<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
GENSIA SICOR INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
9360 Towne Centre Drive
San Diego, CA 92121
(619) 546-8300
August 12, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
which will be held on September 9, 1997, at 11:00 a.m., at the Hyatt Regency
La Jolla, 3777 La Jolla Village Drive, La Jolla, California.
The formal notice of the Annual Meeting and the Proxy Statement have been
made a part of this invitation.
After reading the Proxy Statement, please mark, date, sign and return, at
an early date, the enclosed proxy in the prepaid envelope to ensure that your
shares will be represented. YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN, DATE
AND RETURN THE ENCLOSED PROXY OR ATTEND THE ANNUAL MEETING IN PERSON.
A copy of the Company's Annual Report to Stockholders is also enclosed.
The Board of Directors and Management look forward to seeing you at the
meeting.
Sincerely yours,
David F. Hale
President and Chief Executive Officer
<PAGE>
GENSIA SICOR INC.
------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 9, 1997
------------
The Annual Meeting of Stockholders of Gensia Sicor Inc. (the "Company")
will be held at the Hyatt Regency La Jolla, 3777 La Jolla Village Drive, La
Jolla, California, on September 9, 1997, at 11:00 a.m., for the following
purposes:
1. To elect three Class II directors.
2. To consider and vote upon a proposal to amend and restate the
Company's Employee Stock Purchase Plan.
3. To consider and vote upon a proposal to amend and restate the
Company's 1997 Long-Term Incentive Plan.
4. To consider and vote upon a proposal to approve the grant to the
Chairman of the Board of options to purchase up to 500,000 shares of
Common Stock which were granted in connection with his joining the
Board.
5. To ratify the selection of Ernst & Young LLP as the Company's
independent auditors.
6. To transact such other business as may properly come before the
Annual Meeting and any adjournment of the Annual Meeting.
The Board of Directors has fixed the close of business on July 18, 1997, as
the record date for determining the stockholders entitled to notice of and to
vote at the Meeting and any adjournment of the Annual Meeting. A complete list
of stockholders entitled to vote will be available at the Secretary's office,
9360 Towne Centre Drive, San Diego, California, for ten days before the meeting.
WHETHER YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING OR NOT, WE URGE YOU
TO MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
By order of the Board of Directors.
Wesley N. Fach
Secretary
August 12, 1997
<PAGE>
GENSIA SICOR INC.
------------
PROXY STATEMENT
------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Gensia Sicor Inc., a Delaware corporation ("Gensia
Sicor" or the "Company"), with principal executive offices at 9360 Towne
Centre Drive, San Diego, California 92121, of proxies in the accompanying
form to be used at the Annual Meeting of Stockholders to be held at the Hyatt
Regency La Jolla, 3777 La Jolla Village Drive, La Jolla, California, on
September 9, 1997, and any adjournment of the Annual Meeting (the "Annual
Meeting"). The shares represented by the proxies received in response to
this solicitation and not revoked will be voted at the Annual Meeting. A
proxy may be revoked at any time before it is exercised by filing with the
Secretary of the Company a written revocation or a duly executed proxy
bearing a later date or by voting in person at the Annual Meeting. On the
matters coming before the Annual Meeting for which a choice has been
specified by a stockholder by means of the ballot on the proxy, the shares
will be voted accordingly. If no choice is specified, the shares will be
voted FOR the election of the three nominees for Class II director listed in
this Proxy Statement and FOR approval of proposals 2, 3, 4 and 5 described in
the Notice of Annual Meeting and in this Proxy Statement.
Stockholders of record at the close of business on July 18, 1997 are
entitled to notice of and to vote at the Annual Meeting. As of July 31, 1997
the Company had 74,451,518 shares of Common Stock outstanding and entitled to
vote. Each holder of Common Stock is entitled to one vote for each share
held as of the record date.
Directors are elected by a plurality vote. The other matters submitted
for stockholder approval at the Annual Meeting will be decided by the
affirmative vote of a majority of shares present in person or represented by
proxy and entitled to vote on each such matter. Abstentions with respect to
any matter are treated as shares present or represented and entitled to vote
on that matter and thus have the same effect as negative votes. If shares
are not voted by the broker who is the record holder of the shares, or if
shares are not voted in other circumstances in which proxy authority is
defective or has been withheld with respect to any matter, these non-voted
shares are not deemed to be present or represented for purposes of
determining whether stockholder approval of that matter has been obtained.
The expense of printing and mailing proxy materials will be borne by the
Company. In addition to the solicitation of proxies by mail, solicitation
may be made by certain directors, officers and other employees of the Company
by personal interview, telephone or telegraph. No additional compensation
will be paid to such persons for such solicitation. The Company will
reimburse brokerage firms and others for their reasonable expenses in
forwarding solicitation materials to beneficial owners of the Company's
Common Stock. Employees of Georgeson & Co., Inc. will also solicit proxies at
an anticipated fee of approximately $7,500 plus reasonable out-of-pocket
expenses.
This Proxy Statement and the accompanying form of proxy are being mailed
to stockholders on or about August 12, 1997.
IMPORTANT
WHETHER YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING OR NOT, WE URGE
YOU TO MARK, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT AT YOUR
EARLIEST CONVENIENCE IN THE ENCLOSED POSTAGE-PREPAID RETURN ENVELOPE.
THIS WILL NOT LIMIT YOUR RIGHTS TO ATTEND OR VOTE AT THE ANNUAL
MEETING.
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<PAGE>
ELECTION OF DIRECTORS
The Company has three classes of directors serving staggered three-year
terms. Class I and Class II each consist of three directors and Class III
consists of four directors. Currently one Class III director's seat is
vacant. Three Class II directors are to be elected at the Annual Meeting for
a term of three years expiring at the Annual Meeting in 2000 or until each
such director's successor shall have been elected and qualified. The other
directors of the Company will continue in office for their existing terms,
which expire in 1998 and 1999 for Class III and Class I directors,
respectively.
COMPOSITION OF BOARD OF DIRECTORS
On February 28, 1997, pursuant to a Stock Exchange Agreement, dated as of
November 12, 1996, as amended on December 16, 1996 (the "Stock Exchange
Agreement"), between Gensia, Inc. ("Gensia," currently Gensia Sicor) and
Rakepoll Finance N.V., a corporation organized under the laws of the
Netherlands Antilles ("Rakepoll Finance"), Gensia acquired all of the
outstanding shares of capital stock of Rakepoll Holding B.V., a corporation
organized under the laws of the Netherlands ("Rakepoll Holding") and (prior
to such acquisition) a wholly-owned subsidiary of Rakepoll Finance, in
exchange for 29,500,000 shares of common stock, $.01 par value ("Common
Stock") of the Company and $100,000 in cash (the "Stock Exchange"). See
"Certain Transactions." In connection with the Stock Exchange Agreement,
Gensia and Rakepoll Finance entered into a shareholder's agreement (as
amended, the "Shareholder's Agreement"), concerning the governance of the
Company after the acquisition and certain other matters concerning the
acquisition and disposition of Gensia Sicor securities by Rakepoll Finance
and its affiliates. Carlo Salvi, a director of the Company, is the
controlling beneficial owner of Rakepoll Finance.
The Shareholder's Agreement specifies that the Company is to have a ten
member Board of Directors (to be expanded to twelve members in the event that
holders of Gensia Sicor's Convertible Preferred Stock (other than Rakepoll
Finance and its affiliates) in accordance with the terms of the Convertible
Preferred Stock, become entitled to appoint two directors). The
Shareholder's Agreement further specifies that the Company shall use its best
efforts to cause the Gensia Sicor Board of Directors to consist of (i) two
directors who are executive officers of Gensia Sicor and not affiliated with
Rakepoll Finance ("Management Directors"), (ii) three directors designated by
Rakepoll Finance ("Investor Directors") and (iii) five independent directors
to be designated jointly by the Management Directors and the Investor
Directors (the "Independent Directors"). David Hale and Patrick Walsh are the
current Management Directors; Carlo Salvi and Michael Cannon are the current
Investor Directors; and Donald Panoz, Chairman of the Board, James Blair,
Herbert Conrad, Carlos Ferrer and L. John Wilkerson are the current
Independent Directors. The Shareholder's Agreement provides for the third
Investor Director to be appointed in the future.
During the term of the Shareholder's Agreement, the number of Investor
Directors that Rakepoll Finance will be entitled to designate will vary
according to its ownership interest in Gensia Sicor as a percentage of the
number of shares of Gensia Sicor Common Stock controlled directly or
indirectly by Rakepoll Finance and its affiliates immediately following the
Stock Exchange (the "Initial Interest"). See "Stock Ownership of Management
and Certain Beneficial Owners." If Rakepoll Finance's ownership interest in
Gensia Sicor is (i) 50% or above of its Initial Interest, Rakepoll Finance
shall have the right to designate for nomination and approval three Investor
Directors; the Management Directors shall have the right to designate for
nomination and approval two Management Directors; and the five Independent
Directors shall be designated for nomination and approval jointly by the
Management Directors and the Investor Directors; (ii) 25% or above but less
than 50% of its Initial Interest, Rakepoll Finance shall have the right to
designate for nomination and approval two Investor Directors; and there shall
be four Independent Directors who shall be designated for nomination and
approval jointly by the Management Directors and the Investor Directors;
(iii) 10% or above but less than 25% of its Initial Interest, Rakepoll
Finance shall have the right to designate for nomination and approval one
Investor Director; and there shall be three Independent Directors who shall
be designated for nomination and approval jointly by the Management Directors
and the Investor Directors. Once Rakepoll Finance's interest has fallen below
10% of its Initial Interest, Rakepoll Finance shall have no further right to
designate any Investor
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<PAGE>
Directors or Independent Directors and the Management Directors shall have no
right to designate any Management Directors or Independent Directors.
If at any time Rakepoll Finance's ownership interest in Gensia Sicor
should be reduced with the result that, in accordance with the provisions
described in the foregoing paragraph, the number of directors which Rakepoll
Finance is entitled to designate is reduced, then such entitlement reduction
shall extinguish any right Rakepoll Finance might have under the
Shareholder's Agreement to designate a greater number of directors,
notwithstanding any increase in Rakepoll Finance's ownership in Gensia Sicor
which may occur after such entitlement reduction.
The Shareholder's Agreement further specifies that vacancies on the
Gensia Sicor Board of Directors which result from a reduction in Rakepoll
Finance's and the Management Directors' entitlement to designate directors in
accordance the terms of the Shareholder's Agreement shall be filled by
election by the stockholders at large of Gensia Sicor in accordance with
applicable law, Gensia Sicor's Certificate of Incorporation and its Bylaws.
Mr. Ferrer was elected, and is nominated for reelection as a Class II
director pursuant to a securities purchase agreement (the "Purchase
Agreement") dated May 2, 1997 between the Company and Health Care Capital
Partners L.P. ("Health Care Capital"). The Purchase Agreement requires the
Company to nominate for election a designee of Health Care Capital so long as
Health Care Capital, or its related entities own at least 50% of the
convertible notes it purchased under the Purchase Agreement or the Preferred
Stock issuable upon conversion of such notes. See "Certain Transactions."
Unless authority to vote for directors is withheld, it is intended that
the shares represented by the enclosed proxy will be voted for the election
of Carlos Ferrer, Carlo Salvi and L. John Wilkerson, Ph.D. as Class II
directors. In accordance with the directions received from Rakepoll Finance,
the Management Directors and the Investor Directors pursuant to the
Shareholder's Agreement, the Nominating Committee has nominated Carlo Salvi
and L. John Wilkerson, Ph.D., currently members of the Board of Directors of
the Company, as Class II directors. In accordance with the directions
received from Health Care Capital, the Management Directors and the Investor
Directors, the Nominating Committee has nominated Carlos Ferrer, currently a
member of the Board of Directors of the Company, as a Class II director. In
the event any of such nominees becomes unable or unwilling to accept
nomination or election, the shares represented by the enclosed proxy will be
voted for the election of the balance of those named and such other person as
the Board of Directors may select in accordance with the terms of the
Shareholder's Agreement and the Purchase Agreement. The Board of Directors
has no reason to believe that any such nominee will be unable or unwilling to
serve.
Set forth below is information regarding the nominees for Class II
director and the continuing directors of Class III and Class I, including
information furnished by them as to their principal occupations at present
and for the past five years, certain directorships held by each, their ages
as of July 31, 1997, and the year in which each became a director of the
Company.
Name Age
- ---- ---
CLASS II
Carlos A. Ferrer ........................................................ 43
Mr. Ferrer was elected a director of the Company on May 19, 1997. He
has been a member of Ferrer Freeman Thompson & Co. LLC ("FFT"), the
general partner of Health Care Capital, a private investment fund,
since July 1995. From July 1978 until July 1995, Mr. Ferrer was
employed by CS First Boston Corporation, most recently as
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<PAGE>
Managing Director and Head of Global Health Care Investment Banking.
Mr. Ferrer is a director of Somatogen, Inc.
Carlo Salvi ............................................................. 60
Mr. Salvi has been a director of the Company and Chairman of the
Company's executive operating committee since February 1997.
Additionally, since February 1997 Mr. Salvi has served as a Chairman
of the Board of Directors and President of SICOR-Societe Italiana
Corticosteroidi S.p.A. ("Sicor") of Milan, Italy. Sicor is a
wholly-owned subsidiary of Rakepoll Holding, which is owned by Gensia
Sicor. From September 1995 to February 1997 he was a consultant to Alco
Chemicals Ltd., Swiss Branch ("Alco") in Lugano, Switzerland, which
acts as an agent and distributor of certain Sicor products. From 1986
to September 1995, he was General Manager of Alco.
L. John Wilkerson, Ph.D. ............................................... 54
Dr. Wilkerson has been a director of the Company since May 1991.
Dr. Wilkerson was Chairman of the Board of The Wilkerson Group, a
healthcare products consulting firm, from 1982 until May 1996 and
currently he is a consultant to The Wilkerson Group. Prior to joining
The Wilkerson Group, Dr. Wilkerson was a Vice President and partner
responsible for medical supply security analysis and research at Smith
Barney, Harris, Upham & Co. Dr. Wilkerson is also a director of
British Bio-Technology Corporation, plc, and several private
companies. He received his doctorate from Cornell University.
CLASS III
James C. Blair, Ph.D. .................................................. 57
Dr. Blair has been a director of the Company since 1986 and was
Chairman of the Board of the Company from 1986 to May 1991 and Vice
Chairman of the Board from May 1991 to March 1997. He has been a
General Partner of Domain Associates, a venture capital management
company, since 1985. Previously, Dr. Blair was employed in venture
capital management, investment research and engineering management.
Dr. Blair is also a director of Amylin Pharmaceuticals, Inc., Aurora
Biosciences Corporation, CoCensys, Inc., Dura Pharmaceuticals, Inc.
("Dura"), Trega Biosciences, Inc. and Vista Medical Technologies, Inc.
He holds a doctoral degree in engineering from the University of
Pennsylvania.
Herbert J. Conrad ...................................................... 64
Mr. Conrad has been a director of the Company since September 1993.
From April 1988 to August 1993, Mr. Conrad was President of the
Pharmaceuticals Division, and Senior Vice President, of Hoffmann-La
Roche Inc. Mr. Conrad was a member of the Board of Directors of
Hoffmann-La Roche and a member of its Executive Committee from
December 1981 through August 1993. Mr. Conrad joined Hoffmann-La
Roche in 1960 and held various positions over the years including
Senior Vice President of the Pharmaceuticals Division, Chairman of the
Board of Medi-Physics, Inc. and Vice President, Public Affairs and
Planning Division. Mr. Conrad is also a director of Biotechnology
General Corp., and Dura.
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<PAGE>
David F. Hale............................................................ 48
Mr. Hale has been President and Chief Executive Officer of the Company
since June 1987 and was Chairman of the Board of Directors from May
1991 to February 1997. Prior to joining Gensia, Mr. Hale was
President and Chief Executive Officer of Hybritech Incorporated, a
biotechnology company which was acquired by Eli Lilly & Company in
1986. Mr. Hale joined Hybritech in 1982 as Senior Vice President of
Marketing and Business Development, became Executive Vice President
and Chief Operating Officer later that year, President in 1983 and
Chief Executive Officer in 1986. Before joining Hybritech, Mr. Hale
was Vice President and General Manager of BBL Microbiology Systems, a
division of Becton, Dickinson and Company. Earlier in his career, he
held several positions at Ortho Pharmaceutical Corporation, a division
of Johnson & Johnson, including Director of the Ortho Dermatological
Division and Director of Product Management. Mr. Hale serves on the
boards of Dura and Sequana Therapeutics, Inc.
CLASS I
Donald E. Panoz ........................................................ 62
Mr. Panoz has been Chairman of the Board of Directors of the Company
since February 1997. Mr. Panoz was a founder and principal
shareholder of Elan Corporation, plc ("Elan") and was Chairman of the
Board from 1970 to December 1996. Until January 1995, he held the
position of Chief Executive Officer of Elan. Mr. Panoz was a founder
of Mylan Laboratories and served as its President from 1960 to 1969.
Mr. Panoz is executive chairman of Fountainhead Holdings Ltd. (an
investment holding company) and of Fountainhead Development Corp.,
Inc., its principal U.S. operating subsidiary. He also serves as
non-executive chairman of Warner Chilcott, plc (formerly Nale
Laboratories, plc). Mr. Panoz continues to serve on the board of
Elan.
Michael D. Cannon ...................................................... 52
Mr. Cannon has been a director of the Company and Executive Vice
President of the Company since February 1997. Mr. Cannon has been
employed by Sicor since its founding in 1983 and has served as a
member of the Board of Directors of Sicor since 1994. From 1986 to
1997 he was Director of Business Development of Alco. Mr. Cannon
worked in a variety of technical positions at SIRS S.p.A., a
manufacturer of bulk corticosteroids in Milan, Italy from 1970 to 1982.
Patrick D. Walsh ....................................................... 36
Mr. Walsh has been a director of the Company since February 1997 and
has been President and Chief Operating Officer of Gensia Laboratories,
Ltd. ("Gensia Laboratories") since November 1995. From July 1994 to
November 1995, he was Executive Vice President and Chief Operating
Officer of Gensia Laboratories. He was Vice President of Sales and
Marketing for Fujisawa U.S.A. from 1991 to 1994. From 1984 to 1991
he held various sales and marketing positions at Fujisawa U.S.A.
The Board of Directors held 14 meetings during the 1996 fiscal year. All
Directors then in office attended at least 75% of the aggregate number of
meetings of the Board and of the Committees on which such Directors serve
except for Directors Blair and Wilkerson who attended less than 75% of such
meetings.
The Board of Directors has appointed a Stock Option Committee, a
Compensation Committee, an Audit Committee, an Executive Committee and a
Nominating Committee.
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<PAGE>
The current members of the Stock Option Committee are James Blair and
Herbert Conrad. The Stock Option Committee held three meetings during the
1996 fiscal year. The Stock Option Committee's function is to administer the
Gensia, Inc. Amended and Restated 1990 Stock Plan (the "1990 Stock Plan") and
the Gensia Sicor Inc. 1997 Long-Term Incentive Plan (the "1997 Stock Plan").
See "Report to Stockholders on Executive Compensation."
The current members of the Compensation Committee are James Blair,
Herbert Conrad and Carlo Salvi. The Compensation Committee held four
meetings during the 1996 fiscal year. The Compensation Committee's functions
are to determine and supervise compensation to be paid to officers and
directors of the Company. See "Report to Stockholders on Executive
Compensation."
The current members of the Audit Committee are James Blair, Michael
Cannon and Herbert Conrad. The Audit Committee held two meetings during the
1996 fiscal year. The Audit Committee's functions are to monitor the
effectiveness of the audit effort, to supervise the Company's financial and
accounting organization and financial reporting and to select a firm of
certified public accountants whose duty it is to audit the books and accounts
of the Company for the fiscal year for which they are appointed.
The current members of the Executive Committee are James Blair, David
Hale, Carlos Ferrer, Donald Panoz, Carlo Salvi and L. John Wilkerson. The
Executive Committee held no meeting during the 1996 fiscal year. The
Executive Committee has been delegated the right to exercise all the power
and authority of the Board of Directors to the extent permitted by Delaware
law and the Company's Charter.
The members of the Nominating Committee are David Hale, Carlo Salvi and
L. John Wilkerson. The Nominating Committee held one meeting during the 1996
fiscal year. The Nominating Committee's function is to select and nominate
individuals to fill vacancies in the Company's Board of Directors. The
Nominating Committee will not consider nominees recommended by security
holders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE CLASS II DIRECTOR NOMINEES LISTED ABOVE.
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<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of July 31, 1997, as to
shares of Common Stock beneficially owned by (i) each director and nominee
for director, (ii) the officers of the Company named in the Summary
Compensation Table set forth herein, (iii) the directors and executive
officers of the Company as a group and (iv) each person known by the Company
to be the beneficial owner of more than 5% of the outstanding shares of
Common Stock of the Company. Except as otherwise indicated and subject to
applicable community property laws, each person has sole investment and
voting power with respect to the shares shown. Ownership information is
based upon information furnished by the respective individuals or entities,
as the case may be.
BENEFICIAL OWNERSHIP
OF COMMON STOCK
----------------------------
NUMBER OF PERCENT
SHARES(1) OF CLASS(2)
------------- -----------
Rakepoll Finance N.V........................... 29,500,000 39.6%
Caracas baaiweg 201
P.O. Box 6085
Curacao, Netherlands Antilles
James C. Blair ................................ 126,568(3) *
Michael D. Cannon.............................. 0 *
Herbert J. Conrad.............................. 33,361(4) *
Carlos A. Ferrer .............................. 6,613,756(5) 8.2%
David F. Hale. ................................ 1,061,767(6) 1.4%
Donald E. Panoz................................ 650,000(7) *
Carlo Salvi. . ................................ 30,090,000(8) 40.4%
Patrick D. Walsh.............................. 62,759(9) *
L. John Wilkerson.............................. 79,673(10) *
Daniel D. Burgess.............................. 127,297(11) *
Paul K. Laikind................................ 413,177(12) *
Gene F. Tutwiler .............................. 57,820(13) *
All directors and executive officers
as a group (16 persons) .................... 39,231,935(14) 47.6%
- -------------
*Less than one percent
(1) To the Company's knowledge, the persons named in the table have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable and the information contained in the footnotes to this table.
(2) For purposes of computing the percentage of outstanding shares held by each
person or group of persons named above on a given date, shares which such
person or group has the right to acquire within 60 days after such date are
deemed to be outstanding, but are not deemed to be outstanding for the
purposes of computing the percentage ownership of any other person.
(3) Includes 14,750 shares which Dr. Blair has the right to acquire within 60
days of July 31, 1997 pursuant to the exercise of options and warrants.
Dr. Blair is a General Partner of One Palmer Square Associates, L.P., the
general partner of Domain Partners, L.P. Includes 50,000 shares which
Domain Partners III, L.P. has the right to acquire within 60 days of July
31, 1997. Dr. Blair is a General Partner of One Palmer Square Associates
III, L.P., the general partner of Domain Partners III, L.P. Dr. Blair has
an indirect beneficial interest in these shares. Includes 1,509 shares
beneficially owned by Domain Associates Profit Sharing Plan. Includes
4,125 shares which Domain Associates has the right to acquire within
60 days of July 31, 1997 pursuant to the exercise of warrants. Dr. Blair
is a General Partner of Domain Associates.
(4) Includes 33,361 shares which Mr. Conrad has the right to acquire within
60 days of July 31, 1997 pursuant to the exercise of options.
(5) Includes 6,613,756 shares which may be acquired within 60 days of July 31,
1997 pursuant to the conversion of convertible notes and exercise of
warrants owned by Health Care Capital, the general partner of which is
FFT. Mr. Ferrer is a member of FFT. Mr. Ferrer disclaims beneficial
ownership of the notes and warrants held by Health Care Capital.
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<PAGE>
(6) Includes 448,000 shares held by a trust as to which Mr. Hale has shared
voting and investment power, 54,000 shares held by Mr. Hale as custodian
for his minor children as to which Mr. Hale has sole voting and investment
power, and 423,036 shares which Mr. Hale has the right to acquire within 60
days of July 31, 1997 pursuant to the exercise of options and warrants.
(7) Includes 200,000 shares Mr. Panoz has the right to acquire within 60 days
of July 31, 1997 pursuant to the exercise of options. Includes 300,000
shares which Mr. Panoz may have the right to acquire within 60 days of July
31, 1997 pursuant to the exercise of options that vest upon the attainment
of certain corporate objectives.
(8) Includes 29,500,000 shares owned by Rakepoll Finance, a majority-owned
direct subsidiary of Korbona Industries Ltd., which is wholly-owned by
Mr. Salvi. Also includes 440,000 shares owned by Nora Real Estate a.A. and
50,000 shares owned by Alco, both of which are wholly-owned by Mr. Salvi.
(9) Includes 61,359 shares which Mr. Walsh has the right to acquire within
60 days of July 31, 1997 pursuant to the exercise of options.
(10) Includes 2,062 shares which Dr. Wilkerson has the right to acquire within
60 days of July 31, 1997 pursuant to the exercise of warrants. Includes
16,111 shares which Dr. Wilkerson has the right to acquire within 60 days
of July 31, 1997 pursuant to the exercise of options. Includes 41,250
shares owned by Longbow Partners and 20,250 shares which Longbow Partners
has the right to acquire within 60 days of July 31, 1997 pursuant to the
exercise of options. Longbow Partners is a partnership of which the
partners are certain shareholders of The Wilkerson Group. Dr. Wilkerson
disclaims beneficial ownership of the shares and options held by Longbow
Partners. Dr. Wilkerson is a consultant to The Wilkerson Group.
(11) Includes 82,908 shares which Mr. Burgess has the right to acquire within 60
days of July 31, 1997 pursuant to the exercise of options.
(12) Includes 76,636 shares which Dr. Laikind has the right to acquire within 60
days of July 31, 1997 pursuant to the exercise of options.
(13) Includes 41,636 shares which Dr. Tutwiler has the right to acquire within
60 days of July 31, 1997 pursuant to the exercise of options.
(14) Includes 7,939,990 shares which may be acquired within 60 days of July 31,
1997 pursuant to the exercise of options and warrants. Includes 562,000
shares held by trusts for the benefit of family members of directors and
officers as to which such directors and officers have voting and investment
power.
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<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Information is set forth below concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal
years ended December 31, 1994, 1995, and 1996, of those persons who were at
December 31, 1996 (i) the Chief Executive Officer and (ii) the other four
most highly compensated executive officers of the Company whose salary and
bonus exceeded $100,000 (the "Named Executive Officers"). Mr. Hale's base
salary for 1997 has been set at the same level as his 1996, 1995 and 1994
base salaries. Mr. Burgess resigned as Vice President, Finance, Chief
Financial Office and Treasurer effective February 26, 1997 in connection with
his appointment as President of Gensia Automedics Inc. In connection with
the Stock Exchange and to permit the appointment of Donald E. Panoz as
Non-Executive Chairman of the Board, Mr. Hale resigned as Chairman of the
Board effective February 28, 1997.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------------ --------------------------------
AWARDS
--------------------------------
SECURITIES ALL OTHER
NAME AND PRINCIPAL OTHER ANNUAL RESTRICTED STOCK UNDERLYING COMPEN-
POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) AWARDS ($) OPTIONS (#) SATION ($)
- ---------------------- ---- ---------- --------- ---------------- ---------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
David F. Hale 1996 $450,000 - - - - $20,300(2)
President, Chief 1995 $450,000 $50,800 - $149,625(1) 75,000 $19,200(2)
Executive Officer 1994 $450,000 - - - 200,000(3) $14,100(2)
and Chairman of the
Board
Patrick D. Walsh 1996 $208,000 - $60,100(4) - - $ 2,800(5)
President and Chief 1995 $185,000 $35,800 $53,500(4) $ 59,850(1) 25,000 $ 1,500(5)
Operating Officer of 1994 $ 89,400 - $65,500(4) $ 72,975(6) 65,000(7) $ 300(5)
Gensia Laboratories
Daniel D. Burgess 1996 $175,000 - - - - $22,600(8)
Vice President, 1995 $160,000 $40,800 - $ 59,850(1) 15,000 $22,400(8)
Finance, Chief 1994 $152,500 - - $ 72,975(6) 65,000(9) $ 2,300(8)
Financial Officer
and Treasurer
Paul K. Laikind, Ph.D 1996 $160,000 - $ 3,000 - - $ 3,500(10)
Vice President, 1995 $145,000 $25,800 $ 3,000 $ 59,850(1) 15,000 $ 3,400(10)
Corporate Development 1994 $145,000 - $ 3,000 $ 72,975(6) 65,000(11) $ 3,100(10)
Gene F. Tutwiler, Ph.D 1996 $ 95,700(12) $40,000 $99,020(13) $75,795(14) 40,000 $ 2,900(15)
Executive Vice President,
Research and Development
</TABLE>
(1) Represents the aggregate of the fair market value of the shares of
restricted stock as of the date of grant ($4.00 per share) less the
aggregate consideration paid therefor ($.01 per share). In December 1995,
the Company's Board of Directors determined that in order to encourage its
employees, including officers, to continue to play a key role in building
long-term value at the Company, it should provide such employees with a
restricted stock award as an incentive to stay at the Company and assist in
creating this value. The Board of Directors then authorized certain
employees, including officers, the opportunity to exchange certain of their
outstanding stock options for restricted stock awards. In addition, each
such employee who elected to exchange his or her options was granted
additional restricted stock awards for a number of shares equal to two
times the number of shares which had been exchanged. Accordingly,
Messrs. Hale, Burgess, Laikind and Walsh each had the right to purchase
restricted shares of Common Stock of the Company for a nominal cash
purchase price equal to the par value of the stock ($.01 per share) in
exchange for certain options held by each. The restricted shares vested in
full on January 31, 1997. Mr. Hale received an award of 37,500 shares of
restricted stock and each of Messrs. Burgess, Laikind, and Walsh received
an award of 15,000 shares of restricted stock. The aggregate number and
value of all restricted shares held by Mr. Hale at December 31, 1996 were
37,500 and $173,100, respectively. The aggregate number and value of all
restricted shares held by each of Messrs. Burgess, Laikind and Walsh at
December 31, 1996 were 45,000 and $207,675 respectively.
-9-
<PAGE>
(2) Represents $9,100, $14,700, and $15,800, the respective amounts paid by the
Company for long-term disability insurance premiums for Mr. Hale in 1994,
1995, and 1996, and $5,000, $4,500, and $4,500, the respective amounts paid
by the Company for life insurance premiums for Mr. Hale in 1994, 1995, and
1996.
(3) Includes options to purchase 150,000 shares of the Company's Common Stock
at exercise prices greater than $4.875 which were canceled in October 1994
in exchange for an option to purchase 150,000 shares of the Company's
Common Stock at an exercise price of $4.875 per share, the fair market
value on the date of grant.
(4) Represents $65,500, $53,500 and $60,100, the respective amounts paid by the
Company to Mr. Walsh for expenses in connection with his relocation to San
Diego in 1994, 1995 and 1996, and includes payments to Mr. Walsh for taxes
he incurred on certain relocation expenses. The respective amounts of
relocation reimbursement and tax reimbursement for 1994 are $45,500 and
$20,000. The respective amounts of relocation reimbursement and tax
reimbursement for 1995 are $32,500 and $21,000.
(5) Represents $1,000 and $2,000 paid by the Company for long-term disability
insurance premiums for Mr. Walsh in 1995 and 1996 and $300, $500 and $800,
the respective amounts paid by the Company for certain life insurance
premiums for Mr. Walsh in 1994, 1995, and 1996.
(6) Represents the aggregate of the fair market value of the shares of
restricted stock as of the date of grant ($4.875 per share) less the
aggregate consideration paid therefor ($.01 per share). As of October 29,
1994, officers and certain employees were given the opportunity to exchange
certain of their outstanding stock options for restricted stock awards.
Accordingly, Messrs. Walsh, Laikind and Burgess each had the right to
purchase restricted shares of Common Stock of the Company for a nominal
cash purchase price equal to the par value of the stock ($.01 per share) in
exchange for certain options held by each. The restricted shares vested in
full on March 31, 1996. Each of Messrs. Walsh, Laikind and Burgess received
an award of 15,000 shares of restricted stock.
(7) Includes options to purchase 25,000 shares of the Company's Common Stock at
exercise prices greater than $4.875 which were canceled in October 1994 in
exchange for an option to purchase 25,000 shares of the Company's Common
Stock at an exercise price of $4.875 per share, the fair market value on
the date of grant.
(8) Represents $1,900, $1,900 and $2,000, the respective amounts paid by the
Company for long-term disability insurance premiums for Mr. Burgess in
1994, 1995 and 1996, and $400, $500, and $600, the respective amounts paid
by the Company for certain life insurance premiums for Mr. Burgess in 1994,
1995 and 1996. For 1995 and 1996, also represents certain indebtedness of
Mr. Burgess forgiven by the Company in the amount of $20,000 each year.
(9) Includes options to purchase 30,000 shares of the Company's Common Stock at
exercise prices greater than $4.875 which were canceled in October 1994 in
exchange for an option to purchase 30,000 shares of the Company's Common
Stock at an exercise price of $4.875 per share, the fair market value on
the date of grant.
(10) Represents $2,600, $2,600 and $2,700, the respective amounts paid by the
Company for long-term disability insurance premiums for Dr. Laikind in
1994, 1995 and 1996, and $500, $800, and $900, the respective amounts paid
by the Company for certain life insurance premiums for Dr. Laikind in 1994,
1995 and 1996.
(11) Includes options to purchase 25,000 shares of the Company's Common Stock at
exercise prices greater than $4.875 which were canceled in October 1994 in
exchange for an option to purchase 25,000 shares of the Company's Common
Stock at an exercise price of $4.875 per share, the fair market value on
the date of grant.
(12) Dr. Tutwiler joined the Company in June 1996 and his salary reflects a
partial year of employment.
(13) Represents $64,000 paid by the Company to Dr. Tutwiler for expenses in
connection with his relocation to San Diego in 1996 and $35,100 in taxes he
incurred on certain relocation expenses.
(14) Represents the aggregate of the fair market value of the shares of
restricted stock as of the date of grant ($5.063 per share) less the
aggregate consideration paid therefor ($.01 per share). On June 25, 1996,
the Company's Board of Directors authorized an award of 15,000 shares of
restricted stock to Dr. Tutwiler. The restricted shares vested in full on
February 28, 1997 due to a change in control of the Company. The aggregate
number and value of all restricted shares held by Dr. Tutwiler at
December 31, 1996 were $15,000 and $69,225, respectively.
(15) Represents $1,400, the amount paid by the Company for long-term disability
insurance premiums for Dr. Tutwiler in 1996, and $1,500, the amount paid by
the Company for certain life insurance premiums for Dr. Tutwiler in 1996.
COMPENSATION OF DIRECTORS
The members of the Board of Directors who are not employees of the Company
(other than Mr. Panoz and Mr. Salvi) receive an annual retainer of $10,000 and
they are reimbursed for reasonable expenses incurred
-10-
<PAGE>
in connection with meetings of the Board of Directors and its committees. In
addition, continuing non-employee directors (other than Mr. Panoz and Mr.
Salvi) receive automatic grants of options to purchase 7,500 shares of the
Company's Common Stock at the conclusion of each annual meeting of
stockholders. On April 28, 1997, the non-employee directors: Drs. Blair and
Wilkerson, Mr. Conrad and Jerry C. Benjamin, who subsequently resigned in May
1997 to permit the appointment of Carlos A. Ferrer in accordance with the
Purchase Agreement, received a one-time grant of options to purchase 25,000
shares of the Company's Common Stock. New non-employee directors will
receive a similar one-time grant of options to purchase 25,000 shares of the
Company's Common Stock. Mr. Ferrer received this one-time grant in
connection with his joining the Board of Directors in May 1997.
Effective February 26, 1997, the 1990 Stock Plan was amended to (i)
accelerate all unvested options granted to non-employee directors under the
formula grant section of the 1990 Stock Plan, (ii) permit such options to
continue to be exercisable during the full term of such options in the event
of termination of service, provided that such director agrees to hold any
Common Stock acquired upon exercise of such options for a minimum of six
months from the date of termination, and (iii) to extend the total term of
such options from seven years to ten years. Two non-employee directors who
received formula grants of options under the 1990 Stock Plan have
subsequently resigned: Mr. Benjamin and Steven C. Mendell who resigned in
order to permit the required appointment of directors pursuant to the
Shareholders Agreement.
In connection with Donald Panoz agreeing to act as the non-executive
Chairman of the Board of the Company and to provide certain other services to
the Company, the Company agreed to pay an annual fee of $200,000 for two
years and granted Mr. Panoz options to purchase 500,000 shares of the
Company's Common Stock at an exercise price of $4.288 per share. See
Proposal 4 "Approval of the Chairman's Options." Of these options, 200,000
shares are fully vested, and the remaining 300,000 shares will vest in
increments of 100,000 shares for each $100,000,000 increase in the Company's
market capitalization, prior to February 28, 2000, over $700,000,000. The
agreement may be terminated by either party on 30 days' advance notice in
writing, however if the Company terminates, it will pay Mr. Panoz the
difference between $200,000 and any amounts previously paid. In addition, if
Mr. Panoz' agreement is not earlier terminated and the Company's market
capitalization, prior to February 28, 2000, exceeds $1,000,000,000, Mr. Panoz
will be paid a bonus of $1,000,000, payable in equal annual installments over
a ten-year period, in cash or, at the option of the Company, in stock of the
Company.
Carlo Salvi, as Chairman of the Board of Sicor is entitled to receive
100,000,000 Italian Lira (approximately $59,000) per year. Michael Cannon,
as a member of the Sicor Board of Directors, is entitled to receive
15,000,000 Italian Lira (approximately $8,850) per year.
SEVERANCE AGREEMENTS
The Company is a party to certain Severance Agreements (the "Severance
Agreements") with the Chief Executive Officer and each of the Named Executive
Officers and certain other officers and key employees. Pursuant to the
Severance Agreements, (i) if, within the first 12-month period after the
occurrence of a "Change in Control" of the Company, (a) the officer
voluntarily resigns for "Good Reason" or (b) the Company terminates the
officer's employment for any reason other than "Cause" or "Disability," or
(ii) if the Company terminates the officer's employment because his position
has been eliminated in connection with a restructuring or reduction in force,
as determined by the Company, the officer will be entitled to receive a
severance payment during the "Continuation Period" at an annual rate equal to
the sum of (i) the employee's base compensation at the annual rate in effect
on the date when the termination of his employment with the Company is
effective plus (ii) the arithmetic mean of the employee's annual bonuses for
the last three calendar years completed prior to the date when the
termination of his employment with the Company is effective. Further, the
Continuation Period is treated as employment for purposes of determining the
employee's vesting in any stock options and shares of restricted stock
granted to him by the Company.
-11-
<PAGE>
The "Continuation Period" is defined (except with respect to Mr. Hale's
Severance Agreement) as the period commencing on the effective date of the
employee's termination of employment and ending on the earlier of (i) the
date nine months after the date when the employment termination was effective
or (ii) the date of the employee's death. If, however, the employee is not
employed in a new position comparable to his position with the Company on the
date nine months after his employment termination was effective, then the
Continuation Period is extended to the date when the employee becomes
employed in such a position, but in no event by more than three months. With
respect to Mr. Hale only, the Continuation Period is defined as the period
commencing on the effective date of Mr. Hale's termination of employment and
ending on the earlier of (i) 18 months after the date when the employment
termination was effective or (ii) the date of Mr. Hale's death.
"Change in Control" is defined as the occurrence of any of the following
events: (i) the first purchase of shares of the Company's Common Stock
pursuant to a tender offer or exchange offer (other than an offer by the
Company) for all, or any part, of such Common Stock; (ii) any acquisition of
voting securities of the Company by any person or group, which theretofore
did not beneficially own voting securities, representing more than 30% of the
voting power of all outstanding voting securities of the Company, if such
acquisition results in such entity, person or group owning beneficially
securities representing more then 30% of the voting power of all outstanding
voting securities of the Company; (iii) approval by the Company's
stockholders of a merger in which the Company does not survive as an
independent publicly-owned corporation, a consolidation, or a sale, exchange
or other disposition of all, or substantially all, of the Company's assets;
or (iv) a change in the composition of the Company's Board of Directors
during any period of two consecutive years such that individuals who at the
beginning of such period were members of the Board cease for any reason to
constitute at least a majority thereof, unless the election, or the
nomination for election by the Company's stockholders, of each new Director
was approved by a vote of at least two-thirds of the Directors then still in
office who were Directors at the beginning of the period.
"Good Reason" means that the employee: (i) has been demoted or has
incurred a material reduction in his authority or responsibility as an
employee of the Company; (ii) has incurred a reduction in his total
compensation (including benefits) as an employee of the Company; (iii) has
not received a contemporaneous increase in his total compensation (including
benefits) which is commensurate with increases in total compensation
(including benefits) received by a majority of executive-level employees of
the Company with duties and responsibilities substantially comparable to
those of the employee; (iv) has not received a bonus commensurate with
bonuses (if any) received by a majority of executive-level employees of the
Company with duties and responsibilities substantially comparable to those of
the employee; or (v) has been notified that his principal place of work as an
employee of the Company will be relocated by a distance of 50 miles or more.
"Cause" means (i) a willful act by the employee which constitutes
misconduct or fraud and which is injurious to the Company or (ii) conviction
of, or a plea of "guilty" or "no contest" to, a felony.
STOCK OPTIONS
The following tables summarize option grants and exercises during fiscal
1996 to or by the Chief Executive Officer and the Named Executive Officers,
and the value of the options held by such persons at the end of fiscal 1996.
The Company does not grant Stock Appreciation Rights.
-12-
<PAGE>
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK APPRECIATION
INDIVIDUAL GRANTS(1) FOR OPTION TERM(2)
------------------------------------------------------------ ------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANTED
UNDERLYING TO EXERCISE
OPTIONS EMPLOYEES IN OR BASE EXPIRATION
NAME GRANTED (#) FISCAL YEAR 1996 PRICE ($/SH) DATE 5% ($) 10% ($)
- ---- ----------- ---------------- ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
David F. Hale, - - - - - -
Chief Executive
Officer
Patrick D. Walsh - - - - - -
Daniel D. Burgess - - - - - -
Paul K. Laikind - - - - - -
Gene F. Tutwiler 40,000 4.7% $5.063 6/28/06 $127,364 $322,765
</TABLE>
- --------------
(1) Generally, options become exercisable ratably on a daily basis over a
four-year period and vest in full in the event of a change in control
with respect to the Company and in the event of the death of the
optionee. As a result of the Stock Exchange, all options automatically
vested on February 28, 1997. The exercise price per share of options
granted in 1995 represented the fair market value of the underlying
shares on the date of grant. Generally, options granted have a term of
10 years, subject to earlier termination in certain events related to
termination of employment.
(2) The 5% and 10% assumed rates of appreciation are mandated by the rules
of the Securities and Exchange Commission and do not represent the
Company's estimate or projection of the future Common Stock price.
AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND VALUE OF OPTIONS
AT END OF FISCAL 1996
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT END OF OPTIONS AT END OF
FISCAL 1996 (#) FISCAL 1996 ($)(1)
SHARES ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- --------------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
David F. Hale, - - 378,523/68,977 $278,379/$43,471
Chief Executive
Officer
Patrick D. Walsh - - 19,169/25,831 $2,812/$7,938
Daniel D. Burgess - - 60,036/22,464 $20,709/$7,011
Paul K. Laikind - - 63,815/18,685 $32,889/$7,011
Gene F. Tutwiler - - 0/40,000 $0/$0
</TABLE>
(1) Calculated on the basis of the fair market value of the underlying
securities at December 31, 1996 ($4.63), minus the exercise price.
-13-
<PAGE>
REPORT TO STOCKHOLDERS ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Company (the
"Committee") and the Stock Option Committee are pleased to present their
report on executive compensation. This report is provided by the Committee
to assist stockholders in understanding the Committee's objectives and
procedures in establishing the compensation of the Company's executive
officers and describes the basis on which compensation determinations for
1996 were made by the Committee. In making its determinations, the Committee
has relied, in part, on geographic and competitive considerations,
independent surveys of compensation of management of companies in the
biotechnology and pharmaceutical industries, including companies included in
the Nasdaq Pharmaceutical Stock Index used in the Company's Stock Price
Performance Graph set forth in this proxy statement, and recommendations of
management.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Committee believes that compensation of the Company's executive
officers should:
- Encourage creation of stockholder value and achievement of strategic
corporate objectives.
- Integrate compensation with the Company's annual and long-term
corporate objectives and strategy, and focus executive behavior on the
fulfillment of those objectives.
- Recognize individual initiative, effort and accomplishment.
- Provide a competitive total compensation package that enables the
Company to attract and retain, on a long-term basis, high caliber
personnel.
- Provide a total compensation opportunity that is competitive with
companies in the biotechnology and pharmaceutical industries, taking
into account relative company size, stage of development, performance
and geographic location as well as individual responsibilities and
performance.
- Align the interests of management and stockholders and enhance
stockholder value by providing management with longer term incentives
through equity ownership by management.
KEY ELEMENTS OF EXECUTIVE COMPENSATION
Through 1996, the Company was focused on the development of proprietary
products such as the GenESA System, continuing to make progress in advancing its
research programs and investing in the long term value of Gensia Laboratories.
The Company has not yet brought any proprietary products to market so the
use of traditional corporate performance standards, such as revenues, profits
and return on equity were not appropriate in the evaluation of executive officer
performance. Accordingly, there is no specific relationship of traditional
corporate performance standards to executive compensation. Therefore, the
Compensation Committee has determined that compensation of executive officers
will be based, in part, on the Company's achievements of its objectives
established with the Board of Directors as well as accomplishing other business
objectives, as well as the individual contributions and achievements of each
executive officer. The Company's existing compensation structure for executive
officers generally includes a combination of base salary, bonus, and stock
options.
-14-
<PAGE>
BASE SALARY
Compensation levels are largely determined through comparisons with
companies of similar size and/or complexity in the biotechnology and
pharmaceutical industries and/or companies with which the Company competes
for key personnel. Cash compensation for the Company's executive officers,
including its Chief Executive Officer, is generally targeted at the median of
the companies reviewed. As stated above, because the Company is still
developing its proprietary products and so has not yet brought any such
products to market, the use of traditional corporate performance standards,
such as profit levels, revenues and return on equity, was not appropriate in
the evaluation of executive officer performance in 1996. In establishing
base salaries for 1996, the Committee instead considered, among other
things, the Company's achievements in advancing its products and
accomplishing other business objectives, and the individual contributions and
achievements of each executive officer. Actual compensation is based on an
evaluation of job responsibilities for the position, comparisons of
compensation levels, Company achievements and individual performance.
Individual performance is evaluated by reviewing organizational and
management development progress against individual contributions and
achievements and the degree to which teamwork and Company values are
fostered. At the beginning of fiscal 1996, goals were established for the
Company and approved by the Board of Directors. Goals set for 1996 included
increasing revenues for Gensia, Inc., obtaining approval of certain
Abbreviated New Drug Applications ("ANDAs") and filing additional ANDAs for
approval, completing corporate partnerships to support the Company's research
programs, beginning clinical studies of the Feedback Controlled Heparin
System (the "FCHS") and continuing development of the Company's products that
are in clinical development. Further, compensation levels for the executive
officers are competitive within a range that the Committee considers to be
reasonable and necessary.
BONUS
The Committee may award bonuses under its Key Employee Incentive Plan at
the end of the fiscal year based on the Company's achievements and the
individual's contributions to those achievements, if it deems such an award
to be appropriate. This award may be in the form of restricted stock in lieu
of cash. While the Committee may award cash bonuses from time to time in the
future, it currently intends to award the majority of bonuses in the form of
restricted stock or options. Based on the Company's achievement of a number
of key objectives in 1996 that were important for the continued growth and
development of the Company, including entering into the Stock Exchange
Agreement with Rakepoll Finance; obtaining approval of certain ANDAs and the
filing of key additional ANDAs at Gensia Laboratories, raising additional
financial resources for the Company; and licensing-in additional products for
commercialization by the Gensia sales and marketing organization, the
Committee decided to award restricted stock in lieu of cash bonuses for 1996
to certain officers and key employees.
STOCK OPTIONS
The Company's 1990 Stock Plan and 1997 Stock Plan are administered by the
Company's Stock Option Committee, which is a committee of outside directors
of the Company. The Stock Option Committee believes that by providing those
persons who have substantial responsibility for the management and growth of
the Company with an opportunity to increase their ownership of Company stock,
the best interest of stockholders and executives will be closely aligned.
Therefore, executive officers, as well as all employees, are eligible to
receive stock options from time to time, giving them the right to purchase
shares of Common Stock of the Company at a specified price. The number of
stock options granted to executive officers, including the Chief Executive
Officer, is based on the Company's achievements during the year and the
individual's contributions to those achievements and a review of data on the
range of aggregate annual option grants compared to the number of shares of
stock outstanding for officers with similar duties and titles at
biotechnology companies taking into account differences in such companies'
stock prices, stage of development, achievements and the like.
-15-
<PAGE>
1996 CEO COMPENSATION
Because the Company did not achieve all of its major objectives and
because of the difficult financing environment for the Company, the Committee
did not award a salary increase to Mr. Hale for 1997. As the Company is
still developing its proprietary products and so has not yet brought any such
products to market, the use of traditional performance standards, such as
revenues, profits and return on equity, are not appropriate in the evaluation
of Mr. Hale's performance. The Company and Mr. Hale achieved a number of the
corporate objectives for 1996. Some of these achievements were as follows:
the filing of six ANDAs at Gensia Laboratories, establishment of a strategic
partnership with Pfizer, Inc. to develop compounds for the treatment of pain
which supported certain of the company's research and development expenses,
submission of a New Drug Application amendment for the GenESA System with
additional clinical data on over 1,000 patients, completion of prototype
development and the beginning of clinical studies of the FCHS, continuing
development of its proprietary products, and negotiation and consummation of
a stock exchange agreement with Rakepoll Finance. The Compensation Committee
determined that these achievements were critical to the Company's future
growth and could assist the Company in enhancing stockholder value and
determined to compensate Mr. Hale for his role in achieving these
accomplishments. Accordingly, the Committee awarded a bonus under the
Company's Key Employee Incentive Compensation Plan in the form of restricted
stock of 18,804 shares of Common Stock.
The Stock Option Committee did not grant Mr. Hale any new options to
purchase shares of the Company's Common Stock in 1996.
MISCELLANEOUS
Section 162(m) of the Internal Revenue Code was enacted in 1993 and took
effect for fiscal years beginning in 1994. Section 162(m) disallows the
deductibility by the Company of any compensation over $1 million per year
paid to each of the chief executive officer and the four other most highly
compensated executive officers, unless certain criteria are satisfied. The
Board of Directors has approved the amendment of the Company's 1990 Stock
Plan to, among other things, qualify for an exemption from the $1 million
limit on deductions under Section 162(m) with respect to option grants under
the 1990 Stock Plan. The 1997 Long-Term Incentive Plan, which replaced the
1990 Stock Plan in February 1997 also qualifies for such exemption with
respect to grants under such plan.
This Compensation Committee Report shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent the Company
specifically incorporates this report by reference, and shall not otherwise
be deemed filed under such Acts.
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
James C. Blair James C. Blair
Herbert J. Conrad Herbert J. Conrad
Carlo Salvi
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee and Stock Option Committee
during 1996 were James C. Blair, Herbert J. Conrad, Steven C. Mendell and
Jerry C. Benjamin. Mr. Mendell and Mr. Benjamin resigned as directors and
committee members in March 1997 and May 1997, respectively in order to permit
the required appointment of directors pursuant to the Shareholders Agreement
and the Purchase Agreement.
-16-
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following graph illustrates a comparison of the cumulative total
stockholder return (change in stock price plus reinvested dividends) of the
Company's Common Stock with the CRSP Total Return Index for The Nasdaq Stock
Market (U.S. and Foreign) (the "Nasdaq Composite Index") and the CRSP Total
Return Index for Nasdaq Pharmaceutical Stocks (the "Nasdaq Pharmaceutical
Index"). The comparisons in the graph are required by the Securities and
Exchange Commission and are not intended to forecast or be indicative of
possible future performance of the Company's Common Stock.
<TABLE>
<CAPTION>
12/31/91 12/31/92 12/31/93 12/31/94 12/30/95 12/31/96
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Gensia Sicor $100.00 $ 70.67 $ 71.39 $ 12.25 $ 15.14 $ 13.35
Nasdaq Composite 100.00 116.03 134.32 130.28 182.96 224.06
Nasdaq Pharmaceutical 100.00 83.22 74.17 55.83 102.13 102.44
</TABLE>
Assumes a $100 investment on December 31, 1991 in each of the Company's
Common Stock, the securities comprising the Nasdaq Composite Index, and the
securities comprising the Nasdaq Pharmaceutical Index.
The Nasdaq Pharmaceutical Index includes all companies listed on The
Nasdaq Stock Market within SIC Code 283. A list of those companies included
in the Nasdaq Pharmaceutical Index may be obtained by contacting Wesley N.
Fach, Secretary, at (619) 546-8300.
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CERTAIN TRANSACTIONS
THE STOCK EXCHANGE
On February 26, 1997 the stockholders of Gensia approved the Stock
Exchange Agreement between Gensia and Rakepoll Finance pursuant to which,
Gensia acquired all of the outstanding shares of capital stock of Rakepoll
Holding pursuant to the Stock Exchange. As a result of the Stock Exchange,
Rakepoll Holding became a wholly-owned subsidiary of Gensia Sicor. Rakepoll
Holding is a Netherlands holding company which owns a group of three
specialty pharmaceutical companies (the "Rakepoll Operating Group") comprised
of Sicor, located in Milan, Italy, and two companies located in Mexico,
Lemery, S.A. de C.V. ("Lemery"), and Sicor de Mexico, S.A. de C.V. ("Sicor de
Mexico"). Sicor and Sicor de Mexico manufacture specialty bulk drug
substances. Lemery produces oral and injectable finished multisource drug
products (also called finished dosage forms) utilizing specialty bulk drug
substances produced by the other companies in the Rakepoll Operating Group
and/or purchased from third parties. The specialty bulk drug substances
manufactured by the Rakepoll Operating Group are almost entirely destined for
parenteral or topical administration, including inhalation therapy, and
almost all belong to one of three categories: (i) oncolytic agents, (ii)
steroids or (iii) non-depolarizing muscle relaxants.
In addition, pursuant to the Shareholder's Agreement entered into in
connection with the Stock Exchange Agreement, if Rakepoll Finance maintains
certain equity ownership levels in Gensia Sicor, Rakepoll Finance will be
entitled to designate three of Gensia Sicor's 10 directors who will in turn
designate (jointly with two executive officer directors of Gensia Sicor) five
additional directors. See "Election of Directors." The Shareholder's
Agreement further granted to Rakepoll Finance the right to initially
designate a majority of the directors and the senior managers of each of
Sicor, Sicor de Mexico and Lemery, and grants to the Investor Directors the
right to nominate for the consideration of the Gensia Sicor Board of
Directors replacements for all directors and senior managers so designated.
The Management Directors are entitled to designate the balance of the
directors and senior managers of each such company. Each such director and
senior manager shall serve at the pleasure of the Board of Directors of
Gensia Sicor. Additionally, with respect to Gensia Laboratories, the
Shareholder's Agreement set forth the composition of the Board of Directors
thereof upon consummation of the Stock Exchange (the "Closing Date") and
provided that Rakepoll Finance has the right to designate one of the
directors thereof.
The Shareholder's Agreement provided that, at the Closing Date (i) an
Independent Director shall serve as the non-executive Chairman of the Gensia
Sicor Board of Directors, (ii) David F. Hale shall serve as President and
Chief Executive Officer of Gensia Sicor and (iii) Michael D. Cannon shall
serve as Executive Vice President of Gensia Sicor. The Shareholder's
Agreement further provides for the creation of an Executive Operating
Committee, to be a management committee and not a committee of the Board of
Directors of Gensia Sicor, consisting of Carlo Salvi (to serve as the
Executive Operating Committee's Chairman), the President and Chief Executive
Officer of Gensia Sicor, the President of Gensia Laboratories and the
Executive Vice President of Gensia Sicor.
Pursuant to the Shareholder's Agreement, the consent of the Investor
Directors will be required for Gensia Sicor to take certain actions, such as
a merger or sale of all or substantially all of the business or assets of
Gensia Sicor and certain issuances of securities. The Shareholder's
Agreement also grants certain anti-dilution privileges to Rakepoll Finance
and places limitations on Rakepoll Finance's ability to acquire or dispose of
any Gensia Sicor Common Stock for eighteen months from the Closing Date.
As a result of the Stock Exchange all options to acquire Gensia Common
Stock held by each of the executive officers and directors of Gensia Sicor
became fully vested upon the consummation of the Stock Exchange. In addition
because the Stock Exchange constituted a change in control pursuant to
agreements Gensia had executed with its officers and certain key employees of
Gensia, including David F. Hale, President and Chief Executive Officer of
Gensia Sicor, each such individual became entitled to certain benefits,
including salary continuation and healthcare coverage upon, within a certain
period of time, their resignation for good
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reason, including, without limitation, changes in job authority or
responsibility or employer's physical location, or termination of their
employment for other than cause or disability. Also, in November 1996, the
Gensia Board of Directors (with Mr. Hale not present) agreed to forgive, upon
consummation of the Stock Exchange, a loan made by Gensia to Mr. Hale in
April 1995, upon terms to be determined by the Company's Compensation
Committee. The outstanding principal and interest on such loan was
approximately $150,000. In addition, Gensia and Rakepoll Finance have each
agreed to cause Gensia Sicor to (a) maintain and perform in the same manner
as prior to the execution date of the Stock Exchange Agreement Gensia's
existing indemnification provisions with respect to its present and former
directors and officers for acts or omissions or alleged acts or omissions
occurring at or prior to the Closing Date, subject to certain limitations,
(b) to provide, maintain and perform in the same manner as prior to the
execution date of the Stock Exchange Agreement Gensia's existing
indemnification provisions with respect to its present and future directors
and officers for acts or omissions or alleged acts or omissions occurring
after the Closing Date, subject to certain limitations, and (c) maintain for
a period of no less than three years after the Closing Date, directors and
officers liability coverage with limits, terms and conditions no less
advantageous than Gensia had in effect as of the execution date of the Stock
Exchange Agreement. The Gensia Board of Directors was aware of these
interests and took these interests into account in approving the Stock
Exchange Agreement and the transactions contemplated thereby, including the
Stock Exchange and the Shareholder's Agreement.
Mr. Salvi is the beneficial owner of a majority of Rakepoll Finance. Mr.
Cannon is the beneficial owner of less than ten percent of Rakepoll Finance.
RELATIONSHIP WITH GENSIA CLINICAL PARTNERS
In July 1991, the Company organized Gensia Clinical Partners to provide
funding for further research and clinical development of the Company's
GenESA-Registered Trademark- System technology. Gensia Clinical Partners
received net proceeds of approximately $23.0 million from its limited
partners, all of which has been paid to the Company pursuant to a research
and development contract. Gensia Development Corporation, a wholly-owned
subsidiary of the Company, is the sole general partner of Gensia Clinical
Partners.
The Company has granted Gensia Clinical Partners an exclusive royalty-free
license to use certain patent rights and technology that are related to the
GenESA System in the United States, Canada and Europe. Under its development
and marketing agreement with Gensia Clinical Partners, the Company conducts
research and development relating to the GenESA System, and Gensia Clinical
Partners reimbursed the Company for these services through May 1993. The
full amount of proceeds from the partnership were utilized as of May 1993 and
the Company has continued funding all further expenses related to the GenESA
System. The Company is obligated under the agreements to market the GenESA
System in the United States, Canada and certain countries in Europe, if
approved by regulatory authorities in these countries, and to pay royalties
based on those sales. In addition, the Company is required to make a
milestone payment of approximately $5 million payable in cash or Common Stock
of the Company upon approval of the GenESA System by the United States Food
and Drug Administration. In the second quarter of 1997, the FDA advised
Gensia Sicor that the GenESA System is approvable for use in conjunction with
radionuclide perfusion imaging and echocardiography for patients unable to
exercise adequately. Approval of the produce in the U.S. is contingent on
acceptance by the FDA of final labeling. The Company expects to launch the
product in the U.S. through its hospital base sales organization in the third
quarter of 1997.
During the two to four-year period following the initial commercialization
of the GenESA System, the Company has the option to purchase the limited
partners' interests in Gensia Clinical Partners. If the Company exercises
this option, it will pay the limited partners approximately $22 million
payable in cash or shares of Common Stock of the Company (the "Advance
Payment"), and a royalty on product sales of the GenESA System for an
eleven-year period following the purchase of the interests. At a limited
partner's option, in lieu of the right to receive the Advance Payment and
royalty, a limited partner may elect to receive a predetermined number of
shares of Common Stock of the Company. If all limited partners were to elect
this option, the Company would issue 1,976,250 shares of Common Stock of the
Company (and would not be required to
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make the Advance Payment or pay any royalty). In return for the option to
purchase the partnership interests in Gensia Clinical Partners, the Company
issued warrants to the limited partners to purchase 2,249,175 shares of
Common Stock of the Company. If the Company fails to exercise its option,
the Company will lose all rights to the GenESA System in the United States,
Canada and Europe. The Company contributed approximately $3.2 million for
funding of expenses related to the GenESA System during 1996.
RELATIONSHIP WITH GENTA/JAGOTEC JOINT VENTURE
In January 1993, Gensia and a joint venture ("Genta-Jago") between Genta
Incorporated and Jagotec AG, an affiliate of Jago Pharma AG which was
acquired by SkyePharma PLC ("SkyePharma") in May 1996, formed a collaboration
to develop and market certain oral products for the treatment of
cardiovascular disease using Geomatrix controlled-release drug delivery
technology. In February 1996, Gensia informed Genta-Jago that it would be
focusing its efforts in the future on Geomatrix nifedipine and that it would
not pursue development of the Geomatrix formulations of verapamil and
metaprolol. Effective on October 1, 1996 Gensia Sicor transferred its rights
under the collaboration to Brightstone Pharma, Inc. ("Brightstone"),
SkyePharma's U.S. subsidiary. Brightstone Pharma Inc. will pay Gensia Sicor
a royalty from its share of operating income, if any, derived from any
Geomatrix nifedipine products marketed by Brightstone and Boehringer Mannheim
Corporation. In 1996 Gensia paid $2.3 million in development funding prior
to transferring its rights.
David F. Hale, President and Chief Executive Officer of the Company and
James C. Blair, a director of the Company, were directors of Genta
Incorporated until their resignations in October 1996 and January 1997,
respectively, and Thomas H. Adams, the former chairman of the Board and
former Chief Executive Officer of Genta Incorporated, was a member of
Gensia's Scientific Advisory Board until 1996.
RELATIONSHIP WITH ALCO CHEMICALS, LTD.
Alco, an affiliate of Rakepoll Finance and wholly-owned by Carlo Salvi,
acts as a non-exclusive sales agent for certain bulk pharmaceutical products
produced by certain subsidiaries of the Company, in exchange for a commission
of 4% of sales. The parties will determine, from time to time, those bulk
pharmaceutical products for which Alco will act as a sales agent.
OTHER TRANSACTIONS
The Company paid Domain Partners III, L.P. ("Domain III") $75,000 as
partial consideration for financial commitments made by Domain III in
connection with the possible funding of the development of a new product
opportunity involving a feedback controlled heparin drug delivery system (the
"Automedics Project"). In February 1996, the Board authorized the issuance
of a warrant to purchase up to 50,000 shares of the Company's Common Stock to
Domain III as partial consideration for financial commitments made in
furtherance of the Automedics Project. During 1995, Domain III made a loan
in the principal amount of $250,000 to Gensia Automedics, in connection with
the Automedics Project. The loan, along with accrued interest in the amount
of $13,636, was repaid on January 2, 1996. Dr. Blair, a director of the
Company, is a general partner of One Palmer Square Associates III, L.P., the
general partner of Domain III.
Ian McBeath, Vice President of Gensia Europe Limited until April 8, 1996,
was indebted to the Company in the aggregate amount of approximately L47,400.
The indebtedness was evidenced by two loans, one secured by real property and
the other unsecured. The principal amount of the secured loan was L27,000
with an interest rate of 5% per annum. The principal amount of the unsecured
loan, an interest free loan, was L18,014. Although Mr. McBeath resigned as
an officer of the Company on April 8, 1996, he continued to render consulting
services through July 1, 1996, at which time the secured loan and the
unsecured loan and L2,700 in interest thereon became due and was paid.
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The Wilkerson Group has provided market research and consulting services
to the Company in 1996 for which the Company has paid The Wilkerson Group
approximately $102,000. Dr. Wilkerson, a director of the Company, was an
affiliate of The Wilkerson Group until May 1996.
Two relocation loans were previously made by the Company to Patrick D.
Walsh, President and Chief Operating Officer of Gensia Laboratories. One of
the loans, in the principal amount of $35,000 was repaid in 1996. Mr. Walsh
is indebted to the Company in the aggregate principal amount of $100,000 with
respect to the other loan. Interest at the rate of 5% per annum is payable
on the loan. Accrued interest as of March 31, 1997 is approximately $13,000.
The loan is secured by real property and is due on October 12, 1999.
On June 26, 1996 the Company made an interest free relocation loan to Gene
F. Tutwiler, Vice President, Corporate Development. Dr. Tutwiler is indebted
to the Company in the principal amount of $100,000 with respect to the loan.
The loan is secured by real property and is due on June 25, 2001. Commencing
July 1, 1996 the Company has agreed to forgive 25% of the loan each year Dr.
Tutwiler continues to be employed by the Company.
In March and April 1997 the Company sold 4,150,440 Units to certain
accredited investors in a private placement, at a purchase price of $4.1875
per Unit. Each Unit consists of one share of Common Stock and a warrant for
the purchase of one-half share of Common Stock, at an exercise price of
$4.1875 per share, for each share of Common Stock purchased in the Unit
offering and held until December 31, 1997. The following Gensia Sicor
directors participated in the Unit offering: Mr. Salvi, 100,000 Units; Mr.
Panoz, 50,000 Units; Dr. Blair, 24,000 Units; and Mr. Hale, 10,000 Units.
On May 19, 1997 Health Care Capital purchased $20 million in convertible
notes due in 2004 and warrants to purchase up to 2,645,503 shares of Gensia
Sicor Common Stock at $4.35 per share. The notes bear a coupon of 2.675%.
The notes are convertible into Gensia Sicor Convertible Preferred Stock or
Common Stock at a conversion price of $3.78 per share. Fifty percent of the
warrants are conditional warrants that may not be exercised for three years
and will be cancelled if the Gensia Sicor Common Stock price exceeds certain
levels during the first three years of the loan. Pursuant to the terms of
the Purchase Agreement so long as Health Care Capital or its related entities
own at least $10 million of the notes or the Convertible Preferred Stock the
notes are convertible into, it is entitled to have one Class II director
nominated for election and such director shall be a member of the Company's
Executive Committee. See "Election of Directors."
The Company believes that the foregoing transactions were in its best
interests. It is the Company's current policy that all transactions by the
Company with officers, directors, 5% stockholders or their affiliates will be
entered into only if such transactions are approved by a majority of the
disinterested directors, and are on terms no less favorable to the Company
than could be obtained from unaffiliated parties.
PROPOSAL 2
APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE
GENSIA SICOR INC. EMPLOYEE STOCK PURCHASE PLAN
In order to provide employees of the Company with an opportunity to
purchase Common Stock through payroll deductions, the Board of Directors
originally adopted the Gensia, Inc. Employee Stock Purchase Plan in 1992 under
which 300,000 shares of Common Stock were reserved for issuance. The plan was
amended and restated in 1996 to reserve an additional 100,000 shares for
issuance. In June 1997, the Board of Directors amended and restated the plan
(as amended and restated, the "ESPP") to reserve an additional 100,000 shares
for issuance under the ESPP and to rename the ESPP the Gensia Sicor Inc.
Employee Stock Purchase Plan, subject to the approval of the Company's
stockholders at the Annual Meeting. As of July 31, 1997, an aggregate of 27,883
shares were available for issuance under the ESPP.
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The full text of the ESPP, substantially in the form in which it will take
effect if the ESPP is approved by the stockholders, is set forth in Exhibit A
to this Proxy Statement. The following description of the ESPP is a summary
only. It is subject to, and qualified in its entirety by, Exhibit A.
Under the ESPP, an aggregate of 500,000 shares of Common Stock (which
number includes the 100,000 share increase that stockholders are being asked
to approve) have been reserved for issuance, subject to anti-dilution
adjustments. Any full-time employee will be eligible to participate in the
ESPP after he or she has been continuously employed by the Company for three
consecutive months. Eligible employees may elect to contribute up to 12% of
their total compensation during each six-month offering period, subject to
certain statutory limits. At the end of each six-month offering period, the
Company will apply the amount contributed by the participant during the
offering period to purchase whole shares of Common Stock, but not more than
1,000 shares. Shares of Common Stock are purchased for 85% of the lower of
(i) the market price of the Common Stock immediately before the beginning of
the purchase period or (ii) the market price of such Common Stock on the last
business day of the purchase period. All expenses incurred in connection
with the implementation and administration of the ESPP will be paid by the
Company.
FEDERAL INCOME TAX CONSEQUENCES
The ESPP is intended to qualify as an "employee stock purchase plan" under
section 423 of the Code. No income is recognized by a participant at the
time a right to purchase Company Common Stock is granted. Likewise, no
taxable income is recognized at the time of the purchase, even though the
purchase price reflects a discount from the market value of the shares at
that time.
A participant must recognize taxable income upon a disposition of shares
acquired under the ESPP. The tax treatment may be more favorable if the
disposition occurs after the holding-period requirements of section 423 have
been satisfied. To satisfy the holding-period requirements of section 423,
shares acquired under the Plan cannot be disposed of within two years after
the FIRST day of the offering period during which the shares are purchased.
They also cannot be disposed of within one year after they are purchased.
If the holding period is met, the participant recognizes ordinary income
equal to the LOWER of (a) the excess of the fair market value of the shares
on the date of the disposition over the actual purchase price or (b) 15% of
the fair market value of the shares immediately before the applicable
offering period. The Company will not be entitled to any deduction under
these circumstances.
The excess, if any, of the fair market value of the shares on the date of
the disposition over the sum of the purchase price plus the amount of
ordinary income recognized (as described above) will be taxed as a long-term
capital gain. If a taxable disposition produces a loss (i.e., the fair
market value of the shares on the date of the disposition is less than the
purchase price) and the disposition involves certain unrelated parties, then
the loss will be a long-term capital loss.
If the holding period is not met, the entire difference between the
purchase price and the market value of the shares on the date of purchase
will be taxed to the participant as ordinary income in the year of
disposition. The Company will generally be entitled to a deduction for the
same amount.
The excess, if any, of the market value of the shares on the date of
disposition over their market value on the date of purchase will be taxed as
a capital gain (long term or short-term, depending on how long the shares
have been held). If the value of the shares on the date of disposition is
less than their value on the date of purchase, then the difference will
result in a capital loss (long-term or short-term, depending upon the holding
period), provided the disposition involves certain unrelated parties. Any
such loss will not affect the ordinary income recognized upon the disposition.
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1997 TAX LAW
In August 1997 new tax legislation was enacted (the "1997 Tax Law") which
provides for lower capital gains rates if stock is held for eighteen months.
The 1997 Tax Law also provides for even lower applicable capital gains rates
for stock acquired after December 31, 2000 in certain circumstances if the
stock is held for at least five years.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE AMENDMENT
AND RESTATEMENT OF THE GENSIA SICOR INC. EMPLOYEE STOCK PURCHASE PLAN.
PROPOSAL 3
APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE
GENSIA SICOR INC. 1997 LONG-TERM INCENTIVE PLAN
At the special meeting of stockholders approving the Stock Exchange, the
stockholders of the Company also approved the adoption of the Gensia Sicor
Inc. Long-Term Incentive Plan, under which 2,000,000 shares of Common Stock
have been reserved for issuance under the such plan. On June 20, 1997, the
Board of Directors amended and restated the plan (as amended and restated,
the "1997 Stock Plan") to reserve an additional 1,000,000 shares for issuance
under the plan, subject to the approval of the Company's stockholders at the
Annual Meeting. The 1997 Stock Plan replaced the Company's 1990 Stock Plan
(the "1990 Stock Plan") effective February 26, 1997 and any shares not
subject to exercise under the 1990 Stock Plan or which are not exercised
because of forfeiture or termination of options granted under the 1990 Stock
Plan are added to the shares available under the 1997 Stock Plan. The full
text of the 1997 Stock Plan, substantially in the form in which it will take
effect if approved by the Company's stockholders, is set forth in Exhibit B
to this Proxy Statement. The following summary of the principal features of
the 1997 Stock Plan is subject to, and qualified in its entirety by, Exhibit
B.
DESCRIPTION OF 1997 STOCK PLAN
PURPOSE
The purpose of the 1997 Stock Plan is to promote the interests of the
Company and its stockholders by encouraging key individuals to acquire stock
or to increase their proprietary interest in the Company. By providing the
opportunity to acquire stock or receive other incentives, the Company seeks
to attract and retain those key employees upon whose judgment, initiative and
leadership the success of the Company largely depends. While the maximum
number of shares available for award is modest in comparison to the total
number of shares of the Company Common Stock outstanding, the Company's Board
of Directors believes that the 1997 Stock Plan will constitute an important
means of compensating key employees.
SHARES SUBJECT TO 1997 STOCK PLAN
There are 3,000,000 shares of Company Common Stock reserved for issuance
under the 1997 Stock Plan. The 1997 Stock Plan replaced the 1990 Stock Plan.
Under the 1990 Stock Plan, 6,383,334 shares of Company Common Stock have been
reserved for issuance. The 1990 Stock Plan provided for the grant of both
incentive stock options to employees only and nonstatutory stock options to
employees, directors and independent consultants. The 1990 Stock Plan also
provided for direct sale of shares to employees, directors and outside
consultants. If any options granted under the 1990 Stock Plan for any reason
expire or are cancelled or otherwise terminated without having been exercised
in full, the shares allocable to the unexercised
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portion of such options again become available for new grants under the 1997
Stock Plan. If shares issued under the 1990 Stock Plan are forfeited, they
also become available for new grants under the 1997 Stock Plan.
OUTSTANDING GRANTS
As of July 31, 1997, options to purchase an aggregate of 4,786,356 shares
of Company Common Stock at a weighted average exercise price of $5.69 per
share were outstanding under both the 1990 Stock Plan and the 1997 Stock
Plan. The foregoing numbers do not include options granted to former
employees. As of July 31, 1997, approximately 551 employees, 9 directors and
43 consultants or advisors were eligible to participate in both plans. On
August 8, 1997, the closing price of the Company's Common Stock on the Nasdaq
National Market was $4.50 per share. To date, all employee stock options have
been granted with exercise prices equal to the fair market value of the
Company's Common Stock on the date of grant, as determined by the Stock
Option Committee in accordance with the provisions of the plans. Of the
options granted, 1,098,033 shares have been exercised. As of July 31, 1997,
86,250 shares of Company Common Stock had been issued for direct sale under
the plans. As of July 31, 1997, a total of 893,330 shares of Company Common
Stock were available for future awards under the 1997 Stock Plan. No shares
remain available for grant under the 1990 Stock Plan.
As of July 31, 1997, the following persons or groups had in total received
options to purchase shares of Company Common Stock under either the 1990
Stock Plan or the 1997 Stock Plan: (i) the Chief Executive Officer and the
other remaining officers named in the Summary Compensation Table: Mr. Hale
647,500 shares, Mr. Walsh 145,000 shares, Mr. Burgess 112,500 shares, Dr.
Laikind 92,500 shares, and Dr. Tutwiler 50,000 shares; (ii) all current
executive officers of the Company as a group: 1,434,600 shares; (iii) all
current directors who are not officers as a group 850,500 shares; (iv) each
associate of any of such current directors, executive officers or nominees:
0 shares; (v) each person who has received five percent of options granted
other than those included above: 0 shares; and (vi) all employees and
consultants of the Company 4,019,369 shares. The foregoing numbers do not
include options that were surrendered in connection with the grant of
restricted stock awards.
ADMINISTRATION
The 1997 Stock Plan is administered by the Stock Option Committee (the
"Committee"), composed of directors who are disinterested persons under Rule
16b-3 of the Exchange Act ("Rule 16b-3") or Code Section 162(m) and smaller
committees of directors as established by the Company's Board. In the case
of grants to persons who are not also insiders for purposes of Section 16 of
the Exchange Act, the 1997 Stock Plan may be administered by officers who are
not directors. The Company's Board may fill vacancies from time to time to
remove or add members.
The Committee selects those employees of the Company or its subsidiaries
who will be eligible to receive awards under the 1997 Stock Plan. The 1997
Stock Plan provides that the Committee may grant to eligible individuals any
combination of nonqualified stock options, incentive stock options,
restricted stock, stock appreciation rights, performance awards, stock
payments or dividend equivalents. Each grant will be memorialized in a
separate agreement with the person receiving the grant. This agreement will
indicate the type and terms of the award.
NON-EMPLOYEE DIRECTOR GRANTS
Non-employee directors are eligible to receive nonqualified stock options
under the 1997 Stock Plan in the sole discretion of the Company's full Board.
These grants are designed to comply with the provisions of Rule 16b-3 and are
made at the conclusion of each regular annual meeting of stockholders to
selected
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incumbent non-employee directors who will continue to serve on the Company's
Board thereafter. The shares of Company Common Stock may be issued for past
service by the non-employee directors and without payment of any purchase
price. New non-employee directors may receive initial grants of nonqualified
stock options unless they had received an initial grant at the conclusion of
the annual stockholder meeting in the same calendar year.
Total shares available to non-employee directors may not exceed 15% of the
maximum number of shares available under the 1997 Stock Plan.
STOCK OPTIONS
Nonqualified stock options provide the right to purchase shares of Company
Common Stock at a price which is not less than 85% of the fair market value
of Company Common Stock subject to the option on the effective date of the
grant. These options are granted for a term which may not exceed ten years.
Incentive stock options comply with the provisions of the Code and are
subject to restrictions contained in the Code. Incentive stock options are
granted with an exercise price of not less than 100% of the fair market value
of the Company Common Stock subject to the option on the date of grant and
will extend for a term of up to ten years. Incentive stock options granted to
persons who own more than 10% of the combined voting power of the Company's
outstanding securities must be granted at prices which are not less than 110%
of fair market value on the date of grant and may not extend for more than
five years from the date of grant.
The option exercise price must be paid in full at the time of exercise.
The price may be paid in cash or, as acceptable to the Committee, by loan
made by the Company to the participant, by arrangement with a broker where
payment of the option price is guaranteed by the broker, by the surrender of
shares of the Company owned by the participant exercising the option and
having a fair market value on the date of exercise equal to the option price,
or by any combination of the foregoing equal to the option price.
Options for employees have such other terms and are exercisable in such
manner and at such times as the Committee may determine. As noted below, all
awards under the 1997 Stock Plan vest fully and immediately upon death,
disability or upon a change in control. In addition, an option agreement for
an employee may provide for accelerated exercisability in the case of other
events as determined by the Committee.
The Committee may, at any time prior to exercise and subject to consent of
the participant, amend, modify or cancel any options previously granted and
may or may not substitute in their place options at a different price and of
a different type under different terms or in different amounts.
RESTRICTED STOCK
Restricted stock may be granted or sold to employees for prices determined
by the Committee and subject to such restrictions as may be appropriate.
Typically restricted stock is forfeited and is resold to the Company at cost
in the event that "vesting" is not achieved by virtue of seniority or
performance or other criteria. In general, restricted shares may not be
sold, transferred or hypothecated until restrictions are removed or expire.
Purchasers of restricted stock, unlike recipients of options, have voting
rights and receive dividends, if any, prior to the time when the restrictions
lapse.
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STOCK APPRECIATION RIGHTS
Stock appreciation rights ("SARs") may be granted in tandem with stock
options or separately. If SARs are granted in tandem with options, the
options may be either nonqualified or incentive stock options. SARs granted
by the Committee in tandem with stock options will provide for payments to
grantees based upon increases in the price of Company Common Stock over the
exercise price of the related option. The SARs will provide that the holder
of the SARs may exercise the SARs or the option in whole or in part, but the
aggregate exercise may not cover more than the aggregate number of shares
upon which the value of the SARs is based. SARs granted in tandem with
options may not extend beyond the term of the related option. SARs will be
transferable only to the extent that the related option is transferable. The
Committee may elect to pay SARs in cash or in Company Common Stock or in a
combination of cash and Company Common Stock.
SARs which are issued separately from options will provide for payments
based upon increases in the price of Company Common Stock over the fair
market value of Company Common Stock or the book value of Company Common
Stock on the date of grant. The Committee will determine whether fair market
value or book value will be the appropriate measure. As with other SARs, upon
exercise the Committee may determine to pay the SARs in cash or in Company
Common Stock or in a combination of cash and Company Common Stock.
PERFORMANCE AWARDS, COMMON STOCK PAYMENTS AND DIVIDEND EQUIVALENTS
Performance awards may be granted by the Committee on an individual basis.
Generally these awards will be paid in cash and will be based upon specific
agreements.
The Committee may approve a payment in Company Common Stock to any
employee who otherwise may be entitled to a cash payment other than base
salary (e.g., a bonus). Similarly, the Committee may award shares as
dividend equivalents with respect to grants of options or SARs.
SECTION 162(m)
In order to permit maximum deductibility of compensation relating to
awards of stock options and SARs, a limitation has been imposed upon the
number of such awards which may be made under the 1997 Stock Plan.
Specifically, no more than 250,000 (350,000 in the event of an option
repricing) shares of Company Common Stock shall be subject to stock options
and SARs that are granted annually under the 1997 Stock Plan to any one
employee. A maximum of 3,000,000 shares has been authorized for award under
the 1997 Stock Plan plus shares which are not subject to grants under the
1990 Stock Plan as of the effective date, and shares which become available
because options under the 1990 Stock Plan are forfeited or terminate.
OTHER PROVISIONS
The 1997 Stock Plan contains customary provisions relating to adjustments
for increases or decreases in the number and kind of Company securities.
Furthermore, all awards under the 1997 Stock Plan vest fully and immediately
upon death, disability or upon a change in control. "Change in control"
includes tender offers, mergers, sales of substantially all Company assets,
change in a majority of the Company Board over a two-year period and the
acquisition of more than 30% of the outstanding shares of Company Common
Stock by a person who did not previously own 30% of such stock.
The 1997 Stock Plan will expire ten years after its initial effective
date, unless it is terminated before then by the Company's Board of Directors.
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The Company's Board of Directors may amend, suspend or terminate the 1997
Stock Plan at any time without further action of the Company's stockholders
except with respect to the accelerated vesting or share adjustment provisions
and as required by applicable law.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the federal income tax consequences of the
1997 Stock Plan as it relates to nonqualified stock options, incentive stock
options and share awards is intended to be a summary of applicable federal
law. State and local tax consequences may differ.
OPTIONS
Incentive stock options and nonqualified stock options are treated
differently for federal income tax purposes. Incentive stock options are
intended to comply with the requirements of Section 422 of the Code.
Nonqualified stock options need not comply with such requirements.
An optionee is generally not taxed on the grant or exercise of an
incentive stock option. The difference between the exercise price and the
fair market value of the shares on the exercise date will, however, be a
preference item for purposes of the alternative minimum tax. If an optionee
holds the shares acquired upon exercise of an incentive stock option for at
least two years following grant and at least one year following exercise, the
optionee's gain, if any, upon a subsequent disposition of such shares is a
long-term capital gain (or loss). The measure of the gain is the difference
between the proceeds received on disposition and the optionee's basis in the
shares (which generally equals the exercise price). If an optionee disposes
of stock acquired pursuant to exercise of an incentive stock option before
satisfying the one and two-year holding periods described above, the optionee
will recognize both ordinary income and capital gain (or loss) in the year of
disposition. The amount of the ordinary income will be the lesser of (i) the
amount realized on disposition less the optionee's adjusted basis in the
stock (usually the option price) or (ii) the difference between the fair
market value of the stock on the exercise date and the option price. The
balance of the consideration received on such a disposition will be long-term
capital gain if the stock had been held for at least one year following
exercise of the incentive stock option. The Company is not entitled to an
income tax deduction on the grant or exercise of an incentive stock option or
on the optionee's disposition of the shares after satisfying the holding
period requirement described above. If the holding periods are not
satisfied, the Company will be entitled to a deduction in the year the
optionee disposes of the shares, in an amount equal to the ordinary income
recognized by the optionee.
An optionee is not taxed on the grant of a nonqualified stock option. On
exercise, however, the optionee recognizes ordinary income equal to the
difference between the option price and the fair market value of the shares
on the date of exercise. The Company is entitled to an income tax deduction
in the year of exercise in the amount recognized by the optionee as ordinary
income. Any gain on subsequent disposition of the shares is a long-term
capital gain if the shares are held for at least one year following exercise.
The Company does not receive a deduction for this gain.
SHARE AWARDS
If a participant is awarded or purchases shares, the amount by which the
fair market value of the shares on the date of award or purchase exceeds the
amount paid for the shares will be taxed to the participant as ordinary
income. The Company will be entitled to a deduction in the same amount
provided it makes all required withholdings on the compensation element of
the sale or award. The participant's tax basis in the shares acquired is
equal to the share's fair market value on the date of acquisition. Upon a
subsequent sale of any shares, the participant will realize capital gain or
loss (long-term or short-term, depending on whether the
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shares were held for more than one year before the sale) in an amount equal
to the difference between his or her basis in the shares and the sale price.
If a participant is awarded or purchases shares that are subject to a
vesting schedule, the participant is deemed to receive an amount of ordinary
income equal to the excess of the fair market value of the shares at the time
they vest over the amount (if any) paid for such shares by the participant.
The Company is entitled to a deduction equal to the amount of the income
recognized by the participant.
Code Section 83(b) permits a participant to elect, within 30 days after
the transfer of any shares subject to a vesting schedule to him or her, to be
taxed at ordinary income rates on the excess of the fair market value of the
shares at the time of the transfer over the amount (if any) paid by the
participant for such shares. Withholding taxes apply at that time. If the
participant makes a Section 83(b) election, any later appreciation in the
value of the shares is not taxed as ordinary income, but instead is taxed as
capital gain when the shares are sold or transferred.
1997 TAX LAW
The recently enacted 1997 Tax Law provides for lower capital gains rates
if stock is held for eighteen months. The 1997 Tax Law also provides for
even lower applicable capital gains rates for stock acquired after December
31, 2000 in certain circumstances if the stock is held for at least five
years.
1997 STOCK PLAN BENEFITS
The Committee has full discretion to determine the number, type and value
of awards to be granted to key employees under the 1997 Stock Plan.
Therefore, the benefits and amounts that will be received by each of the
named executive officers, the executive officers as a group and all other key
employees are not determinable.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE AMENDMENT
AND RESTATEMENT OF THE GENSIA SICOR INC. 1997 LONG-TERM INCENTIVE PLAN.
PROPOSAL 4
APPROVAL OF THE CHAIRMAN'S OPTIONS
Donald E. Panoz became the non-executive Chairman of the Board of the
Company on February 28, 1997. Prior to that time Mr. Panoz had not been a
director or a consultant of Gensia Sicor or otherwise employed in any
capacity by Gensia Sicor. In order to induce Mr. Panoz to act as
non-executive Chairman and provide certain other services to the Company,
including, among other things, consulting on strategic planning and assisting
with positioning Gensia Sicor in the financial community, the Company has,
among other things, granted Mr. Panoz non-statutory stock options ("NSOs") to
purchase 500,000 shares of the Company's Common Stock at an exercise price
equal to $4.288 per share (the ten day average closing market price per share
through February 24, 1997) (the "Chairman's Options"). The Chairman's
Options were granted subject to the approval of the Company's stockholders
because they were granted outside of Gensia Sicor's 1997 Long-Term Incentive
Plan, which was approved by the Company's stockholders on February 26, 1997.
For a description of other compensation payable to Mr. Panoz which is not
subject to stockholder approval see "Compensation of Executive Officers and
Directors - Compensation of Directors." The Company believes that the
granting of the Chairman's Options as well as the other compensation the
Company has agreed to pay Mr. Panoz was necessary in order to attract a
Chairman with the qualifications of Mr. Panoz.
Of the 500,000 shares subject to the Chairman's Options, 200,000 shares
are fully vested, and the remaining 300,000 shares will vest in increments of
100,000 shares for each $100,000,000 increase in the
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Company's market capitalization over $700,000,000 prior to February 28, 2000.
Consequently Mr. Panoz will be fully vested in the event the Company's
market capitalization exceeds $1.0 billion at any time prior to February 28,
2000. The Chairman's Options must be exercised by February 28, 2007. On
August 8, 1997, the closing price for the Company's Common Stock on the
Nasdaq National Market was $4.50 per share and current market capitalization
(based on shares of Common Stock outstanding as of July 31, 1997) was
approximately $335,032,000. No other director or officer has been granted
any options with similar performance vesting requirements.
The exercise price of the Chairman's Options is payable in cash. The
Chairman's Options also permit the optionee to pay the exercise price of an
option by delivery (on a form prescribed by the Company) of an irrevocable
direction to a securities broker approved by the Company to sell the
optionee's shares and deliver all or a part of the sale proceeds to the
Company in payment of all or part of the exercise price and any withholding
taxes ("exercise/sale" directions) or by delivery of an irrevocable direction
to pledge the optionee's shares to a securities broker or lender approved by
the Company as security for a loan and to deliver all or part of the loan
proceeds to the Company in payment of all or part of the exercise price and
any withholding taxes ("exercise/pledge" directions). The optionee may also
exercise by transferring Shares already owned for six months by the optionee.
In the event of a subdivision of the outstanding Common Stock or a
combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise) into a lesser number of shares, or a similar
occurrence, or declaration of a dividend payable in Common Stock or, if in an
amount that has a material effect on the price of the shares, in cash, the
Stock Option Committee will make adjustments in the number and/or the number
of shares available under the Chairman's Options, as appropriate.
In the event of a merger or other reorganization, any unexercised shares
under the Chairman's Options will be subject to the agreement of merger or
reorganization. Such agreement may provide for the assumption of the
unexercised portion by the surviving corporation or its parent, for
continuation by the Company (if the Company is the surviving corporation),
for payment of a cash settlement equal to the difference between the amount
to be paid for one share under the agreement of merger or reorganization and
the exercise price, or for the acceleration of exercisability followed by the
cancellation of any portion of the option not exercised, in all cases without
the optionee's consent.
FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS
Neither the optionee nor the Company will incur any federal tax
consequences as a result of the grant of an option. Upon exercising an NSO,
the optionee must recognize ordinary income equal to the "spread" between the
exercise price and the fair market value of Common Stock on the date of
exercise; the Company will be entitled to a deduction for the same amount.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
CHAIRMAN'S OPTIONS.
PROPOSAL 5
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
appointed the firm of Ernst & Young LLP ("Ernst & Young") as the Company's
independent auditors for the fiscal year ended December 31, 1997, subject to
ratification by the stockholders. Representatives of Ernst & Young are expected
to be present at the Company's Annual Meeting. They will have an opportunity to
make a statement, if they desire to do so, and will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF ERNST & YOUNG LLP.
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STOCKHOLDER PROPOSALS
To be considered for inclusion in the proxy statement for presentation at
the Annual Meeting of Stockholders to be held in 1997 a stockholder proposal
must be received at the offices of the Company, 9360 Towne Centre Drive, San
Diego, CA 92121 not later than December 21, 1997. The Company presently intends
to have its next Annual Meeting of Stockholders in May 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Company's directors, executive officers, and any
persons holding more than 10% of the Company's Common Stock are required to
report their initial ownership of the Company's Common Stock and any
subsequent changes in that ownership to the SEC. Specific due dates for
these reports have been established and the Company is required to identify
in this Proxy Statement those persons who failed to timely file these
reports. All of the filing requirements were satisfied for 1996.
OTHER MATTERS
The Board of Directors knows of no other business that will be presented
at the Annual Meeting. If any other business is properly brought before the
Annual Meeting, it is intended that proxies in the enclosed form will be
voted in accordance with the judgment of the persons voting the proxies.
Any stockholder or stockholder's representative who, because of a
disability, may need special assistance or accommodation to allow him or her
to participate at the Annual Meeting may request reasonable assistance or
accommodation from the Company by contacting Gensia Sicor Inc., 9360 Towne
Centre Drive, San Diego, California, (619) 546-8300. To provide the Company
sufficient time to arrange for reasonable assistance or accommodation, please
submit all requests by August 26, 1997.
Whether you intend to be present at the Annual Meeting or not, we urge you
to return your signed proxy promptly.
By order of the Board of Directors.
Wesley N. Fach
Secretary
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EXHIBIT A
GENSIA SICOR INC.
AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN
SECTION 1. PURPOSE OF THE PLAN.
The Plan was established effective as of July 1, 1992, subject to the
approval of the Company's stockholders. The purpose of the Plan is to
provide Eligible Employees with an opportunity to increase their proprietary
interest in the success of the Company by purchasing Stock from the Company
on favorable terms and to pay for such purchases through payroll deductions.
The Plan was restated and amended by the Board of Directors effective
February 22, 1996 and June 20, 1997. The Plan is intended to qualify under
section 423 of the Internal Revenue Code of 1986, as amended.
SECTION 2. ADMINISTRATION OF THE PLAN.
(a) THE COMMITTEE. The Plan shall be administered by the Committee. The
interpretation and construction by the Committee of any provision of the Plan
or of any right to purchase Stock granted under the Plan shall be conclusive
and binding on all persons.
(b) RULES AND FORMS. The Committee may adopt such rules and forms under
the Plan as it considers appropriate.
SECTION 3. ENROLLMENT AND PARTICIPATION.
(a) PARTICIPATION PERIODS. While the Plan is in effect, there shall be
two Participation Periods in each calendar year, consisting of the six-month
periods commencing on each January 1 and July 1.
(b) ENROLLMENT. Any individual who, on the date preceding the first day
of a Participation Period, qualifies as an Eligible Employee may elect to
become a Participant in the Plan for such Participation Period by executing
the enrollment form prescribed for this purpose by the Committee. The
enrollment form shall be filed with the Company not later than the last
working day prior to the commencement of such Participation Period.
(c) DURATION OF PARTICIPATION. Once enrolled, a Participant shall
continue to participate in the Plan for each succeeding Participation Period
until he or she discontinues contributions, withdraws from the Plan or ceases
to be an Eligible Employee. A Participant who discontinues contributions
under Section 4(d) or withdraws from the Plan under Section 5(a) may again
become a Participant, if he or she then is an Eligible Employee, by following
the procedure described in Subsection (b) above.
SECTION 4. EMPLOYEE CONTRIBUTIONS.
(a) FREQUENCY OF PAYROLL DEDUCTIONS. A Participant may purchase shares
of Stock under the Plan solely by means of payroll deductions. Payroll
deductions, as designated by the Participant pursuant to Subsection (b)
below, shall commence with the first payday in the Participation Period and
shall continue on each subsequent payday during participation in the Plan.
(b) AMOUNT OF PAYROLL DEDUCTIONS. An Eligible Employee shall designate
on the enrollment form the portion of his or her Compensation that he or she
elects to have withheld for the purchase of Stock. Such portion shall be a
whole percentage of the Eligible Employee's Compensation, but not less than
1% nor more than 12%.
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(c) CHANGING WITHHOLDING RATE. If a Participant wishes to change the
rate of payroll withholding, he or she may do so by filing a new enrollment
form with the Company not later than the last working day prior to the
commencement of the Participation Period for which such change is to be
effective.
(d) DISCONTINUING PAYROLL DEDUCTIONS. If a Participant wishes to
discontinue employee contributions entirely, he or she may do so by filing a
new enrollment form at any time. Payroll withholding shall cease as soon as
reasonably practicable after such form has been received by the Company.
SECTION 5. WITHDRAWAL FROM THE PLAN.
(a) WITHDRAWAL. A Participant may elect to withdraw from the Plan by
filing the prescribed form with the Company at any time before the last day
of a Participation Period. As soon as reasonably practicable thereafter,
payroll deductions shall cease and the entire amount credited to the
Participant's Plan Account shall be refunded to him or her in cash, without
interest. No partial withdrawals shall be permitted.
(b) RE-ENROLLMENT AFTER WITHDRAWAL. A former Participant who has
withdrawn from the Plan shall not be a Participant until he or she re-enrolls
for a subsequent Participation Period under Section 3(b).
SECTION 6. TERMINATION OF EMPLOYMENT AND DEATH.
(a) TERMINATION OF EMPLOYMENT. Termination of employment as an Eligible
Employee for any reason, including death, shall be treated as an automatic
withdrawal from the Plan under Section 5(a). (A transfer from one
Participating Company to another shall not be treated as a termination of
employment.)
(b) DEATH. In the event of the Participant's death, the amount credited
to his or her Plan Account shall be paid to a beneficiary designated by him
or her for this purpose on the prescribed form or, if none, to the
Participant's estate.
SECTION 7. PLAN ACCOUNTS AND PURCHASE OF SHARES.
(a) PLAN ACCOUNTS. The Company shall maintain a Plan Account on its
books in the name of each Participant. As of each payday in a Participation
Period, the amount deducted from the Participant's Compensation shall be
credited to the Participant's Plan Account. No interest shall be credited to
Plan Accounts.
(b) PURCHASE PRICE. The Purchase Price for each share of Stock shall be
the lower of (i) 85% of the Fair Market Value of such share on the last
trading day before the Participation Period commences or (ii) 85% of the Fair
Market Value of such share on the last trading day in the Participation
Period.
(c) NUMBER OF SHARES PURCHASED. As of the last day of each Participation
Period, each Participant shall be deemed to have elected to purchase the
number of whole shares of Stock calculated in accordance with this Subsection
(c), unless the Participant has previously elected to withdraw from the Plan
in accordance with Section 5(a). The amount then in the Participant's Plan
Account shall be divided by the Purchase Price, and the number of whole
shares that results shall be purchased from the Company with the funds in the
Participant's Plan Account. The foregoing notwithstanding, no Participant
shall purchase more than a maximum of 1,000 shares of Stock with respect to
any Participation Period nor shares of Stock in excess of the amounts set
forth in Sections 8 and 12(a).
(d) AVAILABLE SHARES INSUFFICIENT. In the event that the aggregate
number of shares that all Participants elect to purchase during a
Participation Period exceeds the maximum number of shares remaining available
for issuance under Section 12(a), then the number of shares to which each
Participant is entitled shall be determined by multiplying the number of
shares available for issuance by a fraction, the numerator of which is the
number of shares that such Participant has elected to purchase and the
denominator of which is the number of shares that all Participants have
elected to purchase.
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(e) ISSUANCE OF STOCK. Certificates representing the number of shares of
Stock purchased shall be issued as soon as reasonably practicable after the
close of the Participation Period. Shares may be registered in the name of
the Participant or jointly in the name of the Participant and his or her
spouse as joint tenants with right of survivorship or as community property.
(f) UNUSED CASH BALANCES. Any amount remaining in the Participant's Plan
Account that represents the Purchase Price for a fractional share shall be
carried over in the Participant's Plan Account to the next Participation
Period. Any amount remaining in the Participant's Plan Account that
represents the Purchase Price for whole shares which could not be purchased
under Subsection (c) above or Section 12(a) shall be refunded to the
Participant in cash, without interest.
SECTION 8. LIMITATIONS ON STOCK OWNERSHIP.
Any other provision of the Plan notwithstanding, no Participant shall be
granted a right to purchase Stock under the Plan if:
(a) Such Participant, immediately after his or her election to
purchase such Stock, would own stock possessing more than 5% of the total
combined voting power or value of all classes of stock of the Company or
any parent or Subsidiary of the Company; or
(b) Under the terms of the Plan, such Participant's rights to
purchase stock under this and all other qualified employee stock purchase
plans of the Company or any parent or Subsidiary of the Company would
accrue at a rate that exceeds $25,000 of the fair market value of such
stock (determined at the time when such right is granted) for each calendar
year for which such right or option is outstanding at any time.
Ownership of stock shall be determined after applying the attribution rules
of section 424(d) of the Internal Revenue Code of 1986, as amended. For
purposes of this Section 8, each Participant shall be considered to own any
stock that he or she has a right or option to purchase under this or any
other plan, and each Participant shall be considered to have the right to
purchase 1,000 shares of Stock under this Plan with respect to each
Participation Period.
SECTION 9. RIGHTS NOT TRANSFERABLE.
The rights of any Participant under the Plan, or any Participant's
interest in any Stock or moneys to which he or she may be entitled under the
Plan, shall not be transferable by voluntary or involuntary assignment or by
operation of law, or in any other manner other than by will or the laws of
descent and distribution. If a Participant in any manner attempts to
transfer, assign or otherwise encumber his or her rights or interest under
the Plan, other than by will or the laws of descent and distribution, then
such act shall be treated as an election by the Participant to withdraw from
the Plan under Section 5(a).
SECTION 10. NO RIGHTS AS AN EMPLOYEE.
Nothing in the Plan shall be construed to give any person the right to
remain in the employ of a Participating Company. Each Participating Company
reserves the right to terminate the employment of any person at any time,
with or without cause.
SECTION 11. NO RIGHTS AS A STOCKHOLDER.
A Participant shall have no rights as a stockholder with respect to any
shares that he or she has purchased, or may have a right to purchase, under
the Plan until the date of issuance of a stock certificate for such shares.
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SECTION 12. STOCK OFFERED UNDER THE PLAN.
(a) AUTHORIZED SHARES. The aggregate number of shares of Stock available
for purchase under the Plan shall be 500,000, subject to adjustment pursuant
to this Section 12.
(b) ANTI-DILUTION ADJUSTMENTS. The aggregate number of shares of Stock
offered under the Plan, the 1,000-share limitation described in Section 7(c)
and the price of shares that any Participant has elected to purchase shall be
adjusted proportionately by the Committee for any increase or decrease in the
number of outstanding shares of Stock resulting from a subdivision or
consolidation of shares, the payment of a stock dividend, any other increase
or decrease in such shares effected without receipt or payment of
consideration by the Company or the distribution of the shares of a
Subsidiary to the Company's stockholders.
(c) REORGANIZATIONS. In the event of a dissolution or liquidation of the
Company, or a merger or consolidation to which the Company is a constituent
corporation, the Plan shall terminate unless the plan of merger,
consolidation or reorganization provides otherwise, and all amounts that have
been withheld but not yet applied to purchase Stock hereunder shall be
refunded, without interest. The Plan shall in no event be construed to
restrict in any way the Company's right to undertake a dissolution,
liquidation, merger, consolidation or other reorganization.
SECTION 13. AMENDMENT OR DISCONTINUANCE.
The Board of Directors shall have the right to amend, suspend or terminate
the Plan at any time and without notice; provided that no Participant's
existing rights are adversely affected thereby and that, except as provided
in Section 12, any increase in the aggregate number of shares of Stock to be
issued under the Plan shall be subject to approval by a vote of the
stockholders of the Company.
SECTION 14. STOCKHOLDER APPROVAL.
(a) STOCKHOLDER APPROVAL REQUIRED. The Plan and any rights to purchase
shares hereunder shall be void if the Plan is not approved by the Company's
stockholders on or before the earlier of (i) the date of the 1996 annual
meeting of the Company's stockholders or (ii) the date 12 months after the
adoption of the Plan by the Board of Directors. Until stockholder approval
is obtained, all shares purchased under the Plan shall be held in escrow by
the Company or its designee as agent for the Participants and spouses who own
such shares and shall not be transferable or assignable.
(b) STOCKHOLDER APPROVAL NOT OBTAINED. In the event that stockholder
approval is not obtained on or before the prescribed date, the Plan shall
terminate, all shares then held in escrow shall be repurchased by the Company
for an amount equal to the Purchase Price paid by the Participants, and all
amounts then held in Plan Accounts shall be refunded to the Participants
without interest.
SECTION 15. DEFINITIONS.
(a) "Board of Directors" means the Board of Directors of the Company, as
constituted from time to time.
(b) "Committee" means the Stock Option Committee of the Board of
Directors.
(c) "Company" means Gensia Sicor Inc., a Delaware corporation.
(d) "Compensation" means the base compensation paid in cash to a
Participant by a Participating Company, including salaries and wages, but
excluding bonuses, incentive compensation, commissions, overtime pay, moving
or relocation allowances, car allowances, imputed income attributable to
cars, taxable fringe benefits and similar items, all as determined by the
Committee.
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(e) "Eligible Employee" means any employee of a Participating Company
(i) whose customary employment is for more than five months per calendar year
and for more than 20 hours per week and (ii) who has been an employee of a
Participating Company for not less than three consecutive months.
(f) "Fair Market Value" shall mean the market price of Stock, determined
by the Committee as follows:
(i) If the Stock was traded over-the-counter on the date in question
but was not traded on the Nasdaq system or the Nasdaq National Market
System, then the Fair Market Value shall be equal to the mean between the
last reported representative bid and asked prices quoted for such date by
the principal automated inter-dealer quotation system on which the Stock is
quoted or, if the Stock is not quoted on any such system, by the "Pink
Sheets" published by the National Quotation Bureau, Inc.;
(ii) If the Stock was traded over-the-counter on the date in question
and was traded on the Nasdaq system or the Nasdaq National Market System,
then the Fair Market Value shall be equal to the last-transaction price
quoted for such date by the Nasdaq system or the Nasdaq National Market
System;
(iii) If the Stock was traded on a stock exchange on the date in
question, then the Fair Market Value shall be equal to the closing price
reported by the applicable composite transactions report for such date; and
(iv) If none of the foregoing provisions is applicable, then the Fair
Market Value shall be determined by the Committee in good faith on such
basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee
shall be based on the prices reported in the Western Edition of THE WALL
STREET JOURNAL. Such determination shall be conclusive and binding on all
persons.
(g) "Participant" means an Eligible Employee who elects to participate
in the Plan, as provided in Section 3(b).
(h) "Participating Company" means the Company and each present or future
Subsidiary, except Subsidiaries excluded by the Committee.
(i) "Participation Period" means a period during which contributions may
be made toward the purchase of Stock under the Plan, as determined pursuant
to Section 3(a).
(j) "Plan" means this Gensia Sicor Inc. Employee Stock Purchase Plan, as
amended from time to time.
(k) "Plan Account" means the account established for each Participant
pursuant to Section 6(a).
(l) "Purchase Price" means the price at which Participants may purchase
Stock under the Plan, as determined pursuant to Section 7(b).
(m) "Stock" means the Common Stock of the Company.
(n) "Subsidiary" means a corporation, 50% or more of the total combined
voting power of all classes of stock of which is owned by the Company or by
another Subsidiary.
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SECTION 16. EXECUTION.
To record the amendment and restatement of the Plan by the Board of
Directors on June 20, 1997, the Company has caused its duly authorized
officer to affix the corporate name and seal hereto.
GENSIA SICOR INC.
By /s/ David F. Hale
-------------------------------
President
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EXHIBIT B
GENSIA SICOR INC.
1997 LONG-TERM INCENTIVE PLAN
1. INTRODUCTION AND PURPOSE OF THE PLAN.
The Plan was adopted by the Board on November 12, 1996, and approved by
the Company's stockholders February 26, 1997. The Plan is effective as of
February 26, 1997. The Plan replaces the Amended and Restated 1990 Stock
Plan of Gensia, Inc. (the "1990 Stock Plan"). The Plan was amended by the
Board on June 20, 1997.
The purpose of the Plan is to promote the interests of Gensia Sicor Inc.,
and its stockholders by encouraging officers and Key Employees to acquire
stock or increase their proprietary interest in the Company. By thus
providing the opportunity to acquire Company stock and receive incentive
payments, the Company seeks to attract and retain such Key Employees upon
whose judgment, initiative, and leadership the success of the Company largely
depends.
The Plan shall be governed by, and construed in accordance with, the laws
of the State of California.
2. DEFINITIONS.
Whenever the following terms are used in this Plan, they will have the
meanings specified below unless the context clearly indicates the contrary.
(a) "Board of Directors" or "Board" means the Board of Directors of the
Company, as constituted from time to time.
(b) "Change-in-Control" occurs in the following instances (1) a tender or
exchange for all or part of Company Common Stock (except an offer by the
Company itself); (2) Company stockholder approval of a merger in which the
Company does not survive as an independent and publicly owned corporation
(except a merger which leaves Company stockholders with substantially the
same ownership in the new corporation); (3) Company stockholder approval of a
consolidation or sale, exchange or other disposition of all, or substantially
all, of the Company's assets; (4) change in the composition of the Board over
a two consecutive year period so that individuals who were directors at the
beginning of that period no longer constitute a majority of the Board (unless
the election or nomination of each new director was approved by at least
two-thirds of the directors who had been directors at the beginning of the
period and who were still in office at the time of the election or
nomination); or (5) the acquisition of sufficient Common Shares such that a
person who previously did not own at least 30% of Company Common Shares,
thereafter owns at least 30% (except an acquisition by the Company itself, by
a subsidiary of the Company or a benefit plan maintained by the Company).
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the committee appointed to administer the Plan
pursuant to Section 4.
(e) "Company" means Gensia Sicor Inc., a Delaware corporation.
(f) "Common Shares" or "Common Stock" means the common shares of Gensia
Sicor Inc., and any class of common shares into which such common shares may
hereafter be converted.
(g) "Dividend Equivalent" means the additional amount of Common Stock
issued in connection with an Option, as described in Section 14.
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(h) "Eligible Person" means a Key Employee eligible to receive an
Incentive Award.
(i) "Exchange Act" means the Securities and Exchange Act of 1934, as
amended.
(j) "Fair Market Value" means the market price of Common Shares,
determined by the Committee as follows:
(i) If the Common Shares were traded over-the-counter on the date in
question but were not traded on the Nasdaq system or the Nasdaq National
Market System, then the Fair Market Value shall be equal to the mean
between the last reported representative bid and asked prices quoted for
such date by the principal automated inter-dealer quotation system on which
the Common Shares are quoted or, if the Common Shares are not quoted on any
such system, by the "Pink Sheets" published by the National Quotation
Bureau, Inc.;
(ii) If the Common Shares were traded over-the-counter on the date in
question and were traded on the Nasdaq system or the Nasdaq National Market
System, then the Fair Market Value shall be equal to the last-transaction
price quoted for such date by the Nasdaq system or the Nasdaq National
Market System;
(iii) If the Common Shares were traded on a stock exchange on the date
in question, then the Fair Market Value shall be equal to the closing price
reported by the applicable composite transactions report for such date; and
(iv) If none of the foregoing provisions is applicable, then the Fair
Market Value shall be determined by the Committee in good faith on such
basis as it deems appropriate.
In all cases, the determination of Fair Market Value by the Committee
shall be conclusive and binding on all persons.
(k) "Holder" means a person, estate, trust or entity holding an Incentive
Award.
(l) "Incentive Award" means any Nonqualified Stock Option, Incentive
Stock Option, Common Stock, Restricted Stock, Stock Appreciation Right,
Dividend Equivalent, Stock Payment or Performance Award granted under the
Plan.
(m) "Incentive Stock Option" means an Option as defined under Section 422
of the Code, including an Incentive Stock Option granted pursuant to Section
8 of the Plan.
(n) "Key Employee" shall mean (i) any individual who is a common-law
employee of the Company or of a Subsidiary, (ii) a member of the Board of
Directors, including (without limitation) an Outside Director, or an
affiliate of a member of the Board of Directors, (iii) a member of the board
of directors of a Subsidiary and (iv) an independent contractor who performs
services for the Company or a Subsidiary. Service as a member of the Board
of Directors, a member of the board of directors of a Subsidiary or as an
independent contractor shall be considered employment for all purposes of the
Plan, except as provided in Sections 5(b) and 6.
(o) "Nonqualified Stock Option" means an Option other than an Incentive
Stock Option granted pursuant to Section 8 of the Plan.
(p) "Option" means either a Nonqualified Stock Option or Incentive Stock
Option.
(q) "Outside Director" shall mean a member of the Board of Directors who
is not a common-law employee of the Company or a Subsidiary.
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(r) "Performance Award" means an award whose value may be linked to stock
value, book value, or other specific performance criteria which may be set by
the Board of Directors, but which is paid in cash, stock, or a combination of
both.
(s) "Plan" means the 1997 Long-Term Incentive Plan, which may be amended
from time to time.
(t) "Restricted Stock" means Company stock sold or granted to an Eligible
Person, which is nontransferable and subject to substantial risk of
forfeiture until restrictions lapse.
(u) "Stock Appreciation Right" or "Right" means a right granted pursuant
to Section 11 of the Plan to receive a number of shares of Common Stock or,
in the discretion of the Committee, an amount of cash or a combination of
shares and cash, based on the increase in the Fair Market Value or book value
of the shares subject to the right.
(v) "Stock Payment" means a payment in shares of the Common Stock to
replace all or any portion of the compensation (other than base salary) that
would otherwise become payable to an employee in cash.
(w) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. A corporation that
attains the status of a Subsidiary on a date after the adoption of the Plan
shall be considered a Subsidiary commencing as of such date.
(x) "Total and Permanent Disability" means that the Holder is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted, or can be expected to last, for a continuous
period of not less than one year.
3. SHARES OF COMMON STOCK SUBJECT TO THE PLAN.
(a) Subject to the provisions of Sections 3(c) and 15 of the Plan, the
aggregate number of shares of Common Stock that may be issued or transferred
pursuant to Incentive Awards or covered by Stock Appreciation Rights
unrelated to Options under the Plan shall not exceed 3,000,000, and the
number of shares that may be issued or transferred during any 12-month period
to any Eligible Person pursuant to an Incentive Award or a Stock Appreciation
Right unrelated to an Option shall not exceed 250,000 (or 350,000 in the
event of an Option repricing during that 12-month period). Additionally, the
number of shares of Common Stock available under the Company's 1990 Stock
Plan (whether by forfeiture, termination or nongrant) shall also become
available under this Plan.
(b) The shares to be delivered under the Plan will be made available, at
the discretion of the Board of Directors or the Committee, either from
authorized but unissued shares of Common Stock or from previously issued
shares of Common Stock reacquired by the Company, including shares purchased
on the open market.
(c) If Incentive Awards are forfeited or if Incentive Awards terminate
for any other reason before being exercised, then such Incentive Awards shall
again become available for award under the Plan. If Stock Appreciation Rights
are exercised, then only the number of Common Shares (if any) actually issued
in settlement of such Stock Appreciation Rights shall reduce the number of
Common Shares available under Section 3(a) and the balance shall again become
available for award under the Plan. If Restricted Stock is forfeited, then
such Restricted Stock shall again become available for award under the Plan.
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4. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Committee. The Committee shall
consist exclusively of directors of the Company, who shall be appointed by
the Board. In addition, the composition of the Committee shall satisfy:
(1) Such requirements, if any, as the Securities and Exchange
Commission may establish for administrators acting under plans intended to
qualify for exemption under Rule 16b-3 (or its successor) under the
Exchange Act; and
(2) Such requirements as the Internal Revenue Service may establish
for outside directors acting under plans intended to qualify for exemption
under Section 162(m) of the Code.
The Board shall act on its own behalf with respect to the grant or amendment
of Incentive Awards to Outside Directors and may also appoint separate
committees of the Board, each composed of one or more officers of the Company
who need not be directors of the Company, to administer the Plan with respect
to Key Employees who are not "covered employees" under Section 162(m) of the
Code and who are not required to report pursuant to Section 16(a) of the
Exchange Act.
(b) The Committee has and may exercise such powers and authority as may
be necessary or appropriate for the Committee to carry out its functions as
described in the Plan. The Committee has authority in its discretion to
determine the Eligible Persons to whom, and the time or times at which,
Incentive Awards may be granted and the number of shares or Rights subject to
each award. Subject to the express provisions of the Plan, the Committee
also has authority to interpret the Plan, and to determine the terms and
provisions of the respective Incentive Award agreements (which need not be
identical) and to make all other determinations necessary or advisable for
Plan administration. The Committee has authority to prescribe, amend, and
rescind rules and regulations relating to the Plan. All interpretations,
determinations, and actions by the Committee will be final, conclusive, and
binding upon all parties.
(c) No member of the Board of Directors or the Committee will be liable
for any action or determination made in good faith by the Committee with
respect to the Plan or any Incentive and Performance Award under it.
5. ELIGIBILITY AND DATE OF GRANT.
The date of grant of an Incentive Award will be the date the Committee
takes the necessary action to approve the grant; provided, however, that if
the minutes or appropriate resolutions of the Committee provide that an
Incentive Award is to be granted as of a date in the future, the date of
grant will be such future date.
6. OUTSIDE DIRECTOR PARTICIPATION.
Outside Directors shall receive Option grants under the Plan as described
below:
(a) Upon the conclusion of each regular annual meeting of the Company's
stockholders, each incumbent Outside Director who will continue serving as a
member of the Board thereafter may receive a grant of a Nonstatutory Option
for such number of Common Shares (subject to adjustment under Section 15 and
prorated for partial year service) as the Board shall determine in its sole
discretion.
(b) New Outside Directors shall receive a one-time grant of a
Nonstatutory Option for a number of Common Shares as determined in the sole
discretion of the Board; provided, however, that such grant shall not be made
in any calendar year in which the same individual receives an Option under
(a) above. Such Option, if any, shall be granted on the date when such
Outside Director first joins the Board of Directors of the Company or the
board of directors of a Subsidiary.
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(c) Total grants under this Section 6 (less forfeitures) shall not exceed
15% of the maximum number of Common Shares available for grant under Section
3(a) of the Plan (subject to adjustment under Section 15).
7. NONQUALIFIED STOCK OPTIONS.
The Committee may approve the grant of Nonqualified Stock Options to
Eligible Persons, subject to the following terms and conditions:
(a) The purchase price of Common Stock under each Nonqualified Stock
Option may not be less than eighty-five percent (85%) of the Fair Market
Value of the Common Stock on the date the Nonqualified Stock Option is
granted.
(b) No Nonqualified Stock Option may be exercised after ten (10)
years from the date of grant.
(c) No fractional shares will be issued pursuant to the exercise of a
Nonqualified Stock Option nor will any cash payment be made in lieu of
fractional shares.
8. INCENTIVE STOCK OPTIONS.
The Committee may approve the grant of Incentive Stock Options to Eligible
Persons, subject to the following terms and conditions:
(a) The purchase price of each share of Common Stock under an
Incentive Stock Option will be at least equal to the Fair Market Value of a
share of the Common Stock on the date of grant; provided, however, that if
an employee, at the time an Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company (as defined in Section 424 of the
Code), then the Exercise Price of each share of Common Stock subject to
such Incentive Stock Option shall be at least one hundred and ten percent
(110%) of the Fair Market Value of such share of Common Stock, as
determined in the manner stated above.
(b) No Incentive Stock Option may be exercised after ten (10) years
from the date of grant; provided, however, that if any employee, at the
time an Incentive Stock Option is granted to him, owns stock representing
more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company (as defined in Section 424 of the Code),
the Incentive Stock Option granted shall not be exercisable after the
expiration of five (5) years from the date of grant.
(c) No fractional shares will be issued pursuant to the exercise of
an Incentive Stock Option nor will any cash payment be made in lieu of
fractional shares.
9. OPTION RULES.
The purchase price under each Option may be paid in cash, cash equivalents
or notes acceptable to the Committee, by arrangement with a broker which is
acceptable to the Committee where payment of the Option price is made
pursuant to an irrevocable direction to the broker to deliver all or part of
the proceeds from the sale of the Option shares to the Company, by the
surrender of shares of Common Stock owned by the Holder exercising the Option
and having a Fair Market Value on the date of exercise equal to the purchase
price or in any combination of the foregoing. Each Option granted to an
Eligible Person shall be exercisable in such manner and at such times as the
Committee shall determine. The Committee may modify, accelerate the
exercisability of, extend or assume outstanding Options or may accept the
cancellation of outstanding Options (whether granted by the Company or by
another issuer) in return for the grant of new Options for the same or a
different number of shares and at the same or a different purchase price.
The foregoing notwithstanding, no modification of an Option shall, without
the consent of the Holder, alter or impair his or her rights or obligations
under such Option.
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10. RESTRICTED STOCK.
The Committee may approve the grant of Restricted Stock related or
unrelated to Nonqualified Stock Options or Stock Appreciation Rights to
Eligible Persons, subject to the following terms and conditions:
(a) The Committee in its discretion will determine the purchase price.
(b) All shares of Restricted Stock sold or granted pursuant to the Plan
(including any shares of Restricted Stock received by the Holder as a result
of stock dividends, stock splits, or any other forms of capitalization) will
be subject to the following restrictions:
(i) The shares may not be sold, transferred, or otherwise alienated
or hypothecated until the restrictions are removed or expire.
(ii) The Committee may require the Holder to enter into an escrow
agreement providing that the certificates representing Restricted Stock
sold or granted pursuant to the Plan will remain in the physical custody of
an escrow holder until all restrictions are removed or expire.
(iii) Each certificate representing Restricted Stock sold or granted
pursuant to the Plan will bear a legend making appropriate reference to the
restrictions imposed on the Restricted Stock.
(iv) The Committee may impose restrictions on any shares sold pursuant
to the Plan as it may deem advisable, including, without limitation,
restrictions designed to facilitate exemption from or compliance with the
Securities Exchange Act of 1934, as amended, with requirements of any stock
exchange upon which such shares or shares of the same class are then listed
and with any blue sky or other securities laws applicable to such shares.
(c) The restrictions imposed under subparagraph (b) above upon Restricted
Stock will lapse in accordance with a schedule or other conditions as
determined by the Committee, subject to the provisions of Section 17,
subparagraph (d).
(d) Subject to the provisions of subparagraph (b) above and Section 17,
subparagraph (d), the Holder will have all rights of a stockholder with
respect to the Restricted Stock granted or sold, including the right to vote
the shares and receive all dividends and other distributions paid or made
with respect thereto.
(e) Notwithstanding the provisions of subparagraph (b) above and Section
17, subparagraph (d), Restricted Stock granted or sold may be held by the
trustee of a revocable inter vivos trust (or other trust if such transfer
associated therewith does not cause income to be recognized pursuant to Code
Section 83 and if the trust takes subject to the forfeiture provisions of the
Restricted Stock), approved by the Company, established in whole or in part
by the Holder and/or the Holder's spouse. So long as the Holder is still an
employee, transfer to such trust shall not violate the provisions of
subparagraph (b) above and ownership by such trust shall not invoke any right
or obligation of the Company under Section 17, subparagraph (d).
11. STOCK APPRECIATION RIGHTS.
The Committee may approve the grant of Rights related or unrelated to
Options to Eligible Persons, subject to the following terms and conditions:
(a) A Stock Appreciation Right may be granted
(i) at any time if unrelated to an Option;
(ii) either at the time of grant, or at any time thereafter during
the Option term if related to a Nonqualified Stock Option; or
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(iii) only at the time of grant if related to an Incentive Stock
Option.
(b) A Stock Appreciation Right granted in connection with an Option will
entitle the Holder of the related Option, upon exercise of the Stock
Appreciation Right, to surrender such Option, or any portion thereof to the
extent unexercised, with respect to the number of shares as to which such
Stock Appreciation Right is exercised, and to receive payment of an amount
computed pursuant to Section 11(d). Such Option will, to the extent
surrendered, then cease to be exercisable.
(c) Subject to Section 11(g), a Stock Appreciation Right granted in
connection with an Option hereunder will be exercisable at such time or times
as the Committee in its discretion may determine, and only to the extent that
a related Option is exercisable, and will not be transferable except to the
extent that such related Option is exercisable.
(d) Upon the exercise of a Stock Appreciation Right related to an Option,
the Holder will be entitled to receive payment of an amount determined by
multiplying:
(i) The difference obtained by subtracting the purchase price of a
share of Common Stock specified in the related Option from the Fair Market
Value of a share of Common Stock on the date of exercise of such Stock
Appreciation Right, by
(ii) The number of shares as to which such Stock Appreciation Right has
been exercised.
(e) The Committee may grant Stock Appreciation Rights unrelated to
Options to Eligible Persons which will be exercisable at such times as the
Committee shall determine. Section 11(d) shall be used to determine the
amount payable at exercise under such Stock Appreciation Right if Fair Market
Value is used, except that Fair Market Value shall not be used if the
Committee specifies in the grant of the Right that book value or other
measure as deemed appropriate by the Committee is to be used, and the initial
share value specified in the award shall be used in lieu of "price of a share
of Common Stock specified in the related Option," as provided in Section
11(d).
(f) Payment of the amount determined under Section 11(d) or (e) may be
made solely in whole shares of Common Stock in a number determined at their
Fair Market Value on the date of exercise of the Stock Appreciation Right or
alternatively, at the sole discretion of the Committee, solely in cash or in
a combination of cash and shares as the Committee deems advisable. If the
Committee decides to make full payment in shares of Common Stock, and the
amount payable results in a fractional share, payment for the fractional
share will be made in cash.
(g) The Committee shall, at the time a Stock Appreciation Right is
granted, impose such conditions on the exercise of the Stock Appreciation
Right as may be required to satisfy the requirements of Rule 16b-3 under the
Securities Exchange Act of 1934 (or any other comparable provisions in effect
at the time or times in question). In addition, a Stock Appreciation Right
granted under the Plan may provide that it will be exercisable only in the
event of a Change-in-Control.
12. PERFORMANCE AWARDS.
The Committee may approve Performance Awards to Eligible Persons. Such
awards may be based on Common Stock performance over a period determined in
advance by the Committee or any other measures as determined appropriate by
the Committee. Payment will be in cash unless replaced by a Stock Payment in
full or in part as determined by the Committee.
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13. STOCK PAYMENT.
The Committee may approve Stock Payments of Common Stock to Eligible
Persons for all or any portion of the compensation (other than base salary)
that would otherwise become payable to an employee in cash.
14. DIVIDEND EQUIVALENTS.
A Holder may also be granted at no additional cost "Dividend Equivalents"
based on the dividends declared on the Common Stock on record dates during
the period between the date an Option is granted and the date such Option is
exercised, or such other equivalent period, as determined by the Committee.
Such Dividend Equivalents shall be converted to additional shares or cash by
such formula as may be determined by the Committee.
Dividend Equivalents shall be computed, as of each dividend record date,
both with respect to the number of shares under the Option and with respect
to the number of Dividend Equivalent shares previously earned by the Holder
(or his successor in interest) and not issued during the period prior to the
dividend record date.
15. ADJUSTMENT PROVISIONS.
(a) Subject to Section 15(b), if the outstanding shares of Common Stock
are increased, decreased, or exchanged for a different number or kind of
shares or other securities, or if additional shares or new or different
shares or other securities are distributed with respect to such shares of
Common Stock or other securities, through merger, consolidation, sale of all
or substantially all of the property of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse
stock split or other distribution with respect to such shares of Common
Stock, or other securities, an appropriate and proportionate adjustment shall
be made in (i) the maximum number and kind of shares provided in Section 3 of
the Plan, (ii) the number and kind of shares or other securities subject to
the then outstanding Incentive Awards, and (iii) the price for each share or
other unit of any other securities subject to then outstanding Incentive
Awards without change in the aggregate purchase price or value as to which
Incentive Awards remain exercisable or subject to restrictions.
(b) In addition, upon a Change-in-Control, all Options, Stock
Appreciation Rights, and Performance Awards then outstanding under the Plan
will be fully vested and exercisable and all restrictions on Restricted Stock
will immediately cease. The Committee or any agreement of merger or
reorganization may offer the Holder the right to exchange such vested
Incentive Awards for fully vested and equivalent value awards under a
successor plan.
16. GENERAL PROVISIONS.
(a) With respect to any shares of Common Stock issued or transferred
under any provision of the Plan, such shares may be issued or transferred
subject to such conditions, in addition to those specifically provided in the
Plan, as the Committee may direct.
(b) Nothing in the Plan or in any instrument executed pursuant to the
Plan will confer upon any Holder any right to continue in the employ of the
Company or any of its Subsidiaries or affect the right of the Company to
terminate the employment of any Holder at any time and for any reason.
(c) No shares of Common Stock will be issued or transferred pursuant to
an Incentive Award unless and until all then applicable requirements imposed
by federal and state securities and other laws, rules, and regulations and by
any regulatory agencies having jurisdiction, and by any stock exchanges upon
which the Common Stock may be listed, have been fully met. As a condition
precedent to the issue of shares pursuant to
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the grant or exercise of an Incentive Award, the Company may require the
Holder to take any reasonable action to meet such requirements.
(d) No Holder (individually or as a member of a group) and no beneficiary
or other person claiming under or through such Holder will have any right,
title, or interest in or to any shares of Common Stock allocated or reserved
under the Plan or subject to any Incentive Award except as to such shares of
Common Stock, if any, that have been issued or transferred to such Holder.
(e) The Company may make such provisions as it deems appropriate to
withhold any taxes which it determines it is required to withhold in
connection with any Incentive or Performance Award.
(f) No Incentive Award and no right under the Plan, contingent or
otherwise, will be assignable or subject to any encumbrance, pledge (other
than a pledge to secure a loan from the Company), or charge of any nature
except that, under such rules and regulations as the Company may establish
pursuant to the terms of the Plan, a beneficiary may be designated with
respect to an Incentive Award in the event of death of a Holder of such
Incentive Award. If such beneficiary is the executor or administrator of the
estate of the Holder of such Incentive Award, any rights with respect to such
Incentive Award may be transferred to the person or persons or entity
(including a trust) entitled thereto under the will of the Holder of such
Incentive Award, or, in the case of intestacy, under the laws relating to
intestacy. Except as determined by the Committee, no Incentive Award shall
be transferable by any Eligible Person other than by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order.
In considering transferability of an Incentive Award, the Committee may also
consider the registration limitation of SEC Form S-8 and on that basis may in
its discretion determine whether to prohibit transferability, permit
alternative registration of the Incentive Award, treat the Incentive Award as
SEC Rule 144 "restricted stock," or take such other measures as the Committee
deems appropriate.
(g) The Committee may permit a Holder to satisfy all or part of his or
her withholding or income tax obligations by having the Company withhold all
or a portion of any Common Stock that otherwise would be issued to him or her
or by surrendering all or a portion of any Common Stock that he or she
previously acquired. Such Common Stock shall be valued at its Fair Market
Value on the date when taxes otherwise would be withheld in cash. Any
payment of taxes by assigning Common Stock to the Company may be subject to
restrictions, including any restrictions required by rules of the Securities
and Exchange Commission.
(h) All Incentive Awards shall become 100% vested in the event of death
or total and permanent disability.
17. AMENDMENT AND TERMINATION.
(a) The Board of Directors may, in its discretion, amend, suspend, or
terminate the Plan at any time. An amendment of the Plan shall be subject to
the approval of the Company's stockholders to the extent it affects the
application of the accelerated vesting provisions herein, Section 15, or to
the extent required by applicable laws, regulations and or rules.
(b) The Committee may, with the consent of a Holder, make such
modifications in the terms and conditions of the Incentive Award as it deems
advisable or cancel the Incentive Award (with or without consideration) with
the consent of the Holder.
(c) No amendment, suspension, or termination of the Plan will, without
the consent of the Holder, alter, terminate, impair, or adversely affect any
right or obligation under any Incentive Award previously granted under the
Plan.
(d) In the event a Holder of Restricted Stock ceases to be an employee,
all such Holder's Restricted Stock which remains subject to substantial risk
of forfeiture at the time his or her employment
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terminates will be repurchased by the Company at the original price at which
such Restricted Stock had been purchased unless the Committee determines
otherwise.
(e) In the event a Holder of a Performance Award ceases to be an
employee, all such Holder's Performance Awards will terminate except in the
case of retirement, death, or Total and Permanent Disability. The Committee,
in its discretion, may authorize full or partial payment of Performance
Awards in all cases involving retirement, death, or permanent and total
disability.
(f) The Committee may in its sole discretion determine, with respect to
an Incentive Award, that any Holder who is on unpaid leave of absence for any
reason will be considered as still in the employ of the Company, provided
that rights to such Incentive Award during an unpaid leave of absence will be
limited to the extent to which such right was earned or vested at the
commencement of such leave of absence.
18. EFFECTIVE DATE OF PLAN AND DURATION OF PLAN.
This Plan will become effective upon approval by the stockholders of the
Company within twelve (12) months following the date of its adoption by the
Board of Directors. Unless previously terminated by the Board of Directors,
the Plan will terminate ten (10) years after its approval by the stockholders
of the Company.
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GENSIA SICOR INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING - SEPTEMBER 9, 1997
DAVID F. HALE and WESLEY N. FACH, or each of them, each with the power of
substitution, are hereby authorized to represent as proxies and vote all
shares of stock of Gensia Sicor Inc. (the "Company") the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the Company to be
held at the Hyatt Regency La Jolla, 3777 La Jolla Village Drive, La Jolla,
California on Tuesday, September 9, 1997 at 11:00 a.m. or at any postponement
or adjournment thereof, and instructs said proxies to vote as follows:
Shares represented by this proxy will be voted as directed by the
stockholder. IF NO SUCH DIRECTIONS ARE INDICATED, THE PROXIES WILL HAVE
AUTHORITY TO VOTE FOR THE ELECTION OF THE THREE NOMINEES FOR CLASS II
DIRECTORS AND FOR ITEMS 2, 3, 4 AND 5.
(continued and to be signed on reverse side)
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE THREE
NOMINEES FOR CLASS II DIRECTORS AND FOR ITEMS 2, 3, 4 AND 5.
Please mark
your votes
as indicated
in this example /X/
FOR WITHHOLD
all nominees listed AUTHORITY
below (except as to vote for all
marked to the contrary) nominees listed below
1. ELECTION OF DIRECTORS.
Nominees: Carlos A. Ferrer Carlo Salvi
L. John Wilkerson
(INSTRUCTION: To withhold authority
to vote for any individual nominee,
write that nominee's name in the
space provided below.)
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FOR AGAINST ABSTAIN
2. To approve the amendment and restatement of
the ESPP:
FOR AGAINST ABSTAIN
3. To approve the amendment and restatement of
the 1997 Stock Plan:
FOR AGAINST ABSTAIN
4. To approve the Chairman's Options:
FOR AGAINST ABSTAIN
5. To ratify the appointment of Ernst & Young LLP
as the Company's independent auditors:
6. In their discretion, upon such other business as may properly come
before the meeting
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD
PROMPTLY, USING THE ENCLOSED ENVELOPE.
Signature(s) Dated: , 1997
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Please sign exactly as your name or name(s) appear on this proxy. When signing
as attorney, executor, administrator, trustee or guardian, please give full
title as such. If shares are held jointly, each holder should sign.
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