<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:
[_CONFIDENTIAL,]FOR USE OF THE
[_]Preliminary Proxy Statement COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S)240.14a-11(c) or (S)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
[_]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_]$500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_]Fee paid previously with preliminary materials.
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
19 Hughes
Irvine, California 92618
(949) 455-4700
May 11, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders which
will be held on June 15, 1998, at 1:30 p.m., at the principal executive
offices of Gensia Sicor Inc., located at 19 Hughes, Irvine, 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,
Donald E. Panoz
Chairman and Chief Executive Officer
<PAGE>
GENSIA SICOR INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 15, 1998
----------------
The Annual Meeting of Stockholders of Gensia Sicor Inc. (the "Company") will
be held at the Company's principal executive offices, located at 19 Hughes,
Irvine, California, on June 15, 1998, at 1:30 p.m., for the following
purposes:
1. To elect four Class III 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 ratify the selection of Ernst & Young LLP as the Company's
independent auditors.
5. To transact such other business as may properly come before the Annual
Meeting and any adjournment of the Annual Meeting.
The Board of Directors has fixed the close of business on May 7, 1998, as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and any adjournment of the Annual Meeting. A
complete list of stockholders entitled to vote will be available at the
Secretary's office, 19 Hughes, Irvine, California, for ten days before the
Annual Meeting.
WHETHER YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING OR NOT, WE URGE YOU
TO MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
By order of the Board of Directors.
Wesley N. Fach
Secretary
May 11, 1998
<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"), of proxies in the accompanying form to be used at
the Annual Meeting of Stockholders to be held at the Company's principal
executive offices, located at 19 Hughes, Irvine, California, on June 15, 1998,
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 four nominees for
Class III director listed in this Proxy Statement and FOR approval of
proposals 2, 3 and 4 described in the Notice of Annual Meeting and in this
Proxy Statement.
Stockholders of record at the close of business on May 7, 1998 are entitled
to notice of and to vote at the Annual Meeting. As of April 22, 1998 the
Company had 79,411,797 shares of Common Stock outstanding and entitled to
vote. Each holder of Common Stock is entitled to one vote for each share held
as of the record date.
Directors are elected by a plurality vote. The other matters submitted for
stockholder approval at the Annual Meeting will be decided by the affirmative
vote of a majority of shares present in person or represented by proxy and
entitled to vote on each such matter. Abstentions with respect to any matter
are treated as shares present or represented and entitled to vote on that
matter and thus have the same effect as negative votes. If shares are not
voted by the broker who is the record holder of the shares, or if shares are
not voted in other circumstances in which proxy authority is defective or has
been withheld with respect to any matter, these non-voted shares are not
deemed to be present or represented for purposes of determining whether
stockholder approval of that matter has been obtained.
The expense of printing and mailing proxy materials will be borne by the
Company. In addition to the solicitation of proxies by mail, solicitation may
be made by certain directors, officers and other employees of the Company by
personal interview, telephone or telegraph. No additional compensation will be
paid to such persons for such solicitation. The Company will reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation materials to beneficial owners of the Company's Common Stock.
Employees of Georgeson & Co., Inc. will also solicit proxies at an anticipated
fee of approximately $7,500 plus reasonable out-of-pocket expenses.
This Proxy Statement and the accompanying form of proxy are being mailed to
stockholders on or about May 11, 1998.
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.
<PAGE>
CHANGE OF CONTROL
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 the Company and Rakepoll Finance N.V., a corporation
organized under the laws of the Netherlands Antilles ("Rakepoll Finance"),
Gensia Sicor 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"). In connection with the Stock Exchange Agreement,
Gensia Sicor and Rakepoll Finance entered into a shareholder's agreement (as
amended, the "Shareholder's Agreement"), concerning the governance of the
Company and certain other matters concerning the acquisition and disposition
of Gensia Sicor securities by Rakepoll Finance and its affiliates. As of April
22, 1998, Rakepoll Finance beneficially owned approximately 37.1% of the
outstanding shares of Common Stock of the Company. Carlo Salvi, Executive Vice
President and a director of the Company, is the controlling beneficial owner
of Rakepoll Finance. See "Stock Ownership of Management and Certain Beneficial
Owners."
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 I director's seat, one Class
II director's seat and one Class III director's seat are vacant. Four Class
III directors are to be elected at the Annual Meeting for a term of three
years expiring at the Annual Meeting in 2001 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 1999
and 2000 for Class I and Class II directors, respectively.
COMPOSITION OF BOARD OF DIRECTORS
The Shareholder's Agreement specifies that the Company shall use its best
efforts to cause the 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"). With the resignation of Patrick D. Walsh from the
Board of Directors in March 1998, David F. Hale is the sole current Management
Director. However, since Mr. Hale is no longer an executive officer of Gensia
Sicor, he has been nominated as a Class III director for re-election at the
Annual Meeting in the capacity of an Independent Director. Frank C. Becker and
John W. Sayward, nominated as Class III directors for election at the Annual
Meeting, would be Investor and Management Directors, respectively. Carlo Salvi
and Michael D. Cannon are the current Investor Directors; and Donald E. Panoz,
James C. Blair (who is not running for re-election as a Class III director),
Herbert J. Conrad (nominated as a Class III director for re-election) and
Carlos A. Ferrer are the current Independent Directors. Currently, one
Investor Director's seat, one Independent Director's seat, and one Management
Director's seat are vacant.
During the term of the Shareholder's Agreement, the number of Investor
Directors that Rakepoll Finance is 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
(its "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 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;
2
<PAGE>
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 Directors or Independent Directors and
the Management Directors shall have no right to designate any Management
Directors or Independent Directors.
Mr. Ferrer was elected 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. ("HCCP"). The Purchase
Agreement requires the Company to have a designee of HCCP as a member of the
Company's board of directors or nominate a designee of HCCP for election to
the Company's board of directors so long as HCCP, 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.
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 Messrs. Conrad and Hale,
currently members of the Board of Directors of the Company, and Frank C.
Becker and John W. Sayward as Class III directors. In the event any of such
nominees becomes unable or unwilling to accept nomination or election, the
shares represented by the enclosed proxy will be voted for the election of the
balance of those named and such other person or persons as the Board of
Directors may select in accordance with the terms of the Shareholder's
Agreement. The Board of Directors has no reason to believe that any such
nominee will be unable or unwilling to serve.
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
MESSRS. BECKER, CONRAD, HALE AND SAYWARD AS CLASS III DIRECTORS.
Set forth below is information regarding the nominees for Class III director
and the continuing directors of Class II 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 April
30, 1998, and the year in which each became a director of the Company.
NAME AGE
- ---- ---
CLASS III
Frank C. Becker............................................................. 62
Mr. Becker retired as Vice President, Chemical Research and Development
for Abbott Laboratories, a healthcare products and services company, in
April 1997. Mr. Becker joined Abbott Laboratories in 1959.
Herbert J. Conrad........................................................... 65
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.,
Urocor, Inc., Genvec, Inc. and Dura Pharmaceuticals, Inc. ("Dura").
3
<PAGE>
NAME AGE
- ---- ---
David F. Hale................................................................ 49
Mr. Hale is President and Chief Executive Officer of Women First
HealthCare, Inc. Mr. Hale also serves as Chairman of LMA North America,
Inc. Mr. Hale served as President and Chief Executive Officer of the
Company from June 1987 to November 1997, and was Chairman of its Board
of Directors from May 1991 to February 1997. Prior to joining Gensia
Sicor, 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 board of Dura and several private biomedical companies.
John W. Sayward.............................................................. 46
Mr. Sayward joined Gensia Sicor in 1992 and was named Vice President,
Finance, Chief Financial Officer and Treasurer in February 1997. Prior
to that he was Division Vice President, Finance, Corporate Controller
of Gensia Sicor and Chief Financial Officer of its wholly-owned
subsidiary Gensia Sicor Pharmaceuticals, Inc. From 1975 to 1992, Mr.
Sayward was employed in a wide variety of financial and accounting
positions at Baxter Healthcare Corporation, serving as Vice President
of Finance and Business Development, I.V. Systems Division from 1988 to
1992. From 1986 to 1988 he was Vice President and Controller, Dade
Diagnostics Division of Baxter. Mr. Sayward served in a number of
financial management positions at Baxter and American Hospital Supply
from 1975 to 1986.
CLASS II
Carlos A. Ferrer............................................................. 44
Mr. Ferrer has been a director of the Company since May 1997. He has
been a member of Ferrer Freeman Thompson & Co. LLC ("FFT"), the general
partner of Health Care Capital Partners, 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 Managing
Director and Head of Global Health Care Investment Banking. Mr. Ferrer
is a director of Somatogen, Inc. and AmeriGroup, Inc.
Carlo Salvi ................................................................. 61
Mr. Salvi has been Executive Vice President of the Company since
November 1997, and 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 of SICOR-Societa 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.
4
<PAGE>
NAME AGE
- ---- ---
CLASS I
Donald E. Panoz............................................................. 63
Mr. Panoz has been Chairman of the Board of Directors of the Company
since February 1997, and Chief Executive Officer since November 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........................................................... 53
Mr. Cannon has been a director 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.
The Board of Directors held 17 meetings during 1997. 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 James Blair
who is not standing for re-election).
The Board of Directors has appointed a Stock Option Committee, a
Compensation Committee, an Audit Committee, an Executive Committee and a
Nominating Committee. In addition, in connection with the Company's
divestiture of a majority interest in its Gensia Automedics, Inc. subsidiary,
the Board of Directors appointed an ad hoc Automedics Special Committee
consisting of Michael Cannon and Carlos Ferrer.
The current members of the Stock Option Committee are James Blair and
Herbert Conrad. The Stock Option Committee held four meetings during 1997. The
Stock Option Committee's function is to administer the Gensia Sicor 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 two meetings during
1997. 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 Michael Cannon, Herbert
Conrad and Carlos Ferrer. The Audit Committee held three meetings during 1997.
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 Carlos Ferrer, Donald
Panoz and Carlo Salvi. The Executive Committee held no meetings during 1997.
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. Pursuant to the Purchase Agreement, for so long
as HCCP 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, a designee of HCCP is entitled to be a member of the
Executive Committee and, if
5
<PAGE>
requested by HCCP, such designee is entitled to be considered for membership
on other committees of the Board of Directors.
The members of the Nominating Committee are Carlo Salvi and David Hale. The
Nominating Committee held no meetings during 1997. 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 III DIRECTOR NOMINEES
LISTED ABOVE.
6
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of April 22, 1998 as to shares
of Common Stock beneficially owned by (i) each director and nominee for
director, (ii) the current officers of the Company named in the Summary
Compensation Table set forth herein, (iii) the directors and executive
officers of the Company as a group and (iv) each person known by the Company
to be the beneficial owner of more than 5% of the outstanding shares of Common
Stock of the Company. Except as otherwise indicated and subject to applicable
community property laws, each person has sole investment and voting power with
respect to the shares shown. Ownership information is based upon information
furnished by the respective individuals or entities, as the case may be.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK
--------------------------
NUMBER OF PERCENT
SHARES(1) OF CLASS(2)
---------- -----------
<S> <C> <C>
Rakepoll Finance N.V................................ 29,500,000 37.1%
Caracas baaiweg 201 P.O. Box 6085
Curacao, Netherlands Antilles
Health Care Capital Partners, L.P................... 6,613,756(3) 7.7%
The Mill
10 Glenville Street
Greenwich, CT 06831
Frank C. Becker..................................... 2,000 *
James C. Blair...................................... 81,787(4) *
Michael D. Cannon................................... -- (5) *
Herbert J. Conrad................................... 36,853(6) *
Carlos A. Ferrer.................................... 6,620,160(7) 7.7%
David F. Hale....................................... 1,050,935(8) 1.3%
Donald E. Panoz..................................... 548,832(9) *
Carlo Salvi......................................... 30,580,472(10) 38.5%
John W. Sayward..................................... 68,903(11) *
Paul K. Laikind..................................... 208,201(12) *
Gene F. Tutwiler.................................... 59,743(13) *
All directors and executive officers as a group (13
persons)........................................... 39,377,127(14) 45.8%
</TABLE>
- --------
* Less than one percent
(1) To the Company's knowledge, the persons named in the table have sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them, subject to community property laws
where applicable and the information contained in the footnotes to this
table.
(2) For purposes of computing the percentage of outstanding shares held by
each person or group of persons named above on a given date, shares which
such person or group has the right to acquire within 60 days after such
date are deemed to be outstanding, but are not deemed to be outstanding
for the purposes of computing the percentage ownership of any other
person.
(3) Represents shares which may be acquired within 60 days of April 22, 1998
pursuant to the conversion of convertible notes and exercise of warrants
owned by HCCP and its affiliates.
(4) Includes 26,920 shares which Dr. Blair has the right to acquire within 60
days of April 22, 1998 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 25,243 shares which
Domain Partners III, L.P. has the right to acquire within 60 days of
April 22, 1998. 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. Also
includes 1,509 shares beneficially owned by Domain Associates Profit
Sharing Plan and 4,125 shares which Domain Associates has the right to
acquire within 60 days of April 22, 1998 pursuant to the exercise of
warrants. Dr. Blair is a General Partner of Domain Associates.
7
<PAGE>
(5) Excludes options to purchase 125,000 shares granted to Mr. Cannon on
April 24, 1998.
(6) Includes 38,170 shares which Mr. Conrad has the right to acquire within
60 days of April 22, 1998 pursuant to the exercise of options.
(7) Includes 6,613,756 shares which may be acquired within 60 days of April
22, 1998 pursuant to the conversion of convertible notes and exercise of
warrants owned by HCCP and its affiliates. Mr. Ferrer is a member of FFT,
the General Partner of HCCP. Mr. Ferrer disclaims beneficial ownership of
the notes and warrants held by HCCP. Also includes 6,404 shares which Mr.
Ferrer has the right to acquire within 60 days of April 22, 1998 pursuant
to the exercise of options.
(8) Includes (i) 347,500 shares held by a trust as to which Mr. Hale has
shared voting and investment power and (ii) 54,000 shares held by Mr.
Hale as custodian for his minor children as to which Mr. Hale has sole
voting and investment power.
(9) Includes (i) 200,000 shares Mr. Panoz has the right to acquire within 60
days of April 22, 1998 pursuant to the exercise of vested options, (ii)
300,000 shares which Mr. Panoz may have the right to acquire within 60
days of April 22, 1998 pursuant to the exercise of options that vest upon
the attainment of certain corporate objectives and (iii) 25,000 shares
which Mr. Panoz has the right to acquire within 60 days of April 22, 1998
pursuant to the exercise of warrants.
(10) 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 (i) 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 and (ii) 50,000 shares which Mr. Salvi has the right to acquire
within 60 days of April 22, 1998 pursuant to the exercise of warrants.
Excludes options to purchase 150,000 shares granted to Mr. Salvi on April
24, 1998.
(11) Includes 49,237 shares which Mr. Sayward has the right to acquire within
60 days of April 22, 1998.
(12) Includes 78,559 shares which Dr. Laikind has the right to acquire within
60 days of April 22, 1998 pursuant to the exercise of options.
(13) Includes 43,559 shares which Dr. Tutwiler has the right to acquire within
60 days of April 22, 1998 pursuant to the exercise of options.
(14) Includes 8,062,759 shares which may be acquired within 60 days of April
22, 1998 pursuant to the exercise of options and warrants. Also includes
389,500 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.
8
<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, 1995, 1996 and 1997, of (i) those persons who were at
December 31, 1997 (a) the Chief Executive Officer and (b) the other four most
highly compensated executive officers of the Company whose salary and bonus
exceeded $100,000 (the "Named Executive Officers") and (ii) the Company's
former Chief Executive Officer, David F. Hale, who resigned effective November
14, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------------------
ANNUAL COMPENSATION AWARDS
------------------------------------- -------------------------
OTHER RESTRICTED SECURITIES ALL OTHER
NAME AND ANNUAL STOCK UNDERLYING COMPEN-
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARDS($) OPTIONS(#) SATION($)
------------------ ---- --------- -------- --------------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Donald E. Panoz......... 1997 $ 31,252(1) -- $157,527 -- 500,000 --
President and Chief Ex-
ecutive Officer
Patrick D. Walsh........ 1997 $255,000 $56,875 $ 14,500 -- 100,000 --
Former President and
Chief 1996 $208,000 -- $ 60,100(2) $ 36,800(3) -- $ 2,800(4)
Operating Officer of
Gensia Sicor 1995 $185,000 $35,800 $ 53,500(2) $ 59,850(5) 25,000 $ 1,500(4)
Pharmaceuticals, Inc.
Gene F. Tutwiler, Ph.D.. 1997 $200,000 -- $ 31,940(6) $ 42,677(7) 10,000 $ 3,150(8)
Executive Vice Presi-
dent, 1996 $ 95,700(9) $40,000 $ 99,020(6) $ 97,551(10) 40,000 $ 2,900(8)
Research and Develop-
ment
Paul K. Laikind, Ph.D... 1997 $172,500 -- $ 3,000 $ 38,102(7) 10,000 $ 3,650(11)
Vice President 1996 $160,000 -- $ 3,000 22,867(3) -- $ 3,500(11)
1995 $145,000 $25,800 $ 3,000 $ 59,850(5) 15,000 $ 3,400(11)
Michael D. Cannon....... 1997 $226,150(9) -- -- $ 66,263(7) -- $ 3,240(12)
Executive Vice Presi-
dent
David F. Hale........... 1997 $450,000 -- -- 1,255,596(13) 200,000 $143,580(14)
Former President, Chief 1996 $450,000 -- -- 75,028(3) -- $ 20,300(14)
Executive Officer and 1995 $450,000 $50,800 -- $ 149,625(5) 75,000 $ 19,200(14)
Chairman of the Board
</TABLE>
- --------
(1) Mr. Panoz became Chief Executive Officer of the Company in November 1997
and his salary reflects a partial year of employment.
(2) Represents $53,500 and $60,100, the respective amounts paid by the
Company to Mr. Walsh for expenses in connection with his relocation to
Irvine in 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 1995 are $32,500 and
$21,000, and for 1996 are $40,100 and $20,000.
(3) 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). All shares have
vested.
(4) Represents $1,000 and $2,000 paid by the Company for long-term disability
insurance premiums for Mr. Walsh in 1995 and 1996 and $500 and $800, the
respective amounts paid by the Company for certain life insurance
premiums for Mr. Walsh in 1995 and 1996.
(5) 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
9
<PAGE>
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, Dr. Laikind and Messrs. Hale
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.
All shares have vested.
(6) Represents $64,000 and $31,950, the respective amounts paid by the
Company to Dr. Tutwiler for expenses in connection with his relocation to
San Diego in 1996 and 1997, and $35,100 and $11,321 in taxes he incurred
on certain relocation expenses in 1996 and 1997.
(7) Represents the aggregate of the fair market value of the shares of
restricted stock as of the date of grant ($5.75 per share) less the
aggregate consideration paid therefor ($.01 per share). All shares have
vested.
(8) Represents $1,400, the amount paid by the Company for long-term
disability insurance premiums for Dr. Tutwiler in 1996, and $1,500 and
$3,150, the respective amounts paid by the Company for certain life
insurance premiums for Dr. Tutwiler in 1996 and 1997.
(9) Dr. Tutwiler joined the Company in June 1996 and his salary for 1996
reflects a partial year of employment. Mr. Cannon joined the Company in
February 1997 and his salary reflects a partial year of employment.
(10) Represents the aggregate of the fair market value of the shares of
restricted stock as of the date of grant ($5.063 and $4.00 per share,
respectively) less the aggregate consideration paid therefor ($.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. An additional 6,806 shares were granted to Dr.
Tutwiler as a bonus for his 1996 performance. All of these shares have
vested.
(11) Represents $2,600, $2,700 and $2,700, the respective amounts paid by the
Company for long-term disability insurance premiums for Dr. Laikind in
1995, 1996 and 1997, and $800, $900 and $950, the respective amounts paid
by the Company for certain life insurance premiums for Dr. Laikind in
1995, 1996 and 1997.
(12) Represents $3,240, the amount paid by the Company for life insurance
premiums for Mr. Cannon in 1997.
(13) Represents the aggregate of the fair market value of the shares of
restricted stock as of the date of grant ($5.75, $5.813 and $6.3125 per
share, respectively) less the aggregate consideration paid therefor ($.01
per share). Mr. Hale received a grant of 17,805 shares as a bonus for his
1997 performance and grants of 169,588 shares and 14,573 shares as
severance payments. All shares have vested.
(14) Represents $14,700, $15,800 and $15,970, the respective amounts paid by
the Company for long-term disability insurance premiums for Mr. Hale in
1995, 1996, and 1997, and $4,500, $4,500 and $2,610, the respective
amounts paid by the Company for life insurance premiums for Mr. Hale in
1995, 1996, and 1997. For 1997, also represents certain indebtedness
forgiven by the Company in the amount of $125,000.
COMPENSATION OF DIRECTORS
The members of the Board of Directors who are not employees of the Company
receive an annual retainer of $10,000 and they are reimbursed for reasonable
expenses incurred in connection with meetings of the Board of Directors and
its committees. In addition, continuing non-employee directors 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: Dr. Blair (who is not standing for re-
election), 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
10
<PAGE>
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, Messrs. Benjamin and Mendell, resigned in 1997 in order to
permit the required appointment of directors pursuant to the Shareholder's
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 Mr. Panoz 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. 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 the agreement, 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. In addition on April 24, 1998,
in recognition of their services as Executive Vice Presidents of the Company,
Mr. Salvi was granted options to purchase 150,000 shares, and Mr. Cannon was
granted options to purchase 125,000 shares, of the Company's Common Stock. The
options are exercisable at an exercise price of $4.625 per share and vest over
a period of four years, with a vesting start date of February 28, 1997.
Frank C. Becker has entered into an agreement whereby he will serve as a
consultant to the Company for which he will be compensated at the rate of
$1,000 per day for a minimum of 100 days per year.
SEVERANCE AGREEMENTS
The Company is a party to certain Severance Agreements (the "Severance
Agreements") with Drs. Laikind and Tutwiler. Pursuant to the Severance
Agreements, (i) if, before December 31, 1998 or 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.
The "Continuation Period" is defined 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.
"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
11
<PAGE>
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.
In November 1997 Mr. Hale resigned as President and Chief Executive Officer
of the Company. Pursuant to the terms of severance arrangements, Mr. Hale was
issued a total of 184,161 shares of Common Stock in December 1997 and January
1998. In addition, all options held by Mr. Hale were permitted to continue to
vest over an 18-month period, at the end of which all remaining options would
become immediately exercisable. In March 1998 Patrick D. Walsh resigned as
President and Chief Operating Officer of the Company's Gensia Sicor
Pharmaceuticals, Inc. subsidiary and as a director of the Company. In
connection with his resignation, Mr. Walsh entered into a Settlement Agreement
and Release pursuant to which he is expected to receive approximately $113,092
in cash and $226,219 in cash or shares of Common Stock, at the Company's
option, over the period from March 1998 until August 1998. Mr. Walsh is
eligible to receive an additional 20,000 shares of Common Stock, and have the
balance of his $100,000 loan (plus accrued interest) from the Company
forgiven, should certain milestones be achieved by the Company. In addition,
all options held by Mr. Walsh will continue to vest until March 1999.
12
<PAGE>
STOCK OPTIONS
The following tables summarize option grants and exercises during 1997 to or
by the Chief Executive Officer, the former Chief Executive Officer and the
Named Executive Officers, and the value of the options held by such persons at
the end of 1997. The Company does not grant Stock Appreciation Rights.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE
--------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN OR BASE EXPIRATION ---------------------
NAME GRANTED(#) FISCAL YEAR 1997 PRICE($/SH.) DATE 5%($) 10%($)
---- ---------- ---------------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Donald E. Panoz......... 500,000 20.0% $ 4.29 2/28/07 $1,775,935 $4,097,841
Chairman and Chief
Executive Officer
Patrick D. Walsh........ 100,000 4.0% $ 4.25 1/17/07 $ 267,280 $ 677,341
Former President and
Chief Operating Officer
of Gensia Sicor
Pharmaceuticals, Inc.
Gene F. Tutwiler, Ph.D.. 10,000 0.4% $ 4.25 1/17/07 $ 26,728 $ 67,734
Paul K. Laikind, Ph.D... 10,000 0.4% $ 4.25 1/17/07 $ 26,728 $ 67,734
Michael D. Cannon....... -- -- -- -- -- --
David F. Hale........... 187,369 7.48% $ 4.25 1/17/07 $ 500,800 $1,269,126
Former Chief Executive 12,631 0.50% $4.875 2/26/07 $ 33,949 $ 83,617
Officer
</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 outstanding on February 28, 1997
automatically vested. The exercise price per share of options granted in
1997 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. Under the terms of a severance agreement, all options held by
Mr. Hale were permitted to continue to vest over an 18-month period
following his resignation as President and Chief Executive Officer, at the
end of which all remaining options will become fully vested.
(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.
13
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND VALUE OF OPTIONS
AT END OF FISCAL 1997
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT
OPTIONS AT END OF END OF
FISCAL 1997(#) FISCAL 1997($)(1)
---------------------- -----------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ----------- ---------------------- -----------------
<S> <C> <C> <C> <C>
Donald E. Panoz......... -- -- 200,000/300,000 $305,000/$457,500
Chairman and Chief
Executive Officer
Patrick D. Walsh........ -- -- 68,819/76,181 $96,315/$ 119,071
Former President and
Chief Operating Officer
of Gensia Sicor
Pharmaceuticals, Inc.
Gene F. Tutwiler, Ph.D.. -- -- 42,382/7,618 $ 33,724/$ 11,907
Paul K. Laikind, Ph.D... 7,500 30,205 77,382/7,618 $ 87,199/$ 11,907
Michael D. Cannon....... -- -- -- /-- -- /--
David F. Hale........... 60,000 $224,760 435,683/151,817 $427,915/$231,617
Former Chief Executive
Officer
</TABLE>
- --------
(1) Calculated on the basis of the fair market value of the underlying
securities at December 31, 1997 ($5.813), minus the exercise price.
REPORT TO STOCKHOLDERS ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Company (the
"Committee") and the Stock Option Committee are pleased to present their
report on executive compensation. This report is provided by the Committee to
assist stockholders in understanding the Committee's objectives and procedures
in establishing the compensation of the Company's executive officers and
describes the basis on which compensation determinations for 1997 were made by
the Committee. In making its determination, the Committee has relied, in part,
on geographic and competitive considerations, independent surveys of
compensation of management of companies in the pharmaceutical industry,
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 pharmaceutical industry, 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.
14
<PAGE>
KEY ELEMENTS OF EXECUTIVE COMPENSATION
In 1997, the Company focused on consummating the acquisition of Rakepoll
Holding, integrating the operations of Rakepoll Holding with Gensia Sicor,
investing in the long term value of GSP and the Rakepoll Holding operating
companies, divesting a majority interest in Gensia Automedics and reducing its
expenses.
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 and other business
objectives, as well as the individual contributions and achievements of each
executive officer and, in 1998 and beyond, the profitability of the Company.
The Company's existing compensation structure for executive officers generally
includes a combination of base salary, bonus, and stock options.
Base Salary
Compensation levels are largely determined through comparisons with
companies of similar size and complexity in the pharmaceutical industry and
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. In establishing
base salaries for 1997 the Committee 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 1997, goals were
established for the Company and approved by the Board of Directors. Goals set
for 1997 included consummating the acquisition of Rakepoll Holding,
integrating the operations of Gensia Sicor and Rakepoll Holding, increasing
revenues for Gensia Sicor, obtaining approval of certain Abbreviated New Drug
Applications ("ANDAs") and filing additional ANDAs for approval, and
completing a corporate partnership to support the Company's research expenses.
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. Beginning in 1998, the Company will also take into account the
profitability of the Company on a worldwide basis in awarding such bonuses.
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 1997 that were important for the continued growth and
development of the Company, including consummating the acquisition of Rakepoll
Holding; obtaining approval of ten ANDAs and the filing of key additional
ANDAs at Gensia Sicor Pharmaceuticals, Inc.; raising additional financial
resources for the Company; establishing a collaboration with Sankyo relating
to diabetes research; completing an agreement with Sangstat regarding the sale
of bulk cyclosporine; and successfully reducing its workforce and
consolidating operations in its Irvine facility, the Committee decided to
award bonuses for 1997 to certain officers and key employees, most of whom
received restricted stock in lieu of cash.
15
<PAGE>
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 individual performance 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 pharmaceutical companies taking into account differences in such
companies' stock prices, stage of development, achievements and the like.
1997 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 and retained the same salary
level for Mr. Panoz when it appointed him Chief Executive Officer in November
1997. The use of traditional performance standards, such as revenues, profits
and return on equity are appropriate in the evaluation of the Chief Executive
Officer's performance. In addition, because of the acquisition of Rakepoll
Holding in the first quarter of 1997, additional performance standards were
also appropriate in 1997 to evaluate the performance of the Chief Executive
Officer. The Company achieved a number of its corporate objectives for 1997,
and Mr. Hale as Chief Executive Officer prior to his resignation in November
1997, played a key role in achieving those objectives. Some of these
achievements, which were either accomplished by the time of Mr. Hale's
resignation or which were accomplished in December 1997 but as to which Mr.
Hale had contributed substantial efforts, were as follows: obtaining approval
of ten ANDAs at Gensia Sicor Pharmaceuticals, Inc., raising additional
financial resources for the Company; establishment of a collaboration with
Sankyo relating to diabetes research; completing an agreement with Sangstat
regarding the sale of bulk cyclosporine; and successfully reducing its
workforce and consolidating operations in its Irvine facility 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 to Mr. Hale under
the Company's Key Employee Incentive Compensation Plan in the form of
restricted stock of 17,805 shares of Common Stock for performance in 1997.
The Stock Option Committee did not grant Mr. Hale or, after his appointment
as Chief Executive Officer, Mr. Panoz any new options to purchase shares of
the Company's Common Stock in 1997.
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.
16
<PAGE>
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 STOCK OPTION COMMITTEE
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 during 1997 were James C. Blair,
Herbert J. Conrad, and Carlo Salvi. The members of the Stock Option Committee
were James C. Blair and Herbert J. Conrad. Steven C. Mendell and Jerry C.
Benjamin resigned as directors and members of both committees in March 1997
and May 1997, respectively in order to permit the required appointment of
directors pursuant to the Shareholder's Agreement and the Purchase Agreement.
Dr. Blair is not standing for re-election.
17
<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.
[STOCK PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
12/31/92 12/31/93 12/31/94 12/31/95 12/30/96 12/31/97
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Gensia Sicor.............. $100.00 $ 98.99 $ 17.35 $ 21.43 $ 18.88 $ 23.73
Nasdaq Composite.......... 100.00 115.76 112.28 157.69 193.09 236.22
Nasdaq Pharmaceutical..... 100.00 89.10 67.06 122.68 123.04 127.15
</TABLE>
Assumes a $100 investment on December 31, 1992 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 (949) 455-4700.
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CERTAIN TRANSACTIONS
THE STOCK EXCHANGE
On February 26, 1997 (the "Closing Date") the stockholders of Gensia Sicor
approved the Stock Exchange Agreement between Gensia Sicor and Rakepoll
Finance, pursuant to which Gensia Sicor 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").
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 Sicor Pharmaceuticals, Inc., the Shareholder's Agreement set forth
the composition of the Board of Directors thereof on the Closing Date and
provided that Rakepoll Finance has the right to designate one of the directors
thereof.
Pursuant to the Shareholder's Agreement, the consent of the Investor
Directors is 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 outstanding options to acquire Gensia
Sicor 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 Sicor had executed with its officers and certain
key employees of Gensia Sicor, including David F. Hale, former 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 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 Sicor Board of
Directors (with Mr. Hale not present) agreed to forgive, upon consummation of
the Stock Exchange, a loan made by Gensia Sicor 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 Sicor and Rakepoll Finance 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 Sicor'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 Sicor'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 Sicor had in effect as
of the execution date of the Stock Exchange Agreement.
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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 AND AUTOMEDICS
In July 1991, the Company organized Gensia Clinical Partners, L.P. ("Gensia
Clinical Partners") to provide funding for further research and clinical
development of the Company's GenESA(R) System technology. Gensia Clinical
Partners received net proceeds of approximately $23.0 million from its limited
partners, all of which was 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 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 conducted
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 continued funding all further expenses related to the GenESA System.
The Company was 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 September 1997, the Company received marketing clearance from the
U.S. Food and Drug Administration for the GenESA System for use in the
diagnosis of coronary artery disease in conjunction with radionuclide
myocardial perfusion imaging (radionuclide imaging) and echocardiography for
patients who cannot exercise adequately. Upon receiving such F.D.A. approval,
and pursuant to a pre-existing agreement between the Company and Gensia
Clinical Partners, the Company made a milestone payment of an aggregate of
814,248 shares of its Common Stock to the limited partners of Gensia Clinical
Partners. The limited partners receiving such milestone payment included the
following former and current directors and executive officers of the Company:
Domain Associates (an entity affiliated with director James C. Blair), 1,548
shares; David F. Hale, 1,548 shares; Daniel D. Burgess, 774 shares; Thomas M.
Speace, 774 shares; and L. John Wilkerson, 774 shares.
During the two to four-year period following the initial commercialization
of the GenESA System, the Company had the option (the "Purchase Option") to
purchase the limited partners' interests in Gensia Clinical Partners. The
Company contributed approximately $3.2 million for funding of expenses related
to the GenESA System during 1997.
In December 1997, as part of its restructuring program to focus on its core
specialty pharmaceutical businesses, the Company completed the transfer of
assets of its medical products business to Gensia Automedics, Inc.
("Automedics"). The assets transferred to Automedics include certain interests
in the GenESA System, the AutoHep(R) System ("AHS") and the European
distribution rights to Brevibloc. A majority interest in Automedics was sold
to a private investor group led by Galen Associates and including The Wellcome
Trust. L. John Wilkerson, a director of the Company until December 1997, is a
principal of Galen Associates and Chairman of the Board of Automedics, Jerry
C. Benjamin, a director of the Company until May 1997, is a trustee of The
Wellcome Trust and a director of Automedics. David F. Hale, a director of the
Company and its President and Chief Executive Officer until November 1997, is
a director of Automedics.
Gensia Sicor retains a 19% equity interest in Automedics and may receive
royalties and other payments based on Automedics' future performance. If the
AHS is successfully developed by Automedics, Gensia Sicor will receive a cash
payment as a result of U.S. regulatory marketing clearance of the AHS product.
The private investors initially invested $6 million in Automedics and,
contingent upon certain conditions, may invest an additional $6 million.
Automedics also assumed responsibility for contractual commitments to Protocol
Systems, Inc. for the purchase of GenESA System devices. Gensia Sicor retained
potential obligations under the agreements with Protocol Systems, Inc. and
related to Gensia Clinical Partners which were assigned to Automedics, Inc.
and has agreed to indemnify Automedics under certain circumstances.
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On April 27, 1998 the Company and Automedics announced that they had
determined not to exercise the Purchase Option and had given notice of this
decision to Gensia Development Corporation, the general partner of Gensia
Clinical Partners. This decision was based on, among other things, the lack of
market acceptance of the GenESA System since its U.S. market introduction in
October 1997 and its European market introduction in the second quarter of
1995. Automedics plans to continue to provide technical support for the GenESA
System in the United States and Europe through May 31, 1998. Gensia Sicor and
Automedics have also informed Protocol Systems, Inc., that Automedics plans no
additional purchases of GenESA System devices under a supply agreement which
provides for the purchase of GenESA System devices through the year 2002.
In conjunction with the Automedics transaction, The Laryngeal Mask Company
Ltd. formed a U.S. company, LMA North America, Inc., which holds the U.S.
distribution rights to the LMA product line. Mr. Hale is Chairman of LMA North
America, Inc. LMA North America, Inc. entered into a service agreement
withAutomedics which began January 1, 1998 under which Automedics is selling
the LMA product line, subject to future performance criteria.
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
Mr. Walsh, former President and Chief Operating Officer of Gensia Sicor
Pharmaceuticals, Inc., is indebted to the Company in the aggregate principal
amount of $100,000 as the result of a relocation loan. Interest at the rate of
5% per annum is payable on the loan. Accrued interest as of March 31, 1998 is
approximately $17,500. The loan is secured by real property and is due on
October 12, 1999. In connection with his resignation from the Company in March
1998, Mr. Walsh is eligible to have this loan forgiven in the event certain
milestones should be achieved by the Company.
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 $75,000 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 consisted 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 December 29, 1997, Gensia Sicor announced that its subsidiary, Sicor,
acquired a 50% equity interest in Diaspa S.p.A., a private Italian
pharmaceutical company specializing in bulk fermentation products. Sicor paid
approximately $2.8 million in cash for its 50% equity interest in Diaspa. The
remaining 50% equity interest in Diaspa was purchased by Archimica S.p.A., an
Italian bulk pharmaceutical company in which Mr. Salvi has a 50% beneficial
ownership.
In the last week of December 1997, Gensia Sicor sold approximately 2.4
million Units in a private placement, at a purchase price of $5.8742 per Unit.
Each Unit consisted of one share of Common Stock and a Warrant to purchase
one-half share of Common Stock at an exercise price of $7.34 per share, for
each share of Common Stock purchased in the Unit offering and held until June
30, 1998. The Units were sold to accredited
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investors including two members of Gensia Sicor's management (including Mr.
Sayward, 10,000 Units) as well as Mr. Panoz (13,832 Units) and Mr. Salvi
(340,472 Units). The private placement included the conversion into Units of
an aggregate of $4 million loaned to the Company in early December 1997, $2
million of which was advanced by Fountainhead Holdings Ltd., a family trust
established by Mr. Panoz, and $2 million of which was advanced by Mr. Salvi.
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 Sicor 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 and 1997 to reserve an additional 200,000 shares
for issuance. On April 17, 1998, the Board of Directors amended and restated
the plan (as amended and restated, the "ESPP") to reserve an additional
100,000 shares for issuance under the ESPP, subject to the approval of the
Company's stockholders at the Annual Meeting. As of April 30, 1998, an
aggregate of 182,829 shares were available for issuance under the ESPP.
Under the ESPP, an aggregate of 600,000 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 ESPP 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.
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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.
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. 1997 Long-Term Incentive Plan under which 2,000,000 shares of Common
Stock were reserved for issuance. At the Annual Meeting of Stockholders held
on September 9, 1997, the stockholders of the Company approved an amendment to
such plan to reserve an additional 1,000,000 shares of Common Stock under such
plan. On April 17, 1998, the Board of Directors further 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.
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
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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 4,000,000 shares of Company Common Stock (which number includes
the 1,000,000 share increase that stockholders are being asked to approve)
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 canceled or otherwise terminated without having been
exercised in full, the shares allocable to the unexercised 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 April 22, 1998, options to purchase an aggregate of 5,440,821 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 April 30, 1998, approximately 551 employees, nine directors and 43
consultants or advisors were eligible to participate in both plans. On April
22, 1997, the closing price of the Company's Common Stock on the Nasdaq
National Market was $4.75 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, 1,690,260 shares have been exercised. As of April 22, 1998, 1,344,930
shares of Company Common Stock had been issued for direct sale under the
plans. As of April 22, 1998, a total of 2,012,025 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 April 22, 1998, the following persons or groups had in total received
options to purchase shares or shares of Company Common Stock under either the
1990 Stock Plan or the 1997 Stock Plan: (i) the Chief Executive Officer and
the other officers or former officers named in the Summary Compensation Table:
Mr. Panoz 500,000 shares, Mr. Hale 826,966 shares, Mr. Walsh 175,000 shares,
Dr. Laikind 129,138 shares, and Dr. Tutwiler 72,435 shares; (ii) all current
executive officers of the Company as a group: 1,042,690 shares; (iii) all
current directors who are not officers as a group: 1,089,966 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 as a group: 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
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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 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.
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.
26
<PAGE>
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 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.
27
<PAGE>
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
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, 1998, 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.
STOCKHOLDER PROPOSALS
To be considered for inclusion in the proxy statement for presentation at
the Annual Meeting of Stockholders to be held in 1999 a stockholder proposal
must be received at the offices of the Company, 19 Hughes, Irvine, California
92618 not later than January 11, 1999. The Company presently intends to have
its next Annual Meeting of Stockholders in May 1999.
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. In
1997, Mr. Wilkerson and Mr. Panoz each failed to timely file one report.
28
<PAGE>
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., 19 Hughes,
Irvine, California 92618, (949) 455-4700. To provide the Company sufficient
time to arrange for reasonable assistance or accommodation, please submit all
requests by May 29, 1998.
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
29
<PAGE>
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, June
20, 1997 and April 17, 1998. 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 com mencement 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
-1-
<PAGE>
purchase of Stock. Such portion shall be a whole percentage of the Eligible
Employee's Compensation, but not less than 1% nor more than 12%.
(c) Changing Withholding Rate. If a Participant wishes to change the
-------------------------
rate of payroll withholding, he or she may do so by filing a new enrollment form
with the Company not later than the last working day prior to the commencement
of the Participation Period for which such change is to be effec tive.
(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 Partici pant'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
-2-
<PAGE>
more than a maximum of 1,000 shares of Stock with respect to any Participation
Period nor shares of Stock in excess of the amounts set forth in Sections 8 and
12(a).
(d) Available Shares Insufficient. In the event that the aggregate
-----------------------------
number of shares that all Participants elect to purchase during a Participation
Period exceeds the maximum number of shares remaining available for issuance
under Section 12(a), then the number of shares to which each Participant is
entitled shall be determined by multiplying the number of shares available for
issuance by a fraction, the numerator of which is the number of shares that such
Participant has elected to purchase and the denominator of which is the number
of shares that all Participants have elected to purchase.
(e) Issuance of Stock. Certificates representing the number of
-----------------
shares of Stock purchased shall be issued as soon as reasonably practicable
after the close of the Participation Period. Shares may be registered in the
name of the Participant or jointly in the name of the Participant and his or her
spouse as joint tenants with right of survivorship or as community property.
(f) Unused Cash Balances. Any amount remaining in the Participant's
--------------------
Plan Account that represents the Purchase Price for a fractional share shall be
carried over in the Participant's Plan Account to the next Participation Period.
Any amount remaining in the Participant's Plan Account that represents the
Purchase Price for whole shares which could not be purchased under Subsection
(c) above or Section 12(a) shall be refunded to the Participant in cash, without
interest.
SECTION 8. LIMITATIONS ON STOCK OWNERSHIP.
--------- ------------------------------
Any other provision of the Plan notwithstanding, no Participant shall
be granted a right to purchase Stock under the Plan if:
(a) Such Participant, immediately after his or her election to
purchase such Stock, would own stock possessing more than 5% of the total
combined voting power or value of all classes of stock of the Company or
any parent or Subsidiary of the Company; or
(b) Under the terms of the Plan, such Participant's rights to
purchase stock under this and all other qualified employee stock purchase
plans of the Company or any parent or Subsidiary of the Company would
accrue at a rate that exceeds $25,000 of the fair market value of such
stock (determined at the time when such right is granted) for each calendar
year for which such right or option is outstanding at any time.
Ownership of stock shall be determined after applying the attribution rules of
section 424(d) of the Internal Revenue Code of 1986, as amended. For purposes
of this Section 8, each Participant shall be considered to own any stock that he
or she has a right or option to purchase under this or any other plan, and each
Participant shall be considered to have the right to purchase 1,000 shares of
Stock under this Plan with respect to each Participation Period.
SECTION 9. RIGHTS NOT TRANSFERABLE.
--------- -----------------------
The rights of any Participant under the Plan, or any Participant's
interest in any Stock or moneys to which he or she may be entitled under the
Plan, shall not be transferable by voluntary or involuntary assignment or by
operation of law, or in any other manner other than by will or the laws of
descent and distribution. If a Participant in any manner attempts to transfer,
assign or otherwise encumber 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).
-3-
<PAGE>
SECTION 10. NO RIGHTS AS AN EMPLOYEE.
---------- ------------------------
Nothing in the Plan shall be construed to give any person the right to
remain in the employ of a Participating Company. Each Participating Company
reserves the right to terminate the employment of any person at any time, with
or without cause.
SECTION 11. NO RIGHTS AS A STOCKHOLDER.
---------- --------------------------
A Participant shall have no rights as a stockholder with respect to
any shares that he or she has purchased, or may have a right to purchase, under
the Plan until the date of issuance of a stock certificate for such shares.
SECTION 12. STOCK OFFERED UNDER THE PLAN.
---------- ----------------------------
(a) Authorized Shares. The aggregate number of shares of Stock
-----------------
available for purchase under the Plan shall be 600,000, 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 pay ment 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 here under 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.
-4-
<PAGE>
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, com missions, overtime pay, moving or
relocation allowances, car allowances, imputed income attributable to cars,
taxable fringe benefits and similar items, all as determined by the Committee.
(e) "Eligible Employee" means any employee of a Participating Company
-----------------
(i) whose customary employment is for more than five months per calendar year
and for more than 20 hours per week and (ii) who has been an employee of a
Participating Company for not less than three consecutive months.
(f) "Fair Market Value" shall mean the market price of Stock,
-----------------
determined by the Committee as follows:
(i) If the Stock was traded over-the-counter on the date in question
but was not classified as a national market issue, then the Fair Market
Value shall be equal to the mean between the last reported representative
bid and asked prices quoted by the NASDAQ system for such date;
(ii) If the Stock was traded over-the-counter on the date in question
and was classified as a national market issue, then the Fair Market Value
shall be equal to the closing price quoted by the NASDAQ system for such
date;
(iii) If the Stock was traded on a stock exchange on the date in
question, then the Fair Market Value shall be equal to the closing price
reported by the applicable composite transactions report for such date; and
(iv) If none of the foregoing provisions is applicable, then the Fair
Market Value shall be determined by the Committee in good faith on such
basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee shall
be based on the prices reported in the Western Edition of The Wall Street
---------------
Journal. Such determination shall be conclusive and binding on all persons.
- -------
(g) "Participant" means an Eligible Employee who elects to
-----------
participate in the Plan, as provided in Section 3(b).
(h) "Participating Company" means the Company and each present or
---------------------
future Subsidiary, except Subsidiaries excluded by the Committee.
(i) "Participation Period" means a period during which contributions
--------------------
may be made toward the purchase of Stock under the Plan, as determined pursuant
to Section 3(a).
(j) "Plan" means this Gensia 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).
-5-
<PAGE>
(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.
SECTION 16. EXECUTION.
---------- ---------
To record the amendment and restatement of the Plan by the Board of
Directors on April 17, 1998, the Company has caused its duly authorized officer
to affix the corporate name and seal hereto.
GENSIA SICOR INC.
By /s/ John W. Sayward
---------------------------------------------
John W. Sayward
Vice President, Finance,
Chief Financial Officer and Treasurer
-6-
<PAGE>
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 and on April 17, 1998.
The purpose of the Plan is to promote the interests of Gensia Sicor
Inc., and its shareholders 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 shareholder approval of a merger in which the Company does
not survive as an independent and publicly owned corporation (except a merger
which leaves Company shareholders with substantially the same ownership in the
new corporation); (3) Company shareholder 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).
<PAGE>
(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.
(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 Commit tee 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.
2
<PAGE>
(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 Subsidi ary 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.
(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.
3
<PAGE>
(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 corpora tion 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 4,000,000, 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.
4. Administration of the Plan.
4
<PAGE>
(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.
5
<PAGE>
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
shareholders, 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.
(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
6
<PAGE>
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 notwith-standing, no modification of an Option shall, without the
consent of the Holder, alter or impair his or her rights or obligations under
such Option.
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:
7
<PAGE>
(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 shareholder 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 (S)
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
8
<PAGE>
(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
(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
9
<PAGE>
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.
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
10
<PAGE>
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 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.
11
<PAGE>
(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 shareholders 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,
12
<PAGE>
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 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 shareholders 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 shareholders of the Company.
13
<PAGE>
GENSIA SICOR INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING ON JUNE 15, 1998
JOHN W. SAYWARD 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 19
Hughes, Irvine, California on June 15, 1998 at 1:30 p.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 FOUR NOMINEES FOR CLASS III DIRECTOR AND FOR ITEMS 2, 3 AND
4.
(continued and to be signed on reverse side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE FOUR NOMINEES
FOR CLASS III DIRECTOR AND FOR ITEMS 2, 3 AND 4.
Please mark [X]
your votes as
indicated in
this example
<TABLE>
<CAPTION>
FOR WITHHOLD
all nominees listed AUTHORITY
below (except as to vote for all
marked to the contrary) nominees listed below
<S> <C> <C>
1. ELECTION OF DIRECTORS
Nominees: Frank C. Becker Herbert J. Conrad
David F. Hale John W. Sayward
</TABLE>
(INSTRUCTION: To withhold authority to vote for
any individual nominee, write that nominee's name
in the space provided below.)
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
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 ratify the appointment of Ernst & Young LLP as
the Company's independent auditors:
5. In their discretion, upon such other business
as may properly come before the meeting
</TABLE>
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
Signature(s) Dated: , 1998
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.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
