
(including any governmental action), such indemnified party
will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 4.5, deliver to the
indemnifying party a written notice of the commencement thereof
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 noticed, to
assume the defense thereof with counsel mutually satisfactory to
the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be
represented without conflict by one counsel) shall have the
right to retain one separate counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action,
if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the
indemnified party under this Section 4.5, but the omission so to
deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 4.5.
<PAGE>9
(d) If the indemnification provided for in this
Section 4.5 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss,
liability, claim, damage, or expense referred to therein, then
the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other
relevant equitable considerations; provided, however, that, in
any such case, (A) the Investor will not be required to
contribute any amount in excess of the proceeds (net of
underwriting discounts and commissions) received by the Investor
from all Registrable Securities offered and sold by the Investor
pursuant to the registration statement; and (B) no person or
entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled
to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation. The relative fault of the
indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the
Violation relates to information supplied by the indemnifying
party or by the indemnified party and the parties' relative
intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution
contained in the underwriting agreement entered into in
connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(f) The obligations of the Company and the
Investor under this Section 4.5 shall survive the completion of
any offering of Registrable Securities in a registration
statement under this Section 4, and otherwise.
4.6 Other Registration Participants. The Company
agrees that from and after January 22, 1997 it will not grant to
any person any piggyback or other participation rights in the
Registration Statement referenced in Section 4.2(a) hereof. The
foregoing shall not be deemed to prevent the Company from
granting such rights with respect to any registration statement
that does not cover the Registrable Securities.
5. Miscellaneous.
5.1 Successors and Assigns. The terms and conditions
of this Agreement shall inure to the benefit of and be binding
upon the respective permitted successors and assigns of the
parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
5.2 Governing Law. This Agreement shall be governed
by and construed under the laws of the State of California
(irrespective of its choice of law principles).
<PAGE>10
5.3 Counterparts. This Agreement 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.
5.4 Titles and Subtitles. The titles and subtitles
used in this Agreement are used for convenience only and are not
to be considered in construing or interpreting this Agreement.
5.5 Notices. Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in
writing and shall be deemed effective upon personal delivery to
the party to be notified, or if sent by telex or telecopier,
upon receipt of the correct answerback, or upon deposit with the
United States Post Office, by registered or certified mail, or
upon deposit with an overnight air courier, in each case postage
prepaid and addressed to the party to be notified at the address
as follows, or at such other address as such party may designate
by ten days' advance written notice to the other party:
If to the Company:
Gensia, Inc.
9360 Towne Centre Drive
San Diego, CA 92121-3030
Attn: Secretary
Fax: (619) 453-0095
with a copy to:
Pillsbury Madison & Sutro LLP
P.O. Box 7880
San Francisco, CA 94104
Attn: Thomas E. Sparks, Esq.
Fax: (415) 983-7396
If to the Investor:
Grace Brothers, Ltd.
1560 Sherman Avenue
Suite 900
Evanston, IL 60201
Attn: Brian Brookover
Fax: (847) 733-0339
5.6 Finders' Fee. Each party represents that it
neither is nor will be obligated for any finders' fee or com-
mission in connection with this transaction. Investor agrees to
indemnify and hold harmless the Company from any liability for
any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability
or asserted liability) for which the Investor or any of its
officers, partners, employees or representatives is responsible.
The Company agrees to indemnify and hold harmless
Investor from any liability for any commission or compensation
in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for
which the Company or any of its officers, employees or
representatives is responsible.
5.7 Expenses. The Company and the Investor shall pay
<PAGE>11
their respective costs and expenses incurred with respect to the
negotiation, execution, delivery and performance of this
Agreement; provided, however, that Gensia shall pay $25,000 to
Investor at the Closing for the reasonable fees and expenses of
counsel to Investor with respect to this transaction. Upon the
effectiveness of the Registration Statement referenced in
Section 4.2(a) hereof, Investor shall refund to the Company any
part of such $25,000 which has not been spent on such reasonable
fees and expenses. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement,
the prevailing party shall be entitled to reasonable attorneys'
fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled.
5.8 Amendments and Waivers. Any term of this
Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with
the written consent of the Company and the Investor. Any
amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any securities purchased
under this Agreement at the time outstanding, each future holder
of all such securities, and the Company.
5.9 Severability. If any provision of this Agreement
is held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
5.10 Entire Agreement. This Agreement, and the
Confidentiality Agreement dated December , 1996 between the
parties hereto, constitute the entire agreement between the
parties with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, both oral
and written, between the parties with respect to the subject
matter hereof and thereof. No representation, inducement,
promise, understanding, condition or warranty not set forth
herein or therein has been made or relied upon by either party
hereto. Neither this Agreement nor any provision hereof is
intended to confer upon any Person other than the parties hereto
any rights or remedies hereunder.
<PAGE>12
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
GENSIA, INC.
By /s/ David F. Hale
--------------------------
Title Chairman of the Board,
President and Chief
Executive Officer
GRACE BROTHERS, LTD.
By /s/ Brian Brookover
--------------------------
Title General Partner
<PAGE>1
EXHIBIT 10.3
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of the ninth day of January, 1997 by and between GENSIA,
INC., a Delaware corporation (the "Company"), and ARMEN
PARTNERS, a Delaware limited partnership (the "Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Common Stock. Subject to
the terms and conditions of this Agreement, Investor hereby
purchases and the Company hereby sells and issues to Investor
140,000 shares (the "Original Shares") of the Company's Common
Stock for the purchase price of $4.00 per share (such per share
purchase price is hereinafter referred to as the "Original Per
Share Purchase Price") for an aggregate price of $560,000 (the
"Original Aggregate Purchase Price").
1.2 Closing. The purchase and sale of the Common
Stock shall take place at the offices of the Company, 9360 Towne
Centre Drive, San Diego, California, at 10 A.M., on the date
hereof, or at such other time and place as the Company and
Investor mutually agree upon, verbally or in writing (which time
and place are designated as the "Closing"). At the Closing the
Company shall deliver to Investor a certificate representing the
Common Stock which such Investor is purchasing against delivery
to the Company by such Investor of a bank wire in same day funds
in the amount of the Original Aggregate Purchase Price therefor
payable to the Company's order.
1.3 Adjustment to Original Shares. If subsequent to
the date hereof and prior to the consummation or termination of
the Stock Exchange Agreement between the Company and Rakepoll
Finance N.V. dated as of November 12, 1996, as amended, (the
"Relevant Time Period"), the Company issues additional shares of
Common Stock at a per share price less than the Original Per
Share Purchase Price, or securities convertible into Common
Stock at a conversion price less than the Original Per Share
Purchase Price (other than pursuant to the exercise or
conversion of securities outstanding on the date hereof or
pursuant to the Company's existing stock plans) (such per share
price or conversion price being hereinafter referred to as the
"New Per Share Price"), then in connection with the first such
transaction the Company will issue to Investor an additional
number of shares of Common Stock (the "Additional Shares") equal
to (a) the Original Aggregate Purchase Price divided by the New
Per Share Price minus (b) the number of Original Shares. In the
event that after the issuance of Additional Shares, but before
the end of the Relevant Time Period, the Company issues Common
Stock at a per share price less than the New Per Share Price or
convertible securities at a conversion price less than the New
Per Share Price (other than pursuant to the exercise or
conversion of securities outstanding on the date hereof or
pursuant to the Company's stock plans), then a calculation shall
be made in accordance with the preceding sentence, substituting
the sum of the number of Original Shares plus the number of
Additional Shares in clause (b) above. Such number of shares
shall then be issued to Investor.
<PAGE>2
1.4 Definitions.
(a) The following terms, as used herein, have the
following meanings:
"Closing Date" means the date of the Closing.
"Common Stock" means the Common Stock, par value $0.01
per share of the Company, together with the associated preferred
stock purchase rights established pursuant to the Rights
Agreement dated March 9, 1992 between the Company and
ChaseMellon Shareholder Services L.L.C. as rights agent (the
"Rights").
"Material Adverse Effect" means a material adverse
effect on the condition (financial or otherwise), business,
assets, results of operations of a corporation and its
subsidiaries taken as a whole.
"1934 Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated
thereunder.
"1933 Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Person" shall mean an individual, corporation,
partnership, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization, governmental authority or any other
form of entity not specifically listed herein.
"Purchased Shares" means the Original Shares and any
Additional Shares.
2. Representations and Warranties of the Company.
The Company hereby represents and warrants to Investor that:
2.1 Organization, Good Standing and Qualification.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and
has all requisite corporate power and authority to carry on its
business as now conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction
in which the failure so to qualify would have a Material Adverse
Effect.
2.2 Capitalization. The authorized capital of the
Company consists of:
(i) Preferred Stock. 5,000,000 shares of Preferred
Stock, of which 1,840,000 shares have been designated $3.75
Convertible Exchangeable Preferred Stock, par value $.01 per
share (the "Convertible Preferred Stock"), and 100,000 shares
have been designated Series I Participating Preferred Stock, par
value $.01 per share (the "Participating Preferred Stock").
There are 1,600,000 shares of Convertible Preferred Stock and no
shares of Participating Preferred Stock issued and outstanding.
(ii) Common Stock. 75,000,000 shares of Common
Stock, of which 36,950,792 shares were issued and outstanding as
of September 30, 1996. The Company has entered into a Stock
Exchange Agreement, dated as of November 12, 1996 (the "Stock
<PAGE>3
Exchange Agreement"), with Rakepoll Finance N.V. which, among
other things, provides for the Company to issue 29,500,000
shares of Common Stock to Rakepoll Finance N.V. The
consummation of the transactions contemplated by the Stock
Exchange Agreement, including the issuance of shares of Common
Stock to Rakepoll Finance N.V., is subject to the satisfaction
of certain conditions, including shareholder and regulatory
approval.
2.3 Authorization. All corporate action on the part
of the Company, its officers, directors and stockholders
necessary for (i) the authorization, execution and delivery of
this Agreement, (ii) the performance of all obligations of the
Company hereunder and (iii) the authorization, issuance (or
reservation for issuance) and delivery of the Common Stock being
sold hereunder, to the extent that the foregoing requires
performance on or prior to the Closing, has been taken and this
Agreement constitutes the valid and legally binding obligation
of the Company, enforceable against the Company in accordance
with its terms.
2.4 Valid Issuance of Purchased Shares. The Original
Shares have been, and when and if issued the Additional Shares
will be, duly and validly issued and fully paid and non-
assessable and, based in part upon the representations of the
Investor in this Agreement, issued in compliance with all
applicable federal and state securities laws.
3. Representations and Warranties of Investor. This
Agreement is made with Investor in reliance upon the Investor's
representation and warranties to the Company, which by such
Investor's execution of this Agreement the Investor hereby
confirms, that:
3.1 Organization and Existence. Investor is a
limited partnership validly existing and in good standing under
the laws of Delaware and has all corporate powers and all
material governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now
conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not,
individually or in the aggregate, have a Material Adverse
Effect.
3.2 Corporate Authorization. This execution,
delivery and performance by Investor of this Agreement are
within the corporate powers of Investor and have been duly
authorized by all necessary partnership action on the part of
Investor. This Agreement constitutes the valid and legally
binding obligation of Investor, enforceable against Investor in
accordance with its terms.
3.3 Purchase Entirely for Own Account. All Purchased
Shares to be received by Investor will be acquired for
investment for Investor's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any
part thereof, and that Investor has no present intention of
selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, Investor
further represents that Investor does not have any contract, un-
dertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third
person, with respect to any of the Purchased Shares.
<PAGE>4
3.4 Restricted Securities. Investor understands that
the Purchased Shares are characterized as "restricted securi-
ties" under the federal securities laws inasmuch as they are
being or will be acquired from the Company in a transaction not
involving a public offering and that under such laws and
applicable regulations such securities may only be resold
without registration under the 1933 Act in certain limited
circumstances. In this connection Investor represents that it
is familiar with Securities and Exchange Commission ("SEC") Rule
144, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act.
3.5 Legends. It is understood that the certificates
evidencing the Purchased 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 satisfactory to the Company that
such registration is not required or unless sold pursuant to
Rule 144 of such Act."
(b) If required by the authorities of any state in
connection with the issuance or sale of the Common Stock, the
legend required by such state authority.
4. Registration Rights. The Company covenants and
agrees as follows:
4.1 Certain Additional Definitions.
As used in this Agreement, the following capitalized
terms shall have the following meanings:
"Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering
of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such
prospectus.
"Register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration
statement or similar document in compliance with the 1933 Act,
and such registration statement or document becoming effective
under the 1933 Act.
"Registrable Securities" shall mean (i) the Purchased
Shares; (ii) any Common Stock issued as (or issuable upon the
conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with
respect to, or in exchange for or in replacement of, such
Purchased Shares; and (iii) any Common Stock issued pursuant to
Section 4.2(a).
"Registration Statement" shall mean any registration
statement of the Company that covers any of the Registrable
Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such
<PAGE>5
Registration Statement, including post-effective amendments, all
exhibits and all material incorporated by reference in such
Registration Statement.
4.2 Registration. The Company will use its
reasonable best efforts to effect a registration to permit the
sale of the Registrable Securities as described below, and
pursuant thereto the Company will:
(a) prepare and file and use its reasonable best
efforts to have declared effective by March 31, 1997 by the SEC,
a Registration Statement on Form S-3 relating to resale of all
of the shares of the Registrable Securities and use its
reasonable best efforts to cause such Registration Statement to
remain continuously effective for a period which will terminate
when all Registrable Securities covered by such Registration
Statements, as amended from time to time, have been sold or when
the Registrable Securities may be sold under Rule 144(k) under
the 1933 Act. If such Registration Statement is not declared
effective by the SEC by March 31, 1997 then on the first
business day thereafter the Company shall issue to Investor
additional shares of Common Stock equal to 2% of the shares of
Common Stock previously issued to Investor hereunder. If such
Registration Statement has not been declared effective prior to
the end of any succeeding month then on the first business day
thereafter the Company shall issue to Investor shares of Common
Stock equal to 1.5% of the shares of Common Stock previously
issued to Investor hereunder.
(b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement and the
Prospectus as may be necessary to keep such Registration
Statement effective for the period specified in Section 4.2(a)
and to comply with the provisions of the 1933 Act and the 1934
Act with respect to the distribution of all Registrable
Securities;
(c) notify the Investor, promptly, and confirm such
notice in writing, (i) when the Prospectus or any supplement or
post-effective amendment has been filed, and, with respect to
the Registration Statement or any post-effective amendment, when
the same has become effective, (ii) of any request by the SEC
for amendments or supplements to the Registration Statement or
Prospectus or for additional information, (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for
that purpose, and (iv) 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;
(d) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible moment;
(e) furnish to the Investor, without charge, at least
one copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules,
all, upon a Investor's request, documents incorporated therein
by reference and all exhibits thereto (including those
incorporated by reference);
<PAGE>6
(f) deliver to the Investor, without charge, as many
copies of the Prospectus (including each preliminary prospectus)
and any amendment or supplement thereto as Investor may
reasonably request in order to facilitate the disposition of the
Registrable Securities;
(g) cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange
or market on which similar securities issued by the Company are
then listed, and if the securities are not so listed to use its
reasonable best efforts promptly to cause all such securities to
be listed on either the New York Stock Exchange, the American
Stock Exchange or the Nasdaq Stock Market;
(h) use reasonable best efforts to qualify or
register the Registrable Securities for sale under (or obtain
exemptions from the application of) the Blue Sky laws of such
jurisdictions as are applicable. The Company shall not be
required to qualify as a foreign corporation or to file a
general consent to service of process in any such jurisdiction
where it is not presently qualified or where it would be subject
to general service of process or taxation as a foreign corpora-
tion in any jurisdiction where it is not now so subject.
(i) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC
under the 1933 Act and the 1934 Act and take such other actions
as may be reasonably necessary to facilitate the registration of
the Registrable Securities hereunder.
Investor shall furnish to the Company such information
regarding the distribution of such securities as the Company may
from time to time reasonably request in writing.
If the Company delivers a certificate in writing to
the Investor, to the effect that a delay in the sale of
Registrable Securities by the Investor under the Registration
Statement is necessary because a sale pursuant to such
Registration Statement in its then current form would reasonably
be expected to constitute a violation of the federal securities
laws then the Investor shall agree not to sell or otherwise
transfer such Registrable Securities for the period of time
specified by the Company in its certificate. In no event shall
such delay exceed ten (10) business days; provided, however,
that if, prior to the expiration of such ten (10) business day
period, the Company delivers a certificate in writing to the
Investor to the effect that a further delay in such sale beyond
such ten (10) business day period is necessary because a sale
pursuant to such Registration Statement in its then current form
would reasonably be expected to constitute a violation of the
federal securities laws, the Company may refuse to permit the
Investor to resell any Registrable Securities pursuant to such
Registration Statement for an additional period not to exceed
five (5) business days.
4.3 Registration Expenses. All expenses incident to
the Company's performance of or compliance with this Agreement,
including without limitation all registration and filing fees,
fees with respect to the filings required to be made with the
National Association of Securities Dealers, Inc., fees and
expenses of compliance with the securities or Blue Sky laws,
printing expenses, messenger, telephone and delivery expenses,
fees and disbursements of counsel for the Company, fees and
<PAGE>7
disbursements of all independent certified public accountants of
the Company, fees and expenses incurred in connection with the
listing of the securities, rating agency fees and the fees and
expenses of any person, including special experts, retained by
the Company, will be borne by the Company, regardless of whether
the Registration Statement becomes effective; provided, however,
that the Company will not be required to pay discounts,
commissions or fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals relating
to the distribution of the Registrable Securities or fees or
disbursements of any counsel to the Investor.
4.4 Rule 144.
The Company covenants that it will file the reports
required to be filed by it under the 1933 Act and the 1934 Act
and it will take such further action as the Investor may
reasonably request, all to the extent required to enable
Investor to sell Registrable Securities without registration
under the 1933 Act in reliance on the exemption provided by
Rule 144 or Rule 144A under the 1933 Act or any successor or
similar rules or statues. Upon the request of the Investor, the
Company will deliver to the Investor a written statement as to
whether the Company has complied with such information and
requirements.
4.5 Indemnification. In the event any Registrable
Securities are included in a registration statement under this
Section 4:
(a) To the extent permitted by law, the Company
will indemnify and hold harmless the Investor, any underwriter
(as defined in the Act) for the Investor, any officer, director,
partner or agent thereof, and each person, if any, who controls
the Investor or underwriter within the meaning of the 1933 Act
or the 1934 Act against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject
under the 1933 Act, the 1934 Act or other United States federal
or state securities law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act or other United States
federal or state securities law, or any rule or regulation
promulgated under the 1933 Act, the 1934 Act or other United
States federal or state securities law; and the Company will pay
to the Investor, underwriter or controlling person any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability, or action as incurred; provided, however, that the
indemnity agreement contained in this subsection 4.5(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), nor shall the Company be liable in any
such case for any such loss, claim, damage, liability, or action
<PAGE>8
to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by the Investor, underwriter or controlling person.
(b) To the extent permitted by law, the Investor
will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration
statement, each person, if any, who controls the Company within
the meaning of the 1933 Act, any underwriter, any officer,
director, partner or agent thereof and any controlling person of
any such underwriter, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing
persons may become subject, under the 1933 Act, the 1934 Act or
other United States federal or state securities law insofar as
such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation,
in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written
information furnished by the Investor expressly for use in
connection with such registration; and the Investor will pay any
legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this subsection 4.5(b),
in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 4.5(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 the Investor, which consent shall not be
unreasonably withheld; provided, that, in no event shall any
indemnity under this subsection 4.5(b) exceed the proceeds (net
of underwriting discounts and commissions) from the offering
received by the Investor.
(c) After receipt by an indemnified party under
this Section 4.5 of notice of the commencement of any action
(including any governmental action), such indemnified party
will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 4.5, deliver to the
indemnifying party a written notice of the commencement thereof
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 noticed, to
assume the defense thereof with counsel mutually satisfactory to
the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be
represented without conflict by one counsel) shall have the
right to retain one separate counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action,
if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the
indemnified party under this Section 4.5, but the omission so to
deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 4.5.
<PAGE>9
(d) If the indemnification provided for in this
Section 4.5 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss,
liability, claim, damage, or expense referred to therein, then
the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other
relevant equitable considerations; provided, however, that, in
any such case, (A) the Investor will not be required to
contribute any amount in excess of the proceeds (net of
underwriting discounts and commissions) received by the Investor
from all Registrable Securities offered and sold by the Investor
pursuant to the registration statement; and (B) no person or
entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled
to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation. The relative fault of the
indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the
Violation relates to information supplied by the indemnifying
party or by the indemnified party and the parties' relative
intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution
contained in the underwriting agreement entered into in
connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(f) The obligations of the Company and the
Investor under this Section 4.5 shall survive the completion of
any offering of Registrable Securities in a registration
statement under this Section 4, and otherwise.
4.6 Other Registration Participants. The Company
agrees that from and after January 22, 1997 it will not grant to
any person any piggyback or other participation rights in the
Registration Statement referenced in Section 4.2(a) hereof. The
foregoing shall not be deemed to prevent the Company from
granting such rights with respect to any registration statement
that does not cover the Registrable Securities.
5. Miscellaneous.
5.1 Successors and Assigns. The terms and conditions
of this Agreement shall inure to the benefit of and be binding
upon the respective permitted successors and assigns of the
parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
5.2 Governing Law. This Agreement shall be governed
by and construed under the laws of the State of California
(irrespective of its choice of law principles).
<PAGE>10
5.3 Counterparts. This Agreement 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.
5.4 Titles and Subtitles. The titles and subtitles
used in this Agreement are used for convenience only and are not
to be considered in construing or interpreting this Agreement.
5.5 Notices. Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in
writing and shall be deemed effective upon personal delivery to
the party to be notified, or if sent by telex or telecopier,
upon receipt of the correct answerback, or upon deposit with the
United States Post Office, by registered or certified mail, or
upon deposit with an overnight air courier, in each case postage
prepaid and addressed to the party to be notified at the address
as follows, or at such other address as such party may designate
by ten days' advance written notice to the other party:
If to the Company:
Gensia, Inc.
9360 Towne Centre Drive
San Diego, CA 92121-3030
Attn: Secretary
Fax: (619) 453-0095
with a copy to:
Pillsbury Madison & Sutro LLP
P.O. Box 7880
San Francisco, CA 94104
Attn: Thomas E. Sparks, Esq.
Fax: (415) 983-7396
If to the Investor:
Armen Partners
630 Fifth Street
Suite 918
New York, NY 10111
Attn: Garo H. Armen
Managing General Partner
Fax: (212) 332-4779
5.6 Finders' Fee. Each party represents that it
neither is nor will be obligated for any finders' fee or com-
mission in connection with this transaction. Investor agrees to
indemnify and hold harmless the Company from any liability for
any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability
or asserted liability) for which the Investor or any of its
officers, partners, employees or representatives is responsible.
The Company agrees to indemnify and hold harmless
Investor from any liability for any commission or compensation
in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for
which the Company or any of its officers, employees or
representatives is responsible.
<PAGE>11
5.7 Expenses. The Company and the Investor shall pay
their respective costs and expenses incurred with respect to the
negotiation, execution, delivery and performance of this
Agreement. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which
such party may be entitled.
5.8 Amendments and Waivers. Any term of this
Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with
the written consent of the Company and the Investor. Any
amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any securities purchased
under this Agreement at the time outstanding, each future holder
of all such securities, and the Company.
5.9 Severability. If any provision of this Agreement
is held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
5.10 Entire Agreement. This Agreement, and the
Confidentiality Agreement dated January 3, 1997 between the
parties hereto, constitute the entire agreement between the
parties with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, both oral
and written, between the parties with respect to the subject
matter hereof and thereof. No representation, inducement,
promise, understanding, condition or warranty not set forth
herein or therein has been made or relied upon by either party
hereto. Neither this Agreement nor any provision hereof is
intended to confer upon any Person other than the parties hereto
any rights or remedies hereunder.
<PAGE>12
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
GENSIA, INC.
By /s/ David F. Hale
---------------------------
Title Chairman of the Board,
President and Chief
Executive Officer
ARMEN PARTNERS
By /s/ Garo H. Armen
---------------------------
Title Managing General Partner
<PAGE>1
EXHIBIT 10.4
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of the ninth day of January, 1997 by and between GENSIA,
INC., a Delaware corporation (the "Company"), and ARMEN PARTNERS
OFFSHORE FUND, LTD., a Bermuda limited partnership (the
"Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Common Stock. Subject to
the terms and conditions of this Agreement, Investor hereby
purchases and the Company hereby sells and issues to Investor
90,000 shares (the "Original Shares") of the Company's Common
Stock for the purchase price of $4.00 per share (such per share
purchase price is hereinafter referred to as the "Original Per
Share Purchase Price") for an aggregate price of $360,000 (the
"Original Aggregate Purchase Price").
1.2 Closing. The purchase and sale of the Common
Stock shall take place at the offices of the Company, 9360 Towne
Centre Drive, San Diego, California, at 10 A.M., on the date
hereof, or at such other time and place as the Company and
Investor mutually agree upon, verbally or in writing (which time
and place are designated as the "Closing"). At the Closing the
Company shall deliver to Investor a certificate representing the
Common Stock which such Investor is purchasing against delivery
to the Company by such Investor of a bank wire in same day funds
in the amount of the Original Aggregate Purchase Price therefor
payable to the Company's order.
1.3 Adjustment to Original Shares. If subsequent to
the date hereof and prior to the consummation or termination of
the Stock Exchange Agreement between the Company and Rakepoll
Finance N.V. dated as of November 12, 1996, as amended, (the
"Relevant Time Period"), the Company issues additional shares of
Common Stock at a per share price less than the Original Per
Share Purchase Price, or securities convertible into Common
Stock at a conversion price less than the Original Per Share
Purchase Price (other than pursuant to the exercise or
conversion of securities outstanding on the date hereof or
pursuant to the Company's existing stock plans) (such per share
price or conversion price being hereinafter referred to as the
"New Per Share Price"), then in connection with the first such
transaction the Company will issue to Investor an additional
number of shares of Common Stock (the "Additional Shares") equal
to (a) the Original Aggregate Purchase Price divided by the New
Per Share Price minus (b) the number of Original Shares. In the
event that after the issuance of Additional Shares, but before
the end of the Relevant Time Period, the Company issues Common
Stock at a per share price less than the New Per Share Price or
convertible securities at a conversion price less than the New
Per Share Price (other than pursuant to the exercise or
conversion of securities outstanding on the date hereof or
pursuant to the Company's stock plans), then a calculation shall
be made in accordance with the preceding sentence, substituting
the sum of the number of Original Shares plus the number of
Additional Shares in clause (b) above. Such number of shares
shall then be issued to Investor.
<PAGE>2
1.4 Definitions.
(a) The following terms, as used herein, have the
following meanings:
"Closing Date" means the date of the Closing.
"Common Stock" means the Common Stock, par value $0.01
per share of the Company, together with the associated preferred
stock purchase rights established pursuant to the Rights
Agreement dated March 9, 1992 between the Company and
ChaseMellon Shareholder Services L.L.C. as rights agent (the
"Rights").
"Material Adverse Effect" means a material adverse
effect on the condition (financial or otherwise), business,
assets, results of operations of a corporation and its
subsidiaries taken as a whole.
"1934 Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated
thereunder.
"1933 Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Person" shall mean an individual, corporation,
partnership, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization, governmental authority or any other
form of entity not specifically listed herein.
"Purchased Shares" means the Original Shares and any
Additional Shares.
2. Representations and Warranties of the Company.
The Company hereby represents and warrants to Investor that:
2.1 Organization, Good Standing and Qualification.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and
has all requisite corporate power and authority to carry on its
business as now conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction
in which the failure so to qualify would have a Material Adverse
Effect.
2.2 Capitalization. The authorized capital of the
Company consists of:
(i) Preferred Stock. 5,000,000 shares of Preferred
Stock, of which 1,840,000 shares have been designated $3.75
Convertible Exchangeable Preferred Stock, par value $.01 per
share (the "Convertible Preferred Stock"), and 100,000 shares
have been designated Series I Participating Preferred Stock, par
value $.01 per share (the "Participating Preferred Stock").
There are 1,600,000 shares of Convertible Preferred Stock and no
shares of Participating Preferred Stock issued and outstanding.
(ii) Common Stock. 75,000,000 shares of Common
Stock, of which 36,950,792 shares were issued and outstanding as
of September 30, 1996. The Company has entered into a Stock
Exchange Agreement, dated as of November 12, 1996 (the "Stock
<PAGE>3
Exchange Agreement"), with Rakepoll Finance N.V. which, among
other things, provides for the Company to issue 29,500,000
shares of Common Stock to Rakepoll Finance N.V. The
consummation of the transactions contemplated by the Stock
Exchange Agreement, including the issuance of shares of Common
Stock to Rakepoll Finance N.V., is subject to the satisfaction
of certain conditions, including shareholder and regulatory
approval.
2.3 Authorization. All corporate action on the part
of the Company, its officers, directors and stockholders
necessary for (i) the authorization, execution and delivery of
this Agreement, (ii) the performance of all obligations of the
Company hereunder and (iii) the authorization, issuance (or
reservation for issuance) and delivery of the Common Stock being
sold hereunder, to the extent that the foregoing requires
performance on or prior to the Closing, has been taken and this
Agreement constitutes the valid and legally binding obligation
of the Company, enforceable against the Company in accordance
with its terms.
2.4 Valid Issuance of Purchased Shares. The Original
Shares have been, and when and if issued the Additional Shares
will be, duly and validly issued and fully paid and non-
assessable and, based in part upon the representations of the
Investor in this Agreement, issued in compliance with all
applicable federal and state securities laws.
3. Representations and Warranties of Investor. This
Agreement is made with Investor in reliance upon the Investor's
representation and warranties to the Company, which by such
Investor's execution of this Agreement the Investor hereby
confirms, that:
3.1 Organization and Existence. Investor is a
limited partnership validly existing and in good standing under
the laws of Bermuda and has all corporate powers and all
material governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now
conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not,
individually or in the aggregate, have a Material Adverse
Effect.
3.2 Corporate Authorization. This execution,
delivery and performance by Investor of this Agreement are
within the corporate powers of Investor and have been duly
authorized by all necessary partnership action on the part of
Investor. This Agreement constitutes the valid and legally
binding obligation of Investor, enforceable against Investor in
accordance with its terms.
3.3 Purchase Entirely for Own Account. All Purchased
Shares to be received by Investor will be acquired for
investment for Investor's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any
part thereof, and that Investor has no present intention of
selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, Investor
further represents that Investor does not have any contract, un-
dertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third
person, with respect to any of the Purchased Shares.
<PAGE>4
3.4 Restricted Securities. Investor understands that
the Purchased Shares are characterized as "restricted securi-
ties" under the federal securities laws inasmuch as they are
being or will be acquired from the Company in a transaction not
involving a public offering and that under such laws and
applicable regulations such securities may only be resold
without registration under the 1933 Act in certain limited
circumstances. In this connection Investor represents that it
is familiar with Securities and Exchange Commission ("SEC") Rule
144, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act.
3.5 Legends. It is understood that the certificates
evidencing the Purchased 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 satisfactory to the Company that
such registration is not required or unless sold pursuant to
Rule 144 of such Act."
(b) If required by the authorities of any state in
connection with the issuance or sale of the Common Stock, the
legend required by such state authority.
4. Registration Rights. The Company covenants and
agrees as follows:
4.1 Certain Additional Definitions.
As used in this Agreement, the following capitalized
terms shall have the following meanings:
"Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering
of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such
prospectus.
"Register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration
statement or similar document in compliance with the 1933 Act,
and such registration statement or document becoming effective
under the 1933 Act.
"Registrable Securities" shall mean (i) the Purchased
Shares; (ii) any Common Stock issued as (or issuable upon the
conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with
respect to, or in exchange for or in replacement of, such
Purchased Shares; and (iii) any Common Stock issued pursuant to
Section 4.2(a).
"Registration Statement" shall mean any registration
statement of the Company that covers any of the Registrable
Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such
<PAGE>5
Registration Statement, including post-effective amendments, all
exhibits and all material incorporated by reference in such
Registration Statement.
4.2 Registration. The Company will use its
reasonable best efforts to effect a registration to permit the
sale of the Registrable Securities as described below, and
pursuant thereto the Company will:
(a) prepare and file and use its reasonable best
efforts to have declared effective by March 31, 1997 by the SEC,
a Registration Statement on Form S-3 relating to resale of all
of the shares of the Registrable Securities and use its
reasonable best efforts to cause such Registration Statement to
remain continuously effective for a period which will terminate
when all Registrable Securities covered by such Registration
Statements, as amended from time to time, have been sold or when
the Registrable Securities may be sold under Rule 144(k) under
the 1933 Act. If such Registration Statement is not declared
effective by the SEC by March 31, 1997 then on the first
business day thereafter the Company shall issue to Investor
additional shares of Common Stock equal to 2% of the shares of
Common Stock previously issued to Investor hereunder. If such
Registration Statement has not been declared effective prior to
the end of any succeeding month then on the first business day
thereafter the Company shall issue to Investor shares of Common
Stock equal to 1.5% of the shares of Common Stock previously
issued to Investor hereunder.
(b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement and the
Prospectus as may be necessary to keep such Registration
Statement effective for the period specified in Section 4.2(a)
and to comply with the provisions of the 1933 Act and the 1934
Act with respect to the distribution of all Registrable
Securities;
(c) notify the Investor, promptly, and confirm such
notice in writing, (i) when the Prospectus or any supplement or
post-effective amendment has been filed, and, with respect to
the Registration Statement or any post-effective amendment, when
the same has become effective, (ii) of any request by the SEC
for amendments or supplements to the Registration Statement or
Prospectus or for additional information, (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for
that purpose, and (iv) 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;
(d) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible moment;
(e) furnish to the Investor, without charge, at least
one copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules,
all, upon a Investor's request, documents incorporated therein
by reference and all exhibits thereto (including those
incorporated by reference);
<PAGE>6
(f) deliver to the Investor, without charge, as many
copies of the Prospectus (including each preliminary prospectus)
and any amendment or supplement thereto as Investor may
reasonably request in order to facilitate the disposition of the
Registrable Securities;
(g) cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange
or market on which similar securities issued by the Company are
then listed, and if the securities are not so listed to use its
reasonable best efforts promptly to cause all such securities to
be listed on either the New York Stock Exchange, the American
Stock Exchange or the Nasdaq Stock Market;
(h) use reasonable best efforts to qualify or
register the Registrable Securities for sale under (or obtain
exemptions from the application of) the Blue Sky laws of such
jurisdictions as are applicable. The Company shall not be
required to qualify as a foreign corporation or to file a
general consent to service of process in any such jurisdiction
where it is not presently qualified or where it would be subject
to general service of process or taxation as a foreign corpora-
tion in any jurisdiction where it is not now so subject.
(i) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC
under the 1933 Act and the 1934 Act and take such other actions
as may be reasonably necessary to facilitate the registration of
the Registrable Securities hereunder.
Investor shall furnish to the Company such information
regarding the distribution of such securities as the Company may
from time to time reasonably request in writing.
If the Company delivers a certificate in writing to
the Investor, to the effect that a delay in the sale of
Registrable Securities by the Investor under the Registration
Statement is necessary because a sale pursuant to such
Registration Statement in its then current form would reasonably
be expected to constitute a violation of the federal securities
laws then the Investor shall agree not to sell or otherwise
transfer such Registrable Securities for the period of time
specified by the Company in its certificate. In no event shall
such delay exceed ten (10) business days; provided, however,
that if, prior to the expiration of such ten (10) business day
period, the Company delivers a certificate in writing to the
Investor to the effect that a further delay in such sale beyond
such ten (10) business day period is necessary because a sale
pursuant to such Registration Statement in its then current form
would reasonably be expected to constitute a violation of the
federal securities laws, the Company may refuse to permit the
Investor to resell any Registrable Securities pursuant to such
Registration Statement for an additional period not to exceed
five (5) business days.
4.3 Registration Expenses. All expenses incident to
the Company's performance of or compliance with this Agreement,
including without limitation all registration and filing fees,
fees with respect to the filings required to be made with the
National Association of Securities Dealers, Inc., fees and
expenses of compliance with the securities or Blue Sky laws,
printing expenses, messenger, telephone and delivery expenses,
fees and disbursements of counsel for the Company, fees and
<PAGE>7
disbursements of all independent certified public accountants of
the Company, fees and expenses incurred in connection with the
listing of the securities, rating agency fees and the fees and
expenses of any person, including special experts, retained by
the Company, will be borne by the Company, regardless of whether
the Registration Statement becomes effective; provided, however,
that the Company will not be required to pay discounts,
commissions or fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals relating
to the distribution of the Registrable Securities or fees or
disbursements of any counsel to the Investor.
4.4 Rule 144.
The Company covenants that it will file the reports
required to be filed by it under the 1933 Act and the 1934 Act
and it will take such further action as the Investor may
reasonably request, all to the extent required to enable
Investor to sell Registrable Securities without registration
under the 1933 Act in reliance on the exemption provided by
Rule 144 or Rule 144A under the 1933 Act or any successor or
similar rules or statues. Upon the request of the Investor, the
Company will deliver to the Investor a written statement as to
whether the Company has complied with such information and
requirements.
4.5 Indemnification. In the event any Registrable
Securities are included in a registration statement under this
Section 4:
(a) To the extent permitted by law, the Company
will indemnify and hold harmless the Investor, any underwriter
(as defined in the Act) for the Investor, any officer, director,
partner or agent thereof, and each person, if any, who controls
the Investor or underwriter within the meaning of the 1933 Act
or the 1934 Act against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject
under the 1933 Act, the 1934 Act or other United States federal
or state securities law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act or other United States
federal or state securities law, or any rule or regulation
promulgated under the 1933 Act, the 1934 Act or other United
States federal or state securities law; and the Company will pay
to the Investor, underwriter or controlling person any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability, or action as incurred; provided, however, that the
indemnity agreement contained in this subsection 4.5(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), nor shall the Company be liable in any
such case for any such loss, claim, damage, liability, or action
<PAGE>8
to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by the Investor, underwriter or controlling person.
(b) To the extent permitted by law, the Investor
will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration
statement, each person, if any, who controls the Company within
the meaning of the 1933 Act, any underwriter, any officer,
director, partner or agent thereof and any controlling person of
any such underwriter, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing
persons may become subject, under the 1933 Act, the 1934 Act or
other United States federal or state securities law insofar as
such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation,
in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written
information furnished by the Investor expressly for use in
connection with such registration; and the Investor will pay any
legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this subsection 4.5(b),
in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 4.5(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 the Investor, which consent shall not be
unreasonably withheld; provided, that, in no event shall any
indemnity under this subsection 4.5(b) exceed the proceeds (net
of underwriting discounts and commissions) from the offering
received by the Investor.
(c) After receipt by an indemnified party under
this Section 4.5 of notice of the commencement of any action
(including any governmental action), such indemnified party
will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 4.5, deliver to the
indemnifying party a written notice of the commencement thereof
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 noticed, to
assume the defense thereof with counsel mutually satisfactory to
the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be
represented without conflict by one counsel) shall have the
right to retain one separate counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action,
if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the
indemnified party under this Section 4.5, but the omission so to
deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 4.5.
<PAGE>9
(d) If the indemnification provided for in this
Section 4.5 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss,
liability, claim, damage, or expense referred to therein, then
the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other
relevant equitable considerations; provided, however, that, in
any such case, (A) the Investor will not be required to
contribute any amount in excess of the proceeds (net of
underwriting discounts and commissions) received by the Investor
from all Registrable Securities offered and sold by the Investor
pursuant to the registration statement; and (B) no person or
entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled
to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation. The relative fault of the
indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the
Violation relates to information supplied by the indemnifying
party or by the indemnified party and the parties' relative
intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution
contained in the underwriting agreement entered into in
connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(f) The obligations of the Company and the
Investor under this Section 4.5 shall survive the completion of
any offering of Registrable Securities in a registration
statement under this Section 4, and otherwise.
4.6 Other Registration Participants. The Company
agrees that from and after January 22, 1997 it will not grant to
any person any piggyback or other participation rights in the
Registration Statement referenced in Section 4.2(a) hereof. The
foregoing shall not be deemed to prevent the Company from
granting such rights with respect to any registration statement
that does not cover the Registrable Securities.
5. Miscellaneous.
5.1 Successors and Assigns. The terms and conditions
of this Agreement shall inure to the benefit of and be binding
upon the respective permitted successors and assigns of the
parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
5.2 Governing Law. This Agreement shall be governed
by and construed under the laws of the State of California
(irrespective of its choice of law principles).
<PAGE>10
5.3 Counterparts. This Agreement 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.
5.4 Titles and Subtitles. The titles and subtitles
used in this Agreement are used for convenience only and are not
to be considered in construing or interpreting this Agreement.
5.5 Notices. Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in
writing and shall be deemed effective upon personal delivery to
the party to be notified, or if sent by telex or telecopier,
upon receipt of the correct answerback, or upon deposit with the
United States Post Office, by registered or certified mail, or
upon deposit with an overnight air courier, in each case postage
prepaid and addressed to the party to be notified at the address
as follows, or at such other address as such party may designate
by ten days' advance written notice to the other party:
If to the Company:
Gensia, Inc.
9360 Towne Centre Drive
San Diego, CA 92121-3030
Attn: Secretary
Fax: (619) 453-0095
with a copy to:
Pillsbury Madison & Sutro LLP
P.O. Box 7880
San Francisco, CA 94104
Attn: Thomas E. Sparks, Esq.
Fax: (415) 983-7396
If to the Investor:
Armen Partners Offshore Fund, Ltd.
630 Fifth Avenue
Suite 918
New York, NY 10111
Attn: Garo H. Armen
Managing General Partner
Fax: (212) 332-4779
5.6 Finders' Fee. Each party represents that it
neither is nor will be obligated for any finders' fee or com-
mission in connection with this transaction. Investor agrees to
indemnify and hold harmless the Company from any liability for
any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability
or asserted liability) for which the Investor or any of its
officers, partners, employees or representatives is responsible.
The Company agrees to indemnify and hold harmless
Investor from any liability for any commission or compensation
in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for
which the Company or any of its officers, employees or
representatives is responsible.
<PAGE>11
5.7 Expenses. The Company and the Investor shall pay
their respective costs and expenses incurred with respect to the
negotiation, execution, delivery and performance of this
Agreement. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which
such party may be entitled.
5.8 Amendments and Waivers. Any term of this
Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with
the written consent of the Company and the Investor. Any
amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any securities purchased
under this Agreement at the time outstanding, each future holder
of all such securities, and the Company.
5.9 Severability. If any provision of this Agreement
is held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
5.10 Entire Agreement. This Agreement, and the
Confidentiality Agreement dated January 3, 1997 between the
parties hereto, constitute the entire agreement between the
parties with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, both oral
and written, between the parties with respect to the subject
matter hereof and thereof. No representation, inducement,
promise, understanding, condition or warranty not set forth
herein or therein has been made or relied upon by either party
hereto. Neither this Agreement nor any provision hereof is
intended to confer upon any Person other than the parties hereto
any rights or remedies hereunder.
<PAGE>12
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
GENSIA, INC.
By /s/ David F. Hale
--------------------------
Title Chairman of the Board,
President and Chief
Executive Officer
ARMEN PARTNERS OFFSHRE FUND, LTD.
By /s/ Garo H. Armen
--------------------------
Title Managing General Partner
<PAGE>1
EXHIBIT 10.5
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of the ninth day of January, 1997 by and between GENSIA,
INC., a Delaware corporation (the "Company"), and GHA MANAGEMENT
CORP., a Delaware corporation (the "Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Common Stock. Subject to
the terms and conditions of this Agreement, Investor hereby
purchases and the Company hereby sells and issues to Investor
20,000 shares (the "Original Shares") of the Company's Common
Stock for the purchase price of $4.00 per share (such per share
purchase price is hereinafter referred to as the "Original Per
Share Purchase Price") for an aggregate price of $80,000 (the
"Original Aggregate Purchase Price").
1.2 Closing. The purchase and sale of the Common
Stock shall take place at the offices of the Company, 9360 Towne
Centre Drive, San Diego, California, at 10 A.M., on the date
hereof, or at such other time and place as the Company and
Investor mutually agree upon, verbally or in writing (which time
and place are designated as the "Closing"). At the Closing the
Company shall deliver to Investor a certificate representing the
Common Stock which such Investor is purchasing against delivery
to the Company by such Investor of a bank wire in same day funds
in the amount of the Original Aggregate Purchase Price therefor
payable to the Company's order.
1.3 Adjustment to Original Shares. If subsequent to
the date hereof and prior to the consummation or termination of
the Stock Exchange Agreement between the Company and Rakepoll
Finance N.V. dated as of November 12, 1996, as amended, (the
"Relevant Time Period"), the Company issues additional shares of
Common Stock at a per share price less than the Original Per
Share Purchase Price, or securities convertible into Common
Stock at a conversion price less than the Original Per Share
Purchase Price (other than pursuant to the exercise or
conversion of securities outstanding on the date hereof or
pursuant to the Company's existing stock plans) (such per share
price or conversion price being hereinafter referred to as the
"New Per Share Price"), then in connection with the first such
transaction the Company will issue to Investor an additional
number of shares of Common Stock (the "Additional Shares") equal
to (a) the Original Aggregate Purchase Price divided by the New
Per Share Price minus (b) the number of Original Shares. In the
event that after the issuance of Additional Shares, but before
the end of the Relevant Time Period, the Company issues Common
Stock at a per share price less than the New Per Share Price or
convertible securities at a conversion price less than the New
Per Share Price (other than pursuant to the exercise or
conversion of securities outstanding on the date hereof or
pursuant to the Company's stock plans), then a calculation shall
be made in accordance with the preceding sentence, substituting
the sum of the number of Original Shares plus the number of
Additional Shares in clause (b) above. Such number of shares
shall then be issued to Investor.
<PAGE>2
1.4 Definitions.
(a) The following terms, as used herein, have the
following meanings:
"Closing Date" means the date of the Closing.
"Common Stock" means the Common Stock, par value $0.01
per share of the Company, together with the associated preferred
stock purchase rights established pursuant to the Rights
Agreement dated March 9, 1992 between the Company and
ChaseMellon Shareholder Services L.L.C. as rights agent (the
"Rights").
"Material Adverse Effect" means a material adverse
effect on the condition (financial or otherwise), business,
assets, results of operations of a corporation and its
subsidiaries taken as a whole.
"1934 Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated
thereunder.
"1933 Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Person" shall mean an individual, corporation,
partnership, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization, governmental authority or any other
form of entity not specifically listed herein.
"Purchased Shares" means the Original Shares and any
Additional Shares.
2. Representations and Warranties of the Company.
The Company hereby represents and warrants to Investor that:
2.1 Organization, Good Standing and Qualification.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and
has all requisite corporate power and authority to carry on its
business as now conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction
in which the failure so to qualify would have a Material Adverse
Effect.
2.2 Capitalization. The authorized capital of the
Company consists of:
(i) Preferred Stock. 5,000,000 shares of Preferred
Stock, of which 1,840,000 shares have been designated $3.75
Convertible Exchangeable Preferred Stock, par value $.01 per
share (the "Convertible Preferred Stock"), and 100,000 shares
have been designated Series I Participating Preferred Stock, par
value $.01 per share (the "Participating Preferred Stock").
There are 1,600,000 shares of Convertible Preferred Stock and no
shares of Participating Preferred Stock issued and outstanding.
(ii) Common Stock. 75,000,000 shares of Common
Stock, of which 36,950,792 shares were issued and outstanding as
of September 30, 1996. The Company has entered into a Stock
Exchange Agreement, dated as of November 12, 1996 (the "Stock
<PAGE>3
Exchange Agreement"), with Rakepoll Finance N.V. which, among
other things, provides for the Company to issue 29,500,000
shares of Common Stock to Rakepoll Finance N.V. The
consummation of the transactions contemplated by the Stock
Exchange Agreement, including the issuance of shares of Common
Stock to Rakepoll Finance N.V., is subject to the satisfaction
of certain conditions, including shareholder and regulatory
approval.
2.3 Authorization. All corporate action on the part
of the Company, its officers, directors and stockholders
necessary for (i) the authorization, execution and delivery of
this Agreement, (ii) the performance of all obligations of the
Company hereunder and (iii) the authorization, issuance (or
reservation for issuance) and delivery of the Common Stock being
sold hereunder, to the extent that the foregoing requires
performance on or prior to the Closing, has been taken and this
Agreement constitutes the valid and legally binding obligation
of the Company, enforceable against the Company in accordance
with its terms.
2.4 Valid Issuance of Purchased Shares. The Original
Shares have been, and when and if issued the Additional Shares
will be, duly and validly issued and fully paid and non-
assessable and, based in part upon the representations of the
Investor in this Agreement, issued in compliance with all
applicable federal and state securities laws.
3. Representations and Warranties of Investor. This
Agreement is made with Investor in reliance upon the Investor's
representation and warranties to the Company, which by such
Investor's execution of this Agreement the Investor hereby
confirms, that:
3.1 Organization and Existence. Investor is a
corporation validly existing and in good standing under the laws
of Delaware and has all corporate powers and all material
governmental licenses, authorizations, permits, consents and
approvals required to carry on its business as now conducted,
except for those licenses, authorizations, permits, consents and
approvals the absence of which would not, individually or in the
aggregate, have a Material Adverse Effect.
3.2 Corporate Authorization. This execution,
delivery and performance by Investor of this Agreement are
within the corporate powers of Investor and have been duly
authorized by all necessary partnership action on the part of
Investor. This Agreement constitutes the valid and legally
binding obligation of Investor, enforceable against Investor in
accordance with its terms.
3.3 Purchase Entirely for Own Account. All Purchased
Shares to be received by Investor will be acquired for
investment for Investor's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any
part thereof, and that Investor has no present intention of
selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, Investor
further represents that Investor does not have any contract, un-
dertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third
person, with respect to any of the Purchased Shares.
<PAGE>4
3.4 Restricted Securities. Investor understands that
the Purchased Shares are characterized as "restricted securi-
ties" under the federal securities laws inasmuch as they are
being or will be acquired from the Company in a transaction not
involving a public offering and that under such laws and
applicable regulations such securities may only be resold
without registration under the 1933 Act in certain limited
circumstances. In this connection Investor represents that it
is familiar with Securities and Exchange Commission ("SEC") Rule
144, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act.
3.5 Legends. It is understood that the certificates
evidencing the Purchased 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 satisfactory to the Company that
such registration is not required or unless sold pursuant to
Rule 144 of such Act."
(b) If required by the authorities of any state in
connection with the issuance or sale of the Common Stock, the
legend required by such state authority.
4. Registration Rights. The Company covenants and
agrees as follows:
4.1 Certain Additional Definitions.
As used in this Agreement, the following capitalized
terms shall have the following meanings:
"Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering
of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such
prospectus.
"Register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration
statement or similar document in compliance with the 1933 Act,
and such registration statement or document becoming effective
under the 1933 Act.
"Registrable Securities" shall mean (i) the Purchased
Shares; (ii) any Common Stock issued as (or issuable upon the
conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with
respect to, or in exchange for or in replacement of, such
Purchased Shares; and (iii) any Common Stock issued pursuant to
Section 4.2(a).
"Registration Statement" shall mean any registration
statement of the Company that covers any of the Registrable
Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such
<PAGE>5
Registration Statement, including post-effective amendments, all
exhibits and all material incorporated by reference in such
Registration Statement.
4.2 Registration. The Company will use its
reasonable best efforts to effect a registration to permit the
sale of the Registrable Securities as described below, and
pursuant thereto the Company will:
(a) prepare and file and use its reasonable best
efforts to have declared effective by March 31, 1997 by the SEC,
a Registration Statement on Form S-3 relating to resale of all
of the shares of the Registrable Securities and use its
reasonable best efforts to cause such Registration Statement to
remain continuously effective for a period which will terminate
when all Registrable Securities covered by such Registration
Statements, as amended from time to time, have been sold or when
the Registrable Securities may be sold under Rule 144(k) under
the 1933 Act. If such Registration Statement is not declared
effective by the SEC by March 31, 1997 then on the first
business day thereafter the Company shall issue to Investor
additional shares of Common Stock equal to 2% of the shares of
Common Stock previously issued to Investor hereunder. If such
Registration Statement has not been declared effective prior to
the end of any succeeding month then on the first business day
thereafter the Company shall issue to Investor shares of Common
Stock equal to 1.5% of the shares of Common Stock previously
issued to Investor hereunder.
(b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement and the
Prospectus as may be necessary to keep such Registration
Statement effective for the period specified in Section 4.2(a)
and to comply with the provisions of the 1933 Act and the 1934
Act with respect to the distribution of all Registrable
Securities;
(c) notify the Investor, promptly, and confirm such
notice in writing, (i) when the Prospectus or any supplement or
post-effective amendment has been filed, and, with respect to
the Registration Statement or any post-effective amendment, when
the same has become effective, (ii) of any request by the SEC
for amendments or supplements to the Registration Statement or
Prospectus or for additional information, (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for
that purpose, and (iv) 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;
(d) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible moment;
(e) furnish to the Investor, without charge, at least
one copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules,
all, upon a Investor's request, documents incorporated therein
by reference and all exhibits thereto (including those
incorporated by reference);
<PAGE>6
(f) deliver to the Investor, without charge, as many
copies of the Prospectus (including each preliminary prospectus)
and any amendment or supplement thereto as Investor may
reasonably request in order to facilitate the disposition of the
Registrable Securities;
(g) cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange
or market on which similar securities issued by the Company are
then listed, and if the securities are not so listed to use its
reasonable best efforts promptly to cause all such securities to
be listed on either the New York Stock Exchange, the American
Stock Exchange or the Nasdaq Stock Market;
(h) use reasonable best efforts to qualify or
register the Registrable Securities for sale under (or obtain
exemptions from the application of) the Blue Sky laws of such
jurisdictions as are applicable. The Company shall not be
required to qualify as a foreign corporation or to file a
general consent to service of process in any such jurisdiction
where it is not presently qualified or where it would be subject
to general service of process or taxation as a foreign corpora-
tion in any jurisdiction where it is not now so subject.
(i) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC
under the 1933 Act and the 1934 Act and take such other actions
as may be reasonably necessary to facilitate the registration of
the Registrable Securities hereunder.
Investor shall furnish to the Company such information
regarding the distribution of such securities as the Company may
from time to time reasonably request in writing.
If the Company delivers a certificate in writing to
the Investor, to the effect that a delay in the sale of
Registrable Securities by the Investor under the Registration
Statement is necessary because a sale pursuant to such
Registration Statement in its then current form would reasonably
be expected to constitute a violation of the federal securities
laws then the Investor shall agree not to sell or otherwise
transfer such Registrable Securities for the period of time
specified by the Company in its certificate. In no event shall
such delay exceed ten (10) business days; provided, however,
that if, prior to the expiration of such ten (10) business day
period, the Company delivers a certificate in writing to the
Investor to the effect that a further delay in such sale beyond
such ten (10) business day period is necessary because a sale
pursuant to such Registration Statement in its then current form
would reasonably be expected to constitute a violation of the
federal securities laws, the Company may refuse to permit the
Investor to resell any Registrable Securities pursuant to such
Registration Statement for an additional period not to exceed
five (5) business days.
4.3 Registration Expenses. All expenses incident to
the Company's performance of or compliance with this Agreement,
including without limitation all registration and filing fees,
fees with respect to the filings required to be made with the
National Association of Securities Dealers, Inc., fees and
expenses of compliance with the securities or Blue Sky laws,
printing expenses, messenger, telephone and delivery expenses,
fees and disbursements of counsel for the Company, fees and
<PAGE>7
disbursements of all independent certified public accountants of
the Company, fees and expenses incurred in connection with the
listing of the securities, rating agency fees and the fees and
expenses of any person, including special experts, retained by
the Company, will be borne by the Company, regardless of whether
the Registration Statement becomes effective; provided, however,
that the Company will not be required to pay discounts,
commissions or fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals relating
to the distribution of the Registrable Securities or fees or
disbursements of any counsel to the Investor.
4.4 Rule 144.
The Company covenants that it will file the reports
required to be filed by it under the 1933 Act and the 1934 Act
and it will take such further action as the Investor may
reasonably request, all to the extent required to enable
Investor to sell Registrable Securities without registration
under the 1933 Act in reliance on the exemption provided by
Rule 144 or Rule 144A under the 1933 Act or any successor or
similar rules or statues. Upon the request of the Investor, the
Company will deliver to the Investor a written statement as to
whether the Company has complied with such information and
requirements.
4.5 Indemnification. In the event any Registrable
Securities are included in a registration statement under this
Section 4:
(a) To the extent permitted by law, the Company
will indemnify and hold harmless the Investor, any underwriter
(as defined in the Act) for the Investor, any officer, director,
partner or agent thereof, and each person, if any, who controls
the Investor or underwriter within the meaning of the 1933 Act
or the 1934 Act against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject
under the 1933 Act, the 1934 Act or other United States federal
or state securities law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act or other United States
federal or state securities law, or any rule or regulation
promulgated under the 1933 Act, the 1934 Act or other United
States federal or state securities law; and the Company will pay
to the Investor, underwriter or controlling person any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability, or action as incurred; provided, however, that the
indemnity agreement contained in this subsection 4.5(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), nor shall the Company be liable in any
such case for any such loss, claim, damage, liability, or action
<PAGE>8
to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by the Investor, underwriter or controlling person.
(b) To the extent permitted by law, the Investor
will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration
statement, each person, if any, who controls the Company within
the meaning of the 1933 Act, any underwriter, any officer,
director, partner or agent thereof and any controlling person of
any such underwriter, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing
persons may become subject, under the 1933 Act, the 1934 Act or
other United States federal or state securities law insofar as
such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation,
in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written
information furnished by the Investor expressly for use in
connection with such registration; and the Investor will pay any
legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this subsection 4.5(b),
in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 4.5(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 the Investor, which consent shall not be
unreasonably withheld; provided, that, in no event shall any
indemnity under this subsection 4.5(b) exceed the proceeds (net
of underwriting discounts and commissions) from the offering
received by the Investor.
(c) After receipt by an indemnified party under
this Section 4.5 of notice of the commencement of any action
(including any governmental action), such indemnified party
will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 4.5, deliver to the
indemnifying party a written notice of the commencement thereof
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 noticed, to
assume the defense thereof with counsel mutually satisfactory to
the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be
represented without conflict by one counsel) shall have the
right to retain one separate counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action,
if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the
indemnified party under this Section 4.5, but the omission so to
deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 4.5.
<PAGE>9
(d) If the indemnification provided for in this
Section 4.5 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss,
liability, claim, damage, or expense referred to therein, then
the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other
relevant equitable considerations; provided, however, that, in
any such case, (A) the Investor will not be required to
contribute any amount in excess of the proceeds (net of
underwriting discounts and commissions) received by the Investor
from all Registrable Securities offered and sold by the Investor
pursuant to the registration statement; and (B) no person or
entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled
to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation. The relative fault of the
indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the
Violation relates to information supplied by the indemnifying
party or by the indemnified party and the parties' relative
intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution
contained in the underwriting agreement entered into in
connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(f) The obligations of the Company and the
Investor under this Section 4.5 shall survive the completion of
any offering of Registrable Securities in a registration
statement under this Section 4, and otherwise.
4.6 Other Registration Participants. The Company
agrees that from and after January 22, 1997 it will not grant to
any person any piggyback or other participation rights in the
Registration Statement referenced in Section 4.2(a) hereof. The
foregoing shall not be deemed to prevent the Company from
granting such rights with respect to any registration statement
that does not cover the Registrable Securities.
5. Miscellaneous.
5.1 Successors and Assigns. The terms and conditions
of this Agreement shall inure to the benefit of and be binding
upon the respective permitted successors and assigns of the
parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
5.2 Governing Law. This Agreement shall be governed
by and construed under the laws of the State of California
(irrespective of its choice of law principles).
<PAGE>10
5.3 Counterparts. This Agreement 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.
5.4 Titles and Subtitles. The titles and subtitles
used in this Agreement are used for convenience only and are not
to be considered in construing or interpreting this Agreement.
5.5 Notices. Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in
writing and shall be deemed effective upon personal delivery to
the party to be notified, or if sent by telex or telecopier,
upon receipt of the correct answerback, or upon deposit with the
United States Post Office, by registered or certified mail, or
upon deposit with an overnight air courier, in each case postage
prepaid and addressed to the party to be notified at the address
as follows, or at such other address as such party may designate
by ten days' advance written notice to the other party:
If to the Company:
Gensia, Inc.
9360 Towne Centre Drive
San Diego, CA 92121-3030
Attn: Secretary
Fax: (619) 453-0095
with a copy to:
Pillsbury Madison & Sutro LLP
P.O. Box 7880
San Francisco, CA 94104
Attn: Thomas E. Sparks, Esq.
Fax: (415) 983-7396
If to the Investor:
GHA Management Corp.
630 Fifth Avenue
Suite 918
New York, NY 10111
Attn: Garo H. Armen
President and CEO
Fax: (212) 332-4779
5.6 Finders' Fee. Each party represents that it
neither is nor will be obligated for any finders' fee or com-
mission in connection with this transaction. Investor agrees to
indemnify and hold harmless the Company from any liability for
any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability
or asserted liability) for which the Investor or any of its
officers, partners, employees or representatives is responsible.
The Company agrees to indemnify and hold harmless
Investor from any liability for any commission or compensation
in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for
which the Company or any of its officers, employees or
representatives is responsible.
<PAGE>11
5.7 Expenses. The Company and the Investor shall pay
their respective costs and expenses incurred with respect to the
negotiation, execution, delivery and performance of this
Agreement. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which
such party may be entitled.
5.8 Amendments and Waivers. Any term of this
Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with
the written consent of the Company and the Investor. Any
amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any securities purchased
under this Agreement at the time outstanding, each future holder
of all such securities, and the Company.
5.9 Severability. If any provision of this Agreement
is held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
5.10 Entire Agreement. This Agreement, and the
Confidentiality Agreement dated January 3, 1997 between the
parties hereto, constitute the entire agreement between the
parties with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, both oral
and written, between the parties with respect to the subject
matter hereof and thereof. No representation, inducement,
promise, understanding, condition or warranty not set forth
herein or therein has been made or relied upon by either party
hereto. Neither this Agreement nor any provision hereof is
intended to confer upon any Person other than the parties hereto
any rights or remedies hereunder.
<PAGE>12
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
GENSIA, INC.
By /s/ David F. Hale
-----------------------------
Title Chairman of the Board,
President and Chief
Executive Officer
GHA MANAGEMENT CORP.
By /s/ Garo H. Armen
-----------------------------
Title President & CEO
<PAGE>1
EXHIBIT 10.6
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of the ninth day of January, 1997 by and between GENSIA,
INC., a Delaware corporation (the "Company"), and MARK S. BERG,
(the "Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Common Stock. Subject to
the terms and conditions of this Agreement, Investor hereby
purchases and the Company hereby sells and issues to Investor
187,500 shares (the "Original Shares") of the Company's Common
Stock for the purchase price of $4.00 per share (such per share
purchase price is hereinafter referred to as the "Original Per
Share Purchase Price") for an aggregate price of $750,000 (the
"Original Aggregate Purchase Price").
1.2 Closing. The purchase and sale of the Common
Stock shall take place at the offices of the Company, 9360 Towne
Centre Drive, San Diego, California, at 10 A.M., on the date
hereof, or at such other time and place as the Company and
Investor mutually agree upon, verbally or in writing (which time
and place are designated as the "Closing"). At the Closing the
Company shall deliver to Investor a certificate representing the
Common Stock which such Investor is purchasing against delivery
to the Company by such Investor of a bank wire in same day funds
or check in the amount of the Original Aggregate Purchase Price
therefor payable to the Company's order.
1.3 Adjustment to Original Shares. If subsequent to
the date hereof and prior to the consummation or termination of
the Stock Exchange Agreement between the Company and Rakepoll
Finance N.V. dated as of November 12, 1996, as amended, (the
"Relevant Time Period"), the Company issues additional shares of
Common Stock at a per share price less than the Original Per
Share Purchase Price, or securities convertible into Common
Stock at a conversion price less than the Original Per Share
Purchase Price (other than pursuant to the exercise or
conversion of securities outstanding on the date hereof or
pursuant to the Company's existing stock plans) (such per share
price or conversion price being hereinafter referred to as the
"New Per Share Price"), then in connection with the first such
transaction the Company will issue to Investor an additional
number of shares of Common Stock (the "Additional Shares") equal
to (a) the Original Aggregate Purchase Price divided by the New
Per Share Price minus (b) the number of Original Shares. In the
event that after the issuance of Additional Shares, but before
the end of the Relevant Time Period, the Company issues Common
Stock at a per share price less than the New Per Share Price or
convertible securities at a conversion price less than the New
Per Share Price (other than pursuant to the exercise or
conversion of securities outstanding on the date hereof or
pursuant to the Company's stock plans), then a calculation shall
be made in accordance with the preceding sentence, substituting
the sum of the number of Original Shares plus the number of
Additional Shares in clause (b) above. Such number of shares
shall then be issued to Investor.
<PAGE>2
1.4 Definitions.
(a) The following terms, as used herein, have the
following meanings:
"Closing Date" means the date of the Closing.
"Common Stock" means the Common Stock, par value $0.01
per share of the Company, together with the associated preferred
stock purchase rights established pursuant to the Rights
Agreement dated March 9, 1992 between the Company and
ChaseMellon Shareholder Services L.L.C. as rights agent (the
"Rights").
"Material Adverse Effect" means a material adverse
effect on the condition (financial or otherwise), business,
assets, results of operations of a corporation and its
subsidiaries taken as a whole.
"1934 Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated
thereunder.
"1933 Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Person" shall mean an individual, corporation,
partnership, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization, governmental authority or any other
form of entity not specifically listed herein.
"Purchased Shares" means the Original Shares and any
Additional Shares.
2. Representations and Warranties of the Company.
The Company hereby represents and warrants to Investor that:
2.1 Organization, Good Standing and Qualification.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and
has all requisite corporate power and authority to carry on its
business as now conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction
in which the failure so to qualify would have a Material Adverse
Effect.
2.2 Capitalization. The authorized capital of the
Company consists of:
(i) Preferred Stock. 5,000,000 shares of Preferred
Stock, of which 1,840,000 shares have been designated $3.75
Convertible Exchangeable Preferred Stock, par value $.01 per
share (the "Convertible Preferred Stock"), and 100,000 shares
have been designated Series I Participating Preferred Stock, par
value $.01 per share (the "Participating Preferred Stock").
There are 1,600,000 shares of Convertible Preferred Stock and no
shares of Participating Preferred Stock issued and outstanding.
(ii) Common Stock. 75,000,000 shares of Common
Stock, of which 36,950,792 shares were issued and outstanding as
of September 30, 1996. The Company has entered into a Stock
Exchange Agreement, dated as of November 12, 1996 (the "Stock
<PAGE>3
Exchange Agreement"), with Rakepoll Finance N.V. which, among
other things, provides for the Company to issue 29,500,000
shares of Common Stock to Rakepoll Finance N.V. The
consummation of the transactions contemplated by the Stock
Exchange Agreement, including the issuance of shares of Common
Stock to Rakepoll Finance N.V., is subject to the satisfaction
of certain conditions, including shareholder and regulatory
approval.
2.3 Authorization. All corporate action on the part
of the Company, its officers, directors and stockholders
necessary for (i) the authorization, execution and delivery of
this Agreement, (ii) the performance of all obligations of the
Company hereunder and (iii) the authorization, issuance (or
reservation for issuance) and delivery of the Common Stock being
sold hereunder, to the extent that the foregoing requires
performance on or prior to the Closing, has been taken and this
Agreement constitutes the valid and legally binding obligation
of the Company, enforceable against the Company in accordance
with its terms.
2.4 Valid Issuance of Purchased Shares. The Original
Shares have been, and when and if issued the Additional Shares
will be, duly and validly issued and fully paid and non-
assessable and, based in part upon the representations of the
Investor in this Agreement, issued in compliance with all
applicable federal and state securities laws.
3. Representations and Warranties of Investor. This
Agreement is made with Investor in reliance upon the Investor's
representation and warranties to the Company, which by such
Investor's execution of this Agreement the Investor hereby
confirms, that:
3.1 Authorization. This execution, delivery and
performance by Investor of this Agreement are within the power
of Investor and have been duly authorized by all necessary
action on the part of Investor. This Agreement constitutes the
valid and legally binding obligation of Investor, enforceable
against Investor in accordance with its terms.
3.2 Purchase Entirely for Own Account. All Purchased
Shares to be received by Investor will be acquired for
investment for Investor's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any
part thereof, and that Investor has no present intention of
selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, Investor
further represents that Investor does not have any contract, un-
dertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third
person, with respect to any of the Purchased Shares.
3.3 Restricted Securities. Investor understands that
the Purchased Shares are characterized as "restricted securi-
ties" under the federal securities laws inasmuch as they are
being or will be acquired from the Company in a transaction not
involving a public offering and that under such laws and
applicable regulations such securities may only be resold
without registration under the 1933 Act in certain limited
circumstances. In this connection Investor represents that it
is familiar with Securities and Exchange Commission ("SEC") Rule
144, as presently in effect, and understands the resale
<PAGE>4
limitations imposed thereby and by the 1933 Act.
3.4 Legends. It is understood that the certificates
evidencing the Purchased 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 satisfactory to the Company that
such registration is not required or unless sold pursuant to
Rule 144 of such Act."
(b) If required by the authorities of any state in
connection with the issuance or sale of the Common Stock, the
legend required by such state authority.
4. Registration Rights. The Company covenants and
agrees as follows:
4.1 Certain Additional Definitions.
As used in this Agreement, the following capitalized
terms shall have the following meanings:
"Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering
of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such
prospectus.
"Register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration
statement or similar document in compliance with the 1933 Act,
and such registration statement or document becoming effective
under the 1933 Act.
"Registrable Securities" shall mean (i) the Purchased
Shares; (ii) any Common Stock issued as (or issuable upon the
conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with
respect to, or in exchange for or in replacement of, such
Purchased Shares; and (iii) any Common Stock issued pursuant to
Section 4.2(a).
"Registration Statement" shall mean any registration
statement of the Company that covers any of the Registrable
Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all
exhibits and all material incorporated by reference in such
Registration Statement.
4.2 Registration. The Company will use its
reasonable best efforts to effect a registration to permit the
sale of the Registrable Securities as described below, and
pursuant thereto the Company will:
<PAGE>5
(a) prepare and file and use its reasonable best
efforts to have declared effective by March 31, 1997 by the SEC,
a Registration Statement on Form S-3 relating to resale of all
of the shares of the Registrable Securities and use its
reasonable best efforts to cause such Registration Statement to
remain continuously effective for a period which will terminate
when all Registrable Securities covered by such Registration
Statements, as amended from time to time, have been sold or when
the Registrable Securities may be sold under Rule 144(k) under
the 1933 Act. If such Registration Statement is not declared
effective by the SEC by March 31, 1997 then on the first
business day thereafter the Company shall issue to Investor
additional shares of Common Stock equal to 2% of the shares of
Common Stock previously issued to Investor hereunder. If such
Registration Statement has not been declared effective prior to
the end of any succeeding month then on the first business day
thereafter the Company shall issue to Investor shares of Common
Stock equal to 1.5% of the shares of Common Stock previously
issued to Investor hereunder.
(b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement and the
Prospectus as may be necessary to keep such Registration
Statement effective for the period specified in Section 4.2(a)
and to comply with the provisions of the 1933 Act and the 1934
Act with respect to the distribution of all Registrable
Securities;
(c) notify the Investor, promptly, and confirm such
notice in writing, (i) when the Prospectus or any supplement or
post-effective amendment has been filed, and, with respect to
the Registration Statement or any post-effective amendment, when
the same has become effective, (ii) of any request by the SEC
for amendments or supplements to the Registration Statement or
Prospectus or for additional information, (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for
that purpose, and (iv) 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;
(d) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible moment;
(e) furnish to the Investor, without charge, at least
one copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules,
all, upon a Investor's request, documents incorporated therein
by reference and all exhibits thereto (including those
incorporated by reference);
(f) deliver to the Investor, without charge, as many
copies of the Prospectus (including each preliminary prospectus)
and any amendment or supplement thereto as Investor may
reasonably request in order to facilitate the disposition of the
Registrable Securities;
(g) cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange
or market on which similar securities issued by the Company are
<PAGE>6
then listed, and if the securities are not so listed to use its
reasonable best efforts promptly to cause all such securities to
be listed on either the New York Stock Exchange, the American
Stock Exchange or the Nasdaq Stock Market;
(h) use reasonable best efforts to qualify or
register the Registrable Securities for sale under (or obtain
exemptions from the application of) the Blue Sky laws of such
jurisdictions as are applicable. The Company shall not be
required to qualify as a foreign corporation or to file a
general consent to service of process in any such jurisdiction
where it is not presently qualified or where it would be subject
to general service of process or taxation as a foreign corpora-
tion in any jurisdiction where it is not now so subject.
(i) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC
under the 1933 Act and the 1934 Act and take such other actions
as may be reasonably necessary to facilitate the registration of
the Registrable Securities hereunder.
Investor shall furnish to the Company such information
regarding the distribution of such securities as the Company may
from time to time reasonably request in writing.
If the Company delivers a certificate in writing to
the Investor, to the effect that a delay in the sale of
Registrable Securities by the Investor under the Registration
Statement is necessary because a sale pursuant to such
Registration Statement in its then current form would reasonably
be expected to constitute a violation of the federal securities
laws then the Investor shall agree not to sell or otherwise
transfer such Registrable Securities for the period of time
specified by the Company in its certificate. In no event shall
such delay exceed ten (10) business days; provided, however,
that if, prior to the expiration of such ten (10) business day
period, the Company delivers a certificate in writing to the
Investor to the effect that a further delay in such sale beyond
such ten (10) business day period is necessary because a sale
pursuant to such Registration Statement in its then current form
would reasonably be expected to constitute a violation of the
federal securities laws, the Company may refuse to permit the
Investor to resell any Registrable Securities pursuant to such
Registration Statement for an additional period not to exceed
five (5) business days.
4.3 Registration Expenses. All expenses incident to
the Company's performance of or compliance with this Agreement,
including without limitation all registration and filing fees,
fees with respect to the filings required to be made with the
National Association of Securities Dealers, Inc., fees and
expenses of compliance with the securities or Blue Sky laws,
printing expenses, messenger, telephone and delivery expenses,
fees and disbursements of counsel for the Company, fees and
disbursements of all independent certified public accountants of
the Company, fees and expenses incurred in connection with the
listing of the securities, rating agency fees and the fees and
expenses of any person, including special experts, retained by
the Company, will be borne by the Company, regardless of whether
the Registration Statement becomes effective; provided, however,
that the Company will not be required to pay discounts,
commissions or fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals relating
<PAGE>7
to the distribution of the Registrable Securities or fees or
disbursements of any counsel to the Investor.
4.4 Rule 144.
The Company covenants that it will file the reports
required to be filed by it under the 1933 Act and the 1934 Act
and it will take such further action as the Investor may
reasonably request, all to the extent required to enable
Investor to sell Registrable Securities without registration
under the 1933 Act in reliance on the exemption provided by
Rule 144 or Rule 144A under the 1933 Act or any successor or
similar rules or statues. Upon the request of the Investor, the
Company will deliver to the Investor a written statement as to
whether the Company has complied with such information and
requirements.
4.5 Indemnification. In the event any Registrable
Securities are included in a registration statement under this
Section 4:
(a) To the extent permitted by law, the Company
will indemnify and hold harmless the Investor, any underwriter
(as defined in the Act) for the Investor, any officer, director,
partner or agent thereof, and each person, if any, who controls
the Investor or underwriter within the meaning of the 1933 Act
or the 1934 Act against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject
under the 1933 Act, the 1934 Act or other United States federal
or state securities law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act or other United States
federal or state securities law, or any rule or regulation
promulgated under the 1933 Act, the 1934 Act or other United
States federal or state securities law; and the Company will pay
to the Investor, underwriter or controlling person any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability, or action as incurred; provided, however, that the
indemnity agreement contained in this subsection 4.5(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), nor shall the Company be liable 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 a Violation
which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by the Investor, underwriter or controlling person.
(b) To the extent permitted by law, the Investor
will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration
statement, each person, if any, who controls the Company within
<PAGE>8
the meaning of the 1933 Act, any underwriter, any officer,
director, partner or agent thereof and any controlling person of
any such underwriter, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing
persons may become subject, under the 1933 Act, the 1934 Act or
other United States federal or state securities law insofar as
such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation,
in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written
information furnished by the Investor expressly for use in
connection with such registration; and the Investor will pay any
legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this subsection 4.5(b),
in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 4.5(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 the Investor, which consent shall not be
unreasonably withheld; provided, that, in no event shall any
indemnity under this subsection 4.5(b) exceed the proceeds (net
of underwriting discounts and commissions) from the offering
received by the Investor.
(c) After receipt by an indemnified party under
this Section 4.5 of notice of the commencement of any action
(including any governmental action), such indemnified party
will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 4.5, deliver to the
indemnifying party a written notice of the commencement thereof
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 noticed, to
assume the defense thereof with counsel mutually satisfactory to
the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be
represented without conflict by one counsel) shall have the
right to retain one separate counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action,
if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the
indemnified party under this Section 4.5, but the omission so to
deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 4.5.
(d) If the indemnification provided for in this
Section 4.5 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss,
liability, claim, damage, or expense referred to therein, then
the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection
<PAGE>9
with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other
relevant equitable considerations; provided, however, that, in
any such case, (A) the Investor will not be required to
contribute any amount in excess of the proceeds (net of
underwriting discounts and commissions) received by the Investor
from all Registrable Securities offered and sold by the Investor
pursuant to the registration statement; and (B) no person or
entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled
to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation. The relative fault of the
indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the
Violation relates to information supplied by the indemnifying
party or by the indemnified party and the parties' relative
intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution
contained in the underwriting agreement entered into in
connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(f) The obligations of the Company and the
Investor under this Section 4.5 shall survive the completion of
any offering of Registrable Securities in a registration
statement under this Section 4, and otherwise.
4.6 Other Registration Participants. The Company
agrees that from and after January 22, 1997 it will not grant to
any person any piggyback or other participation rights in the
Registration Statement referenced in Section 4.2(a) hereof. The
foregoing shall not be deemed to prevent the Company from
granting such rights with respect to any registration statement
that does not cover the Registrable Securities.
5. Miscellaneous.
5.1 Successors and Assigns. The terms and conditions
of this Agreement shall inure to the benefit of and be binding
upon the respective permitted successors and assigns of the
parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
5.2 Governing Law. This Agreement shall be governed
by and construed under the laws of the State of California
(irrespective of its choice of law principles).
5.3 Counterparts. This Agreement 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.
5.4 Titles and Subtitles. The titles and subtitles
used in this Agreement are used for convenience only and are not
to be considered in construing or interpreting this Agreement.
<PAGE>10
5.5 Notices. Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in
writing and shall be deemed effective upon personal delivery to
the party to be notified, or if sent by telex or telecopier,
upon receipt of the correct answerback, or upon deposit with the
United States Post Office, by registered or certified mail, or
upon deposit with an overnight air courier, in each case postage
prepaid and addressed to the party to be notified at the address
as follows, or at such other address as such party may designate
by ten days' advance written notice to the other party:
If to the Company:
Gensia, Inc.
9360 Towne Centre Drive
San Diego, CA 92121-3030
Attn: Secretary
Fax: (619) 453-0095
with a copy to:
Pillsbury Madison & Sutro LLP
P.O. Box 7880
San Francisco, CA 94104
Attn: Thomas E. Sparks, Esq.
Fax: (415) 983-7396
If to the Investor:
Mark S. Berg
100 Wall Street
14th Floor
New York, NY 10005
Attn: Mark S. Berg
Fax: (212) 952-1903
5.6 Finders' Fee. Each party represents that it
neither is nor will be obligated for any finders' fee or com-
mission in connection with this transaction. Investor agrees to
indemnify and hold harmless the Company from any liability for
any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability
or asserted liability) for which the Investor or any of its
officers, partners, employees or representatives is responsible.
The Company agrees to indemnify and hold harmless
Investor from any liability for any commission or compensation
in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for
which the Company or any of its officers, employees or
representatives is responsible.
5.7 Expenses. The Company and the Investor shall pay
their respective costs and expenses incurred with respect to the
negotiation, execution, delivery and performance of this
Agreement. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which
such party may be entitled.
5.8 Amendments and Waivers. Any term of this
Agreement may be amended and the observance of any term of this
<PAGE>11
Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with
the written consent of the Company and the Investor. Any
amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any securities purchased
under this Agreement at the time outstanding, each future holder
of all such securities, and the Company.
5.9 Severability. If any provision of this Agreement
is held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
5.10 Entire Agreement. This Agreement, and the
Confidentiality Agreement dated January 9, 1997 between the
parties hereto, constitute the entire agreement between the
parties with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, both oral
and written, between the parties with respect to the subject
matter hereof and thereof. No representation, inducement,
promise, understanding, condition or warranty not set forth
herein or therein has been made or relied upon by either party
hereto. Neither this Agreement nor any provision hereof is
intended to confer upon any Person other than the parties hereto
any rights or remedies hereunder.
<PAGE>12
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
GENSIA, INC.
By /s/ David F. Hale
--------------------------
Title President and Chief
Executive Officer
By /s/ Mark S. Berg
--------------------------
MARK S. BERG
<PAGE>1
EXHIBIT 10.7
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of the ninth day of January, 1997 by and between GENSIA,
INC., a Delaware corporation (the "Company"), and HANOVER
ASSOCIATES LLC, an limited liability corporation (the
"Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Common Stock. Subject to
the terms and conditions of this Agreement, Investor hereby
purchases and the Company hereby sells and issues to Investor
60,000 shares (the "Original Shares") of the Company's Common
Stock for the purchase price of $4.00 per share (such per share
purchase price is hereinafter referred to as the "Original Per
Share Purchase Price") for an aggregate price of $240,000
(the "Original Aggregate Purchase Price").
1.2 Closing. The purchase and sale of the Common
Stock shall take place at the offices of the Company, 9360 Towne
Centre Drive, San Diego, California, at 10 A.M., on the date
hereof, or at such other time and place as the Company and
Investor mutually agree upon, verbally or in writing (which time
and place are designated as the "Closing"). At the Closing the
Company shall deliver to Investor a certificate representing the
Common Stock which such Investor is purchasing against delivery
to the Company by such Investor of a bank wire in same day funds
or check in the amount of the Original Aggregate Purchase Price
therefor payable to the Company's order.
1.3 Adjustment to Original Shares. If subsequent to
the date hereof and prior to the consummation or termination of
the Stock Exchange Agreement between the Company and Rakepoll
Finance N.V. dated as of November 12, 1996, as amended, (the
"Relevant Time Period"), the Company issues additional shares of
Common Stock at a per share price less than the Original Per
Share Purchase Price, or securities convertible into Common
Stock at a conversion price less than the Original Per Share
Purchase Price (other than pursuant to the exercise or
conversion of securities outstanding on the date hereof or
pursuant to the Company's existing stock plans) (such per share
price or conversion price being hereinafter referred to as the
"New Per Share Price"), then in connection with the first such
transaction the Company will issue to Investor an additional
number of shares of Common Stock (the "Additional Shares") equal
to (a) the Original Aggregate Purchase Price divided by the New
Per Share Price minus (b) the number of Original Shares. In the
event that after the issuance of Additional Shares, but before
the end of the Relevant Time Period, the Company issues Common
Stock at a per share price less than the New Per Share Price or
convertible securities at a conversion price less than the New
Per Share Price (other than pursuant to the exercise or
conversion of securities outstanding on the date hereof or
pursuant to the Company's stock plans), then a calculation shall
be made in accordance with the preceding sentence, substituting
the sum of the number of Original Shares plus the number of
Additional Shares in clause (b) above. Such number of shares
shall then be issued to Investor.
<PAGE>2
1.4 Definitions.
(a) The following terms, as used herein, have the
following meanings:
"Closing Date" means the date of the Closing.
"Common Stock" means the Common Stock, par value $0.01
per share of the Company, together with the associated preferred
stock purchase rights established pursuant to the Rights
Agreement dated March 9, 1992 between the Company and
ChaseMellon Shareholder Services L.L.C. as rights agent (the
"Rights").
"Material Adverse Effect" means a material adverse
effect on the condition (financial or otherwise), business,
assets, results of operations of a corporation and its
subsidiaries taken as a whole.
"1934 Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated
thereunder.
"1933 Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Person" shall mean an individual, corporation,
partnership, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization, governmental authority or any other
form of entity not specifically listed herein.
"Purchased Shares" means the Original Shares and any
Additional Shares.
2. Representations and Warranties of the Company.
The Company hereby represents and warrants to Investor that:
2.1 Organization, Good Standing and Qualification.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and
has all requisite corporate power and authority to carry on its
business as now conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction
in which the failure so to qualify would have a Material Adverse
Effect.
2.2 Capitalization. The authorized capital of the
Company consists of:
(i) Preferred Stock. 5,000,000 shares of Preferred
Stock, of which 1,840,000 shares have been designated $3.75
Convertible Exchangeable Preferred Stock, par value $.01 per
share (the "Convertible Preferred Stock"), and 100,000 shares
have been designated Series I Participating Preferred Stock, par
value $.01 per share (the "Participating Preferred Stock").
There are 1,600,000 shares of Convertible Preferred Stock and no
shares of Participating Preferred Stock issued and outstanding.
(ii) Common Stock. 75,000,000 shares of Common
Stock, of which 36,950,792 shares were issued and outstanding as
of September 30, 1996. The Company has entered into a Stock
<PAGE>3
Exchange Agreement, dated as of November 12, 1996 (the "Stock
Exchange Agreement"), with Rakepoll Finance N.V. which, among
other things, provides for the Company to issue 29,500,000
shares of Common Stock to Rakepoll Finance N.V. The
consummation of the transactions contemplated by the Stock
Exchange Agreement, including the issuance of shares of Common
Stock to Rakepoll Finance N.V., is subject to the satisfaction
of certain conditions, including shareholder and regulatory
approval.
2.3 Authorization. All corporate action on the part
of the Company, its officers, directors and stockholders
necessary for (i) the authorization, execution and delivery of
this Agreement, (ii) the performance of all obligations of the
Company hereunder and (iii) the authorization, issuance (or
reservation for issuance) and delivery of the Common Stock being
sold hereunder, to the extent that the foregoing requires
performance on or prior to the Closing, has been taken and this
Agreement constitutes the valid and legally binding obligation
of the Company, enforceable against the Company in accordance
with its terms.
2.4 Valid Issuance of Purchased Shares. The Original
Shares have been, and when and if issued the Additional Shares
will be, duly and validly issued and fully paid and non-
assessable and, based in part upon the representations of the
Investor in this Agreement, issued in compliance with all
applicable federal and state securities laws.
3. Representations and Warranties of Investor. This
Agreement is made with Investor in reliance upon the Investor's
representation and warranties to the Company, which by such
Investor's execution of this Agreement the Investor hereby
confirms, that:
3.1 Organization and Existence. Investor is a
limited liability corporation validly existing and in good
standing under the laws of and has all corporate powers
and all material governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now
conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not,
individually or in the aggregate, have a Material Adverse
Effect.
3.2 Corporate Authorization. This execution,
delivery and performance by Investor of this Agreement are
within the corporate powers of Investor and have been duly
authorized by all necessary partnership action on the part of
Investor. This Agreement constitutes the valid and legally
binding obligation of Investor, enforceable against Investor in
accordance with its terms.
3.3 Purchase Entirely for Own Account. All Purchased
Shares to be received by Investor will be acquired for
investment for Investor's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any
part thereof, and that Investor has no present intention of
selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, Investor
further represents that Investor does not have any contract, un-
dertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third
<PAGE>4
person, with respect to any of the Purchased Shares.
3.4 Restricted Securities. Investor understands that
the Purchased Shares are characterized as "restricted securi-
ties" under the federal securities laws inasmuch as they are
being or will be acquired from the Company in a transaction not
involving a public offering and that under such laws and
applicable regulations such securities may only be resold
without registration under the 1933 Act in certain limited
circumstances. In this connection Investor represents that it
is familiar with Securities and Exchange Commission ("SEC") Rule
144, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act.
3.5 Legends. It is understood that the certificates
evidencing the Purchased 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 satisfactory to the Company that
such registration is not required or unless sold pursuant to
Rule 144 of such Act."
(b) If required by the authorities of any state in
connection with the issuance or sale of the Common Stock, the
legend required by such state authority.
4. Registration Rights. The Company covenants and
agrees as follows:
4.1 Certain Additional Definitions.
As used in this Agreement, the following capitalized
terms shall have the following meanings:
"Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering
of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such
prospectus.
"Register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration
statement or similar document in compliance with the 1933 Act,
and such registration statement or document becoming effective
under the 1933 Act.
"Registrable Securities" shall mean (i) the Purchased
Shares; (ii) any Common Stock issued as (or issuable upon the
conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with
respect to, or in exchange for or in replacement of, such
Purchased Shares; and (iii) any Common Stock issued pursuant to
Section 4.2(a).
"Registration Statement" shall mean any registration
statement of the Company that covers any of the Registrable
<PAGE>5
Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all
exhibits and all material incorporated by reference in such
Registration Statement.
4.2 Registration. The Company will use its
reasonable best efforts to effect a registration to permit the
sale of the Registrable Securities as described below, and
pursuant thereto the Company will:
(a) prepare and file and use its reasonable best
efforts to have declared effective by March 31, 1997 by the SEC,
a Registration Statement on Form S-3 relating to resale of all
of the shares of the Registrable Securities and use its
reasonable best efforts to cause such Registration Statement to
remain continuously effective for a period which will terminate
when all Registrable Securities covered by such Registration
Statements, as amended from time to time, have been sold or when
the Registrable Securities may be sold under Rule 144(k) under
the 1933 Act. If such Registration Statement is not declared
effective by the SEC by March 31, 1997 then on the first
business day thereafter the Company shall issue to Investor
additional shares of Common Stock equal to 2% of the shares of
Common Stock previously issued to Investor hereunder. If such
Registration Statement has not been declared effective prior to
the end of any succeeding month then on the first business day
thereafter the Company shall issue to Investor shares of Common
Stock equal to 1.5% of the shares of Common Stock previously
issued to Investor hereunder.
(b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement and the
Prospectus as may be necessary to keep such Registration
Statement effective for the period specified in Section 4.2(a)
and to comply with the provisions of the 1933 Act and the 1934
Act with respect to the distribution of all Registrable
Securities;
(c) notify the Investor, promptly, and confirm such
notice in writing, (i) when the Prospectus or any supplement or
post-effective amendment has been filed, and, with respect to
the Registration Statement or any post-effective amendment, when
the same has become effective, (ii) of any request by the SEC
for amendments or supplements to the Registration Statement or
Prospectus or for additional information, (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for
that purpose, and (iv) 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;
(d) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible moment;
(e) furnish to the Investor, without charge, at least
one copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules,
all, upon a Investor's request, documents incorporated therein
by reference and all exhibits thereto (including those
<PAGE>6
incorporated by reference);
(f) deliver to the Investor, without charge, as many
copies of the Prospectus (including each preliminary prospectus)
and any amendment or supplement thereto as Investor may
reasonably request in order to facilitate the disposition of the
Registrable Securities;
(g) cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange
or market on which similar securities issued by the Company are
then listed, and if the securities are not so listed to use its
reasonable best efforts promptly to cause all such securities to
be listed on either the New York Stock Exchange, the American
Stock Exchange or the Nasdaq Stock Market;
(h) use reasonable best efforts to qualify or
register the Registrable Securities for sale under (or obtain
exemptions from the application of) the Blue Sky laws of such
jurisdictions as are applicable. The Company shall not be
required to qualify as a foreign corporation or to file a
general consent to service of process in any such jurisdiction
where it is not presently qualified or where it would be subject
to general service of process or taxation as a foreign corpora-
tion in any jurisdiction where it is not now so subject.
(i) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC
under the 1933 Act and the 1934 Act and take such other actions
as may be reasonably necessary to facilitate the registration of
the Registrable Securities hereunder.
Investor shall furnish to the Company such information
regarding the distribution of such securities as the Company may
from time to time reasonably request in writing.
If the Company delivers a certificate in writing to
the Investor, to the effect that a delay in the sale of
Registrable Securities by the Investor under the Registration
Statement is necessary because a sale pursuant to such
Registration Statement in its then current form would reasonably
be expected to constitute a violation of the federal securities
laws then the Investor shall agree not to sell or otherwise
transfer such Registrable Securities for the period of time
specified by the Company in its certificate. In no event shall
such delay exceed ten (10) business days; provided, however,
that if, prior to the expiration of such ten (10) business day
period, the Company delivers a certificate in writing to the
Investor to the effect that a further delay in such sale beyond
such ten (10) business day period is necessary because a sale
pursuant to such Registration Statement in its then current form
would reasonably be expected to constitute a violation of the
federal securities laws, the Company may refuse to permit the
Investor to resell any Registrable Securities pursuant to such
Registration Statement for an additional period not to exceed
five (5) business days.
4.3 Registration Expenses. All expenses incident to
the Company's performance of or compliance with this Agreement,
including without limitation all registration and filing fees,
fees with respect to the filings required to be made with the
National Association of Securities Dealers, Inc., fees and
expenses of compliance with the securities or Blue Sky laws,
<PAGE>7
printing expenses, messenger, telephone and delivery expenses,
fees and disbursements of counsel for the Company, fees and
disbursements of all independent certified public accountants of
the Company, fees and expenses incurred in connection with the
listing of the securities, rating agency fees and the fees and
expenses of any person, including special experts, retained by
the Company, will be borne by the Company, regardless of whether
the Registration Statement becomes effective; provided, however,
that the Company will not be required to pay discounts,
commissions or fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals relating
to the distribution of the Registrable Securities or fees or
disbursements of any counsel to the Investor.
4.4 Rule 144.
The Company covenants that it will file the reports
required to be filed by it under the 1933 Act and the 1934 Act
and it will take such further action as the Investor may
reasonably request, all to the extent required to enable
Investor to sell Registrable Securities without registration
under the 1933 Act in reliance on the exemption provided by
Rule 144 or Rule 144A under the 1933 Act or any successor or
similar rules or statues. Upon the request of the Investor, the
Company will deliver to the Investor a written statement as to
whether the Company has complied with such information and
requirements.
4.5 Indemnification. In the event any Registrable
Securities are included in a registration statement under this
Section 4:
(a) To the extent permitted by law, the Company
will indemnify and hold harmless the Investor, any underwriter
(as defined in the Act) for the Investor, any officer, director,
partner or agent thereof, and each person, if any, who controls
the Investor or underwriter within the meaning of the 1933 Act
or the 1934 Act against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject
under the 1933 Act, the 1934 Act or other United States federal
or state securities law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act or other United States
federal or state securities law, or any rule or regulation
promulgated under the 1933 Act, the 1934 Act or other United
States federal or state securities law; and the Company will pay
to the Investor, underwriter or controlling person any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability, or action as incurred; provided, however, that the
indemnity agreement contained in this subsection 4.5(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
<PAGE>8
unreasonably withheld), nor shall the Company be liable 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 a Violation
which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by the Investor, underwriter or controlling person.
(b) To the extent permitted by law, the Investor
will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration
statement, each person, if any, who controls the Company within
the meaning of the 1933 Act, any underwriter, any officer,
director, partner or agent thereof and any controlling person of
any such underwriter, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing
persons may become subject, under the 1933 Act, the 1934 Act or
other United States federal or state securities law insofar as
such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation,
in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written
information furnished by the Investor expressly for use in
connection with such registration; and the Investor will pay any
legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this subsection 4.5(b),
in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 4.5(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 the Investor, which consent shall not be
unreasonably withheld; provided, that, in no event shall any
indemnity under this subsection 4.5(b) exceed the proceeds (net
of underwriting discounts and commissions) from the offering
received by the Investor.
(c) After receipt by an indemnified party under
this Section 4.5 of notice of the commencement of any action
(including any governmental action), such indemnified party
will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 4.5, deliver to the
indemnifying party a written notice of the commencement thereof
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 noticed, to
assume the defense thereof with counsel mutually satisfactory to
the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be
represented without conflict by one counsel) shall have the
right to retain one separate counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action,
if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the
indemnified party under this Section 4.5, but the omission so to
deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 4.5.
<PAGE>9
(d) If the indemnification provided for in this
Section 4.5 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss,
liability, claim, damage, or expense referred to therein, then
the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other
relevant equitable considerations; provided, however, that, in
any such case, (A) the Investor will not be required to
contribute any amount in excess of the proceeds (net of
underwriting discounts and commissions) received by the Investor
from all Registrable Securities offered and sold by the Investor
pursuant to the registration statement; and (B) no person or
entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled
to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation. The relative fault of the
indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the
Violation relates to information supplied by the indemnifying
party or by the indemnified party and the parties' relative
intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution
contained in the underwriting agreement entered into in
connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(f) The obligations of the Company and the
Investor under this Section 4.5 shall survive the completion of
any offering of Registrable Securities in a registration
statement under this Section 4, and otherwise.
4.6 Other Registration Participants. The Company
agrees that from and after January 22, 1997 it will not grant to
any person any piggyback or other participation rights in the
Registration Statement referenced in Section 4.2(a) hereof. The
foregoing shall not be deemed to prevent the Company from
granting such rights with respect to any registration statement
that does not cover the Registrable Securities.
5. Miscellaneous.
5.1 Successors and Assigns. The terms and conditions
of this Agreement shall inure to the benefit of and be binding
upon the respective permitted successors and assigns of the
parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
5.2 Governing Law. This Agreement shall be governed
by and construed under the laws of the State of California
(irrespective of its choice of law principles).
<PAGE>10
5.3 Counterparts. This Agreement 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.
5.4 Titles and Subtitles. The titles and subtitles
used in this Agreement are used for convenience only and are not
to be considered in construing or interpreting this Agreement.
5.5 Notices. Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in
writing and shall be deemed effective upon personal delivery to
the party to be notified, or if sent by telex or telecopier,
upon receipt of the correct answerback, or upon deposit with the
United States Post Office, by registered or certified mail, or
upon deposit with an overnight air courier, in each case postage
prepaid and addressed to the party to be notified at the address
as follows, or at such other address as such party may designate
by ten days' advance written notice to the other party:
If to the Company:
Gensia, Inc.
9360 Towne Centre Drive
San Diego, CA 92121-3030
Attn: Secretary
Fax: (619) 453-0095
with a copy to:
Pillsbury Madison & Sutro LLP
P.O. Box 7880
San Francisco, CA 94104
Attn: Thomas E. Sparks, Esq.
Fax: (415) 983-7396
If to the Investor:
Hanover Associates LLC
100 Wall Street
14th Floor
New York, NY 10005
Attn: Mark S. Berg
Fax: (212) 952-1903
5.6 Finders' Fee. Each party represents that it
neither is nor will be obligated for any finders' fee or com-
mission in connection with this transaction. Investor agrees to
indemnify and hold harmless the Company from any liability for
any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability
or asserted liability) for which the Investor or any of its
officers, partners, employees or representatives is responsible.
The Company agrees to indemnify and hold harmless
Investor from any liability for any commission or compensation
in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for
which the Company or any of its officers, employees or
representatives is responsible.
5.7 Expenses. The Company and the Investor shall pay
their respective costs and expenses incurred with respect to the
<PAGE>11
negotiation, execution, delivery and performance of this
Agreement. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which
such party may be entitled.
5.8 Amendments and Waivers. Any term of this
Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with
the written consent of the Company and the Investor. Any
amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any securities purchased
under this Agreement at the time outstanding, each future holder
of all such securities, and the Company.
5.9 Severability. If any provision of this Agreement
is held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
5.10 Entire Agreement. This Agreement, and the
Confidentiality Agreement dated January 9, 1997 between the
parties hereto, constitute the entire agreement between the
parties with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, both oral
and written, between the parties with respect to the subject
matter hereof and thereof. No representation, inducement,
promise, understanding, condition or warranty not set forth
herein or therein has been made or relied upon by either party
hereto. Neither this Agreement nor any provision hereof is
intended to confer upon any Person other than the parties hereto
any rights or remedies hereunder.
<PAGE>12
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
GENSIA, INC.
By /s/ David F. Hale
--------------------------
Title Chairman of the Board,
President and Chief
Executive Officer
By /s/ Mark S. Berg
-------------------------
Title Partner
<PAGE>1
EXHIBIT 10.8
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of the ninth day of January, 1997 by and between GENSIA,
INC., a Delaware corporation (the "Company"), and M.S.B.
RESEARCH, an limited partnership (the "Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Common Stock. Subject to
the terms and conditions of this Agreement, Investor hereby
purchases and the Company hereby sells and issues to Investor
62,500 shares (the "Original Shares") of the Company's Common
Stock for the purchase price of $4.00 per share (such per share
purchase price is hereinafter referred to as the "Original Per
Share Purchase Price") for an aggregate price of $250,000
(the "Original Aggregate Purchase Price").
1.2 Closing. The purchase and sale of the Common
Stock shall take place at the offices of the Company, 9360 Towne
Centre Drive, San Diego, California, at 10 A.M., on the date
hereof, or at such other time and place as the Company and
Investor mutually agree upon, verbally or in writing (which time
and place are designated as the "Closing"). At the Closing the
Company shall deliver to Investor a certificate representing the
Common Stock which such Investor is purchasing against delivery
to the Company by such Investor of a bank wire in same day funds
or check in the amount of the Original Aggregate Purchase Price
therefor payable to the Company's order.
1.3 Adjustment to Original Shares. If subsequent to
the date hereof and prior to the consummation or termination of
the Stock Exchange Agreement between the Company and Rakepoll
Finance N.V. dated as of November 12, 1996, as amended, (the
"Relevant Time Period"), the Company issues additional shares of
Common Stock at a per share price less than the Original Per
Share Purchase Price, or securities convertible into Common
Stock at a conversion price less than the Original Per Share
Purchase Price (other than pursuant to the exercise or
conversion of securities outstanding on the date hereof or
pursuant to the Company's existing stock plans) (such per share
price or conversion price being hereinafter referred to as the
"New Per Share Price"), then in connection with the first such
transaction the Company will issue to Investor an additional
number of shares of Common Stock (the "Additional Shares") equal
to (a) the Original Aggregate Purchase Price divided by the New
Per Share Price minus (b) the number of Original Shares. In the
event that after the issuance of Additional Shares, but before
the end of the Relevant Time Period, the Company issues Common
Stock at a per share price less than the New Per Share Price or
convertible securities at a conversion price less than the New
Per Share Price (other than pursuant to the exercise or
conversion of securities outstanding on the date hereof or
pursuant to the Company's stock plans), then a calculation shall
be made in accordance with the preceding sentence, substituting
the sum of the number of Original Shares plus the number of
Additional Shares in clause (b) above. Such number of shares
shall then be issued to Investor.
<PAGE>2
1.4 Definitions.
(a) The following terms, as used herein, have the
following meanings:
"Closing Date" means the date of the Closing.
"Common Stock" means the Common Stock, par value $0.01
per share of the Company, together with the associated preferred
stock purchase rights established pursuant to the Rights
Agreement dated March 9, 1992 between the Company and
ChaseMellon Shareholder Services L.L.C. as rights agent (the
"Rights").
"Material Adverse Effect" means a material adverse
effect on the condition (financial or otherwise), business,
assets, results of operations of a corporation and its
subsidiaries taken as a whole.
"1934 Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated
thereunder.
"1933 Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Person" shall mean an individual, corporation,
partnership, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization, governmental authority or any other
form of entity not specifically listed herein.
"Purchased Shares" means the Original Shares and any
Additional Shares.
2. Representations and Warranties of the Company.
The Company hereby represents and warrants to Investor that:
2.1 Organization, Good Standing and Qualification.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and
has all requisite corporate power and authority to carry on its
business as now conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction
in which the failure so to qualify would have a Material Adverse
Effect.
2.2 Capitalization. The authorized capital of the
Company consists of:
(i) Preferred Stock. 5,000,000 shares of Preferred
Stock, of which 1,840,000 shares have been designated $3.75
Convertible Exchangeable Preferred Stock, par value $.01 per
share (the "Convertible Preferred Stock"), and 100,000 shares
have been designated Series I Participating Preferred Stock, par
value $.01 per share (the "Participating Preferred Stock").
There are 1,600,000 shares of Convertible Preferred Stock and no
shares of Participating Preferred Stock issued and outstanding.
(ii) Common Stock. 75,000,000 shares of Common
Stock, of which 36,950,792 shares were issued and outstanding as
of September 30, 1996. The Company has entered into a Stock
Exchange Agreement, dated as of November 12, 1996 (the "Stock
<PAGE>3
Exchange Agreement"), with Rakepoll Finance N.V. which, among
other things, provides for the Company to issue 29,500,000
shares of Common Stock to Rakepoll Finance N.V. The
consummation of the transactions contemplated by the Stock
Exchange Agreement, including the issuance of shares of Common
Stock to Rakepoll Finance N.V., is subject to the satisfaction
of certain conditions, including shareholder and regulatory
approval.
2.3 Authorization. All corporate action on the part
of the Company, its officers, directors and stockholders
necessary for (i) the authorization, execution and delivery of
this Agreement, (ii) the performance of all obligations of the
Company hereunder and (iii) the authorization, issuance (or
reservation for issuance) and delivery of the Common Stock being
sold hereunder, to the extent that the foregoing requires
performance on or prior to the Closing, has been taken and this
Agreement constitutes the valid and legally binding obligation
of the Company, enforceable against the Company in accordance
with its terms.
2.4 Valid Issuance of Purchased Shares. The Original
Shares have been, and when and if issued the Additional Shares
will be, duly and validly issued and fully paid and non-
assessable and, based in part upon the representations of the
Investor in this Agreement, issued in compliance with all
applicable federal and state securities laws.
3. Representations and Warranties of Investor. This
Agreement is made with Investor in reliance upon the Investor's
representation and warranties to the Company, which by such
Investor's execution of this Agreement the Investor hereby
confirms, that:
3.1 Organization and Existence. Investor is a
limited partnership validly existing and in good standing under
the laws of and has all corporate powers and all
material governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now
conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not,
individually or in the aggregate, have a Material Adverse
Effect.
3.2 Corporate Authorization. This execution,
delivery and performance by Investor of this Agreement are
within the corporate powers of Investor and have been duly
authorized by all necessary partnership action on the part of
Investor. This Agreement constitutes the valid and legally
binding obligation of Investor, enforceable against Investor in
accordance with its terms.
3.3 Purchase Entirely for Own Account. All Purchased
Shares to be received by Investor will be acquired for
investment for Investor's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any
part thereof, and that Investor has no present intention of
selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, Investor
further represents that Investor does not have any contract, un-
dertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third
person, with respect to any of the Purchased Shares.
<PAGE>4
3.4 Restricted Securities. Investor understands that
the Purchased Shares are characterized as "restricted securi-
ties" under the federal securities laws inasmuch as they are
being or will be acquired from the Company in a transaction not
involving a public offering and that under such laws and
applicable regulations such securities may only be resold
without registration under the 1933 Act in certain limited
circumstances. In this connection Investor represents that it
is familiar with Securities and Exchange Commission ("SEC") Rule
144, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act.
3.5 Legends. It is understood that the certificates
evidencing the Purchased 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 satisfactory to the Company that
such registration is not required or unless sold pursuant to
Rule 144 of such Act."
(b) If required by the authorities of any state in
connection with the issuance or sale of the Common Stock, the
legend required by such state authority.
4. Registration Rights. The Company covenants and
agrees as follows:
4.1 Certain Additional Definitions.
As used in this Agreement, the following capitalized
terms shall have the following meanings:
"Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering
of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such
prospectus.
"Register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration
statement or similar document in compliance with the 1933 Act,
and such registration statement or document becoming effective
under the 1933 Act.
"Registrable Securities" shall mean (i) the Purchased
Shares; (ii) any Common Stock issued as (or issuable upon the
conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with
respect to, or in exchange for or in replacement of, such
Purchased Shares; and (iii) any Common Stock issued pursuant to
Section 4.2(a).
"Registration Statement" shall mean any registration
statement of the Company that covers any of the Registrable
Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such
<PAGE>5
Registration Statement, including post-effective amendments, all
exhibits and all material incorporated by reference in such
Registration Statement.
4.2 Registration. The Company will use its
reasonable best efforts to effect a registration to permit the
sale of the Registrable Securities as described below, and
pursuant thereto the Company will:
(a) prepare and file and use its reasonable best
efforts to have declared effective by March 31, 1997 by the SEC,
a Registration Statement on Form S-3 relating to resale of all
of the shares of the Registrable Securities and use its
reasonable best efforts to cause such Registration Statement to
remain continuously effective for a period which will terminate
when all Registrable Securities covered by such Registration
Statements, as amended from time to time, have been sold or when
the Registrable Securities may be sold under Rule 144(k) under
the 1933 Act. If such Registration Statement is not declared
effective by the SEC by March 31, 1997 then on the first
business day thereafter the Company shall issue to Investor
additional shares of Common Stock equal to 2% of the shares of
Common Stock previously issued to Investor hereunder. If such
Registration Statement has not been declared effective prior to
the end of any succeeding month then on the first business day
thereafter the Company shall issue to Investor shares of Common
Stock equal to 1.5% of the shares of Common Stock previously
issued to Investor hereunder.
(b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement and the
Prospectus as may be necessary to keep such Registration
Statement effective for the period specified in Section 4.2(a)
and to comply with the provisions of the 1933 Act and the 1934
Act with respect to the distribution of all Registrable
Securities;
(c) notify the Investor, promptly, and confirm such
notice in writing, (i) when the Prospectus or any supplement or
post-effective amendment has been filed, and, with respect to
the Registration Statement or any post-effective amendment, when
the same has become effective, (ii) of any request by the SEC
for amendments or supplements to the Registration Statement or
Prospectus or for additional information, (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for
that purpose, and (iv) 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;
(d) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible moment;
(e) furnish to the Investor, without charge, at least
one copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules,
all, upon a Investor's request, documents incorporated therein
by reference and all exhibits thereto (including those
incorporated by reference);
<PAGE>6
(f) deliver to the Investor, without charge, as many
copies of the Prospectus (including each preliminary prospectus)
and any amendment or supplement thereto as Investor may
reasonably request in order to facilitate the disposition of the
Registrable Securities;
(g) cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange
or market on which similar securities issued by the Company are
then listed, and if the securities are not so listed to use its
reasonable best efforts promptly to cause all such securities to
be listed on either the New York Stock Exchange, the American
Stock Exchange or the Nasdaq Stock Market;
(h) use reasonable best efforts to qualify or
register the Registrable Securities for sale under (or obtain
exemptions from the application of) the Blue Sky laws of such
jurisdictions as are applicable. The Company shall not be
required to qualify as a foreign corporation or to file a
general consent to service of process in any such jurisdiction
where it is not presently qualified or where it would be subject
to general service of process or taxation as a foreign corpora-
tion in any jurisdiction where it is not now so subject.
(i) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC
under the 1933 Act and the 1934 Act and take such other actions
as may be reasonably necessary to facilitate the registration of
the Registrable Securities hereunder.
Investor shall furnish to the Company such information
regarding the distribution of such securities as the Company may
from time to time reasonably request in writing.
If the Company delivers a certificate in writing to
the Investor, to the effect that a delay in the sale of
Registrable Securities by the Investor under the Registration
Statement is necessary because a sale pursuant to such
Registration Statement in its then current form would reasonably
be expected to constitute a violation of the federal securities
laws then the Investor shall agree not to sell or otherwise
transfer such Registrable Securities for the period of time
specified by the Company in its certificate. In no event shall
such delay exceed ten (10) business days; provided, however,
that if, prior to the expiration of such ten (10) business day
period, the Company delivers a certificate in writing to the
Investor to the effect that a further delay in such sale beyond
such ten (10) business day period is necessary because a sale
pursuant to such Registration Statement in its then current form
would reasonably be expected to constitute a violation of the
federal securities laws, the Company may refuse to permit the
Investor to resell any Registrable Securities pursuant to such
Registration Statement for an additional period not to exceed
five (5) business days.
4.3 Registration Expenses. All expenses incident to
the Company's performance of or compliance with this Agreement,
including without limitation all registration and filing fees,
fees with respect to the filings required to be made with the
National Association of Securities Dealers, Inc., fees and
expenses of compliance with the securities or Blue Sky laws,
printing expenses, messenger, telephone and delivery expenses,
fees and disbursements of counsel for the Company, fees and
<PAGE>7
disbursements of all independent certified public accountants of
the Company, fees and expenses incurred in connection with the
listing of the securities, rating agency fees and the fees and
expenses of any person, including special experts, retained by
the Company, will be borne by the Company, regardless of whether
the Registration Statement becomes effective; provided, however,
that the Company will not be required to pay discounts,
commissions or fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals relating
to the distribution of the Registrable Securities or fees or
disbursements of any counsel to the Investor.
4.4 Rule 144.
The Company covenants that it will file the reports
required to be filed by it under the 1933 Act and the 1934 Act
and it will take such further action as the Investor may
reasonably request, all to the extent required to enable
Investor to sell Registrable Securities without registration
under the 1933 Act in reliance on the exemption provided by
Rule 144 or Rule 144A under the 1933 Act or any successor or
similar rules or statues. Upon the request of the Investor, the
Company will deliver to the Investor a written statement as to
whether the Company has complied with such information and
requirements.
4.5 Indemnification. In the event any Registrable
Securities are included in a registration statement under this
Section 4:
(a) To the extent permitted by law, the Company
will indemnify and hold harmless the Investor, any underwriter
(as defined in the Act) for the Investor, any officer, director,
partner or agent thereof, and each person, if any, who controls
the Investor or underwriter within the meaning of the 1933 Act
or the 1934 Act against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject
under the 1933 Act, the 1934 Act or other United States federal
or state securities law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act or other United States
federal or state securities law, or any rule or regulation
promulgated under the 1933 Act, the 1934 Act or other United
States federal or state securities law; and the Company will pay
to the Investor, underwriter or controlling person any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability, or action as incurred; provided, however, that the
indemnity agreement contained in this subsection 4.5(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), nor shall the Company be liable in any
such case for any such loss, claim, damage, liability, or action
<PAGE>8
to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by the Investor, underwriter or controlling person.
(b) To the extent permitted by law, the Investor
will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration
statement, each person, if any, who controls the Company within
the meaning of the 1933 Act, any underwriter, any officer,
director, partner or agent thereof and any controlling person of
any such underwriter, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing
persons may become subject, under the 1933 Act, the 1934 Act or
other United States federal or state securities law insofar as
such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation,
in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written
information furnished by the Investor expressly for use in
connection with such registration; and the Investor will pay any
legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this subsection 4.5(b),
in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 4.5(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 the Investor, which consent shall not be
unreasonably withheld; provided, that, in no event shall any
indemnity under this subsection 4.5(b) exceed the proceeds (net
of underwriting discounts and commissions) from the offering
received by the Investor.
(c) After receipt by an indemnified party under
this Section 4.5 of notice of the commencement of any action
(including any governmental action), such indemnified party
will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 4.5, deliver to the
indemnifying party a written notice of the commencement thereof
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 noticed, to
assume the defense thereof with counsel mutually satisfactory to
the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be
represented without conflict by one counsel) shall have the
right to retain one separate counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action,
if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the
indemnified party under this Section 4.5, but the omission so to
deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 4.5.
<PAGE>9
(d) If the indemnification provided for in this
Section 4.5 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss,
liability, claim, damage, or expense referred to therein, then
the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other
relevant equitable considerations; provided, however, that, in
any such case, (A) the Investor will not be required to
contribute any amount in excess of the proceeds (net of
underwriting discounts and commissions) received by the Investor
from all Registrable Securities offered and sold by the Investor
pursuant to the registration statement; and (B) no person or
entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled
to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation. The relative fault of the
indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the
Violation relates to information supplied by the indemnifying
party or by the indemnified party and the parties' relative
intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution
contained in the underwriting agreement entered into in
connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(f) The obligations of the Company and the
Investor under this Section 4.5 shall survive the completion of
any offering of Registrable Securities in a registration
statement under this Section 4, and otherwise.
4.6 Other Registration Participants. The Company
agrees that from and after January 22, 1997 it will not grant to
any person any piggyback or other participation rights in the
Registration Statement referenced in Section 4.2(a) hereof. The
foregoing shall not be deemed to prevent the Company from
granting such rights with respect to any registration statement
that does not cover the Registrable Securities.
5. Miscellaneous.
5.1 Successors and Assigns. The terms and conditions
of this Agreement shall inure to the benefit of and be binding
upon the respective permitted successors and assigns of the
parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
5.2 Governing Law. This Agreement shall be governed
by and construed under the laws of the State of California
(irrespective of its choice of law principles).
<PAGE>10
5.3 Counterparts. This Agreement 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.
5.4 Titles and Subtitles. The titles and subtitles
used in this Agreement are used for convenience only and are not
to be considered in construing or interpreting this Agreement.
5.5 Notices. Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in
writing and shall be deemed effective upon personal delivery to
the party to be notified, or if sent by telex or telecopier,
upon receipt of the correct answerback, or upon deposit with the
United States Post Office, by registered or certified mail, or
upon deposit with an overnight air courier, in each case postage
prepaid and addressed to the party to be notified at the address
as follows, or at such other address as such party may designate
by ten days' advance written notice to the other party:
If to the Company:
Gensia, Inc.
9360 Towne Centre Drive
San Diego, CA 92121-3030
Attn: Secretary
Fax: (619) 453-0095
with a copy to:
Pillsbury Madison & Sutro LLP
P.O. Box 7880
San Francisco, CA 94104
Attn: Thomas E. Sparks, Esq.
Fax: (415) 983-7396
If to the Investor:
M.S.B. Research
100 Wall Street
14th Floor
New York, NY 10005
Attn: Mark S. Berg
Fax: (212) 952-1903
5.6 Finders' Fee. Each party represents that it
neither is nor will be obligated for any finders' fee or com-
mission in connection with this transaction. Investor agrees to
indemnify and hold harmless the Company from any liability for
any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability
or asserted liability) for which the Investor or any of its
officers, partners, employees or representatives is responsible.
The Company agrees to indemnify and hold harmless
Investor from any liability for any commission or compensation
in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for
which the Company or any of its officers, employees or
representatives is responsible.
5.7 Expenses. The Company and the Investor shall pay
their respective costs and expenses incurred with respect to the
<PAGE>11
negotiation, execution, delivery and performance of this
Agreement. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which
such party may be entitled.
5.8 Amendments and Waivers. Any term of this
Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with
the written consent of the Company and the Investor. Any
amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any securities purchased
under this Agreement at the time outstanding, each future holder
of all such securities, and the Company.
5.9 Severability. If any provision of this Agreement
is held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
5.10 Entire Agreement. This Agreement, and the
Confidentiality Agreement dated January 9, 1997 between the
parties hereto, constitute the entire agreement between the
parties with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, both oral
and written, between the parties with respect to the subject
matter hereof and thereof. No representation, inducement,
promise, understanding, condition or warranty not set forth
herein or therein has been made or relied upon by either party
hereto. Neither this Agreement nor any provision hereof is
intended to confer upon any Person other than the parties hereto
any rights or remedies hereunder.
<PAGE>12
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
GENSIA, INC.
By /s/ David F. Hale
--------------------------
Title Chairman of the Board,
President and Chief
Executive Officer
By /s/ Mark S. Berg
--------------------------
Title President
<PAGE>1
EXHIBIT 10.9
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of the twenty-second day of January, 1997 by and between GENSIA,
INC., a Delaware corporation (the "Company"), and MARK S. BERG,
(the "Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Common Stock. Subject to
the terms and conditions of this Agreement, Investor hereby
purchases and the Company hereby sells and issues to Investor
200,000 shares (the "Original Shares") of the Company's Common
Stock for the purchase price of $4.00 per share (such per share
purchase price is hereinafter referred to as the "Original Per
Share Purchase Price") for an aggregate price of $800,000 (the
"Original Aggregate Purchase Price").
1.2 Closing. The purchase and sale of the Common
Stock shall take place at the offices of the Company, 9360 Towne
Centre Drive, San Diego, California, at 10 A.M., on the date
hereof, or at such other time and place as the Company and
Investor mutually agree upon, verbally or in writing (which time
and place are designated as the "Closing"). At the Closing the
Company shall deliver to Investor a certificate representing the
Common Stock which such Investor is purchasing against delivery
to the Company by such Investor of a bank wire in same day funds
or check in the amount of the Original Aggregate Purchase Price
therefor payable to the Company's order.
1.3 Adjustment to Original Shares. If subsequent to
the date hereof and prior to the consummation or termination of
the Stock Exchange Agreement between the Company and Rakepoll
Finance N.V. dated as of November 12, 1996, as amended, (the
"Relevant Time Period"), the Company issues additional shares of
Common Stock at a per share price less than the Original Per
Share Purchase Price, or securities convertible into Common
Stock at a conversion price less than the Original Per Share
Purchase Price (other than pursuant to the exercise or
conversion of securities outstanding on the date hereof or
pursuant to the Company's existing stock plans) (such per share
price or conversion price being hereinafter referred to as the
"New Per Share Price"), then in connection with the first such
transaction the Company will issue to Investor an additional
number of shares of Common Stock (the "Additional Shares") equal
to (a) the Original Aggregate Purchase Price divided by the New
Per Share Price minus (b) the number of Original Shares. In the
event that after the issuance of Additional Shares, but before
the end of the Relevant Time Period, the Company issues Common
Stock at a per share price less than the New Per Share Price or
convertible securities at a conversion price less than the New
Per Share Price (other than pursuant to the exercise or
conversion of securities outstanding on the date hereof or
pursuant to the Company's stock plans), then a calculation shall
be made in accordance with the preceding sentence, substituting
the sum of the number of Original Shares plus the number of
Additional Shares in clause (b) above. Such number of shares
shall then be issued to Investor.
<PAGE>2
1.4 Definitions.
(a) The following terms, as used herein, have the
following meanings:
"Closing Date" means the date of the Closing.
"Common Stock" means the Common Stock, par value $0.01
per share of the Company, together with the associated preferred
stock purchase rights established pursuant to the Rights
Agreement dated March 9, 1992 between the Company and
ChaseMellon Shareholder Services L.L.C. as rights agent (the
"Rights").
"Material Adverse Effect" means a material adverse
effect on the condition (financial or otherwise), business,
assets, results of operations of a corporation and its
subsidiaries taken as a whole.
"1934 Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated
thereunder.
"1933 Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Person" shall mean an individual, corporation,
partnership, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization, governmental authority or any other
form of entity not specifically listed herein.
"Purchased Shares" means the Original Shares and any
Additional Shares.
2. Representations and Warranties of the Company.
The Company hereby represents and warrants to Investor that:
2.1 Organization, Good Standing and Qualification.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and
has all requisite corporate power and authority to carry on its
business as now conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction
in which the failure so to qualify would have a Material Adverse
Effect.
2.2 Capitalization. The authorized capital of the
Company consists of:
(i) Preferred Stock. 5,000,000 shares of Preferred
Stock, of which 1,840,000 shares have been designated $3.75
Convertible Exchangeable Preferred Stock, par value $.01 per
share (the "Convertible Preferred Stock"), and 100,000 shares
have been designated Series I Participating Preferred Stock, par
value $.01 per share (the "Participating Preferred Stock").
There are 1,600,000 shares of Convertible Preferred Stock and no
shares of Participating Preferred Stock issued and outstanding.
(ii) Common Stock. 75,000,000 shares of Common
Stock, of which 36,950,792 shares were issued and outstanding as
of September 30, 1996. The Company has entered into a Stock
Exchange Agreement, dated as of November 12, 1996 (the "Stock
<PAGE>3
Exchange Agreement"), with Rakepoll Finance N.V. which, among
other things, provides for the Company to issue 29,500,000
shares of Common Stock to Rakepoll Finance N.V. The
consummation of the transactions contemplated by the Stock
Exchange Agreement, including the issuance of shares of Common
Stock to Rakepoll Finance N.V., is subject to the satisfaction
of certain conditions, including shareholder and regulatory
approval.
2.3 Authorization. All corporate action on the part
of the Company, its officers, directors and stockholders
necessary for (i) the authorization, execution and delivery of
this Agreement, (ii) the performance of all obligations of the
Company hereunder and (iii) the authorization, issuance (or
reservation for issuance) and delivery of the Common Stock being
sold hereunder, to the extent that the foregoing requires
performance on or prior to the Closing, has been taken and this
Agreement constitutes the valid and legally binding obligation
of the Company, enforceable against the Company in accordance
with its terms.
2.4 Valid Issuance of Purchased Shares. The Original
Shares have been, and when and if issued the Additional Shares
will be, duly and validly issued and fully paid and non-
assessable and, based in part upon the representations of the
Investor in this Agreement, issued in compliance with all
applicable federal and state securities laws.
3. Representations and Warranties of Investor. This
Agreement is made with Investor in reliance upon the Investor's
representation and warranties to the Company, which by such
Investor's execution of this Agreement the Investor hereby
confirms, that:
3.1 Authorization. This execution, delivery and
performance by Investor of this Agreement are within the power
of Investor and have been duly authorized by all necessary
action on the part of Investor. This Agreement constitutes the
valid and legally binding obligation of Investor, enforceable
against Investor in accordance with its terms.
3.2 Purchase Entirely for Own Account. All Purchased
Shares to be received by Investor will be acquired for
investment for Investor's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any
part thereof, and that Investor has no present intention of
selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, Investor
further represents that Investor does not have any contract, un-
dertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third
person, with respect to any of the Purchased Shares.
3.3 Restricted Securities. Investor understands that
the Purchased Shares are characterized as "restricted securi-
ties" under the federal securities laws inasmuch as they are
being or will be acquired from the Company in a transaction not
involving a public offering and that under such laws and
applicable regulations such securities may only be resold
without registration under the 1933 Act in certain limited
circumstances. In this connection Investor represents that it
is familiar with Securities and Exchange Commission ("SEC") Rule
144, as presently in effect, and understands the resale
<PAGE>4
limitations imposed thereby and by the 1933 Act.
3.4 Legends. It is understood that the certificates
evidencing the Purchased 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 satisfactory to the Company that
such registration is not required or unless sold pursuant to
Rule 144 of such Act."
(b) If required by the authorities of any state in
connection with the issuance or sale of the Common Stock, the
legend required by such state authority.
4. Registration Rights. The Company covenants and
agrees as follows:
4.1 Certain Additional Definitions.
As used in this Agreement, the following capitalized
terms shall have the following meanings:
"Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering
of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such
prospectus.
"Register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration
statement or similar document in compliance with the 1933 Act,
and such registration statement or document becoming effective
under the 1933 Act.
"Registrable Securities" shall mean (i) the Purchased
Shares; (ii) any Common Stock issued as (or issuable upon the
conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with
respect to, or in exchange for or in replacement of, such
Purchased Shares; and (iii) any Common Stock issued pursuant to
Section 4.2(a).
"Registration Statement" shall mean any registration
statement of the Company that covers any of the Registrable
Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all
exhibits and all material incorporated by reference in such
Registration Statement.
4.2 Registration. The Company will use its
reasonable best efforts to effect a registration to permit the
sale of the Registrable Securities as described below, and
pursuant thereto the Company will:
<PAGE>5
(a) prepare and file and use its reasonable best
efforts to have declared effective by March 31, 1997 by the SEC,
a Registration Statement on Form S-3 relating to resale of all
of the shares of the Registrable Securities and use its
reasonable best efforts to cause such Registration Statement to
remain continuously effective for a period which will terminate
when all Registrable Securities covered by such Registration
Statements, as amended from time to time, have been sold or when
the Registrable Securities may be sold under Rule 144(k) under
the 1933 Act. If such Registration Statement is not declared
effective by the SEC by March 31, 1997 then on the first
business day thereafter the Company shall issue to Investor
additional shares of Common Stock equal to 2% of the shares of
Common Stock previously issued to Investor hereunder. If such
Registration Statement has not been declared effective prior to
the end of any succeeding month then on the first business day
thereafter the Company shall issue to Investor shares of Common
Stock equal to 1.5% of the shares of Common Stock previously
issued to Investor hereunder.
(b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement and the
Prospectus as may be necessary to keep such Registration
Statement effective for the period specified in Section 4.2(a)
and to comply with the provisions of the 1933 Act and the 1934
Act with respect to the distribution of all Registrable
Securities;
(c) notify the Investor, promptly, and confirm such
notice in writing, (i) when the Prospectus or any supplement or
post-effective amendment has been filed, and, with respect to
the Registration Statement or any post-effective amendment, when
the same has become effective, (ii) of any request by the SEC
for amendments or supplements to the Registration Statement or
Prospectus or for additional information, (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for
that purpose, and (iv) 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;
(d) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible moment;
(e) furnish to the Investor, without charge, at least
one copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules,
all, upon a Investor's request, documents incorporated therein
by reference and all exhibits thereto (including those
incorporated by reference);
(f) deliver to the Investor, without charge, as many
copies of the Prospectus (including each preliminary prospectus)
and any amendment or supplement thereto as Investor may
reasonably request in order to facilitate the disposition of the
Registrable Securities;
(g) cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange
or market on which similar securities issued by the Company are
<PAGE>6
then listed, and if the securities are not so listed to use its
reasonable best efforts promptly to cause all such securities to
be listed on either the New York Stock Exchange, the American
Stock Exchange or the Nasdaq Stock Market;
(h) use reasonable best efforts to qualify or
register the Registrable Securities for sale under (or obtain
exemptions from the application of) the Blue Sky laws of such
jurisdictions as are applicable. The Company shall not be
required to qualify as a foreign corporation or to file a
general consent to service of process in any such jurisdiction
where it is not presently qualified or where it would be subject
to general service of process or taxation as a foreign corpora-
tion in any jurisdiction where it is not now so subject.
(i) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC
under the 1933 Act and the 1934 Act and take such other actions
as may be reasonably necessary to facilitate the registration of
the Registrable Securities hereunder.
Investor shall furnish to the Company such information
regarding the distribution of such securities as the Company may
from time to time reasonably request in writing.
If the Company delivers a certificate in writing to
the Investor, to the effect that a delay in the sale of
Registrable Securities by the Investor under the Registration
Statement is necessary because a sale pursuant to such
Registration Statement in its then current form would reasonably
be expected to constitute a violation of the federal securities
laws then the Investor shall agree not to sell or otherwise
transfer such Registrable Securities for the period of time
specified by the Company in its certificate. In no event shall
such delay exceed ten (10) business days; provided, however,
that if, prior to the expiration of such ten (10) business day
period, the Company delivers a certificate in writing to the
Investor to the effect that a further delay in such sale beyond
such ten (10) business day period is necessary because a sale
pursuant to such Registration Statement in its then current form
would reasonably be expected to constitute a violation of the
federal securities laws, the Company may refuse to permit the
Investor to resell any Registrable Securities pursuant to such
Registration Statement for an additional period not to exceed
five (5) business days.
4.3 Registration Expenses. All expenses incident to
the Company's performance of or compliance with this Agreement,
including without limitation all registration and filing fees,
fees with respect to the filings required to be made with the
National Association of Securities Dealers, Inc., fees and
expenses of compliance with the securities or Blue Sky laws,
printing expenses, messenger, telephone and delivery expenses,
fees and disbursements of counsel for the Company, fees and
disbursements of all independent certified public accountants of
the Company, fees and expenses incurred in connection with the
listing of the securities, rating agency fees and the fees and
expenses of any person, including special experts, retained by
the Company, will be borne by the Company, regardless of whether
the Registration Statement becomes effective; provided, however,
that the Company will not be required to pay discounts,
commissions or fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals relating
<PAGE>7
to the distribution of the Registrable Securities or fees or
disbursements of any counsel to the Investor.
4.4 Rule 144.
The Company covenants that it will file the reports
required to be filed by it under the 1933 Act and the 1934 Act
and it will take such further action as the Investor may
reasonably request, all to the extent required to enable
Investor to sell Registrable Securities without registration
under the 1933 Act in reliance on the exemption provided by
Rule 144 or Rule 144A under the 1933 Act or any successor or
similar rules or statues. Upon the request of the Investor, the
Company will deliver to the Investor a written statement as to
whether the Company has complied with such information and
requirements.
4.5 Indemnification. In the event any Registrable
Securities are included in a registration statement under this
Section 4:
(a) To the extent permitted by law, the Company
will indemnify and hold harmless the Investor, any underwriter
(as defined in the Act) for the Investor, any officer, director,
partner or agent thereof, and each person, if any, who controls
the Investor or underwriter within the meaning of the 1933 Act
or the 1934 Act against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject
under the 1933 Act, the 1934 Act or other United States federal
or state securities law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act or other United States
federal or state securities law, or any rule or regulation
promulgated under the 1933 Act, the 1934 Act or other United
States federal or state securities law; and the Company will pay
to the Investor, underwriter or controlling person any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability, or action as incurred; provided, however, that the
indemnity agreement contained in this subsection 4.5(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), nor shall the Company be liable 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 a Violation
which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by the Investor, underwriter or controlling person.
(b) To the extent permitted by law, the Investor
will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration
statement, each person, if any, who controls the Company within
<PAGE>8
the meaning of the 1933 Act, any underwriter, any officer,
director, partner or agent thereof and any controlling person of
any such underwriter, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing
persons may become subject, under the 1933 Act, the 1934 Act or
other United States federal or state securities law insofar as
such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation,
in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written
information furnished by the Investor expressly for use in
connection with such registration; and the Investor will pay any
legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this subsection 4.5(b),
in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 4.5(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 the Investor, which consent shall not be
unreasonably withheld; provided, that, in no event shall any
indemnity under this subsection 4.5(b) exceed the proceeds (net
of underwriting discounts and commissions) from the offering
received by the Investor.
(c) After receipt by an indemnified party under
this Section 4.5 of notice of the commencement of any action
(including any governmental action), such indemnified party
will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 4.5, deliver to the
indemnifying party a written notice of the commencement thereof
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 noticed, to
assume the defense thereof with counsel mutually satisfactory to
the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be
represented without conflict by one counsel) shall have the
right to retain one separate counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action,
if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the
indemnified party under this Section 4.5, but the omission so to
deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 4.5.
(d) If the indemnification provided for in this
Section 4.5 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss,
liability, claim, damage, or expense referred to therein, then
the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection
<PAGE>9
with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other
relevant equitable considerations; provided, however, that, in
any such case, (A) the Investor will not be required to
contribute any amount in excess of the proceeds (net of
underwriting discounts and commissions) received by the Investor
from all Registrable Securities offered and sold by the Investor
pursuant to the registration statement; and (B) no person or
entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled
to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation. The relative fault of the
indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the
Violation relates to information supplied by the indemnifying
party or by the indemnified party and the parties' relative
intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution
contained in the underwriting agreement entered into in
connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(f) The obligations of the Company and the
Investor under this Section 4.5 shall survive the completion of
any offering of Registrable Securities in a registration
statement under this Section 4, and otherwise.
4.6 Other Registration Participants. The Company
agrees that from and after January 22, 1997 it will not grant to
any person any piggyback or other participation rights in the
Registration Statement referenced in Section 4.2(a) hereof. The
foregoing shall not be deemed to prevent the Company from
granting such rights with respect to any registration statement
that does not cover the Registrable Securities.
5. Miscellaneous.
5.1 Successors and Assigns. The terms and conditions
of this Agreement shall inure to the benefit of and be binding
upon the respective permitted successors and assigns of the
parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
5.2 Governing Law. This Agreement shall be governed
by and construed under the laws of the State of California
(irrespective of its choice of law principles).
5.3 Counterparts. This Agreement 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.
5.4 Titles and Subtitles. The titles and subtitles
used in this Agreement are used for convenience only and are not
to be considered in construing or interpreting this Agreement.
<PAGE>10
5.5 Notices. Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in
writing and shall be deemed effective upon personal delivery to
the party to be notified, or if sent by telex or telecopier,
upon receipt of the correct answerback, or upon deposit with the
United States Post Office, by registered or certified mail, or
upon deposit with an overnight air courier, in each case postage
prepaid and addressed to the party to be notified at the address
as follows, or at such other address as such party may designate
by ten days' advance written notice to the other party:
If to the Company:
Gensia, Inc.
9360 Towne Centre Drive
San Diego, CA 92121-3030
Attn: Secretary
Fax: (619) 453-0095
with a copy to:
Pillsbury Madison & Sutro LLP
P.O. Box 7880
San Francisco, CA 94104
Attn: Thomas E. Sparks, Esq.
Fax: (415) 983-7396
If to the Investor:
Mark S. Berg
100 Wall Street
14th Floor
New York, NY 10005
Attn: Mark S. Berg
Fax: (212) 952-1903
5.6 Finders' Fee. Each party represents that it
neither is nor will be obligated for any finders' fee or com-
mission in connection with this transaction. Investor agrees to
indemnify and hold harmless the Company from any liability for
any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability
or asserted liability) for which the Investor or any of its
officers, partners, employees or representatives is responsible.
The Company agrees to indemnify and hold harmless
Investor from any liability for any commission or compensation
in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for
which the Company or any of its officers, employees or
representatives is responsible.
5.7 Expenses. The Company and the Investor shall pay
their respective costs and expenses incurred with respect to the
negotiation, execution, delivery and performance of this
Agreement. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which
such party may be entitled.
5.8 Amendments and Waivers. Any term of this
Agreement may be amended and the observance of any term of this
<PAGE>11
Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with
the written consent of the Company and the Investor. Any
amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any securities purchased
under this Agreement at the time outstanding, each future holder
of all such securities, and the Company.
5.9 Severability. If any provision of this Agreement
is held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
5.10 Entire Agreement. This Agreement, and the
Confidentiality Agreement dated January 9, 1997 between the
parties hereto, constitute the entire agreement between the
parties with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, both oral
and written, between the parties with respect to the subject
matter hereof and thereof. No representation, inducement,
promise, understanding, condition or warranty not set forth
herein or therein has been made or relied upon by either party
hereto. Neither this Agreement nor any provision hereof is
intended to confer upon any Person other than the parties hereto
any rights or remedies hereunder.
<PAGE>12
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
GENSIA, INC.
By /s/ David F. Hale
--------------------------
Title President and Chief
Executive Officer
By /s/ Mark S. Berg
--------------------------
Partner
